EU firms welcome CO2 cuts freeze

THE cost of cutting greenhouse gas emissions has dropped dramatically and Europe is in danger of losing its lead in taking advantage of the green economy, according to an analysis from the European Commission.

But following pressure from business and member states, the commission is not recommending the European Union increase its CO2 reduction target to 30% over the next decade.

The study acknowledges that the currently agreed 20% cut will not be enough to meet what the scientists say is essential to ensure temperatures do not rise by more than 2C and irrevocably change the Earth’s environment.

The decision was welcomed by business groups with Eurofer, the steel industry body, declaring, “back to reality”, while EuroChambres said they were alarmed by the commission’s analysis.

BusinessEurope, which represents 40 business groups from 34 countries, said that while the report emphasises the benefits of increasing targets, it would send the wrong signal, especially to energy intensive industries that have been hit hard by the economic crisis.

Climate Action Commissioner, Connie Hedegaard, said she had put forward a fact-based study and it was now up to the member states to discuss. She added: “The decision is not for now. Obviously, the immediate political priority is to handle the crisis.”

The carbon market has taken a hit and an increase in the amount of carbon to be taken out of the picture would, many argue, save the emissions trading system.

The costs of meeting the 20% target have fallen by a third from €70 billion to €48bn, but the short-term capacity of economic operators to invest in low-carbon technologies had fallen also, the report said.

The additional costs of hitting the 30% target are estimated at €33bn a year. But the move would reduce oil and gas imports by €40bn a year, and cut the costs related to air pollution by €6.5bn to €11bn a year.

The carbon price in the EU emissions trading system in 2020 would increase from €16 per tonne of CO2 under the 20% target, to €30.

Europe’s share of global new investment in green technology was more than 40% in 2008. But investment has been growing rapidly in other countries, especially China, in green cars and renewable energy.

The study sets out other options to reduce emissions including the use of surplus permits held especially by newer EU member states.

It says that fears of carbon leakage – intensive energy industry moving to countries with less stringent requirements – would not increase provided existing safeguards of free allowances and access to international credits remains in place.

The EU three years ago agreed they would move to 30% on condition that other developed nations committed to comparable reductions. But they flatly refused to do so at the Copenhagen talks in December and their collective targets of between 12% and 18% are well below the 25%-40% scientists say is necessary to give a 50/50 chance of keeping global warming below 2C above pre-industrial temperatures.