EU faces battle over €60bn plan to cut CO2

THE European Commission’s €60 billion action plan to tackle global warming puts the EU to the forefront in the fight against climate change — but it is just the first shot in what will be a battle with member states.

EC president Jose Manuel Barroso acknowledged this when he told the EU Parliament the national governments “cannot love the agenda and refuse to commit to the targets”.

Last year the heads of the 27 member states committed to a 20% cut in carbon dioxide emissions by 2020 over the 1990 figures and that if there was an international agreement on cuts, this would be increased to 30%.

They also agreed to provide 20% of energy through renewables by the same date. The package came up with some new mechanisms, building on the sale of carbon credits and extending the reductions in carbon emissions to agriculture, transport, buildings and services, and giving individual allocations to each member state.

Under Phase Three of the EU Emissions Trading Scheme for 2013 to 2020, the power generation sector, such as the ESB, will have to pay for their carbon credits fully from the start. This is expected to increase the price of electricity.

Other big-energy consuming industries, of which there are about 10,000 in the EU and 100 in Ireland, will be sold their credits through Brussels and there will be no national allocations as there are currently.

They account for about 40% of energy use here at present and include a number of dairies, Intel, distillers and breweries and Aughinish Alumina.

The quantity of carbon this sector will be allowed to emit in each country will be reduced by 1.7% per year from 2012. The money will go back to the member state where 20% of it must be spent on energy research.

The non Emissions Trading Sector must reduce its emissions by an average of 10% across the EU. The poorer new member states such as Bulgaria will be allowed to increase their emissions in this sector by 20% while the wealthiest countries will have to make reductions. Ireland and Luxembourg have been given the highest targets of 20%.

However, in Ireland’s case this will not mean a real reduction over the 1990 level because emissions were 25% over the base year in 2005 leaving Ireland to achieve emissions 5% above 1990 by 2020.

All member states will have to change the structure of their energy consumption. Currently the share of renewable energy in the EU’s final energy consumption is at 8.5%, which means that an average increase of 11.5% is needed to meet the target of 20% in 2020.

The commission has proposed individual, legally enforceable targets for each member state, including 16% for Ireland.

Over the next 12 to 18 months member state governments and the parliament will negotiate on the details that will become legally enforceable.