Written - EU Publication of the EU Climate and Energy Package

I would like to welcome the publication today of the EU Climate and Energy Package which includes:

• Proposal for a Directive designed to amend the current EU Emissions Trading Scheme Directive
• A proposal on the effort of Member States to reduce their greenhouse gas emissions to meet the Community’s greenhouse gas emission reduction commitments up to 2020
• Proposed Directive on the geological storage of carbon dioxide

Proposed Directive on renewable energyProposal for a Directive designed to amend the current EU ETS

DirectiveThe EU Emissions Trading Scheme (EU ETS) is a cap and trade mechanism that aims to reduce carbon dioxide emissions from energy intensive industries. It currently covers around 40% of all EU-27 greenhouse gas emissions.

The proposed Directive sets out how the scheme would work from 2012 onwards. Key elements of the proposal include:

• Increasing the proportion of allowances that are auctioned rather than allocated free of charge
• Harmonised rules on allocation of free allowances
• Proposals in relation to redistributing auctioning allowances
• Expanding the scope of the Scheme to cover new sectors and new gases (nitrous oxide and perfluorocarbons)
• A de minimis threshold for inclusion in the Scheme

The proposed Directive aims to provide greater predictability for industry on the long term trajectory for emission reduction. We will need to consider the detail of the proposal and its impact on particular sectors.

I will be looking to the Environment Agency, who are the regulator for installations covered by the EU ETS in Wales, to look closely at the proposal and begin to consider how they will help Welsh businesses prepare for the next stages in the Scheme’s development.

A proposal on the effort of Member States to reduce their greenhouse gas emissions to meet the Community’s greenhouse gas emission reduction commitments up to 2020

This sets out to deliver on the commitment made in the 2007 Spring European Council to achieving a 30% reduction in greenhouse gas emissions as part of an international climate agreement, or a 20% unilateral cut.

This proposal focuses on determining the contribution of Member States to meeting the EU’s greenhouse gas emission reduction commitment for greenhouse gas emissions from sources not covered by the EU ETS.

This is expected to affect principally small-scale emitters such as transport (cars, trucks), buildings (in particular heating), services, small industrial installations, agriculture and waste.

The level of effort suggested for each Member State varies and has been proposed on the basis of a formula. The proposed contribution for the UK is a 16% reduction.

In One Wales, we commit to setting sectoral targets for residential emissions, transport and the public sector.

Proposed Directive on the geological storage of carbon dioxide

The proposed Directive aims to provide a framework to encourage the development of carbon capture and storage (CCS) in the EU.

CCS involves a series of technological processes that involve capturing carbon dioxide (CO2) from the gases emitted as a result of industrial processes and then transporting it before injecting it into geological formations.

Key sectors which are likely to use CCS include power generation from fossil fuels, principally coal and gas, but CCS can also be applied to CO2-intensive industries such as cement, refineries, iron and steel, petrochemicals, oil and gas processing and others.

It is proposed that CCS be included in Phase III (2013-2017) of the EU ETS to incentivise its deployment. During Phase II, which started on 1 Jan 2008, CCS installations can opt in.

Wales is already at the forefront of developing this technology with the announcement last year that RWe that it would pilot the UK's first Carbon Dioxide Capture pilot plant at Aberthaw Power Station.

An initial £8.4m investment will focus on a 1MW capture plant, with further investment planned to support a capture and storage demonstrator plant of at least 25MW.

Proposed Directive on renewable energy

The proposed Directive aims to establish national renewable energy targets that result in an overall binding target of a 20% share of renewable energy sources in energy consumption in 2020 and a binding 10% minimum target for biofuels in transport to be achieved by each Member State.

It aims to increase the share of renewable energy in EU consumption from the current 8.5%.

Member States will be able to decide how to achieve their targets through action in three sectors: electricity, heating and cooling and transport.

The minimum 10% share of biofuels in transport is applicable in all Member States.

The proposed target for the UK is 15%.

We are already working hard in to ensure we are ahead of the game.

Our Renewables Energy Route Map, which will be published for consultation in February, will set out how we should transform Wales into an exemplar, competitive, low-carbon energy economy and how we might make Wales self-sufficient in renewable energy in 20 years.

I was also pleased to announce the progress of the Severn tidal power feasibility study this week that has the potential to secure a substantial contribution of renewable energy.

In summary, the package is an important step towards delivering the commitments made at the 2007 Spring European Council and to drive action across the EU to tackle climate change.

The Assembly Government has put tackling climate change at the heart of its aspirations for Wales and will ensure we play our part in helping the UK meet its commitment to this ambitious agenda. The timing of the publication of the EU package complements work that we have already taken and have in ha