The European Commission has announced a new framework on climate and energy for 2030 for a competitive, secure and low-carbon EU economy.
The new package proposes a 40% reduction in GHG emissions below the 1990 level; a binding 27% renewable target for the EU as a whole; renewed ambitions for energy efficiency policies; a new governance system; and a set of new indicators to ensure a competitive and secure energy system.
Under the new climate and energy package, annual reduction cap on emissions from EU ETS sectors would be increased from the current 1.74% to 2.2% after 2020, while emissions from sectors outside the EU ETS would need to be cut by 30% below the 2005 level.
A market stability reserve for the next ETS trading post-2020, which is also being proposed under the new package, would address the surplus of emission allowances and improve the system's resilience to major shocks by automatically balancing the supply of allowances being auctioned, the European Commission claims.
The new framework will enable regulatory certainty for investors and create a platform for member states to coordinate among themselves that will help develop new technologies.
The existing 2020 climate and energy package included a 20% reduction in GHG emissions; a 20% renewable energy target with specific targets for member states; and a 20% improvement in energy efficiency.
Meanwhile, environmentalists have condemned the new package as it has withdrawn obligatory targets for member states and has not mentioned the specific energy efficiency target; and also argued that the 40% GHG reduction target is insufficient to keep global warming within safe levels.
However, the Commission noted that the role of energy efficiency in the new framework will be further considered in a review of the Energy Efficiency Directive being concluded later this year.
The European Council is likely to consider the framework at its spring meeting on 20 to 21 March 2014.
Commenting on the development, Confederation of British Industry's chief policy director Katja Hall said, "This package puts us on the right path to delivering a competitive, low-carbon future. It's important that member states have flexibility to decarbonise in the most cost-effective way.
"An emissions reduction target of 40% is ambitious and credible, and reflects what we have been calling for. But targets are only as good as the policies that support them, and the EU Emissions Trading System must continue to be the cornerstone of the EU's climate policy."