Climate change policies analysis of sectoral changes in Europe

This study addresses the following question, at the core of Europe's climate policy: Beyond the question of the European Union's ability to meet its emissions commitments under the Kyoto Protocol, are sectoral emissions trends displaying structural changes deemed necessary to reduce emissions, and to attain levels that are consistent with the UNFCCC greenhouse gas concentration stabilisation objectives? What lessons can we draw from emissions trends for the EU future climate policy? Greenhouse gas emissions have been stable for the last decade, but mostly due to events and policy developments unrelated to climate policy, and unlikely to be reproduced in other countries: Germany's reunification, substitution from coal to gas in the United Kingdom driven by power market reform. We should not expect changes of such magnitude in the near future. The issue of our future climate policy hence requires a closer look at underlying trends. Industry's direct emissions decreased thanks to constant improvements in energy efficiency and to the substitution of electricity to direct fossil fuel use. In spite of efficiency gains in the residential sector, increasing floor space and level of equipment entail growing energy consumption. Smaller-size households are now spreading to Southern European countries and should be expected in new Member states as well. Turning to the tertiary/services sector, we find that value added and floor space grew significantly over the decade - 35% and 32% respectively in the EU-15. There again, energy efficiency improvements do not compensate for growing floor spaces. Transport's growth, especially freight, has been significant in all countries. The highest rates of traffic growth per unit of gross domestic product are in Spain and Portugal, two countries where rail infrastructure is fairly limited. CO2 emissions from transport grew by 18% in the EU between 1990 and 2000. Power generation's CO2 emissions have decreased slightly in spite of strong demand growth. Business-as-usual projections provided by DG-TREN show a 50% increase in consumption by 2030. CO2 emission reductions from the sector as a whole will require ambitious policies to control electricity demand. Turning to the macro-economic and development outlook, there is still a gap between per capita income between Portugal, Spain and Greece and the rest of Europe, a gap that is not projected to decrease by 2030. Standards of living, however, converge more rapidly, without inducing important energy efficiency gains, however. It is well-known that countries with economies in transition that are now Members of the EU host a significant potential for energy efficiency improvements. Yet their energy needs are also on the rise. Their per capita energy consumption is much lower than the EU-15 average and will remain so by 2030 according to the EC reference scenario. These countries amount to 12% of the region's total energy consumption and are therefore unlikely to affect Europe's overall energy and CO2 situation to any significant degree. Our overall assessment is that Europe's primary energy demand continues to grow, especially in the residential-services and transport sectors. We do not observe any saturation in EU-15 energy needs. These countries' weight in the region's energy and GHG emissions being significant, their responsibility in undertaking effective climate change policy responses remains prominent. In this context, incremental improvements of current policies may not be enough to achieve Europe's overall goal for 2008-2012, let alone to bring about more significant reductions in the future. There is henceforth a risk of a major drift in greenhouse gas emissions once all one-off and least-cost measures have delivered their potential reductions. It is therefore necessary to envisage real structural changes to ensure sustained emission reductions in the medium to long term. Curbing electricity and transport demand, and the renovation of existing buildings ought to be priority fields of action for Europe and its Member states if they wish to reduce emissions markedly in the future