Greenhouse Gas reporting and reduction mechanism COM (2007) 18 – Article 7a Stakeholder meeting 29 May 2007 European Commission

Climate Change - Background ‘Urgent action’ required to limit mean global temperature rise to +2°C EU Target to reduce GHG emissions 30% by 2020 (if other developed countries do the same). At least 20%. 60% by 2050 50% EU emissions already covered by EU ETS – (cement, paper, wood, combustion, refineries…)

EU Transport GHG emissions 21% of EU emissions – rising at 1.7% p.a. 98% dependent on fossil fuels Aviation, cars, fuels………. Lifecycle Transport Fuel emissions are currently approximately 1000 Mt CO2e

European Transport GHG Emissions

Transport GHG emissions 1990-2004 1.7% Kyoto Agreed 2.0% 1.0%

GHG reduction mechanism - rationale Transport fuel contribution by reducing carbon intensity - net increase in GHG emissions Recognises reductions from transport will be more modest and later than other sectors To ensure changes in fuels (e.g. tar sands, biofuels, coal to liquid etc.) don’t lead to increases in carbon intensity Holistic approach – Well to Tank Maximum flexibility

Scope Extraction (includes flaring) Transport Processing Fuel composition (e.g. additives) Distribution

Quantification Monitoring and reporting Obligation is on ‘suppliers’ (MS) level Single, simple methodology defined at EU level Already an obligation for refineries under EU ETS Methodologies under development (e.g. UK/NL) Default values where appropriate (suppliers could provide actual data if preferred) From 1/1/2009 Verification obligation on MS

Reductions Reductions from 1/1/2011 10% by 2020 1% of 2010 emissions p.a. Flexibility over years Joint reporting

How reductions can be achieved? Flexibility - suppliers are free to reduce GHG in any way e.g. Biofuels – e.g. 10% by 2020 Improvement in efficiency (e.g. refineries) Carbon Capture and Storage – significant potential Reduced flaring

Other reduction options Use of low carbon H2 Increasing use of co-generation Use of process waste heat Fuel composition “Total also intends to provide customers with a range of “energy-saving” products…these motor fuels reduce vehicle fuel consumption…..they reduce CO2 emissions by as much as 5%...” Innovation…..

1% reduction in CO2 intensity 1% reduction is 10 Mt per year 10 years BAU improvement in EU refineries (upper end of range) Reducing global flaring by 3% CCS of 7% of EU refinery emissions (8 projects like BP Peterhead) 1.1% high GHG saving biofuel 3% low GHG saving biofuel NG replacing ≈ 10% refinery fuel

Relation with EU ETS FQD 7a does not effect ETS operation The scheme will stimulate higher cost reduction options within refineries Allowances from required FQD emission reductions in refineries could be cancelled

Parallel developments in USA Potential for synergy with (evolving) CA/USA scheme Same level of ambition Same timescale Possibility of CA scheme becoming US wide EU/CA cooperation on methodologies

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