1 background

The European Council on 11 and 12 December 2008 approved a European Economic Recovery Plan, equivalent to about 1.5 % of the GDP of the European Union (around EUR 200 billion).

The plan provides a common framework for the efforts made by Member States and by the European Union, with a view to ensuring consistency and maximising effectiveness.

As part of this framework, the European Council also reached agreement on the energy/climate change package which should enable this package to be finalised with the European Parliament by the end of 2008.

This decisive breakthrough will enable the European Union to honour the ambitious commitments entered into in this area in 2007 to maintain its leading role in the search for an ambitious and comprehensive global agreement at Copenhagen next year.

2 The agreement

The agreement, hailed as a "landmark" deal and a breakthrough by politicians and the green lobby alike, came before a crucial EU summit opening in Brussels tomorrow at which 27 prime ministers and presidents are supposed to finalise an ambitious package to cut greenhouse gas emissions by 20% by 2020.

The agreement reached yesterday paves the way for a law obliging all EU countries to meet national targets for renewable energy. Two points had threatened to derail the legislation: the insistence that biofuels comprise 10% of transport fuel by 2020, and an attempt by Italy to loosen the law by ordering a review of progress on renewables in 2014. The review date was retained, but the compulsory target and national quotas also survived.

The summit in Brussels will turn on the broader deal to cut emissions by 20% by 2020. Britain came under pressure yesterday to reinvest in green technology the millions of pounds likely to be raised from auctioning carbon emission permits.

Experts argue that using crop-based products as a petrol or diesel substitute is misplaced, as greater energy savings can be made by using them for heating.

Claude Turmes, the Luxembourg Green MEP who led the negotiations for the European parliament, said he had "mixed feelings" about the biofuels factor.

"Despite mounting scientific evidence on the dangers of biofuels, we were unable to completely revise this wrong-headed target ... Renewable energy will be put at the very heart of EU energy policies."

Under EU plans, states will have quotas for how much carbon dioxide their companies can emit and, after 2013, their enterprises will have to compete and pay to be included within the quota.

Electricity production in Eastern Europe, drawing heavily on fossil fuels such as coal, is particularly likely to benefit from such exceptions.

However, diplomats fear the highly complicated negotiations needed to hammer out a final deal could run into the early hours of December 13.

EU member states are also likely to agree relief measures for industries that are likely to suffer from "carbon leakage" as a result of the adoption of climate-change measures -- the relocation of enterprises out of the EU into countries where such measures do not apply and production costs are consequently lower.

"I was proud to see that there is overwhelming support for the European economic-recovery plan presented by the commission," Barroso said. "And I hope that this week European leaders, the European Council, will support the plan that we have proposed. It is an ambitious but sustainable recovery plan, with a 200 billion-euro fiscal stimulus."

However, there is some skepticism within the bloc. Germany in particular appears unenthusiastic about supporting any EU stimulus spending that is as extravagant as the European Commission has suggested. Part of the reason is that Germany, which has the largest population in the EU, would have to contribute some 20 percent of the EU-wide spending package.

The EU summit is also likely to see specific commitments to assist the ailing car and construction industries.

Gordon Brown said the EU is seeking convergence in the measures they will adopt with U.S. plans being put forward by President-Elect Barack Obama.

"I believe that we can work hand-in-hand with the new American administration and stimulate worldwide development through our common actions," Brown said.

AFP - EU leaders sealed an agreement Friday for a 200 billion euro plan designed to dig Europe out of recession and a package to combat global warming on the final day of a crunch summit in Brussels.
After persuading Ireland to submit a stalled EU reform treaty to a second referendum next year, the 27 leaders agreed to club together to fund an economic stimulus package and make major cuts in greenhouse gas emmissions.
"We are starting to change the way we do things in Europe -- talking less and doing more," French President Nicolas Sarkozy, who chaired the gathering, told a post-summit press conference.
With much of Europe in recession, there had been expectations the climate package could unravel as member states baulk at the extra costs involved.
But Sarkozy said that there had been unanimous agreement on the need for an "historic" climate package he said should inspire the rest of the world.
"No continent has given itself such binding rules that we have adopted with unanimity," he said.
The EU's climate-energy package, the "20-20-20" deal, seeks to decrease greenhouse gas emissions by 20 percent by 2020, make 20 percent energy savings and bring renewable energy sources up to 20 percent of total energy use.
Sarkozy denied the targets had been watered down amid calls by several states for amendments to the initial package at a time of recession.
"The objectives remain the same," he said. "No way can the (economic) crisis be used as an excuse not to move on the environment."
But environmental groups, including Greenpeace and WWF, slammed the deal, saying too many concessions had been made to industry and poorer eastern European nations with their highly-polluting coal-fired power generators.
"European heads of state and government have reneged on their promises and turned their backs on global efforts to fight climate change," they said in a joint statement.
Unveiling the package in January, European Commission chief Jose Manuel Barroso put the cost of meeting the targets by 2020 as at least 100 billion euros -- the equivalent of around three euros a week for every European.
Czech President Vaclav Klaus, whose country takes over the EU presidency from France in January, criticised the package as a "silly luxury".
"We should have been able to discuss it during our presidency, to force it now is not very good," said Klaus, whose prime minister agreed to the package.
Although the climate change deal was only nailed down after protracted negotiations, leaders said there had been an overwhelming consensus on the need for a joint assault on the economic slowdown.
"Everybody was on the same line about the need for a recovery plan," said Sarkozy. "Exceptional situations need exceptional measures."
An eve of summit interview by German Finance Minister Peer Steinbrueck, who ridiculed the idea of "tossing around billions" to fend off recession, had indicated that the rescue package would prove a major bone of contention.
But British Prime Minister Gordon Brown, whose "breathtaking" 20-billion-pound (30 billion dollars) stimulus package was singled out by Steinbrueck, said the agreement was a riposte to those who say "do nothing".
"We will continue to reject the do-nothing approach and we will not stand by and let the recession take its course," Brown told reporters.
Under the stimulus plan, member countries would pump on average the equivalent of 1.5 percent of gross domestic product (GDP) into their economies in order to temper the impact of a global recession.
Leaders also adopted a deal to pave the way for Ireland to stage a second referendum on a stalled package of key reforms, the Lisbon Treaty which was rejected by Irish voters in June.
Irish Prime Minister Brian Cowen said he was prepared to call a new referendum as long as promised guarantees are delivered.
"I have said that I would be prepared to return to the public with a new package and seek their approval of it," he told reporters.
"Today we have the clear evidence the European Union is ready to respond" to the concerns displayed by the Irish people in the June plebiscite.
Under the deal, Ireland would try to hold a new referendum by November 2009 in exchange for guarantees on key issues including an assurance that it does not lose its EU commissioner.

The Community has, on multiple occasions, stressed that, in order to meet this objective, the overall global annual mean surface temperature increase should not exceed 2°C above preindustrial levels, which implies that global greenhouse gas emissions should be reduced to at least 50% below 1990 levels by 2050. All sectors of the economy should contribute to achieving these emission reductions. Developed countries should continue to take the lead by committing to collectively reducing their emissions of greenhouse gases in the order of 30% by 2020 compared to 1990.

In this context, the European Council has, at its meeting in March 2007, endorsed an EU objective of a 30% reduction in greenhouse gas emissions by 2020 compared to 1990 as its contribution to a global and comprehensive agreement for the period beyond 2012, provided that other developed countries commit themselves to comparable emission reductions and economically more advanced developing countries commit themselves to contributing adequately according to their responsibilities and capabilities.

In order to cost-effectively achieve this 20% reduction of greenhouse gas emissions by 2020 compared to 1990 levels, additional policies and measures should be implemented to further limit the emission of greenhouse gases from sources not covered under the EU's greenhouse gas emissions trading scheme (EU ETS)2 to the levels as set out in the Annex to this Decision.

European Union environment ministers expect to approve pivotal plans by December to combat climate change, despite differences over plans for energy-intensive industries and the sustainability of biofuels.

The 27 ministers broadly backed a blueprint to slash carbon dioxide (CO2) emissions by at least one-fifth compared to 1990 levels by 2020, increase the share of renewables in power production to 20 percent and boost the share of biofuels used in transport to 10 percent.

The EU wants a quick agreement to put pressure on other powerful regions such as Asia and North America to follow its lead during crunch international climate talks next year aimed at finding a global plan to fight climate change.

"A new international agreement is our top priority by end of 2009, so reaching our targets is very important for a strong position in negotiations," EU Environment Commissioner Stavros Dimas said.

They want further investigations into the advantages of second generation biofuels mostly made from plant waste which they said could be more sustainable.

Some countries also said over-dependence on biofuels only pushed up food prices.

"We need a strict EU framework on biofuels in which we need to stress the sustainability of biofuels compared to the price of land, food and water," French environment minister Jean-Louis Borloo said.

Two new gases, nitrogen oxide and fluorocarbons, were added to the scheme, as were new industrial sectors such as aluminium and ammonia. Above all, Brussels will now set central quotas for ETS emissions instead of leaving it to member states.

Airlines and oil refineries will have to pay for one-fifth of emissions permits in 2013, rising to 100% in 2020.

The European Union's executive adopted plans on Wednesday to slash greenhouse gas emissions, seeking to push the world into tough climate action, but delayed key decisions on how to soften the impact on industry.

The plans will transform Europe's energy supply by 2020, with a 10-fold increase in renewable energy production in Britain for example, and raise power bills by 10 to 15 percent.

The measures would also curb the bloc's rising dependency on imports of fossil fuels.

"We do not want to be dependent on regimes that are not our friends and want to protect ourselves from them," Commission President Jose Manuel Barroso told the European Parliament in presenting the plan.

German utility RWE said it called into question the future of coal -- "Coal is threatened in its economic viability," RWE's <RWEG.DE> head of power generation, Ulrich Jobs, told Reuters.

The measures implement an EU-wide target which EU leaders agreed last March to get a fifth of energy from renewable sources and curb greenhouse gas emissions by 20 percent by 2020. They still need approval by EU leaders and the EU Parliament.

Environmentalists urged the EU to cut emissions unilaterally by 30 percent by 2020. The head of the Nobel Prize-winning U.N. climate change panel said the EU plans may prove too lax.

The Commission's proposals included a major overhaul from 2013 of the EU's flagship Emissions Trading Scheme, which allocates a fixed quota of emissions permits to heavy industry.

Airlines and oil refineries will have to pay for one-fifth of emissions permits in 2013, rising to 100 percent in 2020.

But Brussels delayed until 2010 a key decision on which industries most vulnerable to global competition, such as steel, aluminium and cement, can get all their quota for free.

Industry leaders are worried higher energy costs will tilt competitiveness further in favour of China and India, which have no emissions limits, at a time of record oil prices.

If there were no global deal to curb emissions, succeeding the Kyoto Protocol on climate change after 2012, the EU said it would also consider forcing importers to buy permits.

Power bills for industry and households will rise as the bloc gets more energy from expensive clean technologies, and as the supply of CO2 permits to power generators shrinks from 2013 on. Utilities will pass the extra costs on to consumers.

But Barroso dismissed cost concerns, telling parliament: "The additional effort needed to realise the proposals would be less than 0.5 percent of GDP by 2020. That amounts to about 3 euros ($4.39) a week for everyone."

Resistance is expected over targets for each country to cut greenhouse gases and install renewable energy, but the EU executive talked up potential business benefits.

Business has sought to soften the emissions trading reform, demanding special protection for energy-intensive industries facing global competition such as steel, cement, aluminium and possibly chemicals and pulp and paper.

"If we were to relocate our industries outside Europe we would then have to transport steel to Europe, adding emissions," said Philippe Varin, president of the European Confederation of Iron and Steel Industries, and chief executive of Anglo-Dutch steelmaker Corus, owned by India's Tata Steel.

From 2013, power generators will get fewer permits to emit carbon dioxide and have to buy them all. They will pass the extra electricity costs on to consumers, and those costs will rise as the supply of permits is tightened.

Power bills for industry and households will also rise as a result of targets to supply more energy using clean energy technologies which are more costly than fossil fuels.

Higher bills were an inevitable result of efforts to arrest global warming, the Chief Executive of the British arm of the German utility E.ON, Paul Golby, said on Tuesday.

"The time of a cheap energy world is over," he told Reuters.

Energy Independence and Security Act (the Act) of 2007:

· The bill was introduced in the House of Representatives by Democrats and passed without amendment in January 2007. After some amends in the Senate, the bill was signed into law on December 19, 2007.

· The bill originally sought to cut subsidies to the petroleum industry in order to promote petroleum independence and different forms of alternative energy. These tax changes were ultimately dropped after opposition in the Senate, and the final bill focused on automobile fuel economy, development of biofuels, and energy efficiency in public buildings and lighting.

The main politicians, both Democratic and Republican, recognise that the Act is not perfect, but they agree that it represent a major step toward reducing our dependence on oil, confronting global climate change, expanding production of renewable fuels and giving future generations a nation that is stronger, cleaner and more secure.

3 Summary

The Act present six main topics where take action, there are:

3.1 New Energy Fuel Economy Standards

The Act requires the Department of Transportation to set tougher fuel economy standards, starting with model year 2011, until the standards achieve a combined average fuel economy for model year 2020 of at least 35 miles per gallon (mpg) (today among 27.5 mpg for non-passenger automobiles). The Alliance to Save Energy (ASE) estimates that the improved fuel economy standards will reduce U.S. oil consumption by 1.1 million barrels per day by 2020, saving consumers $22 billion per year.

Starting in model year 2015, the Act starts to phase out the automakers' credit for manufacturing flex-fueled automobiles, which can run on gasoline or an alternative fuel. The credit is phased out completely by model year 2020, placing additional pressure on automakers to improve fuel economy. To help consumers maximize their fuel economy, the Act requires the U.S. Environmental Protection Agency (EPA) to create rules for a national labeling system for tires to show their impact on fuel economy. For federal fleets, the Act prohibits agencies from purchasing light-duty vehicles or medium-duty passenger vehicles that do not achieve low greenhouse gas emissions, and it requires new regulations to cut the petroleum consumption of federal fleets by 20% by 2015, while boosting alternative fuel consumption by 10%. In addition, the Act establishes incentives and loan guarantees for advanced vehicle technologies, but those measures will depend on future appropriations of funds.

As noted by ASE, the new fuel economy standards will reduce greenhouse gas emissions by an amount equivalent to removing 28 million of today's cars from the road. A separate requirement to boost renewable fuel use will also lower greenhouse gas emissions.

3.2 Increase and Extend the Renewable Fuel Standards

The Act boosts the requirements for renewable fuel use to 36 billion gallons by 2022. It requires "advanced biofuels"—defined as fuels that cut greenhouse gas emissions by at least 50%—to provide 21 billion gallons of fuel by 2022, or about 60% of the total requirement. Previously, a national Renewable Fuels Standard (RFS) set by the Act of 2005 required 4.7 billion gallons of renewable fuels in 2007, which would have increased to 5.4 billion gallons in 2008 and to 7.5 billion gallons by 2012.

The Act gives the U.S. Environmental Protection Agency one year to revise the RFS regulations to include the new standards. Also, the Act:

§ prohibits petroleum companies from restricting the sale of alternative fuels under new franchise agreements, a provision that could allow gas station owners to install more pumps for E85 (a blend of 85% ethanol and 15% gasoline).

§ requires labeling diesel fuel pumps with their biodiesel content.

§ for federal fleets requires at least one renewable fuel pump at each fueling center, with few exceptions.

§ calls for a host of studies on biofuel infrastructure and delivery issues, and creates grant programs and research programs for biofuels that will depend on future appropriations.

3.3 Energy Efficiency Standards

The Act phases out the use of inefficient incandescent lights and imposes improved energy efficiency standards on a wide variety of products. According to the American Council for an Energy-Efficient Economy (ACEEE), the new standards for light bulbs require them to use about 20%-30% less energy by 2014, while requiring DOE to set standards for light bulbs to cut their energy use at least 35% by 2020. The Alliance to Save Energy (ASE) calls the Act "the most significant energy-efficiency legislation in three decades" and notes that the lighting standards alone will cut electric bills by $13 billion per year, eliminating the need for 60 mid-sized power plants.

According to ACEEE, the Act:

§ sets new minimum efficiency standards for external power supplies, dishwashers, dehumidifiers, residential boilers, electric motors, and walk-in coolers and freezers.

§ directs DOE to conduct new rulemakings on residential refrigerators and clothes washers, and allows DOE to expedite rulemakings in cases where a broad consensus exists.

§ allows DOE to establish a regional standard for heating products and two regional standards for cooling products, in addition to the national standard. Such regional standards will allow DOE to account for significant climate differences throughout the United States.

§ calls for DOE to create a national media campaign to promote the benefits of increased energy efficiency.

3.4 Increased Renewable Energy Research

The Act calls for accelerated research and development (R&D) and deployment of renewable energy technologies, although all the provisions are subject to congressional appropriations of funds. For solar energy, the Act calls for new R&D programs for solar thermal energy storage, daylighting, and solar-powered air conditioning, as well as grant programs for solar industry workforce training and advanced photovoltaic demonstration projects. For geothermal energy, the Act calls for a wide range of R&D programs, an expansion of the "GeoPowering the West" program to make it "GeoPowering America," and the creation of a new Center for Geothermal Technology Transfer.

3.5 Funding for Renewables and Efficiency

The Act provides a 17% increase in funds for the DOE Office of Energy Efficiency and Renewable Energy (EERE). It appropriates nearly $1.74 billion for EERE, but then rescinds 1% of that, leaving EERE with roughly $1.722 billion for fiscal year 2008. That represents a significant boost above the $1.474 billion that was included in a continuing resolution approved in February 2007. The appropriations Act also provides $5.45 million for the administration of DOE's Innovative Technology Loan Guarantee Program.

3.6 Carbon Neutral Buildings

For federal buildings, the Act sets a goal to cut their energy use by 30% by 2015, and requires new and renovated federal buildings to significantly reduce their reliance on energy from fossil fuels. Compared with existing federal buildings, federal buildings built or renovated in 2010 must cut their fossil-fuel dependency by 55%, and by 2030, new or renovated federal buildings must eliminate their use of fossil fuel energy.

The commercial buildings accounting for 18 percent of the nation’s total energy use and about 45 percent of the nation’s energy use by buildings, ensuring that new commercial construction produces ‘zero-energy’ buildings would be a huge step forward.

The Act will establish an Office of High-Performance Green Buildings (OHPGB) in the U.S. General Services Administration. This office will promote green building technology implementation in Federal buildings.

All new federal buildings and renovated federal buildings must be carbon-neutral by 2030.

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