European Council agrees on the Energy and Climate Package

12.12.2008 | 11:26

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Brussels, 12 December 2008 – at the summit concluded in Brussels today, heads of government and state of the European Union approved the plan to spur economic growth in Europe and reached an agreement on the Energy and Climate Package.

According to Prime Minister Andrus Ansip, who attended the Council, the topic most important for Estonia is the Energy and Climate Package. The said package aims, on the one hand, to combat climate change, on the other hand, it strengthens the reliability of energy supply to the European Union.

The Prime Minister expressed satisfaction that the text of the agreement is fully in accordance with Estonia’s interests and that it considers the concerns of the countries with an insufficient link to the power grids in the rest of Europe.

Particularly, Ansip singled out the treatment of electricity import under the energy security heading in the Council's conclusions, as Estonia had wished.

“In a situation where in the future, the energy producers of the European Union will have to buy their carbon dioxide at quota auctions and producers in third countries will have no such obligation, the electricity produced in third countries will be at an advantage. For Estonia and the entire European Union, this is not only an issue of competition, but of energy security as well, and I am pleased that the Council's conclusions take this problem into consideration," Ansip said.

In terms of energy security, according to Ansip, the plan for Baltic Sea links proposed by the President of the European Commission is very important. The plan envisages partial funding by the European Union for the construction of the energy links. Estonia is hoping for a speedy implementation of this plan.

The extension of the period for the allocation of a free-of-charge quota to electricity producers was also considered positive by Ansip. The Energy and Climate Package provides that energy producers in certain Member States, also including Estonia, receive, to a limited extent, free emission quotas until 2020. A free quota is one option for supporting domestic electricity producers.

According to Ansip, Estonia will also gain from the so-called solidarity clause in the Climate Package. Based on the solidarity clause, ten per cent of the emissions quota will be re-distributed to poorer-than-average Member States, including Estonia. In addition, a further two per cent of the quota amount will be distributed to those countries who have reduced their emissions significantly between 1990 and 2005.

Another good achievement in the Climate Package, according to the Prime Minister, is an amendment in the principle for the computation of the reference year for emissions, which will make it possible to adopt for this a three year average (2005-2007).

“Depending on the price of carbon, Estonia will gain in the amount of 5 billion kroons from the consideration of early reduction and the alteration in the reference year. Under this system, Estonia will be the biggest winner by far,” Ansip said.

“What matters most, however, is the fact that in addition to the objective of combating global warming, the Energy and Climate Package will lay the foundations for a single energy market,” Prime Minister Andrus Ansip emphasised in summary.

Another central topic at the European Council was the economic and financial crisis and the measures to overcome it. The Council adopted the plan to spur economic growth developed by the European Commission. This proposes a large number of measures aiming to increase consumer confidence and demand, mitigate the impact of the crisis on the labour market and accelerate economic reorganisations to raise its competitiveness.

Prime Minister Andrus Ansip said that Estonia supports a coordinated approach to riding out the crisis, stressing at the same time the need to take into account the local situation in the Member States and their freedom to act.

“We must take into consideration the differing starting positions of the different countries,” Ansip said. “Estonia has already taken or is taking steps to spur its economy. It is good that the plan contains a number of positive proposals with regard to the simplification of the use of Structural Funds and the increasing of levels, which we will be able take into account as we make our own plans.”

The plan provides for the allocation of a total of budget funds of 1.5 per cent of the gross domestic product of the European Union. According to Ansip, Estonia’s additional measures this and next year will work out to be nearly twice the recommendation in the plan or up to 3 per cent of Estonia’s gross domestic product.

The European Council also agreed on proceeding with the Treaty of Lisbon. The government of Ireland is looking for possibilities to ratify the Treaty, as the heads of government of the Union take into consideration the concerns of the Irish, which prompted them to say no to the Treaty at the referendum. In a compromise advantageous also for Estonia, upon the entry into force of the Treaty of Lisbon, the European Commission will continue in a composition which will continue to include one citizen from each Member State.

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