EUU, Alm.del - 2019-20 - Bilag 794: Høringssvar og notat vedr. Kommissionens offentlige høring om planen for opjustering af EU's drivhusgasreduktionsmål i 2030

Europaudvalget 2019-20
EUU Alm.del Bilag 794
Offentligt

The Danish Government’s position paper on an ambitious and cost-effective

EU climate architecture

–

a response to the public consultation on the Euro-

pean

Commission’s

2030 Climate Target Plan

The

Danish Government’s

key priorities for the 2030 Climate Target Plan



Increasing the EU’s 2030

climate target to at least 55 percent compared to 1990 levels

A strengthened EU Emissions Trading System (ETS)

–

the central driver for future emission

reductions

Extension of the ETS to road transport and heating in buildings

–

a more uniform price signal

across sectors and the EU backed by an ambitious and cost-effective enabling framework of

supporting policies

A land sector pillar

–

incentives for effective, climate-friendly, and competitive agricultural

production across the EU

Higher EU ambitions as stepping stone for strengthened climate diplomacy



A 2030 EU GHG reduction target of at least 55 percent and a new climate pol-

icy architecture

The Danish Government strongly supports increasing the

EU’s

domestic green-

house gas emissions reduction target to at least 55 percent compared to 1990 lev-

els. It is crucial that we send a strong political signal to the world and our citizens

that the EU can lead by example to encourage other large emitters to follow suit.

An opportunity to review and rethink the EU’s climate policy

Increasing the EU’s climate ambitions

is about more than setting an ambitious

2030 climate target. A major part of the puzzle is also how we will deliver on the in-

creased ambition.

The Commission’s 2030 Climate Target Plan

is an opportunity to

review and rethink the design and overall architecture

of the EU’s energy and cli-

mate policy. It must be ensured that the means to achieve a higher 2030 climate

target are aligned with a long-term objective of climate neutrality by 2050 at the lat-

est for all Member States and the EU as a whole and support the broader objective

of the European Green Deal to transform the EU to an even more sustainable and

prosperous society.

A higher climate target requires more ambitious and cost-effective regulation

Higher climate ambition in 2030 should be realised through equally ambitious and

cost-effective EU regulation that provides incentives to reduce emissions of green-

house gases across all Member States and sectors of the European economy. An

effective climate effort brings multiple benefits in terms of well-being of citizens

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EUU, Alm.del - 2019-20 - Bilag 794: Høringssvar og notat vedr. Kommissionens offentlige høring om planen for opjustering af EU's drivhusgasreduktionsmål i 2030

such as cleaner air, reduced pollution, and future-proof employment opportunities

in green sectors and industries. It is a key task of

EU’s future climate

policy to en-

sure that all Member States move forward and are able to reap the benefits of the

green transition.

The case for a new EU climate policy architecture

The current EU climate policy architecture creates large differences in the marginal

reduction costs between the ETS and the 27 different national regimes in the Effort

Sharing Regulation (ESR). Implementing an increased 2030 climate target by main-

taining the current scope of the ETS and ESR would likely exacerbate these differ-

ences and result in unnecessarily high costs of climate mitigation in the EU. This is

neither beneficial for the climate nor the economy of the EU as a whole.

An increased 2030 climate target should be implemented through a climate policy

architecture that can:



Deliver a more uniform price signal across Member States and sectors in the

EU to ensure that the most cost-effective reductions are realised.



Ensure a level playing field and reduce the risk of carbon leakage within the

EU.



Generate revenue streams to finance the green transition.

The Danish Government encourages the Commission to use the opportunity of the

2030 Climate Target plan to present options for an improved EU climate policy ar-

chitecture with a coherent set of policies that can deliver an increased 2030 target

in a more cost-effective way through the following elements:

1. A strengthened EU Emissions Trading System

–

the central driver for fu-

ture emission reductions

The ETS has demonstrated its worth as the EU’s flagship climate policy instrument.

Following the 2018 revision of the ETS directive, it has succeeded in establishing

an effective EU-wide carbon price signal that has provided incentives to reduce

emissions cost-effectively across Member states. In 2019, emissions covered by

the ETS fell by 8.7 percent compared to 2018 levels.

An effective carbon price through the ETS is the most cost-effective instrument to

deliver an enhanced EU climate target and to incentivise market-driven deployment

of low-carbon technologies and phase-out of fossil fuels across Europe. The rapid

cost reductions of renewable energy technologies such as wind and solar power

mean that that sectors covered by the ETS can deliver a substantially increased

contribution to

the EU’s 2030 target.

The Commission is encouraged to present proposals for strengthening the contri-

bution of the ETS to the green transition by reducing the amount of allowances

through measures such as:

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EUU, Alm.del - 2019-20 - Bilag 794: Høringssvar og notat vedr. Kommissionens offentlige høring om planen for opjustering af EU's drivhusgasreduktionsmål i 2030



A substantial increase in the linear reduction factor

Rebasing the emissions cap at a level that reflects actual emissions

Improving the ability of the market stability reserve to limit the surplus of allow-

ances

A substantial reduction of the level of allowances available to the market should be

the main instrument to strengthen the ETS. The Commission should also explore

options for ensuring that the ETS can maintain a price signal at a minimum level to

provide certainty for green investments. At the same time, it should be ensured that

such measures do not compromise the functioning of the existing market mecha-

nism in the ETS. Furthermore, the Commission is encouraged to analyse the level

of free allocation of allowances to secure climate action across all sectors, while

taking fully into account the international competitiveness of industrial sectors in

risk of carbon leakage.

Integrating negative emissions technologies in the ETS

To reach the EU’s objective

of climate neutrality by 2050, substantial removals of

from the atmosphere will be needed. While natural sinks can deliver significant

removals, it is likely that technological solutions delivering so-called negative emis-

sions could play a part in the efforts to reach climate neutrality. The Commission

should integrate CO

removals from negative emission technologies in an in-

creased 2030 climate target and analyse policy options for further incentivising the

development and deployment of these technologies. This could include integrating

negative emissions technologies in the ETS

–

for example by allocating allowances

to installations that generate negative emissions certified through robust and trans-

parent carbon accounting.

2. Extension of the ETS to road transport and heating in buildings

–

a more

uniform price signal across sectors and the EU backed by an ambitious

and cost-effective enabling framework of supporting policies

The Danish Government

supports the Commission’s intention to analyse and

con-

sider applying the ETS to emissions from road transport and heating in buildings.

Increased electrification of transport and heating will lead to gradual migration of

emissions regulated in the Effort Sharing Regulation into the ETS. Extending the

ETS would be consistent with this long-term development and create a uniform

price signal across sectors making both building renovations and low carbon mobil-

ity financially more attractive while improving the overall cost-effectiveness of the

EU’s climate efforts. In addition, extending the ETS would significantly increase the

revenue from auctioning allowances and thereby create a significant and predicta-

ble revenue stream that could contribute to financing the green transition across the

EU.

However, applying the ETS to emissions from these sectors cannot stand alone. A

carbon price needs to be complemented by an ambitious and cost-effective ena-

bling framework with coherent policies and regulation at EU level to drive emission

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EUU, Alm.del - 2019-20 - Bilag 794: Høringssvar og notat vedr. Kommissionens offentlige høring om planen for opjustering af EU's drivhusgasreduktionsmål i 2030

reductions. This includes for instance strengthening CO

emission performance

standards for combustion engine vehicles to drive the technological development of

zero-emission vehicles.

3. Land sector pillar

–

incentives for effective, climate-friendly, and competi-

tive agricultural production across the EU

Agriculture will account for an increasing share of EU emissions as the rest of the

economy decarbonises. An extension of the ETS to road transport and heating in

buildings would leave agriculture as the primary sector regulated through national

targets under the ESR and thus have major impact for the ESR. At the same time,

efforts to reduce emissions or increase removals of CO

from agricultural land are

currently regulated through the LULUCF regulation, which provides limited incen-

tives for climate action at both farm and Member State level. It is important that a

new architecture address this problem.

Efforts to reduce emissions from agriculture vary considerably between Member

States due to differentiated national reduction targets. Consequently, national ef-

forts to regulate emissions from agriculture that impose costs on producers come

with a significant risk of carbon leakage internally in the EU and higher costs than

necessary. Therefore, the Danish Government encourages the Commission to pro-

pose a common land sector pillar for agriculture and its LULUCF activities (agricul-

tural land) with an EU-wide reduction target.

An EU-wide reduction target combined with ambitious and effective sectoral regula-

tion would create a level playing field for the agricultural sector, increase cost-effec-

tiveness and would improve incentives for farmers to reduce emissions and in-

crease removals of greenhouse gasses. Examples of EU regulation in a common

land sector pillar are listed in the box below. It could drive innovation and cost re-

ductions in mitigation technologies and enable agricultural activities to contribute

cost-effectively

to fulfilling the EU’s climate efforts.

Agriculture is responsible for a significant share of LULUCF emissions and remov-

als. However, at present these emissions and removals are not directly included in

the EU’s 2030 climate target. Establishing a land sector pillar addressing emissions

and removals from agriculture from both the LULUCF regulation and the ESR in the

same regulatory regime would allow for a more integrated and cost-effective mitiga-

tion effort. It is important to establish an effective system of accounting that sup-

ports new and additional efforts to increase carbon removals, supported by meas-

urement, reporting and verification to track carbon flows and, potentially, financial

flows for CO

removal. The Commission is encouraged to develop policies to incen-

tivise business models for large-scale CO

removal through natural solutions.

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EUU, Alm.del - 2019-20 - Bilag 794: Høringssvar og notat vedr. Kommissionens offentlige høring om planen for opjustering af EU's drivhusgasreduktionsmål i 2030

Examples of potential EU-wide regulation in a common land sector pillar

A common land sector pillar should be accompanied by a coherent enabling framework of European

policies that can drive cost-effective climate action. Listed below are illustrative examples:

Business models for carbon dioxide removal: The Commission could develop an EU methodology to

certify carbon dioxide removals at the level of farmers as mentioned in the Circular Economy Action Plan

and Farm to Fork Strategy. This could pave the way for implementing a payment scheme for incentivising

the preservation of carbon stocks in agricultural soils, e.g. through the common agricultural policy (CAP)

or by means of a new market mechanism. The environmental integrity of such a business model should

be ensured by robust and transparent carbon accounting to monitor and verify the authenticity of carbon

removals.

Fertiliser accounts: Greenhouse gas emissions from nitrogen turnover on agricultural land account for a

large proportion of total emissions from the agricultural sector in EU. The Commission could develop com-

mon requirements for the documentation of nitrogen fertilisers’ flows to and from all holdings, thus creating

an overview of its use and a level playing field among Member States in optimising the use of nitrogen fer-

tilisers.

Best Available Technology (BAT) requirements: A number of extant and developing technologies such as

feed and fertiliser additives can contribute to reducing emissions from agricultural production. Yet, the

highly competitive nature of the European market for agricultural products discourages Member States

from passing on additional costs to farmers by implementing national BAT requirements. A shared com-

mon EU reduction target establishes a level playing field and further facilitates common EU BAT require-

ments to agriculture. In addition, this may encourage competition and spark innovation in climate-friendly

agriculture technologies.

Higher EU ambitions as stepping stone for strengthened climate diplomacy

The Danish Government strongly supports efforts to strengthen

the EU’s

global cli-

mate diplomacy. Raising EU ambitions on climate with ambitious and cost-effective

policy measures will underscore the EU’s intention to assume a global leadership

role in the fight against climate change. It would enable the EU to actively encour-

age and inspire other countries outside the Union to raise their ambitions and con-

tribution towards the achievement of the Paris Agreement’s objectives. To do so,

the EU should go beyond traditional climate diplomacy and pursue a

“whole-of-so-

ciety and whole-of-economy”

approach in third countries as a way to engage

the

private sector, including financial institutions and investors, academia and civil soci-

ety. In order to operationalise this vision, the Commission is encouraged to present

an action plan for the European

Green Deal’s global dimension with

clear objec-

tives and concrete initiatives for the climate diplomatic efforts. The Danish Govern-

ment will actively engage in this process, including by identifying concrete ways to

implement this approach.

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