12 Feb First meeting of the Environment Ministers of the European Union since COP21
The French Environment Minister, Ségolène Royal, and her Dutch counterpart Sharon Dijksma, invited the EU Environment Ministers to the Embassy of the Netherlands in Paris on Friday, 12 February 2016. The meeting was organized jointly with the Netherlands, which holds the Presidency of the European Union during the first half of 2016.
This first post-COP21 meeting tackled two key points of the implementation of the Paris Agreement:
- Carbon pricing: the European Union intends to advance discussions on carbon pricing tools and to draw up a real, EU-wide carbon pricing strategy. The Paris Agreement prompts States to make carbon pricing a means to reach their greenhouse gas reduction goals.
Carbon pricing: what for?
A carbon tax implies that businesses will pay for the CO2 they emit during production. This can be done by paying a tax or purchasing and reimbursing emission rights. The costs will impact product prices and this will encourage businesses to produce while reducing CO2 emissions. Global transparency of CO2 costs will make offshoring of production less attractive and encourage businesses and investors to opt for less CO2-intensive alternatives.
A number of countries and regions are currently developing their own carbon dioxide emissions pricing systems. To guarantee a level playing field, the idea would be to make these systems work together.
The Environment Minister Ségolène Royal recalled the four carbon pricing priorities:
► control changes in the price of carbon: the system provides for the regulation of changes in the market price within a minimum and maximum range so as to reduce volatility and improve predictability of the carbon price. The Minister recalled that “this mechanism would make it possible to trigger a great deal more low-carbon investment and cut the cost of supporting renewables, the competitiveness of which would be improved.”
► incorporate a carbon component into countries’ energy taxation: France has already introduced a “climate energy contribution (CCE)” fixed at €22 per tonne for 2016 and set to gradually increase to €56 per tonne by 2020 and to €100 per tonne by 2030. Ségolène Royal stressed “that this carbon component should be accompanied by the development of a tax neutrality principle so as not to lead to an increase in overall tax rates, but only to a tax shift to fossil fuels.”
► prompt the introduction of carbon pricing outside the European Union and federate the countries that go ahead: the aim is to bring together all the countries and businesses that commit to this around common principles such as the removal of fossil fuel subsidies and the convergence of carbon pricing. According to Ségolène Royal “the aim is not to impose a single price on everyone, nor a single means of carbon pricing, but to promote the gradual expansion of the coverage of global emissions through carbon pricing.”
► to take the necessary measures to counter carbon leakage: Ségolène Royal recalled “the need to better target the free allocation of emission allowances by reserving it for cases where it is needed, for those sectors exposed to strong international competition and a real risk of carbon leakage.” Thanks to this development, the quotas released could be used to strengthen the NER300 and NER400 Innovation Funds and finance the development of low-carbon technologies using European carbon trading system (ETS) revenues.
Under the Lima-Paris Action Agenda (LPAA), more than 10,000 stakeholders – citizens, businesses and territories – have made 70 commitments in all energy transition areas, including construction, transport and renewables.
Ségolène Royal put forward three main guidelines:
► reflect on the mapping of LPAA coalitions to make commitments more visible;
► ensure that each country or small group of countries in Europe steers a coalition, so that commitments are operational by summer 2016;
► encourage European businesses to remain on the offensive to develop energy transition markets throughout Europe.
Next EU meetings:
– 4 March 2016: Environment Council
– 17-18 March 2016 European Council