Institutional investors have written to Energy Ministers urging them not to water down decarbonisation proposals ahead of today's crunch meeting
Energy Minsters from across the EU will meet in Brussels later today to agree their stance on a set of major reforms to the bloc's energy system, including the setting of new clean energy targets and emissions goals.
But campaigners and investors are growing concerned efforts to water down the proposals are gaining traction, after suggestions that a group of countries, including the UK, Spain and Germany, are lobbying to weaken the package's impact.
Late last week a coalition of institutional investors, responsible for more than €21tr in assets, wrote to Energy Ministers across the EU to demand the flagship Clean Energy Package includes a long-term decarbonisation target in line with the Paris Agreement, and that Member States are subject to legally binding targets for 2050.
Ministers will meet today to decide a joint position on four texts from the package, including the Renewable Energy Directive and electricity market design proposals. But the investor letter claims the Council's general approach on the Energy Efficiency Directive - on which it has assumed a less ambitious stance than that of the European Parliament - is a cause for concern.
"There is on-going concern, particularly following the Energy Council's General Approach on the Energy Efficiency Directive, that the proposals on Renewable Energy and Governance of the Energy Union will be watered down," the letter states. "This in turn raises the risk that the final agreements do not deliver the most cost-effective path to achieving the EU's 2030 climate and energy targets, supporting low carbon investment today and for the future."
Stephanie Pfeifer, chief executive of the Institutional Investors Group on Climate Change (IIGCC), sent the letter on behalf of IIGCC's members. In a statement she argued that clear, long-term legislative frameworks are "critical" for investors to assess and manage climate-related risks and pursue low-carbon investment strategies.
As a minimum demand, the IIGCC want to see EU ministers commit to a 2050 decarbonisation target; legally binding 2050 targets for Member States, with a clear role for private finance; a target for at least 30 per cent of EU energy to come from renewables by 2030; a strong framework on energy efficiency and renewables, including clear measures to address any 'ambition gap'.
It is a stance broadly echoed by a host of green business groups and many MEPs who have consistently argued the EU should adopt a range of more ambitious targets, often pointing to modelling that suggests a more rapid pace of decarbonisation would benefit the European Economy.
However, think tank E3G is warning a number of countries are now working to disrupt the package to protect their national interest. E3G has named Estonia, Germany, Italy, Spain and the UK as five nations which are "frustrating" the ambitions for a sweeping Clean Energy Package featuring bold measures in areas such as energy efficiency, coal subsidies, and decentralised energy.
For example, it claims some nations are lobbying to protect the ability of coal plants and other fossil fuel generators to be able to access government subsidy under capacity market mechanisms, while others are reportedly blocking moves designed to accelerate the spread of decentralised energy.
"EU governments stand at a crossroad, and they are choosing coal over renewables; incumbent players over consumers; national control over efficiency," Manon Dufour, head of E3G's Brussels office, wrote last week on EurActiv.
A battle is also brewing over the 2030 renewable energy target. The European Parliament is fast emerging as a vocal advocate for more ambitious climate action, and having voted for a stricter 40 per cent energy efficiency target this year and backed 35 per cent renewables target during a vote in the industry, research and energy committee, it is widely expected to approve a renewables target above 27 per cent in a January vote.
And it's not just investors and the EU Parliament that want to see higher renewables ambition. A group of some of the world's largest multinationals, including Google, Amazon and Unilever, published an open letter last week calling for EU Member States to support a binding target of "at least" 35 per cent. They argue "a strong investment signal is key to further positioning industries with large investment potential in supporting Europe's clean energy goals".
But some reports suggest the topic may not even be discussed today, with officials briefing that the Council is waiting to see what formal target the European Parliament adopts first.
However, the meeting is expected to discuss how Member States will be kept on track to meet the final 2030 target, whatever it may be. Countries such as Sweden are concerned a 27 per cent renewables target for 2030 and no binding national targets risks too little action early in the decade, pushing up the risks and costs of decarbonisation. In contrast, countries such as Poland are said to be resisting calls for higher ambition.
The compromise put forward by the Estonian Presidency is for two EU-wide interim targets to benchmark progress towards 2030. Targets suggested are that countries collectively get 22.5 per cent towards the target by 2023, and 40 per cent of the way there by 2025. This would ensure there is no "ambition gap" between the targets and actions from Member States, a briefing note from the Council suggested. The introduction of "ambitious and frequent checkpoints" is also a measure backed by the IIGCC.
Today's meeting is a crunch point for defining the European Council's position on key parts of the Clean Energy Package, but it is also only the start of lengthier negotiations between the Council, Parliament and Commission that will kick off early next year. All eyes now are on whether the Council will deliver a pre-Christmas boost to proceedings, or deliver campaigners the proverbial lump of coal.
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