The climate and energy package is a set of binding legislation which aims to ensure the European Union meets its ambitious climate and energy targets for 2020.
These targets, known as the "20-20-20" targets, set three key objectives for 2020:
The targets were set by EU leaders in March 2007, when they committed Europe to become a highly energy-efficient, low carbon economy, and were enacted through the climate and energy package in 2009.
The EU is also offering to increase its emissions reduction to 30% by 2020 if other major economies in the developed and developing worlds commit to undertake their fair share of a global emissions reduction effort. The European Commission has published a Communication analysing the options for moving beyond a 20% reduction by 2020 and assessing the risk of "carbon leakage".
The 20-20-20 targets represent an integrated approach to climate and energy policy that aims to combat climate change, increase the EU’s energy security and strengthen its competitiveness.
They are also headline targets of the Europe 2020 strategy for smart, sustainable and inclusive growth. This reflects the recognition that tackling the climate and energy challenge contributes to the creation of jobs, the generation of "green" growth and a strengthening of Europe's competitiveness.
It is estimated that meeting the 20% renewable energy target could have a net effect of creating around 417 000 additional jobs, while getting on track to achieve the 20% energy efficiency improvement in 2020 is forecast to boost net employment by some 400 000 jobs.
The climate and energy package comprises four pieces of complementary legislation which are intended to deliver on the 20-20-20 targets:
The EU ETS is the key tool for cutting industrial greenhouse gas emissions most cost-effectively. The climate and energy package includes a comprehensive revision and strengthening of the legislation which underpins the EU ETS, the Emissions Trading Directive.
The revision applies from 2013, the start of the third trading period of the EU ETS. Major changes include the introduction of a single EU-wide cap on emission allowances in place of the existing system of national caps. The cap will be cut each year so that by 2020 emissions will be 21% below the 2005 level.
The free allocation of allowances will be progressively replaced by auctioning, starting with the power sector. The sectors and gases covered by the system will be slightly widened.
Under the so-called Effort Sharing Decision, Member States have taken on binding annual targets for reducing their greenhouse gas emissions from the sectors not covered by the EU ETS, such as housing, agriculture, waste and transport (excluding aviation). Around 60% of the EU's total emissions come from sectors outside the EU ETS.
The national targets, covering the period 2013-2020, are differentiated according to Member States' relative wealth. They range from a 20% emissions reduction (compared to 2005) by the richest Member States to a 20% increase by the least wealthy (though this will still requires a limitation effort by all countries). Member States must report on their emissions annually under the EU monitoring mechanism.
Under the Renewable Energy Directive, Member States have taken on binding national targets for raising the share of renewable energy in their energy consumption by 2020. These targets, which reflect Member States' different starting points and potential for increasing renewables production, range from 10% in Malta to 49% in Sweden.
The national targets will enable the EU as a whole to reach its 20% renewable energy target for 2020 - more than double the 2010 level of 9.8% - as well as a 10% share of renewable energy in the transport sector. The targets will also help to cut greenhouse gas emissions and reduce the EU’s dependence on imported energy.
The fourth element of the climate and energy package is a directive creating a legal framework for the environmentally safe use of carbon capture and storage technologies. Carbon capture and storage involves capturing the carbon dioxide emitted by industrial processes and storing it in underground geological formations where it does not contribute to global warming.
The directive covers all CO2 storage in geological formations in the EU and lays down requirements which apply to the entire lifetime of storage sites.