MEPs push to earmark €5 bln of EU cash for energy saving

Published 21:18 on April 14, 2015  /  Last updated at 23:22 on April 14, 2015  /  EMEA, EU ETS  /  No Comments

The EU Parliament’s industry committee on Tuesday voted to set aside at least €5 billion of European stimulus cash for energy efficiency over the next three years, teeing up crunch negotiations with member states on how to channel hundreds of billions of euros of domestic investments.

The EU Parliament’s industry committee on Tuesday voted to set aside at least €5 billion of European stimulus cash for energy efficiency over the next three years, teeing up crunch negotiations with member states on how to channel hundreds of billions of euros of domestic investments.

Increases in energy efficiency spending would cut the bloc’s energy use, dampening demand for EU ETS allowances.

However, providing extra cash could ease opposition among industry and eastern member states against stronger ETS reform. Poland’s top climate envoy has said a strengthened MSR could be agreed based on the earmarking of carbon allowances currently worth around half of the stimulus cash at stake in today’s vote.

The MEPs voted to adopt changes to the European Commission’s January proposal on the European Fund for Strategic Investments, known as the Juncker plan.

Under the plan, Commission president Jean-Claude Juncker aims to kickstart EU economic growth by unlocking €315 billion of public and private investments over 2015-2017 with €26 billion of guarantees from public funds and the member state-owned European Investment Bank.

EFFICIENCY BENEFITS

The MEPs championed portioning at least €5 billion of that for energy efficiency as a way of helping poorer people heat their homes and reduce dependence on Russian gas imports.

“This specific fund will also allow competitiveness gains for European SMEs and industry as a result of more resource-efficient processes,” said the Green party energy spokesman Claude Turmes MEP in a statement.

A January report from environmental think tank E3G found that just 8% of projects that governments put forward as candidates for the funding were for energy efficiency and power grid infrastructure, while 20% was for high carbon schemes such as thermal power generation and building more roads and airports.

E3G’s Jonathan Gaventa said member states have historically shied away from diffuse and complex energy efficiency investments in favour of bigger-ticket infrastructure items.

“Earmarking would help to overcome financial barriers around efficiency projects and more importantly provides a point of focus to deliver actual investments,” he said, adding that the cash could substantially scale up spending on energy saving from current levels.

The Parliament’s industry committee voted to give lead MEP Kathleen van Brempt a mandate to start fast-track negotiations with the EU Council of member states, which have yet to agree a position.

National governments generally baulk at Parliament’s attempts to ringfence their spending choices although EU powerhouses France and Germany in January called for a dedicated fund for energy efficiency and renewables.

Council, Parliament and the Commission – whose vice president leading the work Jyrki Katainen has spoken out against ringfencing – must agree for the bill to be made law.

BIOFUELS DEAL

Meanwhile, a separate group of MEPs in the Parliament’s environment committee agreed to accept a weakened compromise pushed by member states to put a 7% cap on the use of traditional crop-based biofuels that can be counted towards a target to ensure 10% of energy in transport comes from renewable sources.

Green MEPs refused to back the deal, arguing that traditional biofuels increase emissions due to indirect land use change (ILUC) by displacing food production, which pressures more forests to be cut down for farming. They say the 7% cap will allow an increase in traditional biofuels because current production stands at around 5%.

The compromise, expected to be signed off by the full Parliament as a formality, requires fuel producers to provide some estimates of ILUC emissions.

By Ben Garside – ben@carbon-pulse.com