Commission scrambling to finalise battered climate plans

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The Commission’s services are engaged in intense negotiations to finalise controversial energy and climate proposals, which are under heavy attack from industry groups and some member states, who warn the plans could destroy Europe’s competitiveness. Green groups have come to the defence of the proposals.

Preferential treatment 

A number of EU member states and major European industries, particularly in the energy-intensive sector, have become increasingly unnerved by the possible implications of the Commission’s proposals and have launched an aggressive lobbying effort to scale down the extent of the plans.

A major bone of contention is the revision of the EU ETS. Industry groups, such as the European Round Table of Industrialists (ERT) and BusinessEurope, are pushing for the continued allocation of a set amount of free permits, arguing that full auctioning of permits would be too costly and would drive factories and jobs out of the EU. 

The Commission seems to have taken the concerns of industries to heart, with a leaked draft of the 23 January package indicating the possibility of either preferential treatment for the energy-intensive sector or provisions to protect the sector from outside competition from countries with less stringent environmental laws (EURACTIV 10/01/08). 

Over the weekend (20 January), one Commission official confirmed the plans, saying that the EU’s aluminium, steel and cement industries would only be subjected to full permit auctioning gradually over a period of several years, reported Reuters.

Green groups argue that only full auctioning can guarantee the viability of the EU ETS, and have sounded the alarm, saying the EU’s climate policy is ‘under attack’.

U-turn on renewables?

The Commission’s thinking on renewables has come under severe scrutiny by member states and the renewables industry alike (EURACTIV 16/01/08). But the EU executive may scrap certain elements of its original plans, including the idea to force member states that fail to reach interim targets to grant third country companies access to domestic renewables support schemes, according to ENDS Europe. 

The Commission’s own scientists have also cast serious doubts on the 10% biofuels target, saying it could do more harm than good (EURACTIV 18/01/08), and NGOs have slammed the EU’s biofuels commitments, saying they will lead to ecosystem loss (EURACTIV 11/01/08).

But despite reports of intense negotiations on the issue within the Commission, EU Agriculture Commissioner Mariann Fischer Boel on Friday (18 January) said that a significant change in the EU’s biofuels policy should not be expected.

Belgium, Latvia, Austria and Sweden are the only remaining member states that continue to have serious reservations about the manner in which the Commission intends to distribute CO2 reduction targets, reported ENDS Europe. Under current plans, national targets will be set according to a country's GDP.

In a 17 January letter to EU Industry Commissioner Günter Verheugen, the European Round Table of Industrialists (ERT) argues that is is "too early" to move beyond a system of free CO2 permit allocation to a system "based on auctioning with free allocation by exception". Full auctioning would lead to an excessive removal of capital from industries, which would "slow down the necessary investment in more CO2 efficient technologies and projects", the letter says.

But Matthias Duwe, Director of Climate Action Network (CAN) Europe, argues that "if the EU keeps handing out free CO2 permits to big polluters, the whole instrument will fall flat on its face". 

"This is the final opportunuity to rectify the errors in the EU ETS and if the proposals for next week are not significantly strengthened, misinformation from industry will have dealt a severe blow to EU climate policy, which will no longer be credible to European citizens and to other countries", he said.

The European Trade Union Confederation (ETUC) is concerned that employment and social transition issues are absent from the energy and climate package, and is calling for the inclusion of "an import compensation mechanism, such as a carbon tax, which would equalize carbon costs for companies outside Europe and in Europe", the organisation said in a press statement. 

In March 2007, EU leaders committed to achieving a 20% reduction in the bloc's CO2 and other greenhouse gas (GHG) emissions by 2020. A 20% increase in renewable energy use as well as 10% more biofuels in the EU's transport mix by 2020 were also part of the binding commitments.

Since then, the Commission has been charged with formulating policy proposals to reach the targets. The 'energy and climate change package', expected on 23 January, will include proposals on renewable energies – including biofuels – and how the CO2 'burden' will be shared between member states. A revision of the EU Emissions Trading Scheme (EU ETS) for beyond 2013 is also expected. 

In addition, the Commission will present a communication on carbon capture and storage (CCS) along with a proposed revision of existing EU state aid rules to allow for more 'green' subsidies.

  • 23 Jan.: Commission to propose energy and climate package, including proposals on CO2 burden sharing, renewables, carbon capture and storage, the EU Emissions Trading Scheme (EU ETS) and state aids for environment.
  • 2nd half of 2008: first ministerial conclusions on package expected during French EU Presidency. 

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