Economic Concern Curtails EU’s Climate Policy

  • Date: 20/01/14
  • Barbara Lewis and Charlie Dunmore, Reuters

Seven years after it set some of the world’s most stringent environmental targets, the European Union is about to revise its long-term goals to take more account of industry and changed economic circumstances.

Following years of economic turmoil, low growth and rising energy costs, the EU is looking to strike a balance between tackling climate change and giving industry room to manoeuvre as it prepares to unveil new targets on Wednesday.

Instead of the “Holy Trinity” of goals laid down in 2007 – a 20 percent reduction in carbon dioxide emissions from 1990 levels by 2020, 20 percent use of renewable energy sources and 20 percent gains in energy efficiency – the new targets for 2030 are likely to be simpler.

As the United States enjoys an energy boon because of the exploitation of vast shale gas reserves – its natural gas prices are roughly a third of EU levels – Europe will also avoid putting obstacles in the way of its own shale exploration.

But while the targets are less ambitious and the atmosphere more realist, the expected headline goal would demand effort.

EU officials say they expect the European Commission, the executive arm of the 28-nation bloc, to suggest cutting CO2 emissions by 40 percent from 1990 levels by 2030 – still a higher benchmark than any other industrialised region.

“We still have a responsibility of leadership, but we should not believe we can do this alone,” one of the officials involved in drafting the policy paper said, acknowledging that the EU cannot afford to be as ambitious as it was in 2007.

While the shift reflects realism at a time when the EU’s biggest trading partners, including the United States, Japan and Canada, have scaled back their climate commitments, it is also a nod to the lobbying influence of European industry.

Major companies and utilities have said that overly stringent targets will drive business out of Europe, making it harder for the continent to compete. With growth negligible and unemployment at record highs, that is an argument that has found traction in Brussels.

“The high cost of non-competitive technologies to decarbonise the power sector cannot be borne by our companies in addition to already uncompetitive energy prices,” heads of industry said in a letter to the Commission this month.

The 14 signatories, who asked for “one single, realistic target” plus a goal on industrial growth, included top executives from chemical companies BASF and Dow , and steelmaker Arcelor Mittal.

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