Climate Action

EU Roadmap for moving to a competitive low

carbon economy in 2050

2 July 2012

Artur Runge-MetzgerDirector, DG CLIMA

Climate Action

Outline

• Climate policy challenges• Where does the EU stand now?• Roadmap 2050

• Global analysis• EU analysis

• Next steps

Climate Action

3

Limiting climate change – a global challenge

Science requires that global emissions are cut by 50% by 2050 compared to 1990

EU objective of reducing greenhouse gas emissions by 80-95% by 2050 compared to 1990, in the context of necessary reductions by developed countries

Need for a low carbon 2050 strategy providing the framework for the longer term action

Need to fix intermediary stages towards reaching the 2050 objective

Need to keep developments under review on a regular basis

Climate Action

4

Climate change threatening future economic growth

2005 : US$ 228 billion

Climate Action

5

Climate Action until 2020

Climate Action

Where does the EU stand now?

• EU emissions reduced by 15.5% 1990 -2010

• EU GDP grew 40%• EU on track

towards 20% emission reduction by 2020

6

80.0

90.0

100.0

110.0

120.0

130.0

140.0

150.0

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

GHG emissions

Population

Real GDP

Primary energy

Climate Action

However, majority of Member States will not meet national non-ETS target in 2020

7

2020 projections 2020 national target

Current projections show the EU would meet its 2020 target. However, for 13 Member States, the existing policies would not be sufficient to reach their national target.

Climate Action

8

Roadmap 2050:Global analysis

Climate Action

9

2050 Roadmap

The first extensive global and EU analysis on how the long term target can be reached:•identifies cost-effective pathway, with intermediate milestones,•identifies key technologies guiding R&D,•identifies investments needs and benefits,•identifies opportunities and trade-offs,•guides EU, national and regional policies,•gives direction to private sector and private households for long term investments.

Climate Action

10

The impact of climate action on the global temperature increase by 2100

Global emissions pathway in the next 40 years will determine likely warming by the end of the century

Climate Action

11

Developed Countries

0%

20%

40%

60%

80%

100%

1990 2000 2010 2020 2030 2040 2050

Baseline Global action

EU

0%

20%

40%

60%

80%

100%

1990 2000 2010 2020 2030 2040 2050

Baseline Global action

Only global climate action reduces emissions in all parts of the world

EU objective: 80 to 95% reductions largely through domestic measures:

around -80% internal reductions in 2050 compared to 1990

Developed Countries: similar efforts

Developing Countries: -5% compared to 1990

Equivalent to - 80% compared to business as usual

no cheap offsets by 2050

Developing Countries

0%

100%

200%

300%

400%

500%

1990 2000 2010 2020 2030 2040 2050

Baseline Global action

Climate Action

12

Global climate action leads to converging emissions per capita

Climate Action

13

Global climate action reduces fossil fuel prices

Oil price development

0

25

50

75

100

125

150

2010 2020 2030 2040 2050

$ p

er

ba

rre

l

Baseline Fragmented action Global Action

Climate Action

14

Global forestry and agriculture must be part of the solution

• Need to ensure food security to feed 9 billion people• EU objective of eliminating net deforestation around 2030 • Efforts to reduce agricultural emissions, or rather limit their increase• Increased biomass use for energy as a result of global action on

climate change

Climate Action

15

Global agricultural productivity matters for future food prices

1. No yield improvement2. Base case: Only 0.5% yield improvement for crops3. Base case + also 0.5% yield improvement for livestock

Climate Action

16

Roadmap 2050:EU analysis

Climate Action

17

Efficient pathway:-25% in 2020-40% in 2030-60% in 2040

A cost-efficient pathway towards 205080% domestic reduction in 2050 is feasiblewith currently available technologies,with behavioural change only induced through pricesIf all economic sectors contribute to a varying degree & pace.

0%

20%

40%

60%

80%

100%

1990 2000 2010 2020 2030 2040 2050

0%

20%

40%

60%

80%

100%

Current policy

Power Sector

Residential & Tertiary

Non CO2 Other Sectors

Industry

Transport

Non CO2 Agriculture

Climate Action

18

Roadmap 2050: Energy efficiency will be key

• Energy efficiency is the single most important contribution by 2050

• Also essential in the short term• Climate and energy package: 20% GHG reduction, 20%

renewables and 20% energy efficiency improvement• Current policies only result in 10% energy efficiency

improvement• Roadmap confirms key role of efficiency up to 2020 and

beyond• Efforts towards 20% efficiency target would deliver 25%

GHG reduction• ETS is one instrument to deliver additional efficiency

Climate Action

GDP and GHG decoupling

40

60

80

100

120

140

160

180

200

220

1990 2000 2010 2020 2030

19

90

= 1

00

%

GDP GHG emissions

Additional domestic investment: € 270 billion annually during 2010-2050, equivalent to 1.5% of GDP (Total investment – 19% of GDP in 2009), of which• built environment (buildings

and appliances): € 75 billion

• transport (vehicles and infrastructure): € 150 billion

• power (electricity generation, grid): € 30 billion

Roadmap 2050: Investing in innovation …

Climate Action

GDP and GHG decoupling

40

60

80

100

120

140

160

180

200

220

1990 2000 2010 2020 2030

19

90

= 1

00

%

GDP GHG emissions

• Fuel savings: € 175 to 320 billion on average annually during 2010-2050

• Primary energy consumption about 30% below 2005 without negatively affecting energy services

• Making EU economy more energy secure:• Halves imports of oil and gas

compared to today• Saving € 400 billion of EU oil and gas

import bill in 2050, equivalent to > 3% of today’s GDP

• Air quality and health benefits: € 27 billion in 2030 and € 88 billion in 2050

Roadmap 2050: … means saving energy, reducing energy

bill and raising air quality & health

Climate Action

21

• Where will new jobs come from?• Short term: e.g. in renovation of buildings, production of

insulation materials, renewables industry• Potential net job creation up to 1.5 million by 2020• Use auctioning revenues from EU emissions trading

system and tax revenues for reduction of labour costs and increase in investments and R&D

• Long term job prospects depend on favourable economic framework conditions, e.g. expenditure on research & technology development, innovation, entrepreneurship, new skills, investment

Roadmap 2050:Creating new jobs in the EU

Climate Action

Roadmap 2050: Making the EU fit for the global low-carbon race

• All competitors develop their own low carbon strategies, e.g.

• US:• 1 million electric cars on road by 2015• 80% clean energy by 2035

• China:• Two-year investment plan: +0.8% GDP on innovation,

restructuring, energy conservation, emissions reductions and ecological improvement

• 12th 5-year plan (2011-2015): reducing emissions per unit of GDP by 17%, accelerating R&D and use of low-carbon technologies, low-carbon pilot projects

Climate Action

23

• Ensure the achievement of 20% energy efficiency target by 2020, and in this context use the role of the emissions trading system

• Give clarity for long term investments, especially in ETS sectors• Define 2020 - 2030 policy framework

• Upward review of 1.74% linear reduction to be considered to achieve -80% GHG emissions by 2050

• Measures to protect vulnerable industries against carbon leakage in the case of fragmented action

EU’s policy challenges (1)

Climate Action

24

EU’s policy challenges (2)

• Implement Strategic Energy Technology (SET) Plan (€ 50 billion from 2014-2020)

• Develop innovative financing instruments to use limited public finance to leverage private sector investments in the next EU budget, e.g. in cohesion policy

• Use CAP to contribute to further emission reductions and increased absorption of natural sinks, taking into account the increased demand for agricultural and forestry products including for bio-energy

Climate Action

25

Next steps

• Negotiation of EU Multi-annual Financial Framework and detailed legislation for individual spending programmes.

• Further Commission analysis of cost efficient and equitable mix of individual policy instruments and implications for individual Member States.

• Member States to develop long-term national and regional low emission development strategies.

Climate Action

2626

For further information:

http://ec.europa.eu/clima/policies/brief/eu/index_en.htm