TOPIC PAGE: European Green Deal

The European Green Deal is a comprehensive policy overhaul aiming to support the 27 member states in achieving the targets set by the Paris Agreement.

Having enshrined a flagship net-zero objective by 2050 into law, EU authorities have found common ground on an intermediate goal of cutting carbon emissions by 55% below 1990 levels by 2030.

For this to happen, though, the bloc will have to rethink every single aspect of its economy, giving priority to sectors with the highest carbon footprint such as energy, mobility, buildings and industry.

On 14 July, the European Commission released a first set of thirteen legislative proposals aiming to align sectorial policy frameworks with the tougher 2030 target. More pieces of legislation touching upon decarbonised gas among others are expected to be unveiled in December 2021.

This topic page brings together updates from ICIS on the EU Green Deal developments and the impact regulatory and policy changes will have on the energy markets.

LATEST HEADLINES

Reduced carbon supply, higher EU renewable target unveiled

17/07/2021 LONDON (ICIS)–A steeper cut in carbon emission allowance supply and a confirmed target of 40% renewable share in energy consumption by the end of the decade were among the proposals published by the European Commission on Wednesday as part of the so-called “Fit for 55 Package”.

The EU body has released the long-awaited roadmap that will be instrumental for hitting a 55% carbon emission reduction compared with 1990 levels by 2030, as formally agreed by EU authorities last June. The package amends existing legislation and introduces brand new measures.

In response, the EU benchmark December ’21 product was very volatile, surging by roughly €2.00/tCO2e in the early afternoon in conjunction with the start of the press conference.

But the contract later fell back, most likely because most of the measures announced proved to be largely in line with expectations, with most traders across Europe having already factored them in over the past few weeks.

Climate law, taxonomy, PCIs on the agenda for second half of 2021

02/07/2021 LONDON (ICIS)–Several key pieces of regulation that will affect gas infrastructure in the coming decades will continue their legislative path in the second half of 2021.

Here is a closer look to what is coming up.

CLIMATE LAW

New energy transition targets will become legally binding for the EU as a bloc after the European Parliament and Council approved them in June. These targets include:

– a reduction of CO2 emissions by at least 55% by 2030 compared to 1990, much steeper than a previous 2030 target mandating a 40% cut

– net zero emissions by 2050, negative emissions afterwards

A 2040 target will be proposed by the European Commission in 2023 or 2024.

ETS redesign to continue to support energy commodities

01/07/2021 LONDON (ICIS)–Expected changes to the EU carbon market design are likely to lend further strength to energy commodity prices over the next sessions, ICIS analysts argued based on a leaked draft of the Emissions Trading System (ETS) directive.

The carbon Dec ‘21 benchmark contract was trading at a new record high on Thursday.

European Parliament approves 55% CO2 cut in Climate Law

24/06/2021 LONDON (ICIS)–On 24 June the European Parliament approved the Climate Law that includes new targets to reduce CO2 emissions by at least 55% by 2030 compared to 1990, which is likely to become legally-binding after a European Council vote due on 28 June.

Revised targets also include net zero emissions by the middle of the century and negative emissions after then.

The original aim was a reduction of 40% by the end of the decade.

EU Parliament greenlights €17.5bn fund to help fossil-fuel reliant regions

19/05/2021 LONDON (ICIS)–A €17.5bn fund to mitigate socio-economic consequences of the energy transition in some of the main European fossil fuel-dependent regions was approved by the EU Parliament on Tuesday.

With a majority of 615, 46 abstentions and only 35 votes against, EU lawmakers showed a high degree of consensus for the long-awaited Just Transition Fund (JTF).

First presented on 14 January 2020 as a landmark funding of the Just Transition Mechanism, its adoption came after a provisional agreement was struck by EU co-legislators in December 2020.

EU legislation may squeeze export demand for Swiss GOs

17/05/2021 LONDON (ICIS)–Demand for Swiss guarantees-of-origin may be muted following the enforcement of the revised Renewable Energy Directive (RED II) from 1 July, stakeholders told ICIS.

Under Article 19.11 of the revised directive, European member states shall no longer recognise green certificates from third countries, “except where the Union has concluded an agreement […], and only where there is direct import or export of energy.”

As of today, no agreement of this type was signed between Switzerland and EU bodies.

Adam White, Director at RECS International, a Brussels-based network of renewable buyers and sellers, said the signing of an agreement on GOs would depend on the ratification of the so-called “Inter-institutional Framework Agreement” regarding the single market access, a trade deal Switzerland and the EU have been negotiating since 2014.

Legislation may help French guarantees of origin market exit stalemate

04/03/2021 LONDON (ICIS)–A draft decree aiming at disclosing all types of energy sources has potential to bolster the French market for guarantees of origin (GOs), Lyon-based lobby QuiEstVert told ICIS.

The draft law, expected to be adopted by the end of the year, is based on European directives 2018/2001 on the promotion of the use of energy from renewable sources, and 2019/944 on the internal electricity market.

“Once incorporated into national law, this regulation will constitute a sizeable step forward for both the French and European market for guarantees of origin, as it sets out full disclosure at production level,” Ivan Debay, president of the advocacy group said.

PODCASTS

How will a carbon border tax reshape European energy markets?

31/03/2021 LONDON (ICIS)–From 2023, carbon-intensive goods imported to Europe may be subject to the carbon border adjustment mechanism (CBAM). In this episode, ICIS market expert Federica Di Sario talks with Suzana Carp, Political Strategy Director at Bellona Europe and Sebastian Rilling, carbon analyst with ICIS, on the potential impact on energy markets and how the tax will relate to the pre-existing carbon trading scheme.

European carbon market shifting gears

25/02/2021 LONDON (ICIS)–The European carbon market has been volatile recently, with prices breaking €40/tCO2e on 12 February for the first time since the start of the scheme back in 2005.

Market reporter Federica Di Sario and Marcus Ferdinand, head of European carbon and power analytics at ICIS discuss market dynamics, higher carbon emission targets and the upcoming MSR review in this podcast.

EU Taxonomy – What does it take for an investment to be green?

20/01/2021 LONDON (ICIS)–In a few years, sustainability reports will no longer be a “nice-to-have” but will instead become essential for market players to remain competitive. ICIS reporter Federica Di Sario and Lina Strandvåg Nagell, sustainable finance manager at Bellona, discuss the latest developments of the sustainable taxonomy and why aligning projects early on with such strategy may prevent further costs down the line.

EU offshore push: from 12GW to 300GW in 30 years?

10/12/2020 LONDON (ICIS)–To decarbonise European energy, the EU is betting on offshore renewables. A recent strategy document showed the European Commission intends to sharply increase the bloc’s offshore wind power capacity, setting a 60GW target by 2030 and a 300GW goal for 2050. But is such ambition really within reach? ICIS market reporter Federica Di Sario gets the expert’s take from ICIS analyst Roy Manuell