Introduction Despite facing several challenges such as


ratification of the Paris Agreement by the European Union on the 5th
of October 2016 posed certain crucial challenges to its constituent members and
to the union as a whole. There was considerable pressure on the 28 member
states to ensure that each individual member state submits their ratifications
in unison to the EU to prevent unfair bias towards any other member state and hence
each member state is able to outline their individual contributions. During the
Kyoto Protocol Summit, the European Union had limited participation and had
also faced a shortfall of reaching a common goal in the Copenhagen summit.
Despite facing several challenges such as Brexit, the European Union has set
for itself ambitious targets and is at the forefront of fighting climate change
more proactively then its major counterparts such as the China and India.  

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Climate Action Plan

As per the commitment,
the European Union promises to reduce the Greenhouse Gas Emissions by 20% of
1990’s level, of its member states by 2020 and further subsequent reductions of
up to 40% by 2030 and finally a total reduction by 80% by 2050. These targets
might seem a bit overly ambitious however the European Union is well ahead of
its plan of achieving the 2020 target as it had already reduced 18% of its GHG
emissions by the year 2011. The following graph published in the European
Commission Climate Action “2050 Low Carbon Economy Policy” forecasts the
individual percentage reductions of the different sectors to ensure commitment
to the milestones.















European Union’s Contributions and

The European Union
was the first major economy to submit its intended contribution to the Paris
Agreement in March of 2015. The European Union had already initiated several
key initiatives such as the European Climate Action Plan which incorporates the
Emissions Trading Scheme and the investment in renewable energy technologies
besides the NER 300 funding program. These programs were then streamlined to
meet the objectives of the Paris Agreement. The following paragraphs elaborate
these initiatives in detail.

Energy Technologies

As per the
Europe’s 2020 strategy published by the European Commission, up to 20% of
European Union’s budget between 2014 and 2020 will be spent on funding projects
related to climate such as investing in cleaner, renewable sources of energy,
transport, agriculture, research as well more energy efficient buildings thus
improving the overall quality of life. This cumulates to a total amount of 180
Billion Euros which is the largest investment made by any party of the Paris


In the European
Union, cars and other means of transportation is responsible for producing over
15% (3% of which is aviation) of the overall Carbon Dioxide emissions which is
the main greenhouse gas. New legislation has been introduced to limit the
carbon dioxide emissions from new cars which favors investment in electric
powered. The new legislation such as enforcing capped carbon trading allowances
(part of phase 2 of the EU Emission Trading System) also curtails the dangers
of the growing emissions from the aviation industry which are projected to be
70% higher in the year 2020 than in 2005 and as projected by the International
Civil Aviation Organization (ICAO) even grow by a further 300 to 700 percent by
the year 2050.











Environmental Report: CO2 Emissions Trends from International Aviation,
2005 to 2050



in Low Carbon Technologies

In order to
meet the global climate change objectives, the EU understood the importance of
reinventing carbon intensive infrastructures and the development and deployment
of low carbon technologies, hence the EU decided to increase its funding to the
NER 300 program. As per the program, the European commission funded projects up
to a total value of €1.1 billion to 20 renewable energy projects (geothermal,
concentrated solar power, ocean, and photovoltaics) also including a pioneering
Carbon Capture and Storage (CCS) project. Other initiatives include the
European Economic Recovery Program and Strategic Energy Technology Plan (SET


Emissions Trading System

The European Union took a significant step in controlling its
Greenhouse Gas Emissions by introducing an Emissions Trading System in 2005.
The Emissions Trading System or the ETS developed is the world’s first and
largest (covering almost 75% of the global carbon market) emissions trading “allowances”
(currency for standardizing carbon emissions where 1 allowance = 1 ton of CO2e)
system which reinforces restrictions on the total amount of greenhouse gas
emissions by implementing a “cap and trade” principle. Initially the scheme
targeted reductions of GHG’s from mainly the Power Generation and Industrial
Sectors and later on targeted other sectors such as the transport and aviation
industries and is the European Union’s key tool for curtailing greenhouse gas
emissions from large scale facilities.

The total amount of allowable emissions from all the participating
installations are capped and allowances for emissions are then allocated or
auctioned, failing which the individual installation will incur huge penalties
or fines. These allowances can be traded for financial or production gains
between the different installations. An example of this is that if one industry
requires more production output and thus will exceed its allocated allowances
of emissions, it can purchase emission allowances from a second industry that is
willing to auction/sell its unused allowances for a financial gain, thus
keeping the total number of allowable emissions within the capped limits.

The system works by creating financial/economic incentives for the
participating industries/installations if they take measures for cutting down
the total amount of emissions produced as they can chose to auction/sell of
their remaining allowances at the highest prices to other participating
industries/installations or even credit the allowances for next year. Secondly
the total amount of capped allowances is reduced each year and thus fewer
allowances are issued to the participating industries which in turn invest in
cleaner and more efficient technologies and hence reduce its total emissions.

The European Union Emissions Trading Scheme is structured to operate
in four distinct phases with improved and stringent objectives being targeted in
each subsequent phases that are to be implemented during different time



Phase 1

The first phase
was experimental and was launched for the time period 2005 to 2007. It targeted
carbon dioxide emissions from mainly the power and industrial sectors
installations spread across the member states of the European Union. Over
12,000 power and energy intensive industrial installations participated and
this accounted for roughly 40% of the European Union’s carbon dioxide emissions.
Almost all of the allowances were allocated to business for free and failing to
comply with the allocated allowances incurred a penalty of €40 per tonne of
excess carbon dioxide.

There were some
certain challenges as during the first initial months of implementation, the
national registries were unable to settle transactions, yet during Phase-1, the
European Union was able to accomplish indispensable achievements such as the
unanimous agreement in establishing a price for carbon. This promoted better
cooperation in terms of freely trading allowances between the different member
states. Another significant highlight of Phase 1 was that it helped build the
framework needed to monitor, report and verify the emissions of the
participating installations.















Emissions & Percentage Variation in Metric Tonnes of CO2 by
EU member states during Phase 1




Hence after
cumulating the overall percentages, it was deduced that there has been overall
increase in the overall yearly emissions by 1.9% of the European Union as a
whole. This proved that despite the measures implemented during phase 1, the
European Union would have to ramp up its commitments during phase 2 in order to
achieve the desired objectives.

Phase 2

Phase 2 was
implemented between the years 2008 and 2012 which also coincided with the first
commitment period of Kyoto Protocol, the world’s only legally binding treaty to
cut down on greenhouse emissions. During the first commitment period,
participating countries pledged to reduce their emissions by 5% below 1990
levels. The European Union which constituted of 15 member states at that time
not only adopted the legislation but raised the bar committing to reduce their
emissions by 8% below 1990 levels.

The phase 2 of
the ETS was planned to be a bit more conservative and was supposed to build on
the achievements of phase 1. The overall cap on the total allowances was
lowered by up to 6.5% as compared to Phase 1 and proportion of free allocations
lowered slightly to 90% whereas several countries held auctions for purchasing
allowances. Some other mentionable developments included the decision to
include Nitrogen Oxide emissions into the trading scheme and increasing the
penalty of excess carbon emissions to €100 per tonne.

A major milestone
of the implementation of Phase 2 was the inclusion of aviation carriers into
the Trading Scheme. The European Union wanted to enforce emissions reduction on
all aviation carriers flying locally, within Europe as well as internationally
however other major stake holders like United States and China rebelled and
after much debate the European Union was forced to only incorporate aviation
carriers flying nationally.

Comparing the
trading volumes through the different time periods of Phases 1 and 2 showed an
exponential increase in the total allowances traded each year with just 321
million allowances traded in 2005 (first year of phase 1) to over 7.9 billion
allowances traded in 2012 (last year of phase 2). The following bar chart
displays the trading volumes of allowances through each year Phase 1 (2005 to
2007) and Phase 2 (2008 to 2012).






























 Differences in Capped and Requested Value
of Metric Tonnes of Emissions of CO2 by EU member states


Phase 3

Phase 3 is the
current phase being implemented and falls between the time period years 2013 to
2020. Some main changes proposed include more stern limits on the use of
offsets, and auctioning of all of the allowances and the setting of an overall
cap for the European Union. It will incorporate the addition of installation
from more sectors and other gaseous emissions besides carbon dioxide and
nitrogen oxides and will also give incentives to member states to research and
develop carbon capture technologies and more efficient renewable energy

Phase 4  

Phase 4 is
scheduled to commence between the years 2021 to 2028 and will have a higher
reduction factor of the annual capped amount of allowable CO2 emissions.
A system is also proposed to impose a carbon tax to make the ETS compatible
with carbon tax systems in the different parts of the world.

Adaption Plan to Climate Change

Due to its
progressive thinking, the European Union has initiated projects, both
nationally and in developing countries, to counteract the delayed negative
effects of global warming which include disruption in water supply and
agricultural losses. For Example, developing better Water Management Systems
and drought-tolerant crops are to mention just a few initiatives. Such projects
will not only save lives money but also create jobs which is an added benefit
to the economy of impoverished nations.

noteworthy project is the early flood warning system better known as the
European Flood Awareness System (EFAS). In a study conducted by researchers
titled “The monetary benefit of early flood warnings in Europe” the benefits of
EFAS were estimated to be of the order of 400 euro for repairing damages for
every 1 euro invested in early flood warnings systems. Other studies published
a ratio of 6 Euros for repairing damages for every 1 euro invested in flood
protection thus bolstering the belief that prevention is better than cure.




















International Contributions by the
European Union

The European
Union efforts have been instrumental for aiding developing countries which are
more vulnerable to the effects of the changing climate and has pledged to
contribute more than 14 Billion Euros in aid to the public and private projects
outside Europe through different programs of United Nations Framework
Convention on Climate Change (UNFCC) such as the “Green Climate Fund” and the “Global
Environment Facility (GEF)”. These programs aid the developing countries to
make changes to their infrastructure, climate mitigation and adaption to
curtail Greenhouse Gas Emissions and thus prevent further damage to the

There are
several publications by the Global Climate Change Alliance indicating the
extent, regions and distributions of funding provided by the European Union.
The following bar graph and pie-charts elaborates the EU’s contributions:





























Ever since the
global community has agreed on the harmful effects of Greenhouse Gas Emissions
and decided to take measures to curtail GHG emissions, the European Union has
been at the forefront of pioneering climate change projects. The sheer number
of projects undertaken by the European Union and the diverse areas of their
implementation is a clear indicator of the European Union’s pursuit to
fulfilling its commitments of the Paris Agreement. The European Union’s
multifaceted approach of putting a price on carbon emissions and creating an
allowance trading system has proven to be not only feasible option but at the
same time acts as a viable, flexible and a cost effective solution that will
help limit the import of fossil fuels which cuts down governmental costs
besides other benefits such as improved health of the general populace due to
reduction in pollution.