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Policy outlook for the environment 2018: could momentum return?

Author: David Baldock

In environmental terms there are at least two ways of looking at the prospects for 2018. Viewed through the rather sober lens of EU process, it has the look of a project completion and tidying up period with limited long term impetus to the last full year of the current European Parliament and Commission.

There are major long running dossiers on the table to be settled and the distractions of Brexit to be sorted out. In its role as EU presidency for the first half of the year, Bulgaria does not mention the environment as a key priority in its programme. Climate scepticism is apparent in a number of governments and reinforced by a Trump-led US, which has shown antipathy to many forms of multilateralism in addition to specific objections to the terms of the Paris Agreement. Will we be joining the Chinese in remembering this as the year of the dog?

Alternatively, with a stronger thread of European optimism in sight, might it be a year for sowing the seeds of a greener vision of Europe? The return to economic growth in the EU 27, settling at around 2% per annum since 2014 and expected to stay at that level over the next two years, reduces the crisis incentive to focus heavily on economic fundamentals. Longer term goals to improve wellbeing and sustainability could now capture more attention. New governments are in place or emerging in France, Germany and elsewhere, potentially bringing greater confidence about what can be achieved in the EU. Macron has demonstrated that plenty of space is available for fresh thinking.

The search for vision certainly wasn’t ended by the Commission’s Future of Europe reflections last year. Rather like the earlier Juncker 10 point plan, these failed to convey much environmental ambition. In contrast, there is now an active debate on Europe’s responses to the UN Sustainable Development Goals, including a request from the Council for an implementation strategy from the Commission by mid-2018. The first step is expected to be a reflection paper by the Commission by the second semester of the year. Other prospects for 2018 include a proposed industrial strategy, perhaps more listening to young people and picking up issues that have wider public resonance, such as the scourge of waste plastic. And new processes need to be started, such as a potential eighth Environmental Action Programme; there is even another CAP reform on the horizon!

Internationally, the calendar for the year includes UNFCCC COP 24 in Katowice in December where parties will be expected to agree on the rule book for the Paris Agreement and complete the Tanaloa Dialogue, which aims to review progress to date regarding pledges to inform new commitments to be made in 2020 by all parties to the Convention. The counterpart for the Convention on Biodiversity will be COP 14, held in Egypt in November.

Looking at the EU agenda for 2018, climate related issues are prominent. Several items of important legislation in the 2030 Climate and Energy Framework package are still to be agreed, including the modified (recast) Renewable Energy Directive, where there remain significant differences in view between the Council and the European Parliament (EP). Amongst the most controversial topics is the role of bioenergy in meeting renewable energy targets, especially in the transport sector. The ITRE committee in Parliament is strongly supportive of retaining a mandatory renewables target for the transport sector, which the Commission – appearing to share some of the NGOs’ concerns about the risks of over-incentivising the use of conventional biofuels – had proposed to remove. EU criteria for the sustainability of solid biomass will be a new element of the Directive but not with the scope and specificity that many environmentalists had hoped for.

The level of future ambition to reduce emissions by 2050 is being tested by the arguments over both the proposed Governance of the Energy Union Regulation and the Effort Sharing Regulation. Green MEP Claude Turmes has pushed for an amendment to the former that would set an explicit legislative objective of zero net emissions within the EU by 2050, which is now part of the Parliament’s formal position. On the other hand the requirements on Member States to reduce emissions outside the ETS sector, which are governed by the Effort Sharing Regulation, are subject to a range of flexibilities, (effectively lessening the effort required), several of which have been amplified in the inter-institutional debate over the last year. Both regulations, together with the renewables directive and other proposals in the package addressing energy efficiency, are expected to be agreed in 2018, providing a frame for climate policy up to 2030.

The package contains a rather technical but nonetheless significant regulation that requires Member States to include LULUCF (Land Use, Land Use Change and Forestry) for the first time, in their action to meet EU climate targets. This makes the reporting of net emissions more comprehensive and creates a stronger link between climate and land use policy, whilst also giving governments new opportunities to offset certain emissions against sequestration, for example in forests. IEEP briefings on several aspects of this climate and energy policy package can be found on the website.

Plastics are the leading edge issue in the other large policy package: the Circular Economy. Here, an existing process has been boosted considerably by a surge of public awareness of the scale of plastics as a pollutant, especially in the oceans. The Blue Planet TV series made this a vivid reality for many people, shortly before the January launch of the EU strategy on plastics. In Europe, about 40% of all plastic is used as packaging, the majority of which is used only once. Effectively 95% of its value is lost to the economy after its first use, estimated at around EUR 100 billion per year. The strategy looks ahead at new measures to address the scale of plastic packaging, a more harmonised approach to the use of “biodegradable” as a label on plastics and restrictions on the use of microbeads. The aim is for all plastic packaging to be recyclable by 2030. Progress in pursuing the strategy this year will be watched closely. In the meantime, Commission awareness of the swell of public opinion on plastics was evidenced by Budget Commissioner Oettinger’s references to a plastics tax as a mechanism for addressing EU budgetary challenges – to which I will come to shortly.

Other expected developments relating to resource management include a proposed regulation on minimum quality requirements for reused water, amendments to a group of existing directives, such as on end-of-life vehicles and a framework for measuring progress towards a circular economy. The Commission is still evaluating the 2012 bio-economy strategy, which remains rather disconnected from the fierce debates over bioenergy and the food system, but it has promised a Food Package(!), exploring improvements to the food supply chain in Europe.

The connection between chemicals policy and the circular economy is increasingly apparent and getting more attention in EU policy. For example the Plastics Strategy includes a proposed consultation on the interface between legislative measures covering waste, product standards and chemicals. The forthcoming ban on intentionally adding microplastics and oxo-degradable plastics to products would be put in place via Restrictions introduced through REACH, the comprehensive EU legislation on chemicals. Chemical pollutants and hazardous material in recycled products are another concern.

Two of the more significant and potentially contentious sets of proposals due from the Commission this year are currently expected around late May. Both deal with the money to be spent by the EU in the seven years after 2020 – the next budgetary period. One question is how large the budget should be and how far governments are prepared to contribute more to offset the Euro 12 to 13 billion hole left by the scheduled disappearance of the UK net contribution. The other is, how should the money be spent? Should the CAP for example retain its current 38% share of the Multiannual Financial Framework (MFF) and precisely how will it contribute to adding more value to EU spending, a theme of considerable environmental as well as budgetary interest?

Early messaging from Günther Oettinger, the Budget Commissioner, suggest that the gap in funding might be closed by a combination of savings on current policies (such as the CAP) and an injection of “fresh money”. The latter almost certainly implies higher national contributions, reaching over 1% of Gross National Income, but possibly could include new revenue sources. For example, a High Level Group led by Mario Monti has floated the idea of a new EU tax on certain plastics and synthetics and the treatment of ETS revenues as a contribution to EU funds, opening a further question about whether it could be ring-fenced for climate or wider sustainability focussed funding.

This would be a big political shift from current attitudes to pan EU taxes but less improbable than it would have appeared a few years ago. Whatever its scale, the new budget is an opportunity to pursue more environmental value added in several directions. IEEP has argued that national allocations from the post 2020 MFF should more actively contribute to Energy Union objectives, including GHG emission reductions and improved energy efficiency.

Once the MFF debate is launched, proposals on the CAP are expected to follow soon afterwards. The likely shape of these was foreshadowed by the Commission at the end of November last year in a high level Communication making the case for the importance of agriculture and its place in the MFF and setting out some policy lines, “The future of food and farming”. This was an interesting mixture of rolling over much of the status quo, including the retention of Direct Payments to farmers (with no clear obligations to deliver more in return) and some more innovative suggestions. Much the most striking of these is a proposed shift towards a more “performance-based delivery model”, with a substantial transfer of responsibilities for policy selection, application and target setting to the Member States. Most environmental interests reacted with disappointment to this offering but the potential for tying a revised model of agricultural support much more closely to meeting environmental objectives is now being scrutinised carefully, not least within IEEP.

In relation to biodiversity, there is currently a focus on improving implementation of the Birds and Habitats Directives in the Member States, following an approach set out in the Commission’s Action Plan for Nature, People and the Economy. This is supposed to address the issues identified in the recent Fitness Check; but, as it lacks decisive action on bridging the funding gap, resulting improvements are likely to be marginal in most Member States. The title of the Action Plan also indicates the increasingly utilitarian justification for biodiversity policy, which carries its risks as well as benefits. One benefit is the increasing concern over the decline in pollinators, and the expected launch of an EU pollinators’ initiative this year. A test of the EU’s resolve on this issue may be its coming decision on whether to permanently ban the three neonicotinoid pesticide active substances now subject to substantial restrictions. This depends on the views of Member States, which are likely to be more apparent once they have been presented with the results of EFSA’s current review of these chemicals in the spring.

Implementation of EU environmental legislation on the ground remains a long way from ideal and revelations about car manufacturers avoiding compliance with EU vehicle emission regulations may not be over. Failures by governments also may be in the public eye during 2018 with widespread non-compliance with EU air quality standards in a swathe of European cities, London and Brussels amongst them. The Commission has the powers to pursue errant Member States and apply pressure for the necessary action; their readiness to use them will be a test of their confidence in the political status of environmental policy, as will the reaction of national governments, several of which have become more vocal about the dangers of air pollution while continuing to be reluctant to spend the money and introduce the measures to address the problem. Of course, one of the contributors to poor air quality is the gap between vehicle emissions standards that have been legislated for and the actual emissions performance of cars driven on the road. The Commission will therefore need to continue to pursue a tightening up of testing and monitoring following “dieselgate”.

Externally, the Commission has stated that it aims to “deliver a progressive and ambitious trade agenda, striking a balance between openness and reciprocity and enforcement of social and environmental standards”. What this means in practice remains to be seen. One of the early opportunities to make it operational will be the negotiations with the UK over the future relationship with the EU 27, which are timetabled for this year. If some form of Free Trade Agreement is established, the protection of environmental standards needs to be recognised as an important dimension, for environmental reasons as well as in relation to competitiveness. Any agreement with the UK could set a pattern in environmental matters for other trade deals now being negotiated or in the pipeline. The setting and enforcement of standards is also a key issue in the UK where there is an active debate about establishing a new body to ensure compliance with environmental legislation, a role allocated to the Commission within the EU. Whether this will prove politically acceptable, and what level of environmental commitment the EU side will insist on the UK delivering as a counterpart for continued access to the internal market, is one of many unknowns as the year begins.

In conclusion, while 2018 should see the tying up of some long running legislative measures and preparations for the change of Commission and Parliament, the flow of new policy initiatives and strategic choices should be far from trivial. Civil society and others will be taking stock of progress under the current protagonists and floating ideas for the 2019 Parliamentary elections, the EU post 2020 strategy and the next Commission. There are plenty of opportunities if the environment is well represented, and if environmental stakeholders engage confidently, with the facts and evidence to back the wider public perception of the need for progress. That is a challenge for us all.

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