EU Climate Action Commissioner Connie Hedegaard yesterday (26 May) presented a paper making the case for moving towards a unilateral 30% cut in EU greenhouse gas emissions by 2020. But she failed to stand behind it, bowing to pressure from France and Germany.
The EU's climate chief unveiled a new communication arguing that increasing the EU's 2020 climate goal to a 30% emission reduction from 1990 levels would be both affordable and technically feasible.
The European Commission estimates that as a result of the economic downturn, the cost of meeting the current 20% target has dropped to €48bn per year until 2020, down from an initial estimate of €70 billion when the package was agreed.
Consequently, making the extra effort to reach 30% would now cost just€11bn more than what EU governments signed up to two years ago, it argued (EurActiv 03/05/10).
The crisis has also taken its toll on the EU emissions trading scheme (EU ETS), the bloc's flagship tool for cutting global warming emissions, by bringing down carbon prices.
Hedegaard warned that carbon prices might not automatically go up when Europe exits the crisis, requiring greater carbon-cutting ambitions to stimulate green investment.
But despite making the case for moving to 30%, the commissioner did not lend her support to unilateral EU action, saying that the shift would remain conditional on progress towards a new international climate treaty.
"Are the conditions right now? Would it make sense at this moment? My answer would be 'no'," she said.
Hedegaard said the next step would be to analyse the impact of raising the targets for individual member states so that they can revise their positions. The Spanish EU Presidency is planning to hold preliminary discussions on the issue at a June meeting of environment ministers, she added.
The ambiguity may have been an effort to manage expectations, as many member states are opposed to any move by the Commission to impose further carbon restraints on their industries. They will ultimately make the call if the target is to be raised.
On Tuesday, French and German industry ministers told journalists that Paris and Berlin would only back a move to -30% if other nations were to make comparable efforts (EurActiv 26/05/10).
Hedegaard insisted that the conditional offer remains the best strategy to leverage further commitments from other countries in the international negotiations, despite accusations that the strategy has so far seen few results. She said the EU could review the situation ahead of the Cancún climate conference to see how it could play its cards most effectively.
Safeguarding industrial competitiveness
The communication also assessed the risk of businesses relocating from the EU to countries with less stringent carbon constraints, known as 'carbon leakage'.
It concluded that the unused free allowances accruing to companies struggling with falling orders make it "less likely" that energy-intensive industries will lose ground to foreign businesses as a result of EU climate policies.
The extra effort required to move to a 30% target would only result in extra production losses of 1% for energy-intensive industries, with the chemicals industry worst hit, it added.
Hedegaard said that current measures to combat carbon leakage in the form of free allocations of emission allowances and the option to use offset credits thus "remain justified and should remain in place".
The Commission is continuing to look into border tariffs as an option, she said, before warning that it would be "extremely difficult" to create a system without placing a huge bureaucratic burden on industries.
A flux of recent studies have argued that the risk of carbon leakage has been hugely over-estimated and in fact only a few sectors are affected.
Businesses condemned the push towards 30% emission cuts, arguing that the target would put European companies at a competitive disadvantage.
BusinessEurope, the European business lobby, argued that climate change can only be tackled globally.
"We are [...] convinced that any further increase of the EU's unilateral 20% emission reduction target at this point in time would be unlikely to convince other nations to adopt comparable targets. Furthermore, it would send the wrong signal to European industry in times of economic crisis," said Jürgen R. Thumann, BusinessEurope's president.
The European Alliance of Energy Intensive Industries is opposed to a unilateral move and asked the European Commission to focus on international climate negotiations and long-term policy for achieving 2050 targets. It argued that scenarios suggesting that 30% is now affordable fail to take into account the fact that the economic downturn has "dramatically reduced the capacity of EU industry and society to cope with unilateral burdens".
"Global growth of the manufacturing industry will continue with or without EU participation," it said in a statement. "EU industries' exposure to competing economies without carbon constraints has by no means decreased and must not be further increased by additional, unilateral policies that have proven to be unsuccessful in international negotiations earlier on," it added.
The Confederation of British Industry (CBI) said it shared the Commission's view that now was not the right time to raise the 2020 emission reduction target.
"In the absence of a globally-binding climate deal, talk of unilaterally raising the EU 2020 target is premature. We believe a unilateral move by the EU could disadvantage manufacturers by subjecting them to higher costs than their international competitors," said Neil Bentley, CBI director for business environment. "Before any decisions are made, more work needs to be done on the potential impact that raising the target would have on different sectors and on UK energy security," he added.
However, the Prince of Wales' EU Corporate Leaders Group on Climate Change said there would be an economic case to review the 20% greenhouse gas reduction target even in the absence of a strong international agreement.
It added that a plan addressing the economic implications of the move for certain sectors should be drawn up to deliver progress in energy efficiency, funding low-carbon technologies and carbon capture and storage demonstration projects, among other key areas.
The European Wind Energy Association (EWEA) regretted that the Commission did not recommend an immediate unilateral move to a 30% reduction target, arguing that this would have maintained the momentum to keep first-mover advantage in green technologies.
"The move to 30% would give a very strong signal to investors that Europe means business when it talks about green growth and a sustainable economy. The offer to go to 30% did not work in the Copenhagen climate summit but it would work in keeping the EU at the forefront of the green technology race. Europe is a world leader in wind energy but faces serious competition from China, the US, Japan, South Korea and India. I would hate to see Europe losing out because it was lulled into a false sense of security due to the failure of the climate negotiations," said Christian Kjaer, EWEA chief executive.
The Climate Group argued that reaching agreement on a more ambitious European climate policy is "not about what treaty other major economies may or may not sign up to". Rather, it is about acting in the EU's strategic and economic self-interest by accelerating investment in future energy security, jobs and competitiveness.
"Some businessleaders fear that thousands of jobs could be lost and energy bills could soar if the EU increases its ambition beyond a 20% emissions reduction target. We, and many of the businesses we work with, believe the reverse is true: that European jobs could be lost and energy costs could soar as a direct consequence of the EU not advancing its ambition," said Luc Bas, head of Government Relations: Europe at the Climate Group.
"Government policy is the key driver of low-carbon employment opportunities and thus member states need to support a more ambitious target," he added.
Green NGOS welcomed the communication, but stressed that it was only a first step.
Climate NGO Sandbag pointed out that the EU ETS had failed to contrain the annual carbon supply across the capped sectors for any year except 2008. Citing possible solutions, it said the ETS cap should be redrawn in line with a 30% target, which would set a 34% target for the traded sector compared to 2005 levels and save over 1.4 billion tonnes of emissions in the 2013-2020 trading phase.
"It would also put Europe in position to claim a sizeable stake in the emerging clean energy economy estimated to be worth some $2.3 trillion by 2020," the NGO said.
WWF argued that it is now time for the facts about the benefits of a green economy to "ovecome the fear-mongering of special interests".
"WWF now calls on EU member states to support the Commission's communication and analysis. We are expecting the European Council to call for the policy changes needed to make the increased target a reality," said Jason Anderson, head of EU climate and energy policy at WWF's European Policy Office.
Climate Action Network Europe (CAN-Europe) welcomed the Commission's communication as a response to concerns that Europe lags behind China and the US on clean technologies. "Although there are weaknesses in the communication, notably in its lack of country-specific economic analyses and in its incomplete policy analyses, it is the first concrete step towards the EU making a unilateral commitment for a 30% unconditional greenhouse gas emission reduction," it said.
Friends of the Earth Europe (FoEE) said the European Commission had made a "bold contribution" to increasing the EU's climate ambitions. They called on the EU to now adopt a domestic 40% target.
"Connie Hedegaard has taken a cautious first step, but has fallen short of a clear call to increase EU emission cuts by 2020. If a 30% target is agreed we'll be closer to the crucial 40% figure that should give us a better chance of keeping global warming below two degrees. A 40% reduction is not only possible, but affordable and necessary," said David Heller, climate justice and energy campaigner at FoEE.
He stressed that the cuts must be made domestically rather than through offsetting to create European jobs.
Gert Jan Koopman, director for economic evaluation and structural reform at the European Commission, told a conference on Tuesday (25 May) that it was important not to set the target too high, as doing so would risk destroying competitiveness.
"We need intelligent policymaking because we have not gotten the budget to have expensive policies," he said.
Koopman was echoed by Ivan Hodac, secretary-general of the European Automobile Manufacturers' Association, who noted that "we should be ambitious, but realistically ambitious, because if we are too ambitious we risk losing competitiveness".
Jacques Delmoitiez, president of BASF Polurethanes, conceded the EU should be ambitious, but "first we should try to achieve the first target of 20% and then we can move beyond that target".
But Jennifer Morgan, director of the climate and energy programme at the Washington-based World Resources Institute, tried to bring a more international perspective to the 30% target. She said: "The EU sees it as a threat, whereas in the US they see it as a threat if the EU continues to lead."
- 21 June: EU environment ministers to discuss Commission report and possible move to -30%.