EU Combats Climate Change Commission Unveils Plans to Cut Emissions by 20 Percent

The European Union unveiled ambitious plans to slash emissions and increase investment in renewable energy on Wednesday. The package includes concessions to European businesses and richer member nations, but still positions the EU as a global leader on combating climate change.

Smoke rises over factories in Germany's industry-heavy Ruhr region.

Smoke rises over factories in Germany's industry-heavy Ruhr region.

The European Commission has unveiled a preliminary package of broad climate change policies that would govern industry, energy generation and transportation in the European Union and help the bloc meet its ambitious goal to reduce greenhouse gas emissions by 20 percent below 1990 levels by 2020.

The final form of the fiercely disputed draft policies, announced on Wednesday, made large concessions to industry and transportation companies, the result of weeks of lobbying by business leaders and rich country governments to revamp policies that they feared might hurt Europe's competitiveness abroad. However, the package still positions the EU as a world leader on tackling climate change.

"This package meets the challenges of the future. We think it's good for the planet, it's good for the European community and it's good for its citizens," said Commission President Jose Manuel Barroso in an address to the European Parliament, where representatives of the bloc's 27 member states will now be asked to vote the proposals into force. The package will also require the backing of a majority of the 27 EU governments.

The collective aim of the policies is to achieve ambitious targets that the EU has previously set to reduce emissions by 2020: a 20 percent reduction of emissions below 1990 levels, an increase of the proportion of power generated by renewable sources to 20 percent, and a mandate for 10 percent of the fuel consumed by European vehicles to be from biofuel sources. That agreement was widely touted last December by EU delegates to the UN's climate change conference in Bali, even as lobbyists and government ministers in Brussels were jockeying to protect individual interests in Europe.

In an overhaul to Europe's existing Emissions Trading Scheme (ETS), power generators who currently receive most of their carbon credits -- certificates that allow them to emit a certain quanitiy of carbon dioxide -- for free will have to purchase them at auctions beginning in 2013. The Commission at one point hoped to extend the same requirement to all of Europe's high-polluting industries, but in the policy proposed Wednesday "sectors vulnerable to international competition" will be excused from purchasing credits.

EU Commissioner for Enterprise and Industry Günter Verheugen said Wednesday that he fought to exempt heavy industries like Germany's steel and chemical companies from having to participate in a broadened ETS. He told German broadcaster ARD that setting an example in Europe for global climate protection was important, before adding: "But I'm against economic suicide."

In the recommendations released Wednesday, industries that are not required to comply with the trading scheme would need to reduce their emissions by 10 percent.

Michael Glos, Germany's Economics Minister and a member of the Christian Social Union (CSU), warned that the EU policy package should not create a one-sided burden for Germany and expressed concern that the competitiveness of German heavy industry could be impaired by such a policy. "That is not something that we need," he said. "We will keep a close eye on the matter."

The biofuel requirement also came under scrutiny recently when environmentalists complained that biofuel consumption has unclear and even questionable ecological benefits. The draft policy released Wednesday included the caveats that the 10 percent requirement would be enacted only if the fuel's production is sustainable and it comes from a second-generation source (A non-food crop).

A Saving in the Long Run

Each nation will receive an individual emissions reduction target to contribute to the EU-wide goal. Germany will be responible for reducing its carbon dioxide emissions to 14 percent below 2005 levels, one of the deepest cuts for any EU nation. Germany's stance on climate change policy in the EU is complicated. Last summer Chancellor Angela Merkel used climate change as a cornerstone of her agenda at the G-8 summit in Heiligendamm, but more recently she has spoken on behalf of automakers in Germany who sought exemptions from some of the policies unveiled Wednesday.

Sigmar Gabriel, the German Environment minister and a member of the Social Democrats (SPD), however, said Germany should make an even stronger commitment to combating climate change than the requirements outlined by the commission. Because the Commission used figures from 2005 instead of 1990 as a benchmark, he argued, it would be necessary to make even deeper cuts in order to lower emissions below a healthy level. Nevertheless, he heralded the climate package as a "good and noble achievement."

EU Climate Guidelines by Member State

required reduction in CO2 emissions by 2020 (compared to 2005 levels) required share of renewables in energy consumption by 2020
Austria -16.0% 34%
Belgium -15.0% 13%
Britain -16.0% 15%
Bulgaria 20.0% 16%
Cyprus -5.0% 13%
Czech Republic 9.0% 13%
Denmark -20.0% 30%
Estonia 11.0% 25%
Finland -16.0% 38%
France -14.0% 23%
Germany -14.0% 18%
Greece -4.0% 18%
Hungary 10.0% 13%
Ireland -20.0% 16%
Italy -13.0% 17%
Latvia 17.0% 42%
Lithuania 15.0% 23%
Luxembourg -20.0% 11%
Malta 5.0% 10%
Netherlands -16.0% 14%
Poland 14.0% 15%
Portugal 1.0% 31%
Romania 19.0% 24%
Slovakia 13.0% 14%
Slovenia 4.0% 25%
Spain -10.0% 20%
Sweden -17.0% 49%

Source: European Commission

Rich Western European nations will be responsible for the bulk of the cuts, though no country will be required to make more than a 20 percent decrease. Poorer but rapidly developing member states in Eastern Europe will actually be allowed to increase their emissions, by as much as 20 percent above 1990 levels.

Barosso said Wednesday that the cost of enacting the proposed policy package would be less than 1 percent of the EU's projected gross domestic product in 2020 -- far less than the 5 to 20 percent hit that some economists have predicted global GDP could suffer if climate change is not addressed. He also argued that reducing emissions would reduce Europe's dependence on imports of oil and gas, by as much as €50 billion ($72 billion) a year.

"Every day the price of oil and gas goes up, the real cost of the package falls," he said.

The Commission is also promoting the draft policies on the grounds of "first mover advantage," a claim that investment now in low carbon technology could position European businesses as global leaders in environmentally friendly products and equipment.

The proposals will need to be approved by the European Parliament and by the majority of EU member states before coming into effect -- a process that is expected to last until 2009.



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