climate change etui conference brussels, 29 march 2011 towards industrial policy didier herbert...
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Climate Change
ETUI Conference Brussels, 29 March 2011
Towards Industrial Policy
Didier Herbert
Sustainable Industrial Policy
Europe 2020: 7 flagship initiatives underpin the targets
S m a r t G row t h
S u s ta in a b le G row t h
I n c lu s iv e G row t h
In n ov a ti o n« Innovation Union »
C l im a te , e n e r g y a n d
m o b i l i ty« R esource
efficient E urope »
E m p lo y m e n t a n d s k i l ls
« An agenda for new skills and jobs
»E d u c a ti o n« Youth on the
move »
C o m p e ti ti v e n es s
« An industrial policy for the
globalisation era »
F ig h ti n g p ov e r ty
« E uropean platform against
poverty »D ig ita l s o c ie ty« A digital agenda
for E urope »
I. European Industry: Some facts and figures
•Manufacturing industry is an essential pillar for growth and jobs:One fifth of EU output and employment (more than 50% of private sector employment)Around 4/5 of EU R&D investments75% of EU exports
•Industry solution-provider to tackle societal challenges
II. INDUSTRIAL ACTIVITY CREATES WEALTH AND JOBS...II. INDUSTRIAL ACTIVITY CREATES WEALTH AND JOBS...BUT ALSO HAS UNDESIRABLE EFFECTS…BUT ALSO HAS UNDESIRABLE EFFECTS…
• EU’s CO2 reduction targets – -20-30% by 2020– >-80% by 2050
Natural resource depletionClimate changePollution ofair, water, soilTraffic congestionWasteGlobal population will grow from 6bn to 9bn and they aspire to OECD levels of income
III. Competitiveness in the face of climate change: Questions
•Is there a contradiction between competitiveness and climate change policy (20/20/20 package)?•Does the promotion of sustainability lead to burdens for EU industry’s competitiveness?
Competitiveness in the face of climate change: Some preliminary answers
•EU industry is quite energy efficient compared to other countries and is decoupling growth and pollution. •Industry (directly and indirectly) emits only 25% of total CO2 emissions in EU•Abatement potential for consumers or in transport can be cheaper than in industry
GHG Target:
-20% compared to 1990
-14% compared to 2005
EU ETS-21% compared
to 2005
Non ETS sectors -10% compared to 2005
27 Member State targets, stretching from -20% to +20%
How can we reconcile ambitious climate change objectives with industrial competitiveness ?
When global action is not yet certain …
The Challenge…CLIMATE COMPETITIVENESS
SOCIAL •Some sectors are particularly vulnerable •These industries demand special measures•Risk of Carbon Leakage•All options not Cost Free
ETS - Harmonised allocation rules as of 2013
•Auctioning is default allocation method●Power sector: 100% as of 2013
(save limited exemptions for 10 new MS as per Art 10c)
•Transitional free allocation based on BMsSectors ‘not at risk of carbon leakage’
●Phasing out free allocation (80% of BM in 2013 – 30% of BM in 2020 – 0% in 2027)
Sectors at risk of ‘carbon leakage’●Free allowances , limited to 100% of Benchmarks
II.2 An example of a challenge? Cement
• 1 ton Cement = 0,8 ton CO2
• Avg price cement = €60/ton
• ton CO2=12 Euro
• Risk of greater imports/less exports on third markets
• “Carbon leakage”
CO2 emissions for relevant sectors in the carbon leakage assessment (bubble size indicates size of sector's emissions)
- Sectors in bold do not reach the CL criteria -
Coke oven products
CementPetroleum
Iron and steel
Fertilizers
Organic chemicals
Aluminium
Lime
-10%
0%
10%
20%
30%
40%
50%
60%
-10.0% 10.0% 30.0% 50.0% 70.0% 90.0% 110.0%
CO2 Total costs
Tra
de
inte
nsi
ty
Paper and Paperboard
Plastics (QL)
Ceramic tiles
Bricks
Industrial gases
Casting of iron (QL)
Flat glass
Casting of light metals (QL)
Casting of steel (QL)
QL = Sectors currently under Qualitative assessment
Illustration of a BM curve
Purchased allowances
Free allowances
Benchmark
10% best-sample Nb of installations
Emission Intensity(kg CO2/t product)
How to help industry meeti,ng challenge ? Use industrial policy tools, Ex: SILC
Analysis & Screening
Candidate sectors
SHORT-TERMDevelopment & implementation of
innovation projects
MID-/LONG-TERMScale-up &
demonstrationprojects
Benchmark lineBenchmark line
Free allowancesFree allowances
Purchased allowancesPurchased allowances
SILC I : SHORT-TERM innovation measuresSILC I : SHORT-TERM innovation measures
Several initiatives foreseen
• Bring together relevant technology platforms to ensure appropriate R&D, financing and deployment strategies for low-carbon production
• Promote demonstration projects and uptake for ultra-low carbon production technologies (including CCS)
• Explore opportunities to bring in further innovative incentive mechanisms linked to the carbon market (namely fast movers)
InternalMarket
ICT
Knowledge
Cohesion
Innovation
Skills
Trade
Sustainable
competitiveness
R&D
Competition
CSR
Fiscalbarrie
rs
Employment
Regional
Policy
Infrastructures
Sustainable
Development
ClimateChange
International
Dimension
Market
Access
Energy
Many EU actions contribute to sustainable competitiveness
Markets by themselves will not deliver all the needed solutions…
•Clear Policy Signals are essential – Certainty, Coherence
•Need governments, industry and social partners support:Standards and regulation – implementation crucialDelivering green skillsSupporting environmental technologies
•Share best practice, learn from each other, stakeholder consultation e.g. sustainable industry forum/workshops; industry/private sector engagement
But…Can Europe combine ambitious climate change objectives with strong industrial competitiveness… Importance of global commitments and action
ACTION PLAN ON SUSTAINABLE INDUSTRIAL POLICY and SUSTAINABLE CONSUMPTION & PRODUCTION…
Example : Sustainable Product Policy
Driving the energy and environmental performance of products upwards through ECODESIGNCreating a critical mass of demand through LABELLING and INCENTIVES for the best performing productsRecast Dec 2009 extended to energy-related products;Review by 2012Energy savings of 12% by 2020 from measures already adopted
Global approach for global issueEnsuring a level playing field for Energy Intensive Industries e.g. ETS Benchmarks and encouraging development of Sectoral Approaches
Retail Forum & Food SCP Roundtable
Green supply chains; Share best practice; Wide stakeholder participation; Promote sustainable products; Reduce environmental footprint of retail sector
++ e.g. Green Public Procurement (16% of economy),
Das geschätzte jährliche Einsparungspotential in 2020 entspricht 12% des Stromverbrauchs in Europa in 2007
Enterprise and Industry Directorate-General
Sustainable Industrial Policy
Verbesserungspotential der verabschiedeten Maßnahmen
Annahme Einsparpotential (jährlich bis 2020)
1275/2008 Stromverluste im Bereitschafts- und Ruhezustand von Haushalts- und Bürogeräten
17.12.2008 35 TWh
107/2009 Einfache Set-Top-Boxen 04.02.2009 6 TWh
244/2009 Haushaltslampen mit ungebündeltem Licht
18.03.2009 37 TWh
245/2009 Straßen- und Bürobeleuchtung 18.03.2009 38 TWh
278/2009 Externe Netzteile 06.04.2009 9 TWh
640/2009 Industriemotoren 22.07.2009 135 TWh
641/2009 Heizungsumwälzpumpen 22.07.2009 25 TWh
642/2009 Fernsehgeräte 22.07.2009 26 TWh
643/2009 Haushaltskühl- und Gefriergeräte
22.07.2009 4 TWh
315 TWh
Ökodesign-Verordnung
Environmental goods and services - the window of opportunity…
• New markets, in Europe and internationally,
• Lead these markets internationally • But market shares under threat • Use trade policy – upcoming FTAs• Relationship between core and
connected industries; upstream suppliers and downstream users; business models
• “You are only as Green as your Supply chain”
Stimulus Packages:• China >$200 bn green investments• Korea >80% green; Green New Deal $93
bn >1 m green jobs
The EU needs to be economically and socially as well as environmentally sustainable. Only economically successful companies developing innovative products will be able to contribute to effective environmental protection and social progress. Europe is responsible for only around 13% of global carbon emissions and it does not make economic or environmental sense to inadvertently overburden industry here and drive production to less efficient locations. The EU will only be able to fulfil its leadership role in this field if it manages to show that is indeed realistic and feasible to combine optimal levels of resource efficiency with industrial competitiveness.Net impact on number of jobs likely to be relatively limited, but many more job reallocationsWide impact on skills, job content…Need for high quality jobs
Green is always Good?
Facilitating industrial change
•Mainly responsibility of social partners•Consult on European framework for restructuring•Globalisation Adjustment Fund•Cohesion policy and Structural Funds•Rescue/restructuring Guidelines
Flagship Initiative: "An industrial policy for the globalisation era" (ref. COM(2010) 614 of 28/10/10)
…supporting the transition of manufacturing sectors to greater energy and resource efficiency
…reducing the transaction costs of doing business in Europe, promoting clusters and improving affordable access to finance
…promoting the restructuring of sectors in difficulty towards future oriented activities, including through quick redeployment of skills to emerging high growth sectors and markets
…promoting technologies and production methods that reduce natural resource use
…supporting the transition of service and manufacturing sectors to greater resource efficiency, including more effective recycling
Flagship Initiative "Resource efficient Europe" in 2011
•The aim is to support the shift towards a resource efficient and low-carbon economy that is efficient in the way it uses all resources. The aim is to decouple our economic growth from resource and energy use, reduce CO2 emissions, enhance competitiveness and promote greater energy security;
•Resource efficiency means doing more with less. It means managing our resources - material resources such as metals, minerals and food, and natural resources which provide services, such as clean air, land and water - sustainably, throughout their life cycle, so as to reduce the environmental impact of their use.
•But need to carefully manage transition from industry perspective – not automatically win-win or cost free
26
Efficient pathway:-25% in 2020-40% in 2030-60% in 2040
A cost-efficient pathway towards 2050
80% 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
Contact:
Didier HerbertEuropean Commission Directorate-General Enterprise and Industry Sustainable Industrial Policy Tel: +32.2.29.90087http://ec.europa.eu/enterprise/policies/sustainable-business/index_en.htm