As EU wrangles over CO2 cuts, green tech fears Asia

Tue May 25, 2010 11:21am EDT

Related Topics

* EU exec to launch cost-benefit analysis of 30 pct CO2 cut

* Traditional heavy industry unites against deeper cuts

* EU green industry fears Asian rivals could forge ahead

By Pete Harrison

BRUSSELS, May 25 (Reuters) - European green technology companies warn that failing to toughen up European Union climate targets will play into the hands of rivals in Asia.

Traditional heavy industry has successfully fought off the prospect of deeper European emissions curbs since U.N. talks ended in stalemate in Copenhagen last December.

Since then, climate issues have dropped down the agenda as EU governments struggle to contain the debt crisis.

European climate commissioner Connie Hedegaard will seek to regain the initiative on Wednesday by launching a cost-benefit analysis of deepening EU emissions cuts to 30 percent from the current 20 percent target.

But heavy industry has already launched a pre-emptive attack, uniting against deeper emissions cuts.

The economic crisis may have made such a move cheaper by eroding the price of carbon emissions permits, but it has also left companies too weak to make the required investment, they say. [ID:nLDE6460Z6]

Their argument appears to have already been won, with successive drafts of Hedegaard's paper toning down any hint of a political proposal.

German economy minister Rainer Bruederle said on Tuesday more time was needed to get past the worst of the economic turmoil.

"At such a moment, it is legitimate to owe oneself more time," he told reporters.

But Europe's nascent green industries are keen to point out they are not the same as traditional sectors such as steel and cement -- and sticking with the current 20 percent could slow their growth.

LEAP-FROGGING

"If we stick with 20 percent, there will be fewer incentives for innovation," said Niklas Hoehne of green consultancy Ecofys.

Some EU officials fear that internal wrangling will play into the hands of China, which they suspect is stalling a global climate deal until its green industry is positioned to dominate world green tech markets.

Christian Kjaer, chief executive of the European Wind Energy Association, shares those fears.

"It is a battle between nations, and delaying an international and legally binding agreement on greenhouse gas reductions could help efforts to overtake Europe," he said. "Europe invented the Internet and left it for foreign companies to reap the commercial benefits. I would hate to see a similar development in wind energy."

China aims to be the leading producer of electric vehicles by 2015, says Better Place, which is working on electric car infrastructure in Israel and Denmark.

"As a result, they've set an aggressive industrial policy, which is quickly rallying the supply chain to come together," said Joe Paluska of Better Place. "China sees electric cars as a way to leapfrog the rest of the world for the future of clean transport."

But BusinessEurope, which represents 20 million EU companies, says that tough emissions targets and heavy carbon costs may not be the best route.

Both China and the United States have managed to spur green growth without them, said BusinessEurope's Folker Franz.

"Support for green tech -- yes," he said. "But not out of the pockets of energy users, which have already been hit hard by the economic crisis. Instead, increase the investment in research and development."

(Additional reporting by Ilona Wissenbach and Julien Toyer, writing by Pete Harrison; Editing by Amanda Cooper)

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