EU climate goals under pressure as recession looms
Poland has joined Germany in calling for industry exemptions to EU climate rules as a recession in Europe’s major economies is casting doubts on whether Brussels will be able to push through its ambitious CO2 reduction programme.
EU Industry Commissioner Günter Verheugen yesterday (25 September) gave specific assurances to Poland that 100% free CO2 permit allocation “should be possible” for the country’s energy intensive industries.
Verheugen, speaking at a conference on the Competitiveness Council, repeated the Commission’s position that exemptions should not be formalised before an international climate change deal is reached in December 2009, and insisted that pushing industries out of Europe is not the aim of the EU climate package.
But Brussels’ resolve on the issue may be softening. A non-paper circulated by the Commission cites the aluminium, steel and cement sectors as "likely to be strongly affected [and] would therefore be amongst the substances likely to benefit from partial to totally free allocations" (EurActiv 22/09/08).
The growing financial crisis in the US, which analysts say will have considerable recessionary impacts on major EU economies like Germany, the UK and France, may also make it increasingly difficult for the Commission to justify higher operating costs for industries.
Member states are getting nervous about asking their industries to pay more for CO2 pollution, says Christian Egenhofer, a senior researcher at the Centre for European Policy Studies (CEPS) in Brussels. The “assumptions have gone”, Egenhofer said in reference to likely declining investments and growing constraints on governments’ abilities to use macro-economic instruments towards ‘green’ aims.
Poland’s leaders in particular have been crying foul, arguing that their country’s coal dependent economy, which is still struggling to catch up with Western European economies that were allowed to emit CO2 with impunity for decades, could be severely undermined by the climate and energy package. The country's miners yesterday (25 September) marched on Brussels in direct protest of the EU's climate plans.
Polish concerns are mirrored by the three other members of the 'Visegrad Group' - Hungary, the Slovak Republic and the Czech Republic - which have banded together with several of the EU's new member states to call for a revision of their national targets for cutting greenhouse gas emissions (EurActiv 02/06/08). A slight delay in the adoption of the EU's climate package to March 2009 may also be necessary to ensure fairness, according to a joint statement by the Visegrad group. This is in contrast to the agenda set by the French EU Presidency, which is pushing for an adoption of the package by December 2008.
The demands of the Visegrad countries were given indirect backing at the beginning of the week (22 September) when German Chancellor Angela Merkel announced that her government “could not support the destruction of German jobs through an ill-advised climate policy”, the Financial Times reported.
EU Environment Commissioner Stavros Dimas, meanwhile, argues that an economic slowdown should not stall the EU’s climate efforts. "The financial crisis is here one day and it is gone another day. But the climate crisis will be there always and we must face it," Dimas told reporters in Brussels on 24 September.
Energy-intensive industries in the EU claim that, as the EU tightens its carbon 'belt', producers operating in countries where pollution is cheaper will drive European operators out of business. A global climate change deal, with emissions reduction commitments from both developed and developing countries, is meant to resolve any such imbalance, but negotiations are progressing slowly and will only be concluded in Copenhagen in December 2009.
The EU's aluminium, cement, steel and other heavy industries want Brussels to spell out which sectors could benefit from safeguards in the form of free CO2 emissions allowances before December 2009 in case international climate talks fail. Otherwise, warn heavy industries, the EU will be at risk of 'carbon leakage', meaning that factories would be forced to evacuate their operations, jobs and - crucially - emissions to third countries.
But the Commission does not want to preclude the outcome of global climate talks by publishing such a list before the discussions wrap up. In its proposal for a revised EU Emissions Trading Scheme (EU ETS) for beyond 2012, the EU executive acknowledges the problem and pledges to identify sectors and special exemptions by 30 June 2011.