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Visegrad Four and UK experts discuss EU 2030 climate and energy proposal

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Can climate policies be harmonised with industry needs? Government and business experts of five countries discuss implications of new EU policy

Just one day after the European Commission launched its proposal for the EU 2030 Climate and Energy Framework, government, industry and business experts from the Czech Republic, Hungary, Poland and Slovakia joined representatives of the UK government’s Department for Energy and Climate Change and a British energy company in two webinars to discuss how the new EU policy framework might impact on business and industry competitiveness in their respective countries.

The webinars were jointly organised by the Budapest British Embassy and the Chevening alumni associations of the V4 region, as part of an ongoing knowledge-sharing project sponsored by the UK Foreign and Commonwealth Office and the Visegrad Fund. There were eleven business leaders and government officials taking part in the discussions that were followed online by some 100 listeners, including logins from Turkey and Russia. The webinars were moderated by Ms Sandrine Dixson-Declève, Director of the University of Cambridge Programme for Sustainability Leadership, in Brussels.

Greenhouse gases – will the cutdown halt Europe’s industrial competitiveness for good?

Both the business and the government webinars tackled the main points of the new 2030 package, such as the planned 40% domestic reduction of greenhouse gas emissions, the binding 27% penetration of renewable energy production EU-wide and the indicative 25% increase in energy efficiency. Participants gave presentations summarising their initial reactions to the new policy, welcoming some of its elements and highlighting concerns or areas for development.

Regarding the planned 40% domestic decrease in terms of greenhouse gas emissions, some panelists were of the opinion that this will be the easiest target for the V4 region to meet, considering that most of its emissions can simply be curbed by modernising some of its old coal- or gas powerplants. However, some expressed concern and described this target as too tough and stringent, preferring the EU not to set legally binding targets before fully aligning its policies with the global climate goals.

Discussions touched upon the impact of the greenhouse gas policy already has, and will continue to have on some energy-intensive industries such as steel-making. In some countries, steel industry has shrunk by 60%, and steel companies move production to countries such as the US or Canada that do not have such climate regulations. This, in fact, can lead to carbon leakage that should be avoided. Although most reports currently indicate that carbon leakage does not exist , there is agreement around the fact that energy intensive industries are preferring to invest in countries where labour, taxes and energy costs are lower.

Therefore, webinar participants agreed that it is important to link climate and industry policies more closely. The issue of a „two speed Europe” was mentioned by the moderator, as some countries in Europe are able to decarbonise their economies faster than others. The suggestion was made that maybe a phase-in approach could be introduced giving a slightly longer time frame for some countries to reduce their greenhouse gas emissions. This also should be accompanied by flexibility in the choice of low carbon solutions such as now partially proposed for renewables under the new renewables target at the EU level. This would be similar to the optability and flexibility of previous phase-out strategies applied across Europe and the accession countries to decrease the use of lead and sulphur in fuels.

Innovation: more cross-border co-operation and less regulation needed

The importance of innovation and the introduction of new technologies was discussed with regard to Europe’s ability to remain competitive on global markets while implementing its ambitious climate goals. In order to attract and stimulate investments into clean technology, it is vital that countries collaborate more closely in research, development and deployment projects. In this regard, it would be important to prepare an inventory of the current situation, and likewise, to ensure more transparency and better impact assessment.

Participants agreed that the Commission should ease cross-border co-operation on climate-related research and development by avoiding over-regulation. In addition to technological innovation, it would be of utmost importance to look at practical, industrial application opportunities and innovate for the market, producing solutions that would be affordable for households too.

Renewables: constraint or a boost to investment?

Another large topic addressed by the webinars was the issue of the renewables target. While experts from some member states of the V4 welcomed the EU-wide 27 % renewables target set by the Commission, which does give more flexibility than the previous 2020 nationally binding target, others expressed concern that due to their small territory and geographical aptitudes, they still have limited capacity to generate renewable energy at the ratio foreseen by the 2030 policy framework.

Some speakers described the binding renewables target as a constraint that will be particularly harsh and costly for those member states that have a lower GDP. The creation of an integrated European grid that would enable better balancing, distribution and storage and would provide for greater energy security in Europe was mentioned as a potential innovative solution.

The V4 webinar presentations were welcome by the British speakers, including the representative of the Department for Energy and Climate Change, who summarised preliminary UK views on the Commission’s 2030 proposals, noting that they are a step in the right direction towards an ambitious emissions reduction target for Europe, coupled with the flexibility to achieve it in the most cost-effective way. While remaining committed to renewables and energy efficiency, the UK remains concerned about any renewables or energy efficiency target that would reduce flexibility and increase costs. UK representatives called for the 2030 framework to continue to recognise the risk of carbon leakage and be designed in such a way to maintain the competitiveness of European industry.

The way forward

The webinars concluded that although government approaches are not necessarily aligned in the V4 region and beyond, it will be important over the next couple of months to increase the dialogue and data exchange between governments and businesses in the region to enhance final decision making.

The Foreign and Commonwealth Office looks forward to further enabling this discussion and information exchange as does the Green Growth Platform, bringing together energy and climate ministers (led by UK Secretary of State Edward Davey) across Europe and business. Both are committed to bringing forward possible solutions to the concerns of the high carbon energy dependant countries and sectors across Europe. This will feed into the EU’s 2030 energy and climate negotiations at the March and June European Councils.