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Climate Change ETUI Conference Brussels, 29 March 2011 Towards Industrial Policy

Climate Change ETUI Conference Brussels, 29 March 2011 Towards Industrial Policy Didier Herbert Sustainable Industrial Policy. Europe 2020: 7 flagship initiatives underpin the targets. I. European Industry: Some facts and figures.

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Climate Change ETUI Conference Brussels, 29 March 2011 Towards Industrial Policy

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  1. Climate ChangeETUI Conference Brussels, 29 March 2011Towards Industrial Policy Didier HerbertSustainable Industrial Policy

  2. Europe 2020: 7 flagship initiatives underpin the targets

  3. I. European Industry: Some facts and figures • Manufacturing industry is an essential pillar for growth and jobs: • One fifth of EU output and employment (more than 50% of private sector employment) • Around 4/5 of EU R&D investments • 75% of EU exports • Industry solution-provider to tackle societal challenges

  4. II. INDUSTRIAL ACTIVITY CREATES WEALTH AND JOBS...BUT ALSO HAS UNDESIRABLE EFFECTS… • Natural resource depletion • Climate change • Pollution ofair, water, soil • Traffic congestion • Waste • Global population will grow from 6bn to 9bn and they aspire to OECD levels of income • EU’s CO2 reduction targets • -20-30% by 2020 • >-80% by 2050

  5. III. Competitiveness in the face of climate change: Questions • Is there a contradiction between competitiveness and climate change policy (20/20/20 package)? • Does the promotion of sustainability lead to burdens for EU industry’s competitiveness?

  6. Competitiveness in the face of climate change: Some preliminary answers • EU industry is quite energy efficient compared to other countries and is decoupling growth and pollution. • Industry (directly and indirectly) emits only 25% of total CO2 emissions in EU • Abatement potential for consumers or in transport can be cheaper than in industry

  7. GHG Target: -20% compared to 1990 -14% compared to 2005 EU ETS -21% compared to 2005 Non ETS sectors -10% compared to 2005 27 Member State targets, stretching from -20% to +20%

  8. How can we reconcile ambitious climate change objectives with industrial competitiveness ?When global action is not yet certain …

  9. The Challenge… CLIMATE COMPETITIVENESS • Some sectors are particularly vulnerable • These industries demand special measures • Risk of Carbon Leakage • All options not Cost Free SOCIAL

  10. ETS - Harmonised allocation rules as of 2013 • Auctioning is default allocation method • Power sector: 100% as of 2013 (save limited exemptions for 10 new MS as per Art 10c)‏ • Transitional free allocation based on BMs Sectors ‘not at risk of carbon leakage’ • Phasing out free allocation (80% of BM in 2013 – 30% of BM in 2020 – 0% in 2027)‏ Sectors at risk of ‘carbon leakage’ • Free allowances , limited to 100% of Benchmarks

  11. II.2 An example of a challenge? Cement 1 ton Cement = 0,8 ton CO2 Avg price cement = €60/ton ton CO2=12 Euro Risk of greater imports/less exports on third markets “Carbon leakage”

  12. Emission Intensity (kg CO2/t product) Purchased allowances Benchmark Free allowances Nb of installations 10% best-sample Illustration of a BM curve

  13. Analysis & Screening How to help industry meeti,ng challenge ? Use industrial policy tools, Ex: SILC Candidate sectors SHORT-TERM Development & implementation of innovation projects MID-/LONG-TERM Scale-up & demonstration projects SILC I : SHORT-TERM innovation measures Benchmark line Purchasedallowances Freeallowances     

  14. Several initiatives foreseen • Bring together relevant technology platforms to ensure appropriate R&D, financing and deployment strategies for low-carbon production • Promote demonstration projects and uptake for ultra-low carbon production technologies (including CCS)‏ • Explore opportunities to bring in further innovative incentive mechanisms linked to the carbon market (namely fast movers)‏

  15. Many EU actions contribute to sustainable competitiveness Infrastructures Innovation R&D Employment Cohesion Climate Change Knowledge Regional Policy Skills Sustainable competitiveness ICT International Dimension Trade CSR Internal Market Market Access Sustainable Development Energy Competition Fiscal barriers

  16. Markets by themselves will not deliver all the needed solutions… • Clear Policy Signals are essential – Certainty, Coherence • Needgovernments, industry and social partners support: • Standards and regulation – implementation crucial • Delivering green skills • Supporting environmental technologies • Share best practice, learn from each other, stakeholder consultation e.g. sustainable industry forum/workshops; industry/private sector engagement • But…Can Europe combine ambitious climate change objectives with strong industrial competitiveness…Importance of global commitments and action

  17. ACTION PLAN ON SUSTAINABLE INDUSTRIAL POLICY and SUSTAINABLE CONSUMPTION & PRODUCTION… Example : Sustainable Product Policy • Driving the energy and environmental performance of products upwards through ECODESIGN • Creating a critical mass of demand through LABELLING and INCENTIVES for the best performing products • Recast Dec 2009 extended to energy-related products;Review by 2012 • Energy savings of 12% by 2020 from measures already adopted • Global approach for global issue • Ensuring a level playing field for Energy Intensive Industries e.g. ETS Benchmarks and encouraging development of Sectoral Approaches Retail Forum & Food SCP Roundtable • Green supply chains; Share best practice; Wide stakeholder participation; Promote sustainable products; Reduce environmental footprint of retail sector ++ e.g. Green Public Procurement (16% of economy),

  18. Verbesserungspotential der verabschiedeten Maßnahmen Enterprise and Industry Directorate-General Sustainable Industrial Policy Das geschätzte jährliche Einsparungspotential in 2020 entspricht 12% des Stromverbrauchs in Europa in 2007

  19. Environmental goods and services - the window of opportunity… • New markets, in Europe and internationally, • Lead these markets internationally • But market shares under threat • Use trade policy – upcoming FTAs • Relationship between core and connected industries; upstream suppliers and downstream users; business models • “You are only as Green as your Supply chain” Stimulus Packages: • China >$200 bn green investments • Korea >80% green; Green New Deal $93 bn >1 m green jobs

  20. Green is always Good? • The EU needs to be economically and socially as well as environmentally sustainable. • Only economically successful companies developing innovative products will be able to contribute to effective environmental protection and social progress. Europe is responsible for only around 13% of global carbon emissions and it does not make economic or environmental sense to inadvertently overburden industry here and drive production to less efficient locations. • The EU will only be able to fulfil its leadership role in this field if it manages to show that is indeed realistic and feasible to combine optimal levels of resource efficiency with industrial competitiveness. • Net impact on number of jobs likely to be relatively limited, but many more job reallocations • Wide impact on skills, job content… • Need for high quality jobs

  21. Facilitating industrial change • Mainly responsibility of social partners • Consult on European framework for restructuring • Globalisation Adjustment Fund • Cohesion policy and Structural Funds • Rescue/restructuring Guidelines

  22. Flagship Initiative: "An industrial policy for the globalisation era"(ref. COM(2010) 614 of 28/10/10) …supporting the transition of manufacturing sectors to greater energy and resource efficiency …reducing the transaction costs of doing business in Europe, promoting clusters and improving affordable access to finance …promoting the restructuring of sectors in difficulty towards future oriented activities, including through quick redeployment of skills to emerging high growth sectors and markets …promoting technologies and production methods that reduce natural resource use …supporting the transition of service and manufacturing sectors to greater resource efficiency, including more effective recycling

  23. Flagship Initiative "Resource efficient Europe" in 2011 • The aim is to support the shift towards a resource efficient and low-carbon economy that is efficient in the way it uses all resources. The aim is to decouple our economic growth from resource and energy use, reduce CO2 emissions, enhance competitiveness and promote greater energy security; • Resource efficiency means doing more with less. It means managing our resources - material resources such as metals, minerals and food, and natural resources which provide services, such as clean air, land and water - sustainably, throughout their life cycle, so as to reduce the environmental impact of their use. • But need to carefully manage transition from industry perspective – not automatically win-win or cost free

  24. A cost-efficient pathway towards 2050 80% domestic reduction in 2050 is feasible • with currently available technologies, • with behavioural change only induced through prices • If all economic sectors contribute to a varying degree & pace. Efficient pathway: -25% in 2020 -40% in 2030 -60% in 2040 26

  25. Contact: Didier HerbertEuropean Commission Directorate-General Enterprise and Industry Sustainable Industrial Policy Tel: +32.2.29.90087http://ec.europa.eu/enterprise/policies/sustainable-business/index_en.htm

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