In many ways, the European Union leads the world on climate change policy. In most states, there is broad political support for carbon regulation. They have also undertaken the largest experiment in carbon pricing. While the Emissions Trading Scheme (ETS) certainly has a large number of problems, it will hopefully develop towards greater effectiveness and prove a model for others. The EU also has some ambitious targets and, in many cases, reasonable mechanisms for working towards them.
Of course, it becomes more difficult to sell strong climate policies to voters when the economy heads south. Poland is suddenly extremely anxious about the carbon intensity of its coal-fired power plants, while other states are worried about the global competitiveness of their industries.
This is part of the reason for which it is so critical to get a strong new global agreement by the time of the Copenhagen meeting of the UNFCCC. Once emissions-intensive sectors are regulated in most of the states where they are important, states will be less anxious about losing competitiveness.
On the investment side of alternative energy, I just completed an analysis of the stock prices of 25 alternative energy companies over the past few weeks and interestingly, in the past week when currencies depreciated in Europe and 8 major banks were on their way to failure, 3 out of the 4 companies who actually saw their share prices increase were those companies operating on European exchanges. It will definately be an interesting time to watch what happens in the industry as bank loans dry up.
Speaking at the end of a two-day summit, French President Nicolas Sarkozy said: “The deadline on climate change is so important that we cannot use the financial and economic crisis as a pretext for dropping it“.
Face value
Climate of fear
Oct 23rd 2008
From The Economist print edition
Can Stavros Dimas successfully defend the environment against economic gloom?
Europe and climate change
Two into three won’t go
The European Commission suggests even deeper cuts in emissions
May 27th 2010
ONE of the least convincing things about the European Union’s energy and climate policy is the brazen catchiness of its slogan: 20-20-20. This refers to a 20% reduction in carbon-dioxide emissions and 20% share for renewable energy sources by 2020. The idea that rigorous analysis of the right policies happened to echo the target date seems, at best, trivially condescending. At least this week’s suggestion by the European Commission that the EU should consider unilaterally moving to a 30% cut in CO2 has the merit of showing that something other than public relations and numerology is at work.
Yet for many that is the limit of its appeal. The French and German governments have already come out against the plan. The main business lobby group in Brussels is opposed as well. Their argument is that bigger cuts would burden business at a difficult time, both by increasing the cost of carbon for such large emitters as the steel and cement industries, and by raising the price of electricity for everyone else. The commission’s own analysis gives numbers for these. It puts the cost of achieving a 30% reduction (compared with 1990 emissions levels) in 2020 at €81 billion ($99 billion) a year, against only €48 billion to deliver the 20% target.
That €48 billion is a lot less than the €70 billion cost estimated for the 20% target in 2008, mainly because the recession has already reduced emissions. Green enthusiasts have seized on this to argue that 30% could be had today for little more than 20% was had then. They also point to analysis by the European Climate Foundation, among others, which says that efficiency savings as a result of the 30% policy might save as much or more than its cost.
These arguments are hardly compelling. If the existing policy becomes cheaper because of the recession, why not just pocket the difference and be thankful for small mercies? Even if the calculated gains from the proposal were real (and they may not be), championing diffuse benefits over identifiable costs is always hard politics. A similar argument goes for claims that, by spurring more vibrant green technology, the 30% cut would create lots of jobs, exports and the like.
The government’s commitment to greenery is set to face a further test. A law passed by its Labour predecessor obliges it, by the end of June, to set a limit on Britain’s total emissions of carbon dioxide in the period 2023-27 (limits until then have already been set). Environmentalists want ministers to accept the limit recommended by the Committee on Climate Change, an independent advisory body, but fear the government will choose a laxer one.
Ireland’s staggering hypocrisy on climate change
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Naughten recently pleaded in Brussels that the 2020 targets (of a 20% emissions cut compared with 2005) that Ireland chose to sign up to are too onerous, and threatening to delay EU-wide implementation of the Paris accord. By 2020 Ireland will only have achieved a paltry 5-6% reduction in emissions, with greenhouse gases from transport and agriculture actually rising. The spectre of serious EU fines looms ever closer.
Per capita, Ireland’s emissions are the third highest in the EU, and it is one of only four EU states (alongside Belgium, Luxembourg and Austria) expected to miss its 2020 targets. Things may be about to get a lot worse. With no public announcement, on 11 July Naughten’s department issued a licence permitting oil drilling on the Porcupine Bank off Ireland’s west coast.
Some 5bn barrels of offshore oil may be recoverable, which, when burned, would release 1.5bn tonnes of CO2 – the equivalent of more than a quarter of a century of Ireland’s current total emissions from all sectors.