1 Preparing for Paris Agreement implementation:EU 2030 Climate and Energy Framework and the Energy Union Energiapäivä 25 October 2016 Yrjö MÄKELÄ European Commission DG Climate Action

2 Overview of the presentation 1. Climate science 2. Paris Agreement 3Overview of the presentation 1. Climate science 2. Paris Agreement 3. The Energy Union and the EU Climate and Energy Framework

3 Climate science 1

4 The latest climate scienceIPPC 5th Assessment Report – Key findings: Warming of the climate system is unequivocal Human influence on the climate system is clear Each of the last three decades has been successively warmer at the Earth’s surface than any preceding decade since 1850 Continued emissions of greenhouse gases will cause further warming and changes in all components of the climate system. Limiting climate change would require substantial and sustained reductions in greenhouse gas emissions which, together with adaptation, can limit climate change risks.

5 Emissions of major economies, 1990-2012 (all greenhouse gases, all sources & sinks)(Source: historical emissions data: inventories data to the UNFCCC (http://unfccc.int/national_reports/)

6 Paris Agreement 2

7 An historic Agreement A new chapter in international climate governance and action A win for multilateralism A strong signal to policy makers, investors and businesses

8 The Paris Agreement 2015 Global commitment to transition to a low emission economy Holding the increase of global average temperature to well below 2 degrees Celsius above pre-industrial levels 190 countries and the EU contributed 5-year ambition cycle Transparency and accountability Support for developing countries

9 World emissions and percent change in emission intensity per unit of GDPSource: POLES – JRC Model

10 "Today we celebrate, tomorrow we have to act" Commissioner Cañete, 12 December 2015Next steps: Remaining signatures, ratification processes Crucial implementing details to be worked out in coming years Stepping-up pre-2020 action

11 EU 2030 Climate and Energy Framework and the Energy Union

12 Where do we stand now? Progress in EU GHG emission reductionsDecoupling of GHG emissions from GDP growth -23% GHG reduction in 2014 compared to 1990 ~45% GDP growth over this period

13 Benefits of climate actionBuilding a climate-friendly, low-carbon society and economy is a big challenge, but also a huge opportunity. Many of the necessary technologies exist already. The real challenge is to apply them.  Benefits: Regulatory certainty for businesses and investors Coordination of EU Member States efforts New jobs and 'green' jobs Improved competitiveness Economic growth Environmental and health benefits, e.g. cleaner air New technologies Secure, amore affordable supplies of energy and other resources - less dependent on imports

14 -20 % Greenhouse Gas EmissionsOctober 2014 European Council agreed headline targets of the 2030 climate and energy framework -20 % Greenhouse Gas Emissions 20% Renewable Energy 20 % Energy Efficiency 10 % Interconnection 2020 ≤-40 % Greenhouse Gas Emissions (domestic) 27 % Renewable Energy  27%* Energy Efficiency 15 % Interconnection 2030 * To be reviewed by 2020, having in mind an EU level of 30% Energy Union governance

15 October 2014 European Council gave guidance on how to implement, reconfirmed in March 2016

16 Energy Union 25 February 2015: A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy: A European Energy Union will ensure that Europe has secure, affordable and climate-friendly energy. Wiser energy use while fighting climate change is both a spur for new jobs and growth and an investment in Europe's future. 18 November 2015: State of the Energy Union Progress made since the Energy Union Framework Strategy to bring about the tranistion to a low-carbon, secure and competitive economy

17 Energy Union policy areasThe EU's Energy Union strategy is made up of 5 closely related and mutually reinforcing dimensions: Security, solidarity and trust A fully-integrated internal energy market Energy efficiency Climate action- decarbonising the economy Research, innovation and competitiveness

18 Some key initiatives under the Energy UnionRevision of EU ETS, July 2015 Revision of energy labelling, July 2015 New deal for energy consumers, July 2015 Heating and cooling strategy, February 2016 LNG and storage strategy, February 2016 Effort Sharing, July 2016 Land Use, Land Use Change and Forestry (LULUCF), July 2016 Low-emission mobility, July 2016 Energy efficiency Renewables Energy Union Governance Bioenergy Electricity market design

19 Commission Proposals of July 2016 for Regulations onEffort Sharing Land Use, Land Use Change and Forestry Regulation

20 What is the Commission Proposal for Effort Sharing Regulation 2021-2030 about?Breaks down the EU target for non-ETS sector of % by 2030 into Member States binding targets, allows for flexibilities to achieve these targets, taking into account the Member States capacities and cost effectiveness concerns Covers almost 60 % of EU greenhouse gas emissions Includes buildings, transport, agriculture (non-CO2), waste, F-gases, other smaller sectors outside ETS

21 Effort Sharing proposal: objectivesAchieve a 30% reduction in GHG emissions below 2005 that is fair: taking into account different economic capacities of Member States, cost-efficient: taking into account differences in cost-effective mitigation potentials between Member States; increasing flexibilities, ensures environmental integrity so that the EU 2030 GHG target is met Fair Cost-efficient Environ- mental integrity

22 Effort Sharing Regulation: Principles to set national 2030 targetsNational 2030 targets range between 0% and -40% compared to 2005, adding up to -30% EU wide To recognize different capacities to take action, the principle methodology to set targets is to differentiate according to 2013 GDP per capita. To reflect cost-efficiency concerns, for 11 higher income Member States, an additional adjustment within the group Member States have annual emission limits set over Start from most recent up to date emissions, i.e allows the creation of some limited surplus at the start of 2021 to create flexibility while reducing the risk of environmental integrity

23 Effort Sharing and LULUCF Regulations: Flexibilities to reach targetsContinue with some existing flexibilities Flexibility within the period to take into account annual variability (banking and limited borrowing) MS can trade with other MS Two new flexibilities to use limited amount of credits from other sectors Option to use limited amount of ETS allowances (in total 100 million) for several higher income Member States Option to use credits generated in the land use sector (in total up to 280 million), representing real additional reductions. MS where agriculture is a larger share of emissions, get higher access to this flexibility

24 Commission Communication of July 2016 on Low-emission Mobility

25 Commission Communication: EU Strategy for low-emission mobilityEssential component of the shift to the low-carbon, circular economy Transport sector challenges One quarter of total GHG emissions and major cause of air pollution in cities Dependence on oil for more than 90% of its need Global competition and third countries' market access Changes in mobility models, consumer preferences, disruptive technologies Level of ambition for transport GHG emissions at least 60% lower than in 1990 by mid-century, and firmly on the path towards zero. Emissions of air pollutants to be drastically reduced without delay Actions at EU, MS, and local levels are needed

26 EU Strategy for low-emission mobilityImproving the efficiency of the transport system Digital mobility solutions, Fair and efficient pricing to manage transport demand, Promoting multi-modality Scaling up the use of low-emission alternative energy Effective framework to incentivise low-emission energy (including advanced biofuels, renewable electricity and synthetic fuels), Infrastructure for Alternative Fuels Moving towards zero-emission vehicles Fundamental changes to type approval proposed Post-2020 proposal for CO2 emissions from cars and vans Monitoring, reporting for lorries coaches and buses + CO2 emissions standards

27 Further key initiativesunder the Energy Union Before the end of 2016 (30 November): Energy efficiency Renewables Energy Union Governance Bioenergy Electricity market design

28 Thank you! Visit DG Climate Action online:ec.europa.eu/ clima/ facebook.com/ EUClimateAction twitter.com/ EUClimateAction pinterest.com/ EUClimateAction youtube.com/ EUClimateAction

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30 Global stocktake Centrepiece of the ambition mechanism2018 Dialogue Global Stocktake Facilitative dialogue on emissions reductions New science on 1.5°C Mid-century strategies by 2020 New or updated contributions by 2020 Consider progress on all global goals After 2030, all to communicate emissions reductions contributions every 5 years Progression on previous efforts Convergence on Technical and political phase of stocktake Variety of inputs including IPCC, transparency framework

31 Sustaining the spirit of Paris and securing implementationEU priorities going forward Sustaining the spirit of Paris and securing implementation NDCs Proceed with preparing for the implementation of the EU INDC + swift ratification. Support 3rd country NDCs. Transparency Develop robust rules and modalities for "an" enhanced transparency framework for all (to be finalised 2018) Balance Progress in balance under all elements of the Agreement – mitigation, adaptation and means of implementation Adaptation metrics: work on modalities on how to recognise parties' adaptation efforts, and adequacy and effectiveness of adaptation action and support – link to the enhanced transparency framwork Demand for work on 'adaptation communication' and adaptation registry, but few substantive ideas Capacity building will be a focus of COP22 – Agreement on ToR for Paris Committee on Capacity building, ensuring coherence with emerging new initiatives Ambition Agree on the stocktake process, inputs and outputs, and reflect on the linkages to domestic policies Solidarity Demonstrate commitment to the solidarity aspects – continued support and elevating adaptation agenda

32 State of play: Renewables PolicyAchievements drove down costs key technologies (PV, wind) accelerated deployment – strong impact on investments patterns important effects in terms of emission reductions Challenges ahead EU as technology provider ("renewable nr. 1") Network development as enabler for RES penetration Market integration

33 State of play: Energy EfficiencyAchievements Comprehensive policy framework (EED, EPBD, Eco-design,…) Significant progress towards 2020 target CO2&cars (130g/km in 2015, 95g/km in 2021) energy efficiency standards (light bulbs, appliances, electric motors…) & energy labelling (domestic appliances) Challenges ahead large untapped potential, eg existing buildings finance electrification (long term)

34 Governance legislative proposalLegislative proposal on Energy Union governance with 2 parts: Streamlining planning, reporting and monitoring requirements in the energy and climate fields to Reduce unnecessary administrative burden in line with the Better Regulation agenda Integrate and align planning and reporting requirements with the Energy Union Framework Strategy Defining the Governance process (for delivery of Energy Union objectives and investor certainty) Next steps: following completion of preparatory work (fitness check, public consultation, impact assessment) present legislative proposal by end 2016

35 Schematic illustration of streamlining into Integrated National PlansExisting Obligations NREAP Template Integrated National Energy and Climate Plans Climate Action Planning & Reporting Obligations NEEAP Template Streamlining of Planning Obligations New Obligations Energy Security Internal energy market Research & Innovation

36 Process and timeline 2016 2017 2018 MS 2016 2017 2018 COMIntegrated methodological tools Start national consultations and regional coordination Provide integrated projections Finalise national political process Submit draft national plans COM recom- mendations and MS reviews Submission of final national plans MS 2016 2017 2018 EU Reference Scenario Template for national plans Guidance on regional cooperation Legislative proposals (ESD, RES, EE, market design, governance) Technical support and facilitation of regional consultations Organisation of MS review of plans Recommendations to MS 4th State of the Energy Union including first aggregate assessment of plans COM

37 Source: IPCC 5th Assessment Report

38 Source: IPCC 5th Assessment Report

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40 Changed economic and political realitiesGDP based on PPP valuation (bln current USD) 1990 2015 The Paris Agreement ensures that for the first time there will be action by all, not just from a few countries. This is important, because the world is changing rapidly and looks very different now than when climate agreements were first negotiated in the 1990s. The responsibilities and magnitude for climate action are evolving. Source: IMF World Economic Outlook 2015

41 Global emission profiles by 2030 (business-as-usual)2010 – on the left, The current picture. China, the US, India, Brazil, the EU, Japan, Canada, Russia, South Africa, Mexico and South Korea are all major emitters. 2030 – Business as Usual projections underline the need for urgent action – some countries will increase their emissions, others will continue making reductions but not at the pace required. GHG emission intensity vs. per capita, major economies, Baseline

42 Staying below 2°C – a global mitigation scenarioSo where do we need to be aiming to meet the 2 degree objective? 2030 – you'll see here that compared to the BAU scenario we just saw, all major emitters will have to reduce their emissions, and some more drastically than others. 2050 – By the middle of the century, we need to see major emitters all converging in the bottom left hand corner: low-emissions economies that have decoupled growth and emissions with limited GHG emissions per capita and per unit of GDP. GHG emission intensity vs. per capita, major economies, Global mitigation scenario

43 Potential impact of INDCs on the growth in renewable electricity generation, 2013-2040As just one real-world example,a ccording to the International Energy Agency's date of last year of what implementing the INDCs can achieve, take a look at the projected growth in renewable energy generation around the world. This is IEA data of 2015; I am sure there are further updates this IEA WEO2015

44 Effort Sharing Sectors: progress in EU GHG emission reductions2014 already -13% reductions below 2005 levels achieved Overachievement of the -10% 2020 ESD target very likely New EU Reference scenario 2016 projects -16% reductions by 2020 and -24% by 2030 if current policies are fully working

45 Effort Sharing Regulation: the 2030 non-ETS targets

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47 Continue existing flexibility within the EUBanking: unused Annual Emission Allocations (AEAs) may be banked to later years within the period Borrowing: AEAs may be borrowed from the following year with a 5% limit Transfers: unused AEAs can be transferred to other Member States (up to Member States to decide form of transfers in bilateral agreements including project based transfers) International project credits excluded as EU 2030 target is to be met domestically

48 New: one-off flexibility with ETSIn line with European Council: available for 8 higher income Member States with cost-efficiency concerns and Malta* (recognising very low share of emissions in effort sharing sectors in Malta) MS can use limited amount of ETS allowances (in total 100 million) to offset emissions in the effort sharing sectors MS need to decide before 2020 if and how much of the maximum amount they want to use to ensure ETS stability Less reductions needed in effort sharing sectors, but the limit maintains incentives for transition to a low carbon economy

49 New: flexibility with the land use sectorUse of land use (LULUCF) credits allowed for all Member States to offset emissions in Effort Sharing sectors to incentivise additional action in land use sector by agriculture and forestry to compensate for difficulties in reducing agricultural non-CO2 emissions under the Effort Sharing Regulation Limit on use of maximum 280 million tonnes in total (for EU-28 and period )maintains incentives for transition to a low carbon economy in all sectors Member States where agriculture is a larger share of emissions, get higher access to this flexibility LULUCF credits have to represent real additional reductions to ensure environmental integrity of this new flexibility At first only credits from afforestation and agricultural land Forest management credits will be considered once robustness is proven

50 Land Use credits: allocationAccess for all Member States but differentiated taking into account the relative size of agriculture emissions in the effort sharing sectors more difficult for a MS to achieve its target if the agriculture share is high and the mitigation potential is limited this rule is just to define the distribution of the flexibility actual use of LULUCF credits can offset emissions in all effort sharing sectors MS >25% 15-24% <15%

51 GDP/cap target (before cap 0%/ -40%-) Adjustment for cost-efficiencyHigher income MS: adjustment of 2030 targets to take account of cost efficiency In line with EUCO, adjustments made: Limited decrease in target for some MS in case of large divergence between projected cost efficient reductions and target based on GDP per capita Limited increase in target for some other high income MS that do not have such a divergence Fairness criterion and environmental integrity respected: zero sum game within the group of high income MS GDP/cap target (before cap 0%/ -40%-) Adjustment for cost-efficiency Proposed 2030 target LU -40% (-61%) 9% -40% SE -40% (-42%) 0% FI -39% DK 3% DE -37% -1% -38% FR -36% UK NL AT BE -35% IE -30%

52 The starting point (1): optionsNeeded to translate 2030 targets into annual limits Starting from 2020 targets (-10%) would lead to a high initial surplus Risk of not achieving the target due to lack of incentives for sufficient action early on Starting point based on emissions is not practical (no data available in time)

53 The starting point (2): the proposalContinue an approach similar to the existing methodology Start from most recent up to date emissions, i.e Emissions should decrease from 2016 to 2020, creating some limited surplus at the start in 2021 This facilitates flexibility between Member States Surplus is more limited compared to starting point set at 2020 target, reduces environmental integrity risk 2021 allocation recognises that 12 MS are allowed to increase emissions from to 2020

54 Governance Annual reporting of greenhouse gas emissionsBi-annual reporting on policies and measures and projections Annual evaluation of progress in EU and in Member States every year by the Commission, Member States not making progress need to submit corrective action plan Full compliance check every 5 years instead of annually Reduces administrative burden, and allows to introduce flexibility from the land use sector that has a 5 year cycle Review every 5 years. First time immediately after the 1st Global Stocktake under the Paris Agreement in Commission to report on evolving national circumstances and contribution to EU target and Paris Agreement.

55 What does the proposal deliver? (1)LULUCF What does the proposal deliver? (1) Builds on current LULUCF decision (529/2013) Brings the CO2 commitment for this sector (from KP) into the EU climate and energy framework for the first time As a stand-alone policy pillar Where the "no-debit" rule is retained. Accounted emissions from land use are entirely compensated by an equivalent removal of CO₂ from the atmosphere

56 What does the proposal deliver? (2)Adjustments to LULUCF accounting rules reducing administrative burden and red tape is not addressed to individual actors (farmers, foresters) Ensures that emissions of biomass would be recorded and counted promoting bio-energy feed-stocks that are most sustainable Keeps existing flexibilities (within LULUCF) and introduces new flexibilities (towards ESR) incentivising additional mitigation action choice of action strictly determined by Member States, respect of subsidiarity IA Sec 6.3

57 Land Use: in both LULUCF and the ESRAGRICULTURE non-CO2 (CH4, N2O) – in the ESR Land Use, Land Use Change and Forestry (LULUCF): CO2 While seemingly a naive presentation the pricture very nicely shows the complex GHG cycles associated with LULUCF left and those for non-CO2 agriculture on the right. The latter are dealt with under the ESR. The picture also shows the specific features of LULUCF: LULUCF represents a highly complex and dynamic biological system with multiple sources (emissions) and sinks (removals); Difficult to distinguish which emissions/removals are actually human induced. Partly human induced (strongly linked to global natural carbon cycle) Mainly human-induced => More readily quantifiable Uncertainties? Additionality? Permanence? Leakage?

58 Average share of agriculture non-CO2 emissions in the ESR, 2008-12Figure 4, LULUCF IA

59 Share* of agriculture non-CO2 emissions in ESD 2008-2012Distribution of LULUCF credit limit for the ESD on the basis of share agriculture non-CO2 in the ESD, for Option F2. Source: Table 12 COM(2016)249 (LULUCF IA) Share* of agriculture non-CO2 emissions in ESD Average annual limit of LULUCF credits as a % of annual agriculture emissions Total limit of LULUCF credits over the period in million tonnes** Average annual limit of LULUCF credits as a % of annual 2005 ESD emissions) EU 16% 6% -280 1.0% IE 40% 15% -26.8 5.6% LT 28% -6.5 5.0% DK 27% -14.6 4.0% LV 25% -3.1 3.8% RO 24% 7.5% -13.2 1.7% BG 21% -4.1 1.5% FR 20% -58.2 EE -0.9 FI 18% -4.5 1.3% ES -29.1 SE -4.9 1.1% CY -0.6 EL -6.7 PT -5.2 NL -13.4 SI -1.3 PL -21.7 1.2% HU 14% 3.75% -2.1 0.5% SK -1.2 UK 13% -17.8 0.4% HR AT -2.5 BE -3.8 DE -22.3 CZ 11% -2.6 IT 10% -11.5 0.3% MT 8% -0.03 LU 7% -0.25 0.2% * Rounded to the nearest percentage point ** Calibrated to match 280 million tonnes Source: Table 12 COM(2016)249 (LULUCF IA)

60 Commission proposal for Land Use, Land Use Change and Forestry (LULUCF) RegulationIntegrates LULUCF into the 2030 climate and energy framework while keeping the land use sector as separate component Accounted emissions from land use to be entirely compensated by an equivalent removal of CO₂ from the atmosphere through action in the sector ('no debit rule'). If removals can be generated beyond this, then the MS can use limited amount of these credits generated in land use for compliance under Effort Sharing Regulation. At first only from credits from afforestation and agricultural land. Forest management credits will be considered once robustness is proven. Setting out accounting rules to determine compliance for the land use sector, building on the existing accounting rules developed under the Kyoto Protocol, while updating and improving them

61 EU ETS in a nutshell Europe's key instrument to reduce emissions - in place for 10 years Cap on emissions of more than 11,000 energy-intensive installations across EU covering around 45% of EU CO2 emissions; In the first decade of operation the EU ETS has delivered steady emission reductions, significant learning benefits and inspired many others to consider the use of carbon markets Continuing emissions reductions, EU close to 2020 target. But: surplus of around 2 bio allowances. Back-loading followed by MSR reform agreed to address surplus. Reform efforts increasingly reflected in price signal. Spearhead of EU climate policy

62 EU leaders guidance  ETS revision proposalEnvironmental aspects: Targets: At least 40% domestic emission reductions; ETS: 43% Cap to decrease by 2.2 % from 2021 onwards Auction share shall not decline  57% Economic aspects Free allocation to continue, benchmarks to be updated, 2 carbon leakage groups, more flexible production data Financing aspects: Low-carbon funding mechanisms: Innovation fund million allowances Modernisation fund - around 310 million allowances Free allocation to power in lower income MS STATE OF PLAY Negotiations on the proposal for revision of the EU ETS are ongoing in Council and Parliament. The timetable of the ITRE committee is a month in advance of ENVI, with the next step ITRE vote on 13 October. ENVI vote is planned for 8 December. The aim is to vote the whole report in the February 2017 EP plenary. • The current Slovak presidency has formally indicated its aim is to agree on a general approach (formally agreed position by Council) by the December ENVI Council,

63 Update of benchmark valuesExisting benchmark values derived from 2008 data => 22 years old in 2030 Update benchmark values twice – for and for 3 standard rates (0,5 % - 1 % - 1,5 % p.a.) Classification based on verified data The proposed approach … … reinforces innovation incentives … is simple and predictable … allows to decide major elements in the Directive The default rate of 1% is a realistic starting point - as a reduction of 1% per year means our industry will have 100 years to fully decarbonise! We are open to consider further refinement within the current framework (eg EP - additional category of 0.3%).

64 Carbon leakage groups – better focusCarbon leakage list valid for 10 years Evolution of current approach with two groups: High risk – installations receive 100% Low risk – installations receive 30% Build on existing criteria: trade & emission intensity ~50 major energy intensive sectors likely to keep high risk status = ~94% of emissions Qualitative assessment for borderline cases Continued state aid approach for indirect cost compensation Tiered approach – assessed also during the impact assessment. • The Commission has proposed continuation of the current approach: 2 carbon leakage groups. • A tiered approach is understood as a system with more than two carbon leakage groups. As analysed in the Commissions' impact assessment accompanying the ETS revision proposal, such a system could lead to even more targeted free allocation, differentiating further the risk of carbon leakage, but it could also increase complexity and administrative burden. • Qualitative assessment – Extending compensation to all exposed installations? + not prejudging the new state aid guidelines Compensation for indirect carbon costs via state aid schemes is a measure targeted at sectors exposed to risk of carbon leakage specifically due to high share of indirect carbon costs, i.e. electro-intensive industries. The list of eligible sectors has been determined based on clear quantitative criteria, including share of indirect additional costs induced by EU ETS in proportion to GVA of at least 5%, and was also supplemented with a consistent qualitative assessment. While the ceramics sector is not eligible to receive state aid for indirect costs, the current legislation does recognize exposure to risk of carbon leakage for the sector. Based on the carbon cost criterion (share of total carbon costs in proportion to GVA), the sector has been placed on carbon leakage lists ( and ), and accordingly was allocated free allowances. The industry has therefore received adequate protection against carbon leakage to date.

65 Need for a correction factor?Correction factor as a backstop provision remains, while need and size minimised by inter alia: Updating benchmark values twice in the period Eliminating choice and updating production figures used for allocation twice in the period Keeping carbon leakage list stable for 10 years Reducing number of sectors in high risk group Creating initial new entrants reserve with phase 3 unallocated allowances

66 Existing opt-out for small emittersThresholds: rated thermal input <35 MW and reported emissions < 25,000 tCO2 per year Used by only 7 Member States Covering less than 10% of eligible installations. Small emitters may have substantial capacity to emit  Opt out still requires continued monitoring, otherwise risk of loss of environmental integrity and risk of competition distortions

67 ETS revision: simplification for small emittersMany proposed changes contribute to simpler regulation: Renewed possibility for MS to opt-out small emitters, subject to equivalent measures Combined data collection and use for benchmarks and activity levels – simpler data collection exercise Stable carbon leakage list – more predictability Key parameters set in Directive – simpler and more predictable Possibility to set simpler rules for small projects under low-carbon funds Validity of allowances – no banking operation needed

68 Low carbon funding mechanisms

69 Free allocation to the power sectorContinue existing provisions for 10 lower income Member States Limited quantity - up to 40% national auction budget Increased transparency: for investments as of 10Mio € Member States to set up a competitive bidding process

70 Innovation fund Support for low-carbon demonstration400m allowances + 50m allowances from MSR, amount depending on carbon price For carbon capture and storage, innovative renewables New: also for low-carbon innovation in industrial sectors Increased maximum funding rate (60%) Possibility to receive funding when certain milestones are achieved

71 Modernisation fund 2% of ETS allowances (≈310 mio)Aim: modernise energy sector and energy efficiency For 10 lower income Member States with GDP per capita < 60% of EU average (2013) Distribution of funds among Member States agreed by European leaders Proposal sets out governance structure

72 Power generation mix in EU Reference scenarioSignificant development of RES (solar and wind onshore) Decline of generation from solid fuels Gas-fired generation decreases until 2020, but increases thereafter playing a balancing role Nuclear decreases slightly in the medium term