Discussion Paper

Drawing from the recent work of GLOBE International, the Road To Copenhagen Project and
the European Parliament1 on climate change, together with recommendations submitted by
stakeholders such as WWF, McKinsey, the European Climate Foundation, the e-Parliament
and German utility RWE, the GLOBE Europe Board puts forward the present discussion paper
to stimulate our debate next 30th April. This document is not agreed within the GLOBE Europe
board and will subsequently be changed and enriched with the eventual contributions of our
National Focal Points and serve as the basis for further discussion in the national legislatures
of the European region. The deadline for submission of comments is 31st July 2009.

***

1. Review of the EU targets after an international agreement in Copenhagen

2. Implementation of the CARE Package
3. Earmarking auctioning revenues for mitigation and adaptation in developing
countries and other purposes
4.“Green New Deal” Initiatives
5. Energy efficiency
6. The “Supergrid”
7. Electro-mobility

1. Review of the EU targets after an international agreement in Copenhagen

The agreement on the Climate and Energy Package in December 2008 (including the
Emission Trading System and the Effort-Sharing Decision) has been an important step forward
in the fight against climate change. However, in light of the latest scientific evidence, the 20%
reduction level of the CARE Package is inconsistent scientifically with the EU’s own goal of
keeping global average temperature increase below 2°C. It is also far lower than the 25-40%
reduction range by 2020 for industrialised countries, supported by the EU in Bali.

In particular, the 2020 GHG-reduction target of -20% is insufficient and must be replaced by a
target of at least -30% after the Copenhagen Summit. Therefore it is essential that the weaker

1Particularly: the EP report on the Commission Communication Building a Global Climate Change Alliance between
the European Union and poor developing countries most vulnerable to climate change adopted on 21 October 2008;
the EP report 2050: The future begins today - Recommendations for the EU's future integrated policy on climate
change of the Temporary Committee on Climate Change, adopted on 4 February 2009; and the Resolution of the
European Parliament on the Commission Communication Towards a comprehensive climate change agreement in
Copenhagen adopted on 11 March 2009.

-1-
aspects of the agreement are strengthened in its implementation and complemented by bold
parallel efforts.

2. Implementation of the CARE Package

Consequently, the next European Parliament and the EU national parliaments must therefore
ensure an implementation of the CARE Package in the first place according to the intentions
and agreements of the European Council. This includes stringent regulations on carbon
leakage, benchmarking, auctioning regulation, etc. to be agreed in the Commitology
procedure. An implicit deviation from the agreed legislation is unacceptable.

3. Earmarking auctioning revenues for mitigation and adaptation in developing

countries and other purposes

There is a massive and often relatively low-cost GHG-abatement potential in developing

countries, which humanity as a whole will have to use, and use fairly, to stay below 2°C. To
deliver these mitigation actions, developed countries must transfer sufficient resources to
developing countries. An ambitious share of the auctioning revenue should therefore be
reserved for supporting mitigation and adaptation in developing countries. The rest of the
auctioning revenues need to be earmarked for climate purposes, e.g. to support energy
efficiency, innovative technologies and the development and deployment of renewable
energies.

In this context, the EU should commit itself to a binding quantified target for mitigation
support in developing countries as part of an international agreement. This should be an
additional quantified target to the 2020 30% emission reduction commitment. Such a “global
support target” can be legally implemented as an amendment to the effort sharing and/or EU
ETS legislation.

4. “Green New Deal” Initiatives

Europe needs economic recovery policies that positions us well for the strategic challenges of
the future. We must both stimulate and build new markets and industries and meet the
challenge of energy security and climate change. Policies and economic measures are required
for a smart recovery that positions economies well for the path to low carbon prosperity as
they come out of recession.

Best are measures that meet the short term need to stimulate the economy and also provide an
effective basis for long term policies and meeting long term targets. Most of these measures –
as set out below - are especially job-intensive and will therefore help to create jobs with good
future perspectives. Smart recovery must be low-carbon because this will help economies
build resilience to volatile fossil fuel prices, build new industries and markets of the future as
well as reduce the costs incurred by delaying action on climate change.

-2-
In particular, if further recovery measures are taken, they should focus on:

• A large scale-up of energy efficiency and building sector retrofits through direct government
investments and loans to house owners as well as small and medium-sized businesses. This
will provide jobs and opportunities in sectors such as construction, which have been
particularly hard hit by the economic downturn.

• Renewables require liquidity measures to mobilize private sector investment on a large scale
rapidly. Green infrastructure banks, loan guarantees and green bonds could perform this urgent
task of helping renewables over a liquidity hump.

• Upgrading physical infrastructure, such as investment in electricity grid upgrades and

extensions (e.g. a Supergrid). This is especially important for large-scale renewable
deployment. In particular, interconnectors and regional networks must be rapidly developed to
give markets confidence that the infrastructure will be there when large scale renewable
capacities are built.

• Infrastructure investments must be targeted towards low-carbon transport where possible.

• Supporting clean technology markets by financing of clean-technology projects by

providing and expanding feed-in tariffs, renewable portfolio standards, guarantees and loans.

• A review of national procurement guidelines with the aim of going carbon neutral.

• Initiation of flagship projects, such as the Supergrid.

• Significant increase in the spending on Research and Development (R&D) related to energy
efficiency, electro-mobility, renewables and CCS.

The EU Economic Recovery Plan

As part of the implementation of the EU recovery plan endorsed by the European Council in
December 2008, last 28 January the European Commission proposed to reallocate €5 billion of
unspent EU money, mostly to support CCS projects, offshore wind farms and the deployment
of broadband Internet connections in rural areas.

Under the Commission plans, a total of €3.5 billion would be devoted to clean energy projects.
The investment in CCS projects proposed by the European Commission is justified due to its
global importance as a technology that developing countries will also need to adopt if the fight
against climate change is to be effective. However, GLOBE Europe supports the European
Parliament's proposal to redirect unspent funds by September 2010 to renewables and energy
efficiency, which can be employed immediately, can create millions of jobs and must be the
long-term solution to climate change.

-3-
Planned EU Research & Development Investment

On 9 April Janez Potočnik, EU Commissioner for Science and Research, announced that the
EU will invest €7.2 billions in green technologies using a series of public private partnerships
(PPPs):
- €1.2 billion will be earmarked for R&D as part of the Factories for the Future programme;
- €1 billion will be dedicated to researching energy efficient buildings;
- €5 billion will be dedicated to the Green Car Initiative
The first calls for research projects linked to these PPPs are expected in July 2009, with the
Commission keen to see the first projects under way in spring 2010.

Public sector linkages with the private sector are welcome, as they will help bring speed and
efficiency to the development of sustainable technologies, and will make Europe more
attractive to investors and researchers.

However, national governments to help define strategic research priorities for companies to
pursue in the field of energy efficiency, electro-mobility, renewables and CCS.

5. Energy efficiency (WWF)

The EU Action Plan for Energy Efficiency: Realising the Potential of 2006 states that
“Realising the 20% potential by 2020, equivalent to some 390 Mtoe, will result in large energy
and environmental benefits. CO2 emissions should be reduced by 780 Mt CO2 with respect to
the baseline scenario, more than twice the EU reductions needed under the Kyoto Protocol by
2012 (and three times the emissions reductions foreseen by the Effort Sharing proposal of the
Commission). Additional investment expenditure in more efficient and innovative technologies
will be more than compensated by the more than € 100 billions annual fuel savings.”

The EU Climate and Energy Package adopted in late 2009 laid down a strategy to reduce
greenhouse gas emissions (GHG) by 20% by the year 2020 below 1990 emissions levels,
establishing that the GHG cut contribution of the sectors not covered by the EU Emission
Trading System (ETS) would amount to about 1/3 of the overall target.

This 20% of EU emissions reduction target by 2020 is, however, not enough: it does not
reflect accepted science, and it falls short of the EU’s existing international commitment to
lead the world to eventually stay well below 2 degree global warming. This translates into
about zero emissions by mid century for all industrialized nations and means that the EU has
to reduce its emissions domestically by 30% based on 1990 levels.

However, such a reduction target is achievable, affordable and able to boost the EU economy,
because over 40% of these reductions can be achieved by exploiting energy efficiency mainly
on the demand side. The necessary clean and innovative technologies are there, but political
action is needed to remove the barriers to their use and speed up their application.

Given that the energy efficiency target set by the EU is not legally binding, national
parliaments must make an additional effort to proactively pursue the policies and investments
in energy conservation which will deliver these reductions, on the basis of the general

-4-
consensus that investing in energy conservation is the most cost effective way to tackle
climate change and energy consumption.

Investing in energy conservation will be instrumental in meeting also the renewable energy
target, since a large share of the renewable energy expansion can be met by increased energy
efficiency. Aggressive policies and investments in favour of energy efficiency in all sectors
will reduce the investment needed in the renewable energy generation, will facilitate the
achievement of the renewables target and alleviate Member States’ shared effort in meeting
the GHG emission reductions requested by the EU climate and Energy Package.

The European Commission estimates that without past energy efficiency improvements EU
final energy use would have increased by 115 Mtoe or 11% per year over the 1997-2006
period (one third of all crude oil imports into the EU-27 in 2006), but the measures adopted by
the EU would achieve energy savings only of about 13% by 2020 if properly implemented by
Member States.

The direct cost of our inability to use energy efficiently amounts to more than €100 billion
annually by 2020 and 390 Mtoe. Without doubt converting the 20% primary energy savings
target by 2020 into a legally binding objective is the only way to secure a long-term focus on
energy conservation, put a clear obligation on EU governments to boost investments in energy
efficiency and ensure that non-ETS sectors contribute to the GHG reduction target in a fair
way.

The Energy Efficiency Action Plan published in 2006, which introduced the 20% primary
energy saving target by 2020, identified six key areas with the highest potential for energy
saving in Europe: consumer goods, buildings and services, transport, energy transformation,
financing, energy behaviour and international partnerships, and proposed 85 actions and
measures to be taken at EU and national level. According to the European Commission, one
third of the actions have been completed but much remains to be done. The existing regulation
is absolutely necessary to establish an energy efficient economy: directives like Energy
Performance of Buildings and Eco-design for energy using products will help us get rid of the
worst products and practices, they will trigger the market penetration of more efficient
products, materials and services but the EU ambition cannot stop here. More daring and far-
sighted policies and investments are needed to make EU a real low carbon, energy efficient
economy where clean technologies and green jobs will be at the core of its economy.

As parliamentarians, our challenge is to help formulate a new vision that will allow us to get
the same (or more) services without increasing our energy consumption, going beyond a series
of single measures aiming at regulating a specific area/sector and an appropriate policy
framework that will enable this vision.

6. The “Supergrid” (E-Parliament)

“Smart” high voltage direct current (HVDC) grids for clean energy, connecting whole trans-
European regions, would enable energy users to draw on power generated by solar, wind,
hydro, geothermal and other renewable energy sources wherever they are plentiful across the
European region, transport it over long distances with negligible losses, and use hydroelectric
power as back-up energy to help ensure a 100% reliable clean energy supply. These
infrastructures would make a crucial contribution to decarbonise power generation by solving

-5-
the main bottlenecks that limit the expansion of clean energies and therefore help increase
their share in the European markets.

Three complementary actions would greatly foster the development of a suitable “Supergrid”
infrastructure:

- The EU, the Member States and the European Investment Bank (EIB) should make public-
private partnership investments in renewable energies to give the private sector the confidence
to invest the rest.

- New grid connections suffer delays of up to 10-15 years due to local protests and the
slowness of planning procedures. National legislation across the EU to fast-track new grid
connections is needed for the “Supergrid” and for renewable energy at all levels.

− National parliaments need to review the mandate to grid operators to ensure that they play a
full role in accelerating the construction of a regional grid, and not just supply electricity at the
lowest possible price. This should include allowing any company to build grid connections,
not just the national monopoly, and ensuring that the local monopoly gives those new links a
connection to the national grid.

7. Electro-mobility (RWE)

Europe's gasoline and diesel fuel road transportation fleet, including personal cars and light
trucks, is a major contributor to CO2 emissions. The contribution from these sectors increased
by over 30% between 1990 and 2006. Traditional battery technologies have resulted in
vehicles with range per charge limitations that were a barrier to consumer acceptance for
general on-road use. Electric-hybrid drive vehicles are being developed which will be capable
of typical commuter trips using only electricity and reserving the use of liquid fuels for longer
trips. Similar vehicles are being produced for the transportation of goods and for public
transportation. Some of these vehicles are available now and many more are expected in the
very near future, saving consumers on their transportation fuel bills, and reducing GHG
emissions.

Electric motors produce very little noise and relatively little waste heat. While electric motors
frequently operate at over 80% efficiency, heat engines seldom achieve even 20 % efficiency
in real-world operating conditions. As a result, an electric car will travel several times as far on
the same amount of energy as an equivalent car fuelled with gasoline. The benefit will be even
larger as the majority of electric vehicle charging will be done at off-peak times, when less
electricity may be generated from coal. Where electricity is produced from fossil fuels at
centralized plants, there is the potential for carbon capture, which is not feasible with cars and
trucks burning gasoline and diesel fuel.

Replacing even a portion of the vehicles powered by fossil fuels with vehicles based on zero-
emissions electric drive vehicles will make a positive contribution to reducing the EU's total
GHG emissions. The net benefit will depend on the mix of energy sources used to produce the
electricity.

Among the initiatives that could speed up the shift to electro-mobility, the following would
deserve particular attention:

-6-
- R&D efforts should pay attention to battery development for electric vehicles at EU and
Member State level.

- Financial incentives for private and business customers to buy an electric vehicles (Evs) or a
plug-in hybrid electric vehicles (PHEVs), as well as financial incentives for private and
business customers to buy intelligent steerable charging stations, which allows charging in
periods with high renewable energy share (e.g. 2 a.m.) should be set in place.

- Local authorities could reserve usage of public parking places exclusively for EVs / PHEVs.

- Deregulation of the operation of charging stations would provide investment security.

-7-