Will EU live up to its green ambition?

December 10, 2008

Paul Taylor Great Debate— Paul Taylor is a Reuters columnist. The opinions expressed are his own —

European Union leaders this week face a crucial credibility test of their ambition to lead the world in fighting climate change, just as President-elect Barack Obama is making it a top priority for the United States.

Will the EU give real teeth to its pledge to cut greenhouse gas emissions by at least 20 percent by 2020, draw 20 percent of their energy from renewable sources and cut energy consumption by 20 percent over the same period, or will it fall short?

The omens for the Dec. 11-12 summit are not too encouraging.

Europe’s climate goals were agreed in March 2007 in sunnier economic days. The financial crisis and looming recession have fueled pressure from heavy industry and some governments to go easy on implementation measures.

The EU will almost certainly reach a deal by the early hours of Saturday, which French President Nicolas Sarkozy will no doubt declare a triumph for his presidency of the bloc.

Yet the draft legislation has already been watered down to assuage industrial lobbies led by Germany, and more concessions will have to be made to placate coal-dependent Poland.

European Commission President Jose Manuel Barroso says he is confident the essentials of the EU executive’s proposal to turn Europe’s climate objectives into reality will remain intact.

But green campaigners say the result will be a toothless package that falls far short of the EU’s leadership boast.

“The glass is three-quarters empty. The emperor is standing there with no clothes,” says Stephan Singer, head of the European Climate Change and Energy Unit at pressure group WWF.


He and other environmentalists argue that the EU should be aiming to cut emissions by 30 percent in the light of impending “regime change” in the White House, Australia’s ratification of the Kyoto Protocol on climate change, and sigs of progress by China, India, Brazil, Indonesia and the Philippines.

Singer says the 27-nation EU will probably achieve its so-called 20-20-20 objectives, since European emissions are already almost 9 percent down on the 1990 starting point, leaving just 11 percent to cut in the next decade.

Moreover, EU states can make half those reductions far from home through a Clean Development Mechanism, which gives them carbon credits for funding emissions cuts in developing nations.

The emerging EU deal may not be tough enough to galvanize other nations into an agreement at U.N. climate negotiations in Copenhagen in December 2009 to save the planet from potentially catastrophic ecological consequences of global warming.

Fear of high initial costs for business and consumers has made many European governments wary of unilateral EU action, despite warnings from economists such as Britain’s Sir Nicholas Stern that the price of inaction will eventually be far higher.

Auto manufacturers have been given an additional three years till 2015 to meet a binding limit on carbon emissions from cars, and fines for non-compliance have been tapered in a way that may encourage some producers to overstep the mark.


The main climbdowns have been on the European Emissions Trading Scheme (ETS), which caps overall output of carbon dioxide, the main greenhouse gas, and makes companies buy and sell permits to emit CO2 according to their needs.

The Commission proposed requiring industry to buy all or most ETS allowances at auction from 2013. Power companies would have to buy 100 percent of their permits from the outset.

However, energy-intensive sectors such as steel, glass, chemicals, aluminum, ceramics and cement, which threatened to relocate outside Europe if forced to pay for pollution permits, will now be granted free allowances — at least initially — unless there is an international agreement.

The criteria proposed by the French presidency to determine which industries are exposed to international competition and are hence deemed unable to pass on auctioning costs to customers seem particularly generous to business.

This is a victory for German Chancellor Angela Merkel, whose green credentials have been tarnished by industrial lobbying since she presided over the 20-20-20 accord last year.

Merkel is determined not to jeopardize jobs in Germany, Europe’s biggest industrial economy, in an election year.

Exempting many companies from having to buy permits will reduce the incentive to use energy efficiently and shrink the proceeds from auctioning earmarked to fund clean energy projects in poorer EU states and developing countries.

Even electricity generators may now get some free carbon allowances in countries that are highly dependent on coal.

This is a sop to Poland and other central European states that are heavily reliant on coal and do not want to become more dependent on Russia by switching to less polluting gas.


A summit deal may hinge on Germany and Britain agreeing to earmark more EU money for next-generation clean coal power stations, cross-border electricity grid interconnectors and perhaps new nuclear plants for Poland and its Baltic neighbors.

On the plus side, European countries have made significant progress on legislation to promote renewable energy sources such as wind, wave, tidal and solar power.

And they are well set to reap big energy efficiency gains through better building design, insulation, lighting, heating and cooling.

So the EU’s green credibility may just about survive the inevitable compromises and delays necessary to get a deal at the Brussels summit, although environmental campaigners are bound to denounce a sell-out.

“In the end, we will achieve 80 to 90 percent of our objectives and the critics will scream about the other 10 or 20 percent,” sighed an EU official involved in the climate drive.

“But Obama will look at what Europe is doing and see he has a partner in the fight against climate change.”

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