March 15, 2011
European Commission Issues Roadmap for Emissions Reductions by 2050
by Robert Kropp
In response to the publication of Roadmap 2050, the Institutional Investors Group on Climate Change
calls on policy makers to encourage the private investment necessary to meet reduction targets.
Last week, the European Commission (EC)
published A Roadmap for
moving to a competitive low carbon economy in 2050, which "presents a Roadmap for possible
action up to 2050 which could enable the EU (European Union) to deliver greenhouse gas (GHG)
reductions in line with the 80 to 95% target agreed." The target cited is widely believed by
climate scientists to be necessary for limiting the effects of climate change to below an increase
in global temperature of 2ºC.
The EU has committed to a reduction in GHG emissions
of 20% by 2020. By 2009, according to the Commission, Europe's emissions had already decreased to
16% below 1990 levels. "With full implementation of current policies," the report states, "The EU
is on track to achieve a 20% domestic reduction in 2020 below 1990 levels, and 30% in 2030." The
decrease in emissions recorded already had prompted calls to increase the 2020 target to 30%.;
according to the WWF, political momentum is
building to increase the target.
Jason Anderson, Head of EU Climate and Energy Policy at
WWF, said, "European CO2 emissions have already dropped by more than 17%, and the EEA (European
Economic Area) anticipates stable emissions even with economic recovery. That means the 20% target
will require virtually no effort to achieve."
Pointing out that Europe is responsible for
less than 10% of the world's emissions, however, the EU has indicated a preference for an
international agreement before raising its target for 2020.
Of the three targets for
climate and energy established by the Europe 2020 Strategy, two, the report
reveals—the reduction by Member States of GHG emissions by 20%, and increasing renewable energy
technologies to 20% of the energy mix—are on target. However, increasing energy efficiency remains
below its 20% target at present; if the EU meets this target as well, the report contends, a
decrease in emissions of 25% could be recorded by 2020.
The investment necessary to meet
the ambitious goals for 2050 are considerable, according to the report. The "key components which
are starting to form the backbone of efficient, low carbon energy and transport systems after
2020," it states, "Will require major and sustained investment: on average over the coming 40
years, the increase in public and private investment is calculated to amount to around € 270
billion ($376 billion) annually."
"Unlocking the investment potential of the private
sector and individual consumers presents a major challenge," the report continued. "While most of
this extra investment would be paid back over time through lower energy bills and increased
productivity, markets tend to discount future benefits, and disregard long-term risks. A key
question is, therefore, how policy can create the framework conditions for such investments to
happen, including through new financing models."
Responding to the publication of Roadmap
2050, the Institutional Investors Group on Climate
Change (IIGCC), a network of European institutional investors, issued a statement, emphasizing "the need for EU policy makers to work with the institutional investor
community to shape policy which encourages the private investment necessary to meet a 80% reduction
in greenhouse gas emissions by 2050."
IIGCC currently has 72 members, with $9 trillion in
assets under management.
Noting the considerable additional investment necessary for
meeting emissions reduction targets for 2050, IIGCC stated, "The private sector will need to
provide by far the largest share of this capital at around 85%."
"It is crucial,
therefore, that policy creates incentives for low carbon investments and future funding mechanisms
are structured to take the commercial realities faced by investors into account," the statement
Addressing energy efficiency issues relating to the built environment, Paul
McNamara, chairman of the IIGCC Property Working Group, stated, "It is imperative that the
opportunity to drive energy efficiency in buildings is not lost and that workable, detailed
solutions are promoted which effect a fundamental shift in the behavior of the private real estate
The efforts by the EU to establish and meet ambitious emissions reduction targets
stand in sharp contrast to the situation in the US, where, during the same week as the publication
of Roadmap 2050, the House Energy and Power Subcommittee approved a bill that would prevent the
Environmental Protection Agency (EPA) from implementing a number of regulations designed to
decrease the nation's GHG emissions.
The bill, entitled the Energy Tax Prevention Act, was
sponsored by Representative Fred Upton of Michigan, the Chairman of the House Energy and Commerce
Committee. In interviews, Upton has denied the role of human activity in climate change.
In a statement of support for the legislation, Upton said, "Like all of you, I support a
cleaner environment. But let’s be honest, neither a Cap-and-Trade energy tax nor EPA regulations of
greenhouse gases achieve that goal."
The EPA regulations targeted by the legislation
address emissions from motor vehicles and large sources such as power plants and factories. The
Agency's authority for regulating GHG gases was established by the Clean Air Act, and upheld by a
Supreme Court decision in 2007.
In her testimony before the House subcommittee, EPA
Administrator Lisa Jackson said that the proposed legislation "would presume to overrule the
scientific community on the scientific finding that carbon pollution endangers Americans’ health
"Politicians overruling scientists on a scientific question – you might be
remembered more for that than for anything else you do," Jackson continued.