Climate Change
ETUI Conference Brussels, 29 March 2011
Towards Industrial Policy
Didier Herbert
Sustainable Industrial Policy
Europe 2020: 7 flagship initiatives underpin the targets
S m a rt
G row th
I n n ov a tio n
« Innovation
Union »
E d u c a tio n
« Y outh on the
move »
D ig ita l s o c ie ty
« A digital agenda
for E urope »
S u s ta i n a b le
G row th
I n c l u s iv e
G row th
C lim a te ,
E m p lo y m e n t
e ne rg y a nd
a n d s k ills
m o b ility
« An agenda for
new s kills and jobs
« R es ource
»
efficient E urope »
C o m p e titiv e n e
F ig h tin g
ss
p ov e r ty
« An indus trial
« E uropean
policy for the
platform agains t
globalis ation era »
poverty »
I. European Industry: Some facts
and figures
•Manufacturing industry is an essential
pillar for growth and jobs:
One fifth of EU output and employment (more
than 50% of private sector employment)
Around 4/5 of EU R&D investments
75% of EU exports
•Industry solution-provider to tackle
societal challenges
II. INDUSTRIAL ACTIVITY CREATES WEALTH AND JOBS...
BUT ALSO HAS UNDESIRABLE EFFECTS…
Natural resource depletion
Climate change
Pollution of
air, water, soil
Traffic congestion
Waste
Global population will grow from 6bn
to 9bn and they aspire to OECD levels
of income
• EU’s CO2 reduction
targets
– -20-30% by 2020
– >-80% by 2050
III. Competitiveness in the face of
climate change: Questions
•Is there a contradiction between
competitiveness and climate change
policy (20/20/20 package)?
•Does the promotion of sustainability lead
to burdens for EU industry’s
competitiveness?
Competitiveness in the face of climate
change: Some preliminary answers
•EU industry is quite energy efficient
compared to other countries and is
decoupling growth and pollution.
•Industry (directly and indirectly) emits
only 25% of total CO2 emissions in EU
•Abatement potential for consumers or in
transport can be cheaper than in industry
GHG Target:
-20% compared to 1990
-14% compared to 2005
EU ETS
-21% compared
to 2005
Non ETS sectors
-10% compared to 2005
27 Member State targets, stretching from -20% to +20%
How can we reconcile
ambitious climate change
objectives with industrial
competitiveness ?
When global action is not
yet certain …
The Challenge…
CLIMATE
COMPETITIVENESS
SOCIAL
•Some sectors are particularly vulnerable
•These industries demand special
measures
•Risk of Carbon Leakage
•All options not Cost Free
ETS - Harmonised allocation rules as of 2013
•Auctioning is default allocation method
●Power sector: 100% as of 2013
(save limited exemptions for 10 new MS as per Art 10c)
•Transitional free allocation based on BMs
Sectors ‘not at risk of carbon leakage’
●Phasing out free allocation
(80% of BM in 2013 – 30% of BM in 2020 – 0% in 2027)
Sectors at risk of ‘carbon leakage’
●Free allowances , limited to 100% of Benchmarks
II.2 An example of a challenge?
Cement
• 1 ton Cement = 0,8 ton
CO2
• Avg price cement =
€60/ton
• ton CO2=12 Euro
• Risk of greater
imports/less exports on
third markets
• “Carbon leakage”
CO2 emissions for relevant sectors in the carbon leakage assessment
(bubble size indicates size of sector's emissions)
- Sectors in bold do not reach the CL criteria -
60%
Organic chemicals
50%
Paper and Paperboard
Aluminium
Plastics (QL)
Iron and steel
40%
Ceramic tiles
Fertilizers
Trade intensity
Bricks
30%
Coke oven products
Industrial gases
Casting of iron (QL)
20%
Petroleum
Flat glass
Cement
Casting of light metals (QL)
10%
Casting of steel (QL)
Lime
0%
-10.0%
10.0%
30.0%
50.0%
-10%
CO2 Total costs
70.0%
90.0%
QL = Sectors currently
under Qualitative assessment
110.0%
Illustration of a BM curve
Emission Intensity
(kg CO2/t product)
Purchased allowances
Benchmark
Free allowances
10% best-sample
Nb of installations
How to help industry meeti,ng
challenge ?
Use industrial policy tools, Ex: SILC
Analysis & Screening
Candidate sectors
SHORT-TERM
Development & implementation of
innovation projects
MID-/LONG-TERM
Scale-up &
demonstration
projects
SILC I : SHORT-TERM innovation measures
Purchased allowances
Free allowances
Benchmark line
Several initiatives foreseen
• Bring together relevant technology platforms to ensure appropriate
R&D, financing and deployment strategies for low-carbon
production
• Promote demonstration projects and uptake for ultra-low carbon
production technologies (including CCS)
• Explore opportunities to bring in further innovative incentive
mechanisms linked to the carbon market (namely fast movers)
Many EU actions contribute to sustainable competi
Innovat
ion
R&
D
Climate
Change
Cohesio
n
Knowledge
Skills
ICT
Infrastru
ctures
Employ
ment
Regio
nal
Internatio
nal Policy
Dimensio
n
Sustainable
competitiveness
Trade
CSR
Competi
tion
Internal
Market
Energy
Fiscal
barrie
rs
Sustaina
ble
Develop
ment
Marke
t
Acces
s
Markets by themselves will not deliver
all the needed solutions…
•Clear Policy Signals are essential – Certainty, Coherence
•Need governments, industry and social partners support:
Standards and regulation – implementation crucial
Delivering green skills
Supporting environmental technologies
•Share best practice, learn from each other, stakeholder consultation
e.g. sustainable industry forum/workshops; industry/private sector
engagement
But…Can Europe combine ambitious climate change objectives with
strong industrial competitiveness…
Importance of global commitments and action
ACTION PLAN ON SUSTAINABLE INDUSTRIAL POLICY and
SUSTAINABLE CONSUMPTION & PRODUCTION…
Example : Sustainable Product Policy
Driving the energy and environmental performance of products
upwards through ECODESIGN
Creating a critical mass of demand through LABELLING and
INCENTIVES for the best performing products
Recast Dec 2009 extended to energy-related products;
Review by 2012
Energy savings of 12% by 2020 from measures already adopted
Global approach for global issue
Ensuring a level playing field for Energy Intensive Industries e.g. ETS
Benchmarks and encouraging development of Sectoral Approaches
Retail Forum & Food SCP Roundtable
Green supply chains; Share best practice; Wide stakeholder
participation; Promote sustainable products; Reduce environmental
footprint of retail sector
++ e.g. Green Public Procurement (16% of economy),
Verbesserungspotential der
verabschiedeten Maßnahmen
Enterprise and Industry Directorate-General
Sustainable Industrial Policy
Ökodesign-Verordnung
Annahme
1275/2008
17.12.2008
Einsparpotential
(jährlich bis 2020)
35 TWh
04.02.2009
18.03.2009
6 TWh
37 TWh
18.03.2009
06.04.2009
22.07.2009
22.07.2009
22.07.2009
22.07.2009
38 TWh
9 TWh
135 TWh
25 TWh
26 TWh
4 TWh
107/2009
244/2009
245/2009
278/2009
640/2009
641/2009
642/2009
643/2009
Stromverluste im Bereitschaftsund Ruhezustand von Haushaltsund Bürogeräten
Einfache Set-Top-Boxen
Haushaltslampen mit
ungebündeltem Licht
Straßen- und Bürobeleuchtung
Externe Netzteile
Industriemotoren
Heizungsumwälzpumpen
Fernsehgeräte
Haushaltskühl- und
Gefriergeräte
315 TWh
Das geschätzte jährliche Einsparungspotential in 2020 entspricht 12% des Stromverbrauchs in
Europa in 2007
Environmental goods and services - the
window of opportunity…
• New markets, in Europe and
internationally,
• Lead these markets internationally
• But market shares under threat
• Use trade policy – upcoming FTAs
• Relationship between core and connected
industries; upstream suppliers and
downstream users; business models
• “You are only as Green as your Supply
chain”
Stimulus Packages:
• China >$200 bn green investments
• Korea >80% green; Green New Deal $93
bn >1 m green jobs
Green is always Good?
The EU needs to be economically and socially as well as environmentally
sustainable.
Only economically successful companies developing innovative products
will be able to contribute to effective environmental protection and social
progress. Europe is responsible for only around 13% of global carbon
emissions and it does not make economic or environmental sense to
inadvertently overburden industry here and drive production to less
efficient locations.
The EU will only be able to fulfil its leadership role in this field if it
manages to show that is indeed realistic and feasible to combine optimal
levels of resource efficiency with industrial competitiveness.
Net impact on number of jobs likely to be relatively limited, but many
more job reallocations
Wide impact on skills, job content…
Need for high quality jobs
Facilitating industrial change
•Mainly responsibility of social partners
•Consult on European framework for
restructuring
•Globalisation Adjustment Fund
•Cohesion policy and Structural Funds
•Rescue/restructuring Guidelines
Flagship Initiative: "An industrial policy for the
globalisation era" (ref. COM(2010) 614 of 28/10/10)
…supporting the transition of manufacturing sectors to greater energy and resource
efficiency
…reducing the transaction costs of doing business in Europe, promoting clusters and
improving affordable access to finance
…promoting the restructuring of sectors in difficulty towards future oriented activities,
including through quick redeployment of skills to emerging high growth sectors and
markets
…promoting technologies and production methods that reduce natural resource use
…supporting the transition of service and manufacturing sectors to greater resource
efficiency, including more effective recycling
Flagship Initiative "Resource efficient
Europe" in 2011
•The aim is to support the shift towards a resource efficient and low-carbon
economy that is efficient in the way it uses all resources. The aim is to
decouple our economic growth from resource and energy use, reduce CO2
emissions, enhance competitiveness and promote greater energy security;
•Resource efficiency means doing more with less. It means managing our
resources - material resources such as metals, minerals and food, and
natural resources which provide services, such as clean air, land and water
- sustainably, throughout their life cycle, so as to reduce the environmental
impact of their use.
•But need to carefully manage transition from industry perspective – not
automatically win-win or cost free
A cost-efficient pathway
towards 2050
80% domestic
reduction in 2050 is100%
feasible
100%
 with currently available
Power Sector
80%
technologies,
 with behavioural
change only induced
Residential & Tertiary
60%
through prices
 If all economic sectors
Industry
contribute to a varying
40%
degree & pace.
Current policy
60%
40%
Transport
Efficient pathway:
-25% in 2020
-40% in 2030
-60% in 2040
80%
20%
20%
Non CO2 Agriculture
Non CO2 Other Sectors
0%
1990
0%
2050
26
2000
2010
2020
2030
2040
Contact:
Didier Herbert
European Commission
Directorate-General
Enterprise and Industry
Sustainable Industrial Policy
Tel: +32.2.29.90087
http://ec.europa.eu/enterprise/policies/sustainable-business/index_en.htm