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date: 30 September 2022

# Climate Change Policy in the European Union

• Tim RaynerTim RaynerTyndall Centre for Climate Change Research, University of East Anglia
•  and Andrew JordanAndrew JordanTyndall Centre for Climate Change Research, University of East Anglia

### Summary

The European Union (EU) has long claimed, with some justification, to be a leader in international climate policy. Its policy activities in this area, dating from the early 1990s, have had enormous influence within and beyond Europe. The period since ca. 2000 in particular has witnessed the repeated emergence of policies and targets that are increasingly distinct from national ones and sometimes globally innovative. They encompass a wide array of instruments (e.g., market-based, informational, voluntary, as well as regulatory). Policy development has been motivated by a mixture of concerns: to avoid national differences in policy causing distortions of the EU’s internal market; to enhance the domestic legitimacy of the wider project of European integration; to improve energy security; and to increase economic competitiveness through “ecological modernization.” Climate policy has also offered a means to enhance the standing of the EU as a global actor. The EU has, in general, been influential in international negotiations, for example, in its promotion of the 2°C warming limit and advocacy of emission reduction “targets and timetables.” In turn, its own policy has been shaped by developments at global level, as with the surprisingly enthusiastic adoption of the “flexible mechanism” of emissions trading. However, it is becoming increasingly apparent that acute challenges to policy coherence and effectiveness—applying to emerging policy on adaptation, as well as mitigation—lie ahead in a Europe that is more polarized between its more environmentally conscious Member States and those in central and eastern Europe who have extracted significant concessions to protect their fossil fuel–intensive sectors. Although the Paris Agreement of 2015 offers an important opportunity to “ratchet up” the ambition of EU policy, it is proving to be a difficult one to seize.

### Subjects

• Policy, Politics, and Governance

### Introduction: The Importance of the European Union’s Role in Climate Policy

Since the late 1990s, the European Union (EU) has racked up a series of apparently impressive climate policy achievements which lend substance to the oft-heard claim that it is a global leader in the field. For example, it has developed novel ways to share the effort required to reduce emissions between its Member States and across different economic sectors. It has pioneered the use of novel policy instruments, such as emissions trading, which have been emulated elsewhere. In global-level negotiations, the EU has practiced a “leadership-by-example” approach and consistently advocated “targets and timetables” for action, including that average global temperature rise should not exceed 2°C above pre-industrial levels and that global greenhouse gas (GHG) emissions should be halved from 1990 levels by 2050 (Council of the European Union, 2007, 2014). While emissions in the rest of the world continued to grow apace, the EU’s commitment to reduce GHG emissions by 8% under the Kyoto Protocol was met, and, by 2015, levels were down by 23% from 1990 levels (EEA, 2015). Moreover, the EU has been the largest contributor of climate finance to help developing countries (European Commission, 2014a). Meanwhile, policymakers have begun to consider how Europe can prepare itself to reduce its vulnerability, and adapt, to future climate impacts (European Commission, 2013).

Although in many ways a sui generis system of multilevel governance, the EU’s experience in handling a range of climate policy dilemmas arguably has a much wider relevance, especially to broadly similar systems—including other regional groupings of states, as well as federal and/or quasi-federal states—with which it is often compared (Krämer, 2006; Schreurs, Selin, & VanDeveer, 2009; Stephenson & Boston, 2011). Both its relative diversity and institutional strength suggest that the EU can be looked upon as a rather benign “critical case”: “if [it] cannot develop effective climate policies, then the implications for the globe are grim” (Wettestad, 2000, p. 26). Its important diplomatic role, seeking to build alliances with other major emitters, with neighboring countries and vulnerable developing countries, also underlines the need to understand developments in the EU. The EU’s climate policy experience is thus hugely important. Set against these expectations, a series of high-profile stumbles and setbacks—exemplified by the EU’s unexpectedly marginalized role at the Copenhagen UN conference of 2009 and chronic problems with its emissions trading scheme—have been of particular concern. The Paris conference of 2015, however, offered cause for cautious optimism about the EU’s continuing role.

In this chapter, we begin by providing a short outline of the nature of the EU as a polity, highlighting the institutions through which it develops policy and some of the implications for its capacity to act on climate change. Focusing on the period since the mid-1990s, we note the drivers of its relatively ambitious policies, but also some of the key constraints and the extent to which they have been overcome by different actors’ entrepreneurial activity. We go on to reflect on the extent to which, and the different ways in which, the EU’s claims to global leadership may be justified and take stock of the current policy mix and its overall coherence. A final section discusses some of the current and likely future controversies that put the EU’s reputation for climate policy leadership in doubt, centering on the growing polarization in the positions held by mainly northern, more environmentally conscious Member States, and a group of central and eastern European governments, led by Poland, who wish to protect their fossil fuel–intensive sectors.

### Policymaking and Governance in the EU

Contrary to the claims of many Euro-sceptics, the EU lacks a clear center of power driving its policy agenda. With (at the time of this writing) 28 Member States, several large institutions—the European Commission, the Council and the European Parliament—and crisscrossed by myriad formal and more informal networks, it is an open question as to who in fact “governs.” Member States make up the Council of the European Union (when represented by national ministers with responsibility for particular areas, such as environment) and the European Council (consisting of heads of state or government). The presidency of the Council that sets the daily agenda rotates every six months among Member State governments. The Council allows the European Commission the power to act as “guardian” of what are perceived to be Europe-wide interests, by proposing legislation that, if adopted, is binding across all countries. By doing so, situations in which conflicting national regulations impede the free movement of goods across borders in the Single Market—the facilitation of which may be regarded as the EU’s core mission1—can be avoided.

The Commission is divided into Directorates-General (DGs), akin to national ministries. These include, since 2010, DG Climate Action, which has joined separate DGs for Energy and for Environment. Although appointed to represent the interests of the EU as a whole, the 28 commissioners—one from each Member State—also serve as a clearinghouse for the interests of the Member States in policy formulation. The Commission also acts as the EU’s external representative (Van Schaik, 2010; Vogler, 2011) together with the current and incoming Council presidency.

In developing proposals for legislation, the Commission normally consults national governments and stakeholders (Wallace, Pollack, & Young, 2015). Only if such proposals are jointly adopted by national governments (in the Council) and the European Parliament does EU-wide legislation come into effect. In contentious areas, “issue linkage” (combining different issues for joint settlement) and “side-payments”—whereby “winners” can compensate “losers” so that all benefit—are often required to overcome distributional obstacles to reach negotiated outcomes (Skjaerseth, 2014). The rotating presidency of the Council is influential in deciding which items in the legislative pipeline are pushed forward toward adoption. For its part, the European Parliament (directly elected since 1979) is essentially a reactive chamber that amends policy proposals from the Commission and must negotiate with the Council to see its preferences realized in final legislative texts. It nevertheless acts as a key entry point to the legislative process for many actors who might otherwise be excluded.

Once legislation is adopted, forms of free-riding, nonimplementation, or discrimination by Member States can be sanctioned by the European Court of Justice, potentially through fines (Krämer, 2013). However, the EU’s relatively limited enforcement capacity often opens up “implementation gaps” (Jordan & Tosun, 2012). Targets may go unmet because delivery mechanisms have not been specified, as the Europe 2020 growth strategy prominently testifies (EPSC, 2015). In sectors such as environment and climate protection, once legislation has been adopted, calls may emerge for it to be reformed in order to lift perceived regulatory burdens on industry (Jordan, Bauer, & Green-Pedersen, 2013a).

The depth and pace of integration over the last 50 years is such that today, the boundary between national policy and European has become blurred in many sectors. Cooperation between actors at subnational level is also encouraged, as in the case of the Covenant of Mayors: a movement of European cities committed to developing energy efficiency and renewable energy, and its sister initiative Mayors Adapt, encouraging adaptation to the impacts of climate change (Covenant of Mayors, n.d.).

In this multi-level policymaking system, environmental concerns have shifted from being a marginal aspect to a high-profile area which, unlike many other EU policy areas, generates relatively strong public support. Environmental issues in general, and climate change in particular, lend themselves logically to supranational rather than national policy. Periodic changes to the EU’s founding Treaties have provided more and more legal authority (or “competence”) to act (see, e.g., Benson & Jordan, 2008). But in some areas particularly germane to climate policy, Member States have insisted on preserving a high degree of autonomy—“subsidiarity” in the language of the EU—meaning that the Commission’s competence to propose common policies is still relatively limited (Grubb & Gupta, 2000) in relation to energy, taxation, and land-use planning. The Maastricht Treaty (ratified in 1993) extended qualified majority voting to all environmental areas, but retained the need for unanimity on tax and energy measures. Although the 2007 Lisbon Treaty extended the EU’s energy policy competence somewhat, national sensitivities over energy security are such that Member States have insisted on the right to determine the mix of sources they rely on, and decision-making on the most important elements of climate and energy policy has continued to require unanimity.

Recent literature (Braun, 2014; Marcinkievicz & Tosun, 2015) has highlighted how enlargement of the EU in 2004 to include eight new members from formerly communist central and eastern Europe has introduced a new and increasingly problematic dimension for European climate policy. The EU’s norms and values regarding the importance of climate protection, developed since the late 1980s, and underpinned by well-developed social movements and growing clean-tech industrial sectors in countries such as Germany and the United Kingdom (Wurzel & Connelly, 2011), are for the most part not shared by policymakers in these new Member States. As a result, the extent of the EU’s policy ambition has at times been limited, particularly by increasingly assertive opposition from the so-called Visegrád Four: Poland, Hungary, the Czech Republic, and Slovakia (Fischer, 2014). Policymaking is also constrained by an at times overriding concern with minimizing the supposed burden of regulation, in the interests of industrial competitiveness, and jobs (Jordan et al., 2013a). This perennial concern has become even more acute since the 2008 financial crisis (Čavoški, 2015).

### Drivers and Milestones of Climate Policy Development

Since the late 1980s, when the issue began to emerge on the political agenda, climate policy development has been driven by a mixture of factors, presenter in various combinations in the history of different policy instruments. In addition to the need to avoid national differences in policy causing distortions of the EU’s internal market, noted above, these include: the potential for climate action to enhance the often shaky legitimacy of the wider project of European integration (see, e.g., Warleigh Lack, 2011); the desire to develop a distinct European identity on the global stage; the need to improve energy security, in particular in relation to Russian gas supplies (Buchan, 2010); or to increase competitiveness of European industry through a program of “ecological modernization,” which necessitates relatively ambitious regulation (Szarka, 2012). At different times, different actors throughout the EU have adopted a policy-entrepreneurial role to highlight these opportunities and skillfully overcome potential obstacles to policy development.

Regarding the potential of climate policy to develop a specific European identity on the global stage, the EU has indeed at times increased its standing, often clearly distinguishing itself from the positions of other actors such as the United States. It has, in general, been an influential voice in global-level negotiations, especially in its promotion of the 2°C warming limit, first agreed upon by EU environment ministers in 1996 (Tol, 2007), and advocacy of legally binding emission reduction “targets and timetables,” multilaterally negotiated and agreed through the UN Framework Convention on Climate Change (UNFCCC) (Jordan & Rayner, 2010). But in turn, its own policy has been shaped by developments at global level. The “compliance pull” (Oberthür & Taenzler, 2007) and incentives associated with international treaty commitments have increased the willingness of Member State governments to implement innovative policy instruments of a kind that would not have diffused horizontally between states as easily. It is important, therefore, always to view the 28 Member States as existing under the framework of EU policymaking, which in turn is “nested” in the wider global regime (Skjaerseth & Wettestad, 2002).

In the context of the global regime, the EU’s capacity to develop relatively ambitious policy has derived from a phenomenon that has been dubbed “competitive multi-level reinforcement” (Schreurs & Tiberghien, 2007). Since the mid-1990s, actors operating at different levels of governance have become adept at “passing the baton” (Schreurs & Tiberghien, 2007, p. 25) of leadership from one to another, in such a way that potential veto points have not been as significant as might have been imagined. In this way, the EU’s open and pluralistic governance structure—its “polycentricity” (Rayner & Jordan, 2013)—can be regarded as beneficial. Policymakers were apparently less troubled than they would be in a single national government by electoral concerns and the vicissitudes of public opinion. However, EU climate policy development should not be regarded as a linear and consistent progression over time. The early 2000s should be seen as a time when the circumstances for EU climate policy leadership were particularly auspicious (Jordan, van Asselt, Berkhout, Huitema, & Rayner, 2012) in a way that may not endure.

#### Kyoto (Policy Toward 2012)

The December 1997 Kyoto Conference of the Parties (COP) to the UNFCCC represents a major milestone in EU, as well as global, climate policy. With the talks approaching, the EU moved beyond a set of policies that had been in a sense “symbolic” (Oberthür & Dupont, 2011) to negotiate a significant internal “burden sharing” agreement, among its then-15 members. This arrangement allowed less developed Member States “headroom” to grow economically and increase their emissions, while quite substantial reductions were made by the richer, more environmentally progressive Member States, the overall effect being to reduce emissions by 15% by 2012 from 1990 levels. It defied expectations that such burden-sharing arrangements were unlikely and provided the EU with a basis on which to advocate a 15% reduction by industrialized countries as a whole (Ringius, 1999). This development marked a significant landmark in the evolution of EU climate policy, even if subsequently the Kyoto Protocol required a lesser, 8% reduction on the same timescale. The Protocol’s “targets and timetables” approach very much reflected the EU’s traditional, regulatory approach to governing. But the Treaty also saw European negotiators swallow their opposition to “flexible mechanisms”—emissions trading, the Clean Development Mechanism (CDM), and Joint Implementation (see Oberthür & Ott, 1999)—that were suspected of providing a means for the United States in particular to evade domestic emission reductions.2 By dropping its opposition, the EU was able to secure U.S. agreement in Kyoto—though ironically not, as it happened, subsequent ratification of the Protocol (Schreurs, Selin, & VanDeveer, 2009).

In the aftermath of Kyoto, Member States acknowledged that their own national efforts combined would be insufficient in themselves to deliver the 8% reduction. To ensure its delivery, in March 2000 the Commission began to develop “common and coordinated policies and measures,” using a multi-stakeholder process known as the European Climate Change Programme (ECCP). The major policy to emerge at this time was the EU emissions trading scheme (ETS), under which about 40% of the EU’s total GHGs came under a system in which allowances to emit would be allocated and made tradable in a carbon market, in order to incentivize the most cost-effective forms of abatement (Skjærseth & Wettestad, 2010). Given the opposition from both Member States and industry to the idea of auctioning allowances (in accordance with the “polluter pays” principle), free allocation based on historical emissions (“grandfathering”) emerged as the standard approach (Skjærseth & Wettestad, 2010). In the initial phase, Member States were given responsibility for producing national allocation plans, which set out the total cap for domestic emissions and the more specific distribution among eligible installations. However, the Commission could reject plans deemed insufficiently ambitious in view of the EU’s Kyoto commitment.

Internationally, while the EU was taking steps to ensure it could deliver its Kyoto commitments, and demonstrating how flexible mechanisms could be implementing, it was also pressing for the required number of parties to ratify the Protocol, in order for it to come into effect. Once President Bush had announced U.S. withdrawal (in 2001), the EU worked to secure Russian ratification in 2004, allowing the Protocol to enter into force. As a quid pro quo for Russian ratification, the EU agreed to support Russia’s membership of the World Trade Organization and to make some adjustments to the terms on which Russian gas entered the European Single Market (Bretherton & Vogler, 2006).

#### Copenhagen (Policy Toward 2020)

The adoption of the ETS, and a series of other instruments that followed, signaled a trend toward deeper, faster, and smoother climate policy harmonization than had been possible in the 1990s (Jordan et al., 2012). A consensus looked to be in place around the idea that the EU should lead by example at global level and stood to gain first-mover advantage from initiating a low-carbon “post-industrial revolution” (ENDS No. 384, p. 26). Between 2003 and 2009, eight key pieces of legislation were adopted (see Table 1). The initial ETS directive, and its extension to cover aviation, were followed by four proposals that together comprised the 2009 climate and energy package. These were a directive providing for a new phase of the ETS, extending trading from 2013 to 2020, introducing a common, annually declining cap for the whole EU, and phasing in auctioning to allocate allowances; a regulation providing for differentiated “effort-sharing” targets to reduce emissions in sectors not covered by emissions trading (such as transport, housing, agriculture); a directive setting out the world’s first legal framework for safe carbon capture and storage (CCS); and a directive including targets for renewable energy sources. Legislation on fuel quality and limiting CO2 emissions from cars was negotiated separately.3 The climate and energy package was designed to implement commitments endorsed by European leaders in 2007 that, by 2020, overall emissions should be cut by 20% from 1990 levels, 20% of total energy consumption should come from renewable sources (corresponding to about 34% of electricity), and the EU’s energy consumption be reduced by 20% (Jordan, Huitema, van Asselt, Rayner & Berkhout, 2010; Oberthür & Pallemaerts, 2010).

#### Table 1. EU Climate Policy Instrument Mix

Principal policy focus

ECCP and related actions (1998–2006)

Climate and energy package and additional action (2007–2010)

GHG emissions

EU ETS Directive (2003)

EU ETS review (2008/9)

Fluorinated gases Regulation (2006)

Fluorinated gases Regulation review

Voluntary agreement with car manufacturers (1998)

Vehicle emissions Regulation (2009)

Effort Sharing Decision (national non-ETS targets) (2009)

Carbon Capture and Storage Directive (2009)

Renewable energy

Renewable Energy Directive (2001)

Renewable Energy Directive (2009)

Directive on the promotion of biofuels and other renewable fuels for transport (2003)

Fuel quality Directive (2009)

Energy efficiency

Energy Services Directive (2006)

Energy Efficiency Directive (2012)

Combined Heat and Power Directive (2004)

Further implementation/legislative review of existing legislation

Ecodesign of Energy-Using Products Directive (2005)

Energy Labeling Directive (1992)

Energy Performance of Buildings Directive (2002)

Rapid adoption of the climate and energy (“20 20 by 2020”) package was prioritized by an EU policy elite now convinced of the necessity of, and benefits from, European leadership, and that others could be persuaded to raise their ambition as part of a post-Kyoto successor agreement due to be negotiated at the Copenhagen COP in December 2009. To Member State leaders such as the United Kingdom’s Tony Blair and Germany’s Angela Merkel, leadership allowed Europe to distance itself from unpopular positions adopted by the US and to align themselves with the growing consensus that the costs of climate change mitigation were minor compared to the damages from inaction that would be avoided later (Stern, 2006). Moreover, it allowed concerns in more progressive Member States over competitive disadvantage from imposing higher costs on national industries to be addressed by EU-wide actions to create a more “level playing field.” Less climate-conscious East Europeans, who had been hit by the withholding of supplies by Gazprom in early 2006 (and who, like Poland, were highly protective of coal-reliant power sectors4) were won over by the promise of reduced energy dependence on Russian gas (Boasson & Wettestad, 2013; Strambo, Nilsson, & Månsson, 2015) and other side payments built into the package. These compensated poorer Member States in three ways:

By setting different national targets in the non-ETS sectors based on GDP/capita

By setting different national targets for the share of EU energy consumption to be achieved by renewable energy based on a combination of GDP and flat-rate increase in the share of renewable energy

By using auctioning revenues (ETS) to compensate lower-income member states

The combination of these three policies covering different issues ensured that burden sharing (now called effort sharing) was perceived as sufficiently fair. In the revised ETS, access to CDM credits and free allowances for energy-intensive industry sectors were designed to limit potentially negative effects on competitiveness (Skjaerseth, 2014).

The climate and energy package marked the first time that CCS was recognized by the Commission as an essential part of Europe’s pathway to decarbonization. CCS technology entails a variety of processes for extracting CO2 from large point sources and permanently storing it underground. High energy and financial costs make the technology uneconomic without specific policy interventions to support it. The package established a CCS policy framework drawing funds from auction revenues under the ETS to fund early demonstration projects.5 In negotiations over the package, the European Parliament secured 300 million allowances from the ETS new entrants’ reserve (“NER300”) to co-finance up to 12 CCS demonstration projects and other renewable technologies, linking the new CCS legislation to the ETS, in return for accepting a greater proportion of free allowances (demanded by Germany) (Skjaerseth, 2014).

Agreement of the package, in an enlarged Union of diverse Member States, in many respects marks a high point for EU climate policy. At the 2009 Copenhagen COP, EU policymakers expected the rest of the world to regard it as a positive example and to welcome its adoption of an aspirational emission reduction target of 80–95% for 2050 (Council of the European Union, 2009), reflecting the most recent scientific assessment by the Intergovernmental Panel on Climate Change (IPCC, 2007). As part of its negotiating strategy, the EU committed to increase its domestic reduction target from 20 to 30% by 2020 if its industrialized world counterparts also made significant pledges. In the event, EU negotiators found themselves sidelined (Parker & Karlsson, 2010) by countries whose shares of global emissions were considerably larger and whose willingness to commit to absolute emission reduction was far less, the profoundly disappointing Copenhagen Accord being the result.

Copenhagen—privately described by the president of the European Council Herman van Rompuy as an “incredible disaster,” in which the EU was “totally excluded and mistreated” (Guardian, 2010)—can be seen as a turning point in the EU’s frontrunner approach. When newly appointed Climate Commissioner Hedegaard proposed a unilateral increase in the EU’s mitigation target to 30% (despite the predefined conditions not being met), the idea was flatly rejected not only by Central and Eastern European Member States but also others in the midst of the post-2008 economic crisis; even Germany had no clear position (Fischer & Geden, 2015). EU polic makers began to move away from using the UNFCCC negotiations as a means of promoting internal policy development (Fischer & Geden, 2015). New central and eastern European Member States were no longer prepared to accept such a strategy, especially with the effects of the economic crisis becoming more evident.

In 2011, although EU leaders endorsed the aspirational objective of reducing Europe’s GHG emissions by 80–95% by 2050 (European Council, 2011), this continued to be conditional on necessary reductions being collectively achieved by developed countries. Poland, which since joining the EU as part of the 2004 “enlargement” has expressed particular scepticism toward climate policy (Marcinkiewicz & Tosun, 2015), rejected the Commission’s proposed low-carbon 2050 “roadmap” (European Commission, 2011), which set out broad measures to achieve an 80% GHG reduction target for 2050, on the grounds that it would involve raising the EU’s 2020 target to 25% (ENDS Report 437).

#### Paris (Policy Toward 2030)

After the Copenhagen debacle, the EU regained some prestige two years later through negotiation in December 2011 of the “Durban Platform.” This agreed to work on a new and comprehensive agreement—involving mitigation actions by all parties, sufficient to prevent mean temperature rise from exceeding 2°C, and a new focus on adaptation—in time for the 2015 Paris COP. The EU’s stated ambition was a new climate protocol, “ambitious, legally binding, multilateral rules-based with global participation and informed by science” (European Union, 2013).

At the same time, however, the EU’s international credibility was being undermined by the chronic inability of its “flagship” ETS to deliver a price on carbon sufficient to motivate low-carbon investment and innovation.6 The problem was caused by a surplus of allowances, itself a product of the economic crisis (which had an unanticipated emissions-reducing effect), high imports of international credits, and, to some extent, successful renewables policy. Eventually, the need to secure a credible position ahead of the Paris COP was one reason a “rescue” of the ETS proved possible, through the agreement in 2015 to establish a market stability reserve (Wettestad & Jevnaker, 2016). Hundreds of millions of surplus carbon allowances can now be withdrawn from the market and placed into the new reserve, allowing supply–demand imbalances to be managed and protection from unexpected and sudden demand shocks.

The EU also needed to agree new emission reduction targets out to 2030, which could then serve as a contribution to a new round of global-level negotiations. Internationally, it had been agreed that parties to the UNFCCC should submit “intended nationally determined contributions” (INDCs) by March 2015, the adequacy of which would be reviewed in view of the 2°C target before a new global deal was reached. At their October 2014 summit, EU leaders agreed to a 2030 Climate and Energy Policy Framework, setting targets for an “at least” 40% reduction in overall emissions (from 1990 levels), 27% of overall energy consumption to come from renewable sources, and a 27% improvement in energy efficiency compared to business-as-usual (European Council, 2014). International emission reduction credits would not count toward the 40%.

Consent of central and eastern European Member States to the 2030 targets was ensured only through substantial financial compensation and exemptions. For example, from 2021, emissions allowances in the range of 12% of the total annual EU output will be distributed to Member States with below average GDP. Member States can then sell these and are largely free to dispose of the proceeds as they choose. In addition, the central and eastern European Member States may continue allocating 40% of their allowances in the electricity sector for free, effectively insulating them from any decarbonization incentive effect.

The Commission argued that 40% in 2030 would put the EU on course to achieve its longer-term 80–95% reduction goal; the trajectory implied is shown in Figure 1. The ambition of the targets for renewables and energy efficiency is at the lower end of the spectrum of negotiating positions—another concession to the central and eastern European Member States. Nevertheless, agreeing the 2030 package allowed the EU to meet the INDC submission deadline. Arguably, leaving the discussion any longer could have been fatal, given the many calls on leaders’ attention presented by renewed economic problems and the worsening migration/refugee crisis.

The 2030 package testified to how energy and climate policy was entering a more intergovernmental, or “renationalized,” phase (Fischer, 2014). Making the renewables target “binding at EU level,” but not disaggregating it by Member State, represented a departure for EU climate policy, a compromise with those Member States, such as the United Kingdom, the Netherlands, and Poland, who have consistently opposed binding national targets as unnecessarily burdensome (Rayner & Jordan, 2011). A new governance mechanism was proposed to ensure that national plans for renewables and energy efficiency and the overall EU strategy, developed as part of a new Energy Union concept, correspond with one another.

The Energy Union concept dates from April 2014, when then Polish Prime Minister Donald Tusk used Poland’s presidency of the Council to propose a new agenda whereby energy security would take priority over climate and competition-related objectives. The concept called for region-wide purchasing of gas, linking and strengthening the EU’s electricity transmission systems, and making “full use” of EU fossil fuel stocks, including coal and shale gas (Tusk, 2014). Subsequently, the Commission steered the agenda back toward climate goals when it named “Energy Union with a forward looking climate policy” as a strategic priority for the next five years (European Commission, 2015a).

The celebrated Paris Agreement of December 2015 does not set targets and timetables in the top-down manner previously favored by the EU. Instead, it relies on transparency, peer pressure, and national accountability to ensure that pledges made through the INDCs are implemented. Recognizing the need for greater ambition after Paris, the Commission strongly and successfully advocated an every-five-year review of progress under UN auspices to assess the prospects of remaining under 2°C, and a “ratchet,” or “ambition mechanism,” to enhance national mitigation plans. The Commission holds that global emissions need to fall by at least 60% below 2010 levels by 2050, equivalent to the EU’s long-standing objective of halving global emissions by 2050 compared to 1990 (European Commission, 2015b). Despite the considerable satisfaction expressed by EU negotiators, however, nothing in the agreement actually compels signatories to significantly increase their ambition level every five years; nor, for that matter, are rich countries compelled to provide the finance they have offered.

One surprising outcome of the Paris Agreement was its endorsement of 1.5°C as an aspirational temperature goal, in view of the damage to small island states and others associated with 2°C of warming. With even 2°C recognized as probably requiring the deployment of as yet untested negative emissions technologies (Williamson, 2016), such as bioenergy with carbon capture and storage (IPCC, 2014), the EU’s Climate Commissioner Cañete felt obliged to comment that further research would be needed into such technology (Neslen, 2015).

The literature on the EU’s leadership in international climate policy distinguishes between structural, directional, instrumental, and idea-based types (Grubb & Gupta, 2000; Parker & Karlsson, 2010). Structural or “power-based” leadership (Vogler, 2011) involves the use of material incentives such as finance to achieve desired outcomes. Directional leadership entails leading by example with bold unilateral policymaking, in anticipation of a demonstration effect. Instrumental leadership involves the linkage of issues and coalition building to reach agreements. Finally, idea-based leadership, akin to the concept of policy entrepreneurship, entails exerting an impact on how international policy agendas are defined.

The EU’s diplomacy with Russia to bring about the entry into force of the Kyoto Protocol, and its commitments to finance mitigation and adaptation in developing countries,7 testify to a degree of structural leadership capacity. As the world’s biggest provider (responsible for more than half) of official development assistance, the EU is the largest contributor of climate finance to help developing countries adapt to climate change and develop on a low-emission path. From this investment, the EU enjoys a relatively high degree of influence and credibility with developing countries. In other, perhaps more significant respects, however, the EU’s structural leadership has been shown to be limited, as when it attempted in 2012 to include all flights originating or ending outside the EU in the ETS, which would have required foreign airlines to purchase allowances. In doing so, the Commission was hoping to spur efforts to agree a global mechanism to reduce the aviation sector’s previously uncontrolled emissions. However, Russia, China, and Saudi Arabia, among others, decried a perceived infringement of their national sovereignty, and, in the face of threats of retaliatory trade sanctions, the Commission agreed to suspend the measure while solutions were pursued multilaterally (Marshall, 2013). Elsewhere, the EU has apparently not exercised significant leverage in its own “backyard,” where signatories to the Energy Community Treaty (Albania, Bosnia and Herzegovina, Macedonia, Kosovo, Montenegro, Serbia, Moldova, and Ukraine) have made little effort regarding renewable energy and energy efficiency targets, and the Commission has put little pressure on them to do so (Mileusnic, 2015).

With the bilateral relationship between the United States and China increasingly key to developments in the global regime, the EU’s influence seems set to decline. By 2015, China and the United States together accounted for around 50% of total GHG emissions, while the EU’s share had fallen to around 11% (measured in conventional territorial terms).8 Its relative lack of economic power, especially in comparison to the United States and China, means that the EU has concentrated on offering directional leadership in terms of developing innovative instruments and setting ambitious goals for itself. As outlined above, this lead was offered strongly in the lead-up to Copenhagen, but was not followed. But the EU’s subsequent inability to agree internally to raise its emission reduction to 30% in the immediate aftermath of Copenhagen is an indictment of faltering ambition, particularly as analysis showed that the effects of recession were making this target reachable at a cost only marginally higher than the 20% cut had been estimated to cost (ENDS Report 445). The 40% by 2030 target may be regarded as inadequate as a contribution to global decarbonization on the scale required to respect the 2°C warming target, particularly if judged on a global equity criterion (Peters, Andrew, Solomon, & Friedlingstein, 2015). That said, despite the EU’s obvious failure to secure sufficiently ambitious emission reduction targets, internally or globally, directional influence is identifiable in other respects, especially in the case of the ETS. Here, Commission staff have supported Chinese policymakers in designing and implementing an emissions trading scheme in the light of European experience (Hübler, Voigt, & Löschel, 2014).

Instrumentally, the Durban Platform and the Paris Agreement show a continuing ability on the part of the EU to broker deals while maintaining internal coherence. Before and during the Paris COP, the EU’s credibility among developing countries allowed it actively to encourage—and arguably even lead—the formation of an influential “high ambition” coalition of developed and developing countries, calling for temperature rise to be limited to “well below 2°C” (Oroschakoff, Stefanini, & Restuccia, 2015) and for a progressive ratcheting of ambition. But to reach global agreement, the EU has noticeably relaxed its vision of a targets-and-timetables approach, meaning that the temperature target stands little chance of actually being realized.

### A Coherent and Effective Policy Mix?

Since the late 1990s, the EU has developed a range of climate-related policies and targets that are increasingly distinct from national ones, and sometimes globally innovative. They encompass a wider array of instruments (e.g., market-based, informational, and voluntary, as well as regulatory) than has traditionally been the norm in EU environmental policy. Table 1 sets out key examples. For the majority of Member States, most if not all their national climate policy is now made in, or in association with, the EU.

Monitoring data reveals that EU GHG emissions decreased by 23% between 1990 and 2014 and reached the lowest levels on record—even while the European economy grew by 46% over the same period (EEA, 2015). Projections show that the EU is heading for a 24% reduction by 2020 with current measures in place, or a 25% reduction with additional measures already being planned in Member States (EEA, 2015). The self-imposed 20% reduction target for 2020 begins to look distinctly underambitious; the 40% reduction by 2030, implying just a 1% annual cut, threatens a wasted decade.

How far these reductions have been the result of effective EU policy and to what extent other serendipitous factors, such as economic restructuring and recession, have been at work is a matter of debate. So too is whether the policy mix achieves emission reductions in an efficient and cost-effective way, when interactions between instruments at both EU and national level—in climate policy and in energy policy more widely—are taken into account. It is important to recognize how EU energy policymakers are simultaneously managing several important agendas, including energy security and market liberalization as well as climate protection, while also enforcing internal market rules and the EU’s growth aspirations. Whether these agendas are aligned with one another and are being pursued in a coordinated manner emerges as a fundamental question (Strambo, Nilsson, & Månsson, 2015; for a wider discussion of the dilemmas of contemporary energy policy, see Tosun, forthcoming).

On the first question, a surprising lack of policy monitoring and evaluation infrastructure throughout the EU makes for considerable uncertainty over policy effectiveness (Hildén, Jordan, & Rayner, 2014). Critics have long highlighted the role of economic and energy market restructuring in allowing the United Kingdom and Germany in particular to achieve up to 50% of the emissions savings recorded (Eichhammer et al., 2001). This has enabled a degree of cost-free posturing (Kerr, 2007). More recent analyses have suggested that without the combined effect of the EU ETS, instruments to promote renewable electricity and environmental tax reforms, CO2 emissions in 2008 would have been around 5% higher than 1990 levels, rather than the 7% reduction actually observed (Meyer & Meyer, 2013).

On the question of the economic efficiency of the policy mix, critics have noted the arbitrary nature of the targets in the 20-20-20 package (Helm, 2009; Stavins, 2014) and how they were shaped by political feasibility considerations and the EU’s experience with monetary union and the earlier completion of the internal market. Packages tend to reflect the lowest common denominator of actor preferences and the outcomes of the interaction between the component parts depend critically on the conceptual coherence. Once an ETS cap on emissions is in place, flanking policy instruments are either irrelevant (if not binding) or counterproductive (if they are) (Stavins, 2014)—unless, that is, they address a market failure that is not addressed by the price signals from the cap-and-trade mechanism. When binding, any additional emissions reductions achieved in the electricity sector under the “complementary” measure (e.g., renewables targets) will cause electricity generators to have allowances surplus to requirements. These will be sold on, perhaps to emitters in other sectors, with the result that emissions there will be greater than otherwise. The emissions-reduction impact of the renewables policy is thereby nullified.

Such arguments rest, however, on notable assumptions, and in particular the assumption that increasingly stringent targets in the EU ETS—sufficient to raise the carbon price to the extent that renewable energy targets become unnecessary—are politically feasible. But emission targets and emissions trading systems are highly vulnerable to industry pressure, leading other analysts (such as Buchan, 2010) to defend separate renewables targets on the grounds that they have actually delivered more innovation than the ETS, significant CO2 abatement and cost decreases through learning-by-doing. Without renewables support policies, especially those in Denmark, Germany, and Spain, the massive cost decreases in solar photovoltaics and wind during the last decades would not have taken place.

The weakness of the carbon price is one reason why progress on CCS has been slow. The expected date for the first round of demonstration plants, 2012, passed without action. Problems with the NER300 fund (extracted from ETS auctions) were compounded by questions over the permanency of storage in geological formations, public opposition, and a lack of incentives for energy suppliers to act. Of the 39 projects that NER300 funded, 38 were renewables projects; only one was CCS. National schemes have fared little better. Meanwhile, commercial-scale CCS plants are operating in the United States and Canada, where more investment has been made in research and development, while China has announced it will achieve this by 2020. R&D is an area where the Commission would clearly like to have a larger role, but it is hamstrung by the national approaches of Member States (notably the United Kingdom) and lack of resources (Helm, 2009).

A further area of controversy in terms of policy effectiveness has centered on the EU’s promotion since 2003 of biofuels for transport, and its slow response to growing evidence of social and environmental harm caused beyond European borders, particularly through the indirect land-use change (ILUC) caused by large areas being dedicated to biocrops (Anderton & Palmer, 2015). The 2009 Renewable Energy Directive included a target of 10% renewable energy in transport fuel by 2020. After years of controversy, it was agreed to limit to 7% the use of biofuels that compete with crops grown on agricultural land, while allowing member states to set lower national limits (Euractiv, 2015).

#### Adaptation and Climate Policy Mainstreaming

Since 2005, the perceived need to prepare for, and respond to, the impacts of climatic change has widened the scope of EU climate policymaking. In that year, a working group on climate impacts and adaptation was included in the ECCP (Rayner & Jordan, 2010), with a white paper (European Commission, 2009) and fully fledged strategy eventually emerging (European Commission, 2013). Acceptance has grown that key European economic and policy sectors, including agriculture, forestry, water, coastal zone management, biodiversity, and health, will experience effects to which societal actors will have to adapt. While these sectors tend to be a different set from those most involved in mitigation, the energy sector is also at risk from climate impacts—including its ability to decarbonize (Pittock, 2011). Since 2005, the EU has also pushed for a greater emphasis on adaptation in the global regime, expressing its willingness to finance efforts in developing countries (European Commission, 2014a).

In comparison to its efforts on mitigation, and to pioneering action by a number of Member States, the EU was slow off the mark. One obvious reason was that policymakers feared that taking adaptation more seriously could undermine the EU’s leadership position on mitigation (Rayner & Jordan, 2010). Another was that the EU lacked the competence to act in the critical area of land-use planning, where Member States guard their sovereignty particularly closely. In the EU, the question of legal competence is, as we have noted, hugely important.

The adaptation strategy eventually adopted (European Commission, 2013) is cautious in its interpretation of EU competences in the field, concentrating on three pillars:

1.

Promoting action by Member States: The Commission will encourage all Member States to adopt comprehensive strategies and will provide funding to help them build up their adaptation capacities and take action. It will also support adaptation in cities through the voluntary Mayors Adapt initiative (see Covenant of Mayors, n.d.).

2.

“Climate-proofing” action at EU level by further promoting adaptation in key vulnerable sectors such as agriculture, fisheries, and cohesion policy, ensuring that Europe’s infrastructure is made more resilient, and promoting the use of insurance against natural and man-made disasters.

3.

“Climate-proofing” and “mainstreaming” are now viewed as key elements in EU climate policy, reflecting the view that many policy sectors need to play a part in increasing societal and ecosystem resilience to climate change impacts, as well as reducing GHG emissions. Simply put, mainstreaming involves the design and implementation of all policies to take account of climate-related impacts, positive and negative, and facilitate adaptive responses at different levels of governance (Brouwer, Rayner, & Huitema, 2013). To this end, the 2009 white paper committed to “a review of how policies could be re-focused or amended to facilitate adaptation” (European Commission, 2009). As part of this drive, the Commission also proposed that fully 20% of expenditure should be climate-related (earmarked for either mitigation or adaptation) in the financial framework covering 2014–2020 (European Commission, 2010).

Underlying such new commitments, however, is a degree of uncertainty about what climate-proofing or mainstreaming involves, what steps it requires, and what the effects could be in terms of emissions reduction and improved climate resilience. Whether the 20% budgetary ambition can be reached is a moot point. Setting such a target runs the risk of encouraging relabeling certain expenditures out of convenience. If this is not to be the result, significant improvements will be required in the capacity of managing authorities to “absorb” the funds, i.e., to find suitable activities to finance. Arguably equally worrying, while Commission proposals for the European Regional Development Fund, for example, put forward quantified earmarking for energy efficiency and renewable energy, no such commitment was made for climate change adaptation, raising the possibility of competition amongst different climate objectives (Hjerp et al., 2012). Thus, although often couched in technical language, profound political challenges at multiple levels of governance lie at the heart of the mainstreaming agenda (Rayner & Jordan, 2013; van Asselt, Rayner, & Persson, 2015).

### Conclusion: Future Controversies and Challenges

This chapter has stressed the overall successes of EU climate policy, noting how obstacles to increased ambition have grown since 2009. As the EU has become more polarized between largely northern, more environmentally conscious Member States and central and eastern European governments (led by Poland), common political will for ambitious climate policy has become scarcer. Even the European Parliament’s green credentials have been tarnished (Burns, Carter, Davies, & Worsfold, 2013). In the near term, proposals due in 2016 from the Commission will be hugely contested in several key policy areas, including updates to the ETS, the Effort Sharing Decision (for non-ETS emissions), Renewable Energy and Energy Efficiency Directives, new emissions standards for passenger cars, and the Energy Union governance mechanism. After 2009, fears of the emergence of a two-speed decarbonization process in the EU grew, particularly in conditions of continuing economic austerity and the absence of a strong global-level framework. But after Paris, hopes were raised that widespread buy-in to emission reduction demonstrated by the EU’s competitors could be sufficient to overcome objections and usher in a new period of relatively ambitious European climate policy. This concluding section takes stock of this emerging landscape.

The increasing assertiveness and “political emancipation” of the Visegrád states (Fischer, 2014), as well as Bulgaria and Romania, and their insistence on national sovereignty over their energy mixes has underpinned a trend toward more intergovernmental decision-making in climate policy. The immediate challenge for the EU is to recognize this reality and provide a degree of flexibility to Member States, while still ensuring that collectively they can deliver the EU’s goals and offer a sufficiently certain framework for investors after 2020. The Commission has proposed an Energy Union governance framework under which each Member State develops its own “National Climate and Energy Plan” to contribute to the EU’s 2030 renewable energy and energy efficiency goals (European Commission, 2014b). These plans are due to reflect national circumstances and competences and be monitored in terms of progress, with the possibility of the Commission demanding more action if Member States collectively fall short of the EU’s goals. Arguably, the EU’s continuing credibility also requires that the 2030 range of targets is directly reflected in other EU-level policies and funding mechanisms, including the electricity and gas infrastructures that are prioritized as Projects of Common Interest and given funding through the Connecting Europe Facility, the European Fund for Strategic Investment, and other funding streams. Rules to make this happen, however, are not in place at the time of writing.

But the Paris outcome opens up the potential—and given how the concept was so strongly advocated by the EU, arguably also the obligation—for the 2030 targets to be further “ratcheted” up, and for stronger governance mechanisms to ensure that they will be met. The 2014 Council conclusions provided for a review of the “at least” 40% reduction target after the Paris COP. Without a “ratcheting up,” the 1% per year emissions reduction rate from 2020 to 2030 risks the EU falling behind its competitors in the development of new, low-carbon industries. The EU’s credibility as a global “high ambition” leader would take a severe blow. The difficulty in using Paris as a window of opportunity did not take long to become clear, however. Anticipating opposition from the Visegrad Four, the Commission began 2016 by ruling out any increase in the 40% by 2030 target, sparking an outcry from several Member State governments and green groups (Neslen, 2016).

In the longer term, the Commission’s commitment to contain temperature rise to “well below” 2°C, agreed in Paris, will also generate pressures for policy reform—at least if it is taken seriously. Taking it seriously will require the EU to prioritize the urgent development of negative emissions technologies like bioenergy with carbon capture and storage (BECCS). Experience to date with developing policy for each element of that mix—bioenergy and CCS—has been dogged by controversy and less progress than advocates of each originally hoped. Without breakthroughs on negative emissions, however, one of the main examples of the EU’s ideas-based leadership—the widespread recognition of the importance of halting global temperature rise at 2°C—is in danger of proving to be merely a chimera (UNFCCC, 2015).

• Boasson, E. L., & Wettestad, J. (2013). EU climate policy: Industry, policy interaction and external environment. Farnham, U.K.: Ashgate.
• Jordan, A. J., Huitema, D., van Asselt, H., Rayner, T., & Berkhout, F. (Eds.). (2010). Climate change policy in the European Union. Cambridge, U.K.: Cambridge University Press.
• Dupont, C., & Oberthür, S. (2015). Decarbonization in the European Union: Internal policies and external strategies. Basingstoke, U.K.: Palgrave Macmillan.
• Wurzel, R., Connelly, J. and Liefferink, D. (Eds.). (forthcoming). Still taking the lead? The European Union in international climate change politics. London: Routledge.

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### Notes

• 1. The EU is dedicated to implementing “four freedoms”: free movement of goods, services, people, and capital (Art 3, Treaty of Rome).

• 2. The Clean Development Mechanism was designed to help those countries with emission reduction targets under Kyoto (i.e., developed countries) in achieving compliance by allowing them to purchase offsets created by emission reduction projects in developing countries. It was also intended to assist countries hosting CDM projects to achieve sustainable development.

• 3. A pioneering voluntary agreement between the Commission and vehicle manufacturers, signed in 1998 (Jordan et al., 2012), was the centerpiece of the EU strategy to reduce CO2 from cars (COM (95) 689) and improve vehicle efficiency by 25% in 10 years. However, slow progress saw it replaced by a legislative intervention (Jordan & Matt, 2014).

• 4. Poland’s electricity system is 90% coal-dependent.

• 5. Member States determine the use of the revenue generated from the auctioning of their allowances, subject to constraints. Over half of the total allowance value should be directed to investments in combating or adapting to climate change, although such investment is not well tracked.

• 6. The price of EU allowances (EUAs) fell from almost 30€/tCO2 in mid-2008 to less than 5€/tCO2 in mid-2013.

• 7. At the climate conferences in Copenhagen (2009) and Cancún (2010), the EU and other developed countries pledged jointly to provide nearly $30 billion in “fast start” finance to developing countries in 2010–2012 to support immediate action on the ground. They also committed to mobilize$100 billion a year by 2020 from a variety of sources.

• 8. If emissions are calculated on a consumption basis, including the carbon embodied in the goods consumed within Europe, the EU’s share of emissions would be higher and its mitigation record would look somewhat less impressive (Helm, 2012).