Brussels, Belgium – Leaders of European Union nations have committed to a climate change and energy strategy that by 2020 will see reductions in greenhouse gas emissions to at least 20% below 1990 levels, and the production of at least one fifth of the Union’s power from renewable energy sources.

In endorsing the plan put forth by the European Commission in January, the leaders built upon issues raised in a 2006 Green Paper on future EU energy policy, calling for a “a new industrial revolution” that will “transform Europe into a highly energy-efficient and low-CO2 energy economy” by 2050.

In agreeing to reduce emissions by 20% compared to 1990 levels, EU leaders pledged to increase that target to 30% if other developed countries made similar commitments. Developing countries should also take steps to reduce the “emissions intensity of their economic development”, according to their capabilities, say the leaders.

The targets are considered intermediate points with a long term goal of reducing emissions by 60% to 80% by 2050 compared to 1990.

The 20% reduction compared to 1990 levels goes further than the Union’s 8% target under the Kyoto Protocol. The EU is struggling but maintains it can meet its Kyoto target, with nations such as the United Kingdom of their goal, while others, such as Spain, have far exceeded their targets.

The main policy instrument for reducing emissions has been the EU Emissions Trading Scheme (EU-ETS), which covers major industrial emitters in member countries. The ETS has spurred the worldwide carbon trading market to a value of over $22 billion annually, but has suffered price volatility as a result of over-allocation of credits by some countries. As part of a review to improve the system, the leaders pledged to consider extending it to land use, land-use change, forestry and surface transport.

Target for renewable energy

The leaders endorsed the creation of a comprehensive regional energy strategy, which will include energy efficiency, renewable energy, and greenhouse gas emissions plans. For now, they have set a binding target of a 20% share for renewable energy in overall energy consumption by 2020.

While that figure is binding for the Union, each member state will set its own national targets for specific sectors, such as electricity, heating, and cooling, with the aim of meeting the overall target. The market penetration of renewables will likely be much higher in countries that have the experience and ability to deploy it, such as Germany and Spain. Eastern European countries say they will struggle to afford the more expensive renewables, and country targets will differ according to each nation’s individual circumstances.

Following France’s urging, the document endorsed by leaders includes recognition of each nation’s right to choose their own energy mix, which may involve nuclear power as long as safety and security are taken into account.

A binding target was also set for biofuels, requiring a minimum 10% share for biofuels in overall gasoline and diesel consumption by 2020. That target, however, is subject to “sustainable” production of biofuels, and the commercial availability of ‘second generation’ biofuels such as cellulose ethanol.

Those qualifications were added after concerns were expressed about the use of food crops, agricultural inputs, and large land areas for the production of energy crops. Even with the establishment of targets and development of a domestic industry, the EU will need to import a portion of its biofuel needs for at least the next several decades.

The plan also calls for increased energy efficiency, setting a non-binding objective of reducing 20% of the EU’s energy consumption compared to projections for 2020. Plans to increase energy efficiency requirements for office and street lighting are expected to be adopted by 2008 and requirements for incandescent lamps and private households by 2009.

To support the transition to cleaner energy, the European Commission will present a strategy for energy technology research, development, and deployment later this year.

The full document endorsed by EU leaders can be found here: Presidency Conclusions - Brussels European Council (PDF).