Have you seen the governance beast? - an explainer of Energy Union governance

Have you seen the governance beast?

This mysterious creature made his debut appearance on social media last year. Best described as a cross between a goat, an eagle and a Gruffalo, each part of his outlandish body had a meaning for EU energy and climate governance.

We designed the beast in the run-up to a proposal on EU energy and climate governance. The proposal was part of a package of draft energy and climate legislation released by the Commission on 30 November 2016. The ‘governance’ element is responsible for ensuring climate and energy targets are met, and planning and reporting on progress.

So it may have a dry-sounding name, but getting governance right is crucial to reaching 100% renewable energy in the EU and winning our fight against climate change.

WWF’s governance beast featured all the elements we wanted to see reflected in the European Commission’s proposal. Things such as wings for high ambition - going beyond the EU’s 80-95% emissions reduction 2050 target, which was agreed before the EU signed up to the more ambitious Paris Agreement. Like sharp claws to prevent EU countries backsliding and ensure they get more ambitious over time. Like teeth, to ensure compliance with EU targets. Like a big heart, to ensure a fair and just transition to 100% renewable energy, and ears for listening to stakeholders.

One of the most important parts of the beast are its eyes. For WWF, it was essential the governance proposal did not stop at 2030, but rather it needed to look ahead to 2050. Longer-term climate plans are crucial for investor confidence and for avoiding stranded assets - investments which are lost, for example in a coal plant which becomes obsolete. In fact, in the energy sector, short term plans alone make little sense since power plants and renewable energy ²infrastructure have lifetimes measured in decades. The shorter term plans can be shaped once the longer term strategies are in place.

When the ‘Clean Energy for all Europeans’ package - the official title of the bundle of proposed energy and climate legislation - was finally released, the governance draft was one of the stronger parts. For WWF, it was a good attempt by the Commission at bringing energy and climate change together for the first time, and putting the current multitude of different planning and reporting obligations under one roof. To do this, the Commission proposed that Member States develop National Energy and Climate Plans (NECPs) up to 2030.

One of the weak elements of the governance proposal is the lack of clarity on how the Commission will enforce the already agreed 2030 climate and energy targets for renewables and energy efficiency - the teeth of the governance beast. How will Member States be encouraged to deliver renewable energy pledges which are enough to get to the EU’s goal of 27%? Another undeveloped element concerns how the public and stakeholders should be involved in developing and implementing the plans - the beast’s ears.

But the main governance shortcoming for WWF concerns the long-term climate planning - the beast’s eyes. Firstly, this only gets a small mention in the European Commission’s proposal. Secondly, Member States are asked to hand in their long-term plans in 2020 - that is, after their 2030 plans in 2019. This makes no sense - no business would ever do their shorter term plan before the longer one. Thirdly, the Commission talks of 50-year plans, meaning going to 2070 (as the governance proposal comes into force as from 2020). For WWF, and surely for EU politicians, 2070 is too far away to be meaningful and focusing on that date is an invitation to put off prioritising climate ambition until later. The best timing would be for 30-year plans, meaning 2050, as EU countries are already working to that deadline and we know that the EU has to be fully decarbonised by then at the latest. 2050 is close enough to provide a clear direction for the 2020-2030 period and to have an impact on decisions today, while still providing a longer-term vision for businesses and society.

A fourth drawback with the long-term planning element of the governance proposal is the lack of guidance from the Commission on what should be included in the 50 - or preferably 30 - year plans. WWF is running an EU LIFE-funded project called MaxiMiseR which focuses on making long-term climate plans as good as possible. With the lack of clear information from the Commission, MaxiMiseR will soon produce its own guidance on what should be in a longer term plan or strategy. Elements like regular review and monitoring, stakeholder engagement, high ambition, integration with other parts of the economy, are all as important for long-term plans as they are for the 2030 National Energy and Climate Plans of the governance proposal. All these areas were assessed by MaxiMiseR when it ranked Member States’ current long-term climate strategies - and found that there was much to be improved.

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Clearly, if we were to re-draw our governance beast today, to reflect the Commission’s proposal, it would be rather simpler than the original design. Some body parts are less detailed or smaller than they should be. The wings of ambition would be tiny, for one, so the beast would be flightless. But interestingly the Commission has now created its own governance beast. Inspired by WWF’s effort, the Commission produced an Energy Union governance ‘firefly’ to show the elements of its proposal. Some of these appeared to match ours - such as wings for ambition and eyes to look to 2050. Yet the design does not yet match the reality: the ‘firefly’ needs to grow some more ‘beast’-like elements - such as teeth - to be up to the job.

The next two years are a chance for the EU Member States and the European Parliament to beef up the weak body parts and improve the governance proposal. We will be following the process closely to ensure this key policy file is improved during the negotiations, particularly on the long-term climate plans, stakeholder engagement, and enforcement of energy and emissions reduction targets.

Getting Energy Union governance right is about more than a funny ‘beast’. It will make meeting our energy and climate targets much more likely, and reduce the costs to consumers of doing so. It will ensure we live up to our commitments under the Paris Agreement. It will help Europe remain a climate leader and play its role in the fight against climate change.

This article was written by WWF and originally published in Europe's World' magazine