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REPORT | EUROPE’S CLIMATE AND ENERGY OUTLOOK – Now that the ink on COP21 is dry

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Friends of Europe’s 2016 Energy and Climate Summit took place in Brussels at the end of an extraordinary few weeks in climate politics. The Paris Agreement, the landmark 2015 climate deal, reached the required threshold for ratification, many years earlier than anyone anticipated. A long-anticipated agreement to cut emissions from aviation was also made. A global deal was also made to phase out hydrofluorocarbons (HFCs), one of the most harmful greenhouse gases.

But the Summit also took place in the context of a European Union that is grappling with a number of serious challenges, including Brexit, frosty relations with Russia, limited progress on the Energy Union and the ongoing weaknesses of European economies.

The Paris Agreement offers an opportunity to reset climate policy to meet the targets agreed at the COP21 climate conference, and the EU is working on several measures, including reforms to the Emissions Trading Scheme (ETS) and efforts to stimulate innovation.

While representatives of the business community were supportive of a higher carbon price, they warned of the ongoing importance of protecting carbon-intensive industries from competition from outside Europe.

It is also important to build European industries in new, low-carbon technologies such as energy storage and low-carbon transport. But this is not just a question of technological innovation. It also requires new business models and financing arrangements, such as the EU’s European Fund for Strategic Investments (EFSI) and Innovfin, the European Investment Bank’s fund for innovative companies.

The summit heard that Europe does not have to decide between decarbonisation and energy security. Instead, cutting emissions will help to make Europe more energy secure by reducing demand for imported fossil fuels.

While home-grown renewable energy will be important, the key to cutting carbon while increasing security of supply is energy efficiency. But Europe is currently missing out on massive opportunities because policymakers are obsessed with the supply side and continue to ignore the potential of demand management. Cutting demand will not only reduce emissions and consumer bills, it will also cut the amount of new capacity that is needed.

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You may also wish to view the event page of the Summit, which includes podcasts and the photo gallery.

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