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Europe Forced to Recalculate Climate Change Policies

Last week, the European Union’s energy ministers swiftly stepped in to finally put an end to growing calls to unilaterally increase the block’s emission-cutting target to 30%, as economic concerns are overshadowing concerns about climate change.

The debate over whether to increase the current target of reducing greenhouse gas emissions 20% from 1990 levels by 2020 dates back to late 2008 when EU leaders first endorsed the idea and intensified with the proximity of Copenhagen’s climate change late last year.

But the failed negotiation appeared to rule out any unilateral move from Europe, which officially conditions any additional reductions to “comparable” or “commensurate” measures in other major economies.

Momentum for a unilateral 30% cut was rekindled as environmental groups with the support of the block’s heavyweights -- Germany, France and the UK -- argued that targets should be revised as a result of the recession and plummeting emissions. Additional investment would allow Europe to retain the lead in climate change technologies, while stimulating the economy, they said.

The debate was intense and involved high-level negotiations, but it was finally put to rest when EU energy ministers who “reiterated” climate change commitments, included the block’s unwillingness to increase the 20% emission cut target unilaterally as part of Europe’s 2011-2020 energy strategy.

The guidelines laid out are the foundation of the long-term strategy heads of state are expected to endorse next spring, in effect ruling out any future unilateral cut for the remaining of the decade. In early May, the EU Commission, the block’s executive branch, strongly endorsed more robust climate change commitments as part of an analysis on the impact of increasing the current target.

Northern European countries, including the UK and Germany, continued to back the idea ahead of the Commission’s presentation of its conclusions, even as Eastern European and southern European countries worse hit in the most recent debt crisis grew more skeptical and mute.

“Both the international context and the economic analysis suggest that the EU is right to continue preparing for a move to a 30% target,” the EU Commission said. “Significant long-term benefits for Europe's competitiveness can be reaped.”

The Commission analysis argues the recession and its aftermath have reduced the cost of meeting the 20% target by about a third to $58 billion annually until 2020 from the $84 billion estimated in 2008.

Greenhouse gas emissions plummeted in 2009 for a fourth year, with industrial output decreasing 11%. A decline in energy demand coupled with rising oil prices decreased the cost of releasing 1 ton of CO2 under the European Trading Scheme.

The Commission study argues that by adding $13 billion a year to the originally estimated price tag, that is almost $100 billion a year in total, the EU would be able to cut overall emissions 30% by 2020, all while stimulating the economy and decreasing oil and gas demand.

Furthermore, the reduced cost of meeting the 20% target undermines the EU’s carbon market by reducing the economic incentives to invest in climate change industries.

Armies of environmentalists and industry lobbyist eager to weigh in on the landmark decision began to mobilize. At stake are billions of dollar in new investment, thousands of jobs, and indeed the energy future of Europe.

Those opposed argued it was not the time to increase targets and demanded financial help from countries supporting the proposal, especially Germany. The sovereign debt crisis and risk of default further eroded support from several member governments that simply could not commit their economies to further strain. On top of that, several reports also contested claims more jobs would be created. A French government study concluded there would be significant risk of carbon leakage, that is, of industries moving to other parts of the world to avoid punitive climate change costs.

But one day before the Commission position was presented in the form of a communication to the Parliament and the Council, France and Germany derailed any chance of a policy chance when they backtracked and said the EU shouldn’t move without a global agreement. “We believe that after the failure of the Copenhagen summit, we must give ourselves a bit more time,” said German Economy Minister Rainer Bruederle.

“We have shared our concerns at the commission's proposal,” said French Industry Minister Christian Estrosi. “The European Union is ready to adopt the 30% figure if other major economies make comparable undertakings.”

When EU Climate Action Commissioner Connie Hedegaard presented the study, an addition had been made to the original draft: “The purpose of this Communication is not to decide now to move to a 30% target: the conditions set are clearly not met.”

Hedegaard was forced to concede a unilateral target increase was simply not politically viable. “Are the conditions right now? Would it make sense at this moment? My answer would be no,” she said. And while the debate will likely resurface once Europe returns to a robust economic growth, what is clear is that the economic crisis has forced governments to recalculate their climate change policies.

In other words, politicians have picked up on public sentiment that the priority now is not reducing greenhouse gas emissions, but job creation and a return to prosperity.

By. Andres Cala

Source: Energy Tribune




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