2017 Annual Report

10 Years Promoting Europe's

Climate Leadership

Caio Koch-Weser,

Chairperson of the board

“ECF has been the organising channel through which resources have been brought to strengthen civil-society and the climate community in Europe as a whole.”

Laurence Tubiana,

Chief Executive Officer

“Together, with the collaboration of highly dedicated and engaged colleagues, we set a new strategic course in 2017 that will enable us to leverage the ECF’s proven ability to advance sound technical and policy advice into shaping the political narrative.”

As proclaimed by Commission Vice-President Maroš Šefcovic, 2017 was the “Year of Delivery” for the Energy Union. Much debate centred on the Clean Energy Package, the biggest EU legislative package on climate and energy in history, which will set the common EU rules for investments in renewable energy and energy efficiency. In addition, progress was made on the reform of the EU Emissions Trading System (ETS), which improves carbon pricing in Europe by making it easier to cancel allowances and stabilise prices, and on the new Effort Sharing Regulation, which sets national limits for emissions that are not covered by the ETS while preserving a basic level of environmental integrity.

The EU legislative process is a major focus for ECF grantees as it is the place where European solutions for increasing clean energy investments are being debated. Given its importance, many ECF partners were involved in 2017, from campaigning NGOs like CAN-Europe, WWF and Carbon Market Watch to policy advisors like E3G, Agora Energiewende, IDDRI, Ecologic Institute, RAP, BPIE and CISL.

Despite progress on all these files, the core problem remains that they assume a level of EU ambition that is incompatible with the Paris Agreement. The EU’s stated ambition of a 27% share of renewable energy by 2030, for instance, is insufficient to accelerate the pace of clean energy investments in line with a long-term trajectory of well below 2oC. In 2017, the ECF and its grantees prepared the ground to make this gap visible and make the case for higher ambition in Europe to 2030 and beyond. ECF grantees helped make the case for stronger clean energy targets, opposition to coal subsidies and the use of EU funds for strategic energy infrastructure on electricity rather than natural-gas projects.

To support public education around these policy debates, the ECF and its partners published an agenda-setting piece of analysis on the European energy sector in November 2017. The report, “Cleaner, Smarter, Cheaper: Responding to Opportunities in a Changing Energy System”, found that Europe can aim for much more renewable energy by 2030 at similar costs (at least up to 61% compared to the 49% under the current Commission proposal); that gas plays a much smaller role in balancing variable renewable energy sources than currently perceived, even as we retire coal in Europe, due to smart electrification and demand side flexibility, which challenges the perception around gas as a bridging or transition fuel; and that the power sector can reduce emissions much faster than currently foreseen. This points to ways that the EU can set itself more ambitious targets in the light of the Paris Agreement.

The ECF also worked to ensure that the full potential of reduced energy demand be taken into account in the revisions of the Energy Efficiency Directive and the Energy Performance of Buildings Directive, as well as the Clean Energy Package more generally.

Alongside these efforts, the ECF and its partners helped make the case in 2017 that the EU should put in place a long-term system of governance to help the bloc achieve net-zero GHG emissions by 2050, in line with the Paris Agreement. This work was in response to the Commission’s legislative proposal for a Regulation on Energy Union Governance, part of the Clean Energy Package. The proposal represented a good, although inadequate, first step towards Paris-compatible governance by adopting a more dynamic, integrated and whole economy framework. The ECF and its partners worked with experts and advocates at EU and Member State levels to strengthen the proposed Regulation’s 2050 dimension, in particular by making the case for an EU commitment to achieve carbon neutrality by 2050 and for obligations on Member States and the Commission to adopt participative long-term strategies for achieving that objective. Negotiations went well in 2017: In December, the relevant European Parliament committees voted in favour of an EU commitment to net-zero emissions by 2050 at the latest; the debate will continue in 2018. The ECF and its partners will continue to make the case for a long-term framework, potentially laying the foundations of an EU “2050 Climate Law”. This would signal to the world the seriousness of the EU’s intention to implement the Paris Agreement and would establish the EU as a pioneer in the legal mechanisms to achieve this.

Building the will for climate action at the national level

In 2017, the ECF and its partners coordinated activities across a number of countries in Europe to build support for European climate action from the national level up. Key alliances such as that between France and Germany continued to play a vital role, but it was also important to foster a dialogue between all EU member states to avoid any perception of a “two-speed” Europe on progressive energy and climate policies. It was also important to encourage the UK’s continued leadership role on climate, regardless of its future relations with the EU.

Germany

In Germany, the ECF´s partners and grantees from all parts of society—NGOs, businesses, and science—capitalised on the occasions of the G20 summit in Hamburg and COP23 in Bonn to put climate and the Energiewende high on the public agenda during an election year. Highlights were a high-level event in Hamburg’s city hall in July organised by a newly initiated platform for foundations, “F20”, which showcased the economic and social opportunities of the transition. The ECF supported a demonstration in Bonn in November that attracted an unexpectedly large crowd of 25,000 people—the biggest climate demonstration in Germany to date. This was complemented by a widely publicised joint business declaration by over 50 companies, coordinated by ECF grantee 2-Degree-Foundation, asking the future government for stringent climate action and a coal phase-out.

While there is a broad societal consensus in Germany on the importance of climate leadership and a coal phase-out, GHG emissions are not decreasing sufficiently. To address this, the ECF worked in 2017 to inform the public debate about the importance for any new government, following national elections in Germany, to implement urgent measures in order to stay on track for its Paris commitments. This work builds on the ability of the ECF’s partners to simultaneously feed their expertise into the public debate while making the case for a just transition to a low-carbon economy, due to the benefits it will bring for the economy, for health and for the well-being of future generations.

France

In 2017, the ECF and its partners in France aimed to ensure that the presidential debate, and the agenda of the newly elected President, would be fully informed by the importance of climate action at both the national and international levels. The election of Emmanuel Macron as president provided new opportunities for French leadership on climate. While the environment was not a top priority for candidate Macron, it is now a key part of President Macron’s programme. His choice of Nicolas Hulot as Minister for the Ecological and Inclusive Transition was a first positive signal, followed in July by the announcement of the Plan Climat. Among the various policies announced were a commitment to develop a national strategy for reaching carbon neutrality by 2050, a ban of fossil-fuel production by 2040, a coal production phase out by 2020, the increase of the carbon tax beyond €100 per tonne by 2030 and €14bn of investments in energy efficiency for buildings in the next five years. The ECF and its partners helped to ensure that this new policy direction was properly introduced into the European debate.

Macron’s victory and his enthusiastic support for the European project also helped rebuild public trust in the EU, which is an essential platform for progress on climate change in Europe and internationally. At the global level, Macron provided a positive counterpoint to President Trump’s stated intention to withdraw the United States from the Paris agreement, by hosting the One Planet Summit in Paris on 12 December 2017, with support from the ECF and many of its grantees. This summit was an important milestone in the run up to the vital international negotiations in 2020.

United Kingdom

In the United Kingdom, the ECF and its grantees helped build awareness around the opportunities for the UK to embrace a clean growth strategy and lead a new global diplomatic alliance on the coal phase-out, despite the dominance of Brexit in the county’s political discourse. There have been encouraging signs of progress on cross-party support for ambitious action on climate and energy. In October 2017, the UK government published a much-delayed Clean Growth Strategy setting out how it intends to meet ambitious, legally binding carbon budgets to 2032. The strategy marked a significant shift in the government’s approach to decarbonisation—placing a strong emphasis on the potential for low-carbon industries and innovation to drive economic growth. The strategy was high on ambition but thin on detail, and substantial further work will be needed particularly around transport, heating and land use to ensure the UK can deliver on its binding climate targets. ECF grantees have been working to develop credible policy solutions and also to shift the media and political narrative on climate action away from the earlier focus on energy costs and competitiveness towards an understanding that decarbonisation can be good for the economy. Polling from centre-right think tank Bright Blue, which revealed young people and centre-right voters regard climate and clean energy as a priority, made a huge impact among Conservative Party strategists and government ministers. Furthermore, building on its rapid phase-out of coal power (responsible for 80% of the country’s emission reductions in the past five years) the UK launched, with Canada, the Powering Past Coal Alliance of countries, regions, cities and businesses committed to moving the world away from burning coal and towards cleaner power sources. By the end of 2017, 58 partners had signed up, including 27 countries, many from within the EU.

Poland

In Poland, the most coal-dependent country in Europe, the ECF and its partners worked to change the political landscape around coal. This work addressed two challenges: a general recognition that fossil fuels play a significant role in the Polish economy, and the huge socioeconomic and political influence of the mining and energy sectors. In 2017 this work particularly focused on air pollution—the biggest environmental threat in Poland and the direct result of burning coal, not only for electricity but also for home heating. The ECF-funded campaign made significant progress. The Polish government announced a “Clean Air Programme”, with new regulations for home-heating appliances, restrictive solid-fuel standards and social projects addressing energy poverty. Seven out of sixteen Polish regions introduced local bans for coal usage in the household sector. The national government introduced a new ordinance for coal boilers that is compliant with the EU Ecodesign Directive. In December 2017, the Prime Minister appointed a new undersecretary of state for air quality, in charge for preparation and implementation of the Clean Air Programme. And the growing negative sentiment toward coal, shared by two thirds of society and informed by ECF-funded campaigning and research, helped to inform the government energy strategy about the limited utility of coal in Poland’s future power generation.

Accelerating the transition to clean power

Bonn‭, ‬Germany‭, ‬Nov 4‭, ‬2017‭ - ‬Europe Beyond Coal groups march in support of a coal phase out ahead of the COP23‭ ‬international climate negotiations‭. ‬The march comes two days after the launch of the new initiative‭, ‬which draws together the work of 28‭ ‬NGOs across Europe to accelerate the closure of coal plants across Europe‭, ‬Europe Beyond Coal‭, ‬Felix von der Osten

The power sector is a major source of CO2 emissions, and coal-fired generation is the dominant source. Coal plants are also major sources of air pollution—in 2015, pollution from the EU’s coal fleet led to 19,500 premature deaths and health costs put at €29 billion to €54 billion. In November 2017, a large coalition of civil society groups from across Europe came together to launch the Europe Beyond Coal campaign, which aims to secure a just transition from coal to renewables-based energy systems. The ECF is proud to support the campaign and many of its participating organisations.

The ECF continued its work in 2017 to support efforts in a growing number of countries, cities, and businesses and in the investor community to move away from coal. The UK reconfirmed its commitment to phase out coal by 2025—and in 2017 recorded its first coal-free day of power generation since the industrial revolution. The new Netherlands government committed to coal phase-out by 2030, including three just-commissioned plants. Italy, France and Portugal also announced coal phase-outs and Denmark and Finland firmed up previous commitments. In Germany, the biggest coal-using country in Europe, the issue of a managed exit from coal power generation is a key issue in the coalition talks following the 2017 federal election. 2017 also saw the adoption of new EU pollution standards for large combustion plants, building on many years of technical work by ECF grantees. If implemented robustly, these “BREF” standards will significantly reduce the health impacts caused by pollution from coal plants.

Towards a sustainable mobility of passengers and goods

The ECF continued its work in 2017 to reduce the consumption of oil for mobility of passengers and goods in Europe. In Europe, countries struggled to reconcile ambitious overall climate goals with the revelation that several economies were heavily invested in diesel technology, which had previously been conceived of as climate-friendly but now looked to be on the brink of obsolescence. The scale of the challenge of moving rapidly away from diesel was illustrated in the Low-Carbon Mobility in Germany: Challenges and Economic Opportunities report by Cambridge Econometrics showing that in Germany alone 600,000 jobs are linked to the production of high-carbon vehicle technologies. The ECF sought to increase public awareness of the wider social and economic impacts of the transition to low-carbon mobility through a study that found that such a transition would boost Germany’s economy. This study was endorsed by national trade-unions, the biggest German car manufacturers and their automotive association.

The ECF’s grantees continued their work to expose automobile test-cycle cheating. An ECF grantee, the ICCT, showed the gap between laboratory tests and on-road performance had widened to as much as 40%. Grassroots NGOs funded by the ECF in several EU Member States worked hard to increase public awareness on the growing gap between the test-cycle and real-world driving emissions. A wide-ranging investigation by the European Parliament blamed the poor implementation of testing on collusion between car manufacturers and their national governments. In parallel, the system for testing new cars and putting them on the EU market was reformed, giving the European Commission greater powers to oversee the process and hand out fines for non-compliance. At the same time, the testing cycle itself was replaced with the improved Worldwide harmonised Light vehicles Test Procedure. Cities reacted to higher-than-expected diesel emissions by proposing diesel bans. This piled pressure on national governments, with five governments announcing they would phase out internal-combustion engines in the period 2030-2040. In November, the European Commission set CO2 standards for the EU—the world’s second-largest car market—with a 30% reduction target for cars between 2021 and 2030, which could equate to 5% annual improvement if the enforcement regime is properly tightened up in parallel. The Commission also committed to bringing forward Heavy Duty Vehicle (HDV) standards in 2018. The ECF helped inform the public debate around improved auto standards by supporting the development of a closely aligned community of experts working on sustainable mobility, which led to ambitious policies for LDV emissions and biofuels, as well as the promise of EU policy action on HDVs.

Finally, the ECF and its grantees worked to fill the sustainability gap in the proposed new EU Renewable Energy Directive, which looked set to reduce the role of unsustainable palm oil biodiesel and increase the focus on second-generation biofuels from wastes and residues. In France, the ECF and Fondation pour la Nature et l’Homme worked to build consensus about the indirect emissions from electric cars, seeking to rebut oil industry misinformation and to address the concerns of NGOs worried about the role of nuclear in providing the required power.

Reducing demand for energy across Europe

In addition to its work on the EU legislative files, the ECF also continued to ensure energy efficiency is a priority in key EU Member States. In Poland, ECF grantee Krakow Smog Alert highlighted the need for efficiency improvements in buildings to combat air pollution from household heating stoves and energy poverty. The Polish Institute for Environmental Economics worked closely with the national government and the World Bank to develop financial instruments to support measures in single-family homes. In Germany, the ECF supported DENEFF to develop a set of tools to engage and facilitate energy efficiency financing in commercial buildings (Finanzforum Energieeffizienz). In France, Renovons!, a multistakeholder campaign on energy poverty supported by a wide range of social justice and environmental organisations and the private sector, was launched to demand better quality and more energy-efficient homes. Finally, the UK government’s Clean Growth Strategy and National Infrastructure Assessment places energy efficiency at the heart of the plan and calls for energy efficiency improvements to be an infrastructure priority. This milestone represents several years of effort by ECF grantees E3G and RAP.

At the same time, the ECF began to refocus its efforts in 2017 to take a more systemic approach to the role of buildings in urban systems and broaden the coalition of engaged stakeholders by addressing the social and health benefits of zero-emission buildings. This extends to resource efficiency—and “circularity”—rather than just energy efficiency, to maximise not only end-use efficiency of buildings and equipment but also minimise the embedded emissions in materials and products. The circular economy opens up new avenues to truly systemic solutions for a transition to alternative models for economic productivity, reduction of GHG emissions and of raw material use. The ECF explored how to accelerate a shift to a circular economy and ensure that (new) materials, products and services maximise GHG emissions reduction by embedding circularity requirements in relevant regulations, standards and public procurement guidelines.

In September 2017, Europe’s statistics agency, Eurostat, published a revised guidance note on Energy Performance Contracts in Government Accounts, which increases the possibilities for public authorities to keep energy efficiency investments off their balance sheet and to spread the costs over the duration of the contract. This means that governments do not have to increase their deficit and debt reported for energy-efficiency investments, eliminating a major barrier to public-sector investment in energy efficiency. The change was helped by analysis commissioned by the ECF and by engagement by its grantees and partners, led by E3G and involving a wide network of experts and stakeholders.

Delivering both decarbonisation and competitiveness through innovation

In establishing the Industrial Innovation for Competitiveness (i24c) platform in 2015, the ECF developed thought-leading research and engagement of key stakeholders in the discussion around how a new European industrial strategy can prioritise innovation to deliver an industrial economy consistent with the Paris Agreement. i24c’s reports in 2016 and 2017 on energy, building and mobility, as well as wider questions around how industrial and innovation policy can be developed, helped focus the public debate around EU industrial policy on the opportunities presented by the transition to a new economy. The ECF helped demonstrate why a “whole of government” political priority is necessary for this, and how particular technology developments, such as industrial CCS can be fostered at EU level and in key industrial regions. In 2017, the ECF focused on the cement and construction industries, contributing to the Commission’s decision to establish a new industrial initiative focused on the construction sector. The ECF is now also supporting a major new research effort, with international as well as European dimensions, to investigate how a circular economy approach can deliver transformative decarbonisation of key materials and industrial sectors. In 2017 this work helped inform EU policy discussions on the plastics, metals, mobility and construction value chains.

Reducing the climate and air-pollution impacts of shipping

GHG emissions from the shipping sector are projected to grow between 50-250% by 2050 and are at odds with the Paris Agreement. It is technically feasible for the sector to move beyond its current reliance on fossil fuels and ultimately reach net-zero emissions, but much more needs to be done. In 2017 the ECF and its partners helped drive a campaign to reduce the risks of the use and carriage of heavy fuel oil (HFO) as ship fuel in the Arctic. Facilitated by the ECF, in January 2017 the Clean Arctic Alliance and cruise ship operator Hurtigruten launched the Arctic Commitment. Its signatories call on the International Maritime Organization (IMO) to phase out HFO from Arctic shipping by 2020. By end 2017 it had been signed by more than 70 organisations and high-profile individuals, including industry and indigenous associations, scientists, MEPs, and Arctic explorers. The campaign built a groundswell of support and helped ensure that measures to reduce the risks of HFO to the Arctic will be discussed at the IMO for the first time in April 2018.

Towards a Paris-compliant financial system

In order to meet the internationally agreed target of keeping the global average temperature rise well below 2°C, patterns of investment, business models and economic regimes will need to change. The ECF and its partners continued work to use the private cost of capital as a lever to shift trillions of investment capital from high- to low-carbon assets and thus in favour of the low-carbon transition. In 2016/2017, the Finance Dialogue (FD), an initiative hosted by the ECF to encourage co-development of projects among funders, NGOs and investors, successfully facilitated a campaign around the Task Force on Climate-related Financial Disclosures (TCFD). The FD partnered with WWF, UNPRI, ShareAction and others to promote standards of transparency on carbon risk as key element in corporate reporting. The aim of the TCFD campaign was to encourage disclosure of climate related risks by the corporate sector. In fact, the campaign helped fuel an even broader discourse on policy and regulation on sustainable finance. Correspondingly, as the low-carbon finance transition has gained speed, the ECF started new work on a 2050 pathway to align emerging European financial policy and regulation with the Paris Agreement.

Challenging the economic orthodoxy

The rise of populism presents a serious new challenge for climate policies. Moreover, there is a growing perception that recent political developments reflect a deeper crisis of globalisation and the dominant market-based economic paradigm, which is now seen to have produced important inequalities and unsustainable trends during the last decades. In this context, in 2017 the ECF brought together European thinkers and actors to reflect on how to accelerate the search for a new and more politically acceptable economic paradigm with climate policies at its core. A high-level kick-off event took place under the German presidency of the G20, including Nobel laureate economist George Akerlof, as well as the heads of leading economic institutes like INET (Berlin), DIW (Berlin), OFCE (Paris) and IPPR (London). To explore the potential of possible new approaches, the ECF commissioned introductory studies describing the existing paradigm of economic thought and emerging ideas in the areas of trade, inequality, carbon pricing, financial markets, the euro and fiscal policy. One study looked at the theory of change of paradigm shifts. The studies were discussed at a workshop in Edinburgh by experts including Adair Turner and Ottmar Edenhofer.  The ultimate goal of this initiative is to attempt to integrate the reality of climate action into a new, fairer economic orthodoxy. To this end, the project will explore the opportunity of creating an open-minded Berlin platform that will be closely linked to similar approaches in the UK/US and help to shape the future role of Europe and climate protection in such a new-paradigm world.

Developing long-term pathways to sustainable development

The ECF developed the 2050 Pathways Platform, launched at the end of 2016, to support the development of robust long-term decarbonisation pathways in priority countries and to create political momentum for long-term climate objectives as driver of near-term ambition through better planning. The ECF focused in early 2017 on making the Platform operational, through consulting with its members (countries, local governments, businesses) and partners (think-tanks, universities and service providers) to identify its priorities. It became fully operational in the middle of the year, with the release of guidelines for long-term pathways, followed by public events during Climate Week in New York and a high-level event hosted by the Fiji Prime Minister at COP23 in Bonn in November 2017.

The last was the opportunity to launch the Platform’s Pacific Package, signaling the importance of long-term pathways through the engagement of a region at the forefront of climate ambition and resilience. The Pacific Package will start with a 2050 pathways handbook adapted to the region’s specific needs, leading to the development of pathway exercises in a few countries in late 2018. The Platform also supported the development of the Marshall Islands’ long-term strategy, to be released in 2018. Based on its network and unique diplomatic reach, the Platform Secretariat was mandated by the French government to gather countries together in a Carbon Neutrality Coalition. This will aim to lead by example and release ambitious long-term pathways well before 2020, their due date under the Paris Agreement. The Coalition’s declaration, bringing together 16 countries and 32 cities, was announced as one of the 12 commitments of the One Planet Summit on 12 December in Paris.

Transforming the power system in priority regions around the world

The ECF’s International Forum for Energy (IFE) initiative supports organisations in South East and East Asia to rapidly transform the power system of this key region. This region is important as the locus of the most new coal-fired generation in the world outside China and India, while at the same time having some of the best potentials for renewable energy. By supporting technical assistance to governments, building up technical capacity in key institutions in relevant locations and supporting civil society groups, as well as working alongside international and regional financial institutions, IFE can help bring the price of renewables to levels competitive with more polluting generation more quickly and thus help realise a systematic decarbonisation strategy for the region.

In its first year IFE supported technical assistance by the U.S. National Renewable Energy Lab and the Danish Energy Agency to support the Vietnamese government in energy systems planning and renewables integration. IFE also supported the expansion of two regional expert hubs in Vietnam and Indonesia. The ECF is grateful to CleanED, based at the University of Science and Technology in Hanoi, Vietnam, and the Institute for Essential Services Reform, in Jakarta, Indonesia, for their partnership in developing IFE in the region. These new partners add to the growing network of think tanks around the world dedicated to a sustainable future. This approach has been expertly enabled by IFE’s key partner, the Agora Energiewende.

Strengthening global climate policy

In 2017, the ECF launched the International Climate Politics Hub (ICPH) as an independent and informal diplomatic advisory service that aims to enhance ambition on global climate action. ICPH brings together a global team of experts on climate politics, science, diplomacy, communications, and mobilisation to provide political strategy that informs tactical interventions undertaken by a broad range of constituencies and individuals. Several key ECF partners and grantees are part of the ICPH network, including E3G, Germanwatch, CAN-France, and others.