UK invites re-run of Dieselgate with EU energy stance

Green Budget Europe: The UK conservative government is inviting a repeat of Europe’s ineffective car-testing system with its current position on EU energy policy. Prime Minister Cameron’s government does not want an effective governance process to ensure European countries meet EU energy and climate targets for 2030.

The UK is arguing that a Member State that doesn’t honour commitments included in its National Energy and Climate Plan shouldn’t face sanction.

“The lack of effective regulation is the key problem we have seen with EU rules for cars”, said James Nix, Director of Green Budget Europe. “Carmarkers such as Volkswagen knew the EU rules were weak and badly enforced, and so they flouted them, ignoring the damage to health and the environment. Could the UK government really want more of the same for energy and climate change?

National Energy and Climate Plans will be included under the new EU initiative for energy and climate policy, known as Energy Union. Energy Union is expected to play an increasing policy role from 2016 onwards, and particularly after 2020 for emissions not covered under the EU’s emission trading scheme.

However, the UK is failing to plan for beyond 2020. Already, the UK government has dealt a huge blow to investment certainty with a lack of clarity in support for renewables, gas, energy storage and other generation plant from 2020, adversely affecting the amount of new finance being committed to the energy transition. Restoring investment certainty for 2020 and beyond must be the priority of the UK government regarding energy and climate change.

The UK has much to gain and nothing to lose by becoming a champion of binding rules for energy and climate governance in the EU, said GBE. Under its 2008 Climate Change Act, the UK led the world in creating a comprehensive, binding planning and reporting process to reduce climate emissions. The UK has continually signalled its commitment to a low carbon and energy efficient economy and has consistently met its climate emissions targets. The primary effect of non-binding EU rules on climate and energy would be to enable others not to bother.

A failure to include checks and balances in EU legislation to ensure Member States meet their targets would diminish investment certainty across Europe. The City of London plays a significant financial role in the European energy transition. Money goes through London to invest in efficiency as well as constructing solar arrays, energy storage installations and wind farms across the EU. For these flows to continue and grow, the UK needs a system of enforcement that ensures fellow Member States will do what they say they will do. Without effective EU governance on energy and climate, the UK loses out because investment going through the City of London is diminished, both to finance the UK’s own energy transition, and also the transition occurring across Europe.

Green Budget Europe suggests that for 2025 and beyond Member States agree a system of incentives and penalties to keep their emissions on target. “The EU’s emissions trading scheme is currently being reformed so that emissions continue to reduce”, said GBE Director James Nix, “and there also need to be checks and balances to ensure that emissions not covered by the EU’s trading scheme also decline”.

Along with a majority of member states, the UK is on course to meet its emission reduction targets for 2020. A minority of countries are behind target. The three countries with the most to do are Luxembourg (23 percentage points off target), Belgium and Ireland (both c. 10 percentage points behind), according to EU data.

Regarding the new Energy Union initiative, the Czech Republic is also currently holding the same stance as the UK. Today, The Czech Rep is over-reliant on nuclear and particularly coal. At the same time, the Czech government wants to leave coal behind. Without binding targets, however, investors – whether from Prague or Paris – will not have the certainty that is needed to invest in energy efficiency or renewables in the Czech Republic.

As part of the G7, Europe’s largest countries pledged to end fossil fuel use at its June summit in Germany. “The agreement to transition to renewables is already there. What’s needed now is the investment certainty to deliver it”, concluded James Nix.