EUROPE SPELLS OUT CLIMATE PLAN, TAKES GLOBAL LEAD

The EU is preparing to take the next step in tackling climate change after the European Commission presented a draft legislative package on 23 January.

"Climate change is the great project of our generation," said José Manuel Barroso, President of the European Commission. "Europe can be the first economy for the low-carbon age," he added, hoping that the EU would lead the way towards a new global bargain on climate change involving all countries, including the US and emerging economic giants China and India.

Environment Commissioner Stavros Dimas praised the package for giving Europe "a head start in the race to create a low-carbon global economy that will unleash a wave of innovations and create new jobs in clean technologies."

Less than a year ago, Europe agreed to make a 20 percent cut in greenhouse gas emissions by 2020 as compared to 1990 levels (see Bridges Trade BioRes, 16 March 2007, http://www.ictsd.org/biores/07-03-16/inbrief.htm#2) -- a percentage it would increase to 30 if other countries followed suit. The current draft spells out the implementation of the strategy, including through burden-sharing among EU members states, the expansion and tightening of the European emissions trading scheme and a mandatory expansion of renewable energy. It includes a controversial target for increasing the use of biofuels to ten percent of transport fuels, coupled with a new set of conditions to ensure their sustainability.

Key elements of the climate and energy package

The 20 greenhouse gas percent reduction target agreed last year has now been broken down among EU member states, with some taking on more stringent targets, and those less developed facing less steep targets. The European emissions trading scheme will be a key tool in achieving the goal, and will be expanded to cover additional greenhouse gases beyond carbon dioxide, and additional sectors, such as oil refineries and airlines, chemical and aluminium production. The energy-intensive steel, cement and aluminium industries will likely get their emissions permits for free after 2013, when the new, tighter regime comes into place, in order to allay competitiveness concerns. Power utilities, which are to a great extent shielded from international competition due to their physical proximity to the consumers, will have to pay for all their permits starting in 2013.

EU member states will be obliged to derive 20 percent of their energy from renewable sources. This target has also been divided among individual member states, with some countries set to take on significantly higher proportions of renewables in the energy mix. States will also be able to purchase renewable certificates from other countries.

The package also contains provisions to support carbon capture and storage technologies, and new rules for state aid towards climate projects.

Overall, Commission President Barroso said the climate and energy package would cost each EU citizen EUR3 per week - less than a tenth of what the Stern report predicted adaptation costs to climate change would amount to if countries did not take action (see Bridges Weekly, 1 November 2006, http://www.ictsd.org/weekly/06-11-01/inbrief.htm#3).

Barroso noted that should international negotiations on a global climate agreement not succeed, Europe may take trade measures to safeguard its energy-intensive industry (see related story, this issue).

Checks on biofuel production

The draft directive on renewable energy spells out the requirement for ten percent of transport fuel to be derived from biofuels. This target has proved controversial, as the sustainability of biofuels has been seriously questioned over the last year. Just a week before the release of the draft climate and energy package, 17 non-governmental organisations, including Oxfam and Friends of the Earth, warned the Commission that "large-scale biofuel production can cause negative indirect or knock-on impacts such as increasing food and feed prices and increasing water scarcity, which would lead to negative impacts on the world's poor."

The draft directive places new restrictions on the biofuels target. Biofuels would have to give a real saving in carbon dioxide emissions of 35 percent compared to oil. Feedstock crops cannot be grown on land with high biodiversity values, nor land containing high carbon stocks. In addition, growing biofuels feedstock would have to fulfil best agricultural practices criteria. The restrictions would apply both to home-grown and imported biofuels.

The environmental groups were not swayed by these additions to the draft, however. "Growing crops to fuel our thirsty and inefficient cars will be a disaster for the environment and is a false solution to climate change," said Adrian Bebb, agrofuels campaign coordinator for Friends of the Earth Europe.

A Malaysian commentator from the palm oil industry called the restrictions non-tariff barriers. Biodiesel derived from palm oil has been particularly controversial, as tropical forests have been cleared to make way for palm oil plantations.

Response from the environmental community

The civil society response to the draft climate and energy package was less than enthusiastic. "Overall, it is a very small effort to cope with a threat that might lead to Arctic melting and displacement of millions of people in developing countries because of increased floods," said Stephan Singer, head of the climate and energy unit at the WWF global conservation group.

Many groups felt the 20 percent target for greenhouse gas reduction lacked ambitious. At the UN conference on climate change in Bali, Indonesia in December 2007, the EU had called for a cut in emissions of 25 to 40 percent under 1990 levels (see Bridges Trade BioRes, 18 December 2007, http://www.ictsd.org/biores/07-12-18/story1.htm).

Friends of the Earth Europe lamented the fact that the package did not give much emphasis to an energy efficiency target that the EU had agreed to last year. An editorial in the Financial Times also noted the lack of focus on energy efficiency, which it said was "by far the lowest-cost means of reducing emissions. There is a target for efficiency [within the new EU climate and energy package] -- a 20 per cent improvement by 2020 -- but it lacks the same legal force as the target for renewables."

The package will still go through a lengthy process before entering into force. The European Parliament and member states will have to approve it, and may amend it before doing to.

ICTSD reporting; "EU Executive Adopts Blueprint for Climate Fight," REUTERS, 24 January 2008; "EU Countries Get Renewable-Energy Targets," WALL STREET JOURNAL, 24 January 2008; "EU sets emissions targets to fight climate change," AFP, 23 January 2008; "EU threatens trade partners over global warming," AFP, 23 January 2008; "Green barricade: Trade faces a new test as carbon taxes go global," FT, 23 January 2008.