June 17, 2011
Guest post by FoE Europe.
Next week, the Environment Council and Parliament have the opportunity to show Europe is serious about climate change when they adopt guidelines on cutting emissions. Evidence that an EU wide 30% domestic target for 2020, and even a 40% target, will trigger economic, social and environmental benefits is increasing rapidly. Unfortunately, this evidence is not being heeded.
This coming Tuesday, the Council will adopt intermediate targets for 2020, 2030 and 2040 as presented in the European Commission’s Climate Roadmap for 2050, unveiled in March. The roadmap calls for 25% domestic cuts by 2020 but Environment Ministers are not putting much emphasis on this short term target, let alone looking to increase it. Is it a coincidence that a number of big companies, such as EDF the French power monopoly, want to skip the 2020 target in favour of a 2030 target?
Jos Delbeke, Director General of DG Climate Action, has demonstrated his lack of understanding for this contradictive behaviour (1). According to him the European Commission’s milestones have been designed explicitly to give business better predictability for long term planning.
Moreover, business is continuing to protect an instrument which has been set up to fail. It is becoming increasingly clear that the EU’s flagship policy, the European Trading Scheme (ETS), is incompatible with policies on energy efficiency and renewables. The introduction of the energy efficiency directive combined with over allocation of pollution permits from previous phases will make the carbon price crash. It is a simple question of coherence – and energy efficiency has to be a key driver in bringing down emissions.
Many companies have good reasons to protect the ETS – mostly those that since 2005 have been receiving surplus allowances for free and will continue to do so from 2012 onwards. Some companies will make billions of Euros of windfall profits selling these free pollution permits. The steel sector has profited most from this perverted system; it accrued a 70 Mt surplus in 2010, making its surplus to date 212 Mt. This over allocation of carbon allowances is worth €3.4 billion at current prices, equivalent to the entire annual financial support Europe currently provides to renewables.
Later next week the European Parliament will vote on the Eickhout report which calls for 30% cuts by 2020. Is it another coincidence that Business Europe, the umbrella organisation of European industry, is calling on Members of the European Parliament to stick to the current EU position of 20% of which more than half can be offset by emission reductions outside Europe? No it is not.
It is no news that some powerful parts of business, mainly energy intensive or extractive industries, are undermining progressive climate action. However one positive development is the growing number of business voices supporting increased climate action. There is an emerging split between them and those companies holding on to old fashioned ways of producing goods and materials and shutting their minds to the economic benefits that progressive climate action will bring.
Companies are increasingly realising that ambitious climate policies will create up to 6 million jobs, increase European GDP by up to $842bn, and put Europe at the forefront for innovation. We hope Ministers and MEPs will join them next week.