A global climate agreement was successfully reached in Paris in December 2015. The legally binding agreement, involving all major countries, will result in a more level playing field in the global efforts to combat climate change and to reduce the risk of carbon leakage. Given the pledges by 195 countries and covering 98% of global greenhouse gas emissions, there are good preconditions to reconsider of an upward adjustment of the EU 2030 emissions reduction target.
Fortum encourages the EU to specify its existing long-term target to 95% reduction by 2050 in order to secure the 1.5-degree goal. Similarly, the mileposts towards 2050 should similarly be more ambitious, and the target for 2030 should be 45-50%. The target for 2040 should be specified in 2023.
To reach the more ambitious reduction targets, the role of emissions trading scheme (ETS) must be strengthened. A significant step would be to increase the linear reduction factor (LRF) of the ETS to at least 2.6% from 2021 onwards. LRF refers to the annual reduction rate of the emissions in the ETS, e.g. LRF=2.6% means reduction of emissions by 2.6% per year. Fortum continues to advocate a strong ETS as the most cost-efficient, technology-neutral and flexible tool to mitigate climate change. Furthermore, we propose that the EU investigates extending the scope of ETS into the heating and cooling sector.
The outcome of Paris COP21 and the good progress towards the EU 2020 targets for greenhouse gas emission reductions certainly fulfil the preconditions set for increasing the EU ambition level. An early decision on the long-term goal and intermediate targets is important in creating a stable and predictable framework for the post-2030 period. This is needed in particular in the energy industry which will be making investments for 2050 during the next decade.
For more information:
Kari Kankaanpää, +358 50 4532330, kari [dot] t [dot] kankaanpaa [at] fortum [dot] com