Less dependency on biofuels in EU climate plan

By Paul Taylor, European Affairs Editor - Analysis

BRUSSELS (Reuters) - Biofuels are down and energy efficiency measures are up as the European Union's ambitious plan to fight climate change works its way towards becoming law.

When EU leaders adopted bold headline goals last year to cut greenhouse gas emissions and promote renewable energy sources, they set a binding target of drawing 10 percent of transport fuel from biofuels derived from crops and biomass by 2020.

But with soaring world food prices blamed partly on competition for farmland from agri-fuel producers, biofuels are no longer the flavor of the month.

"What was hailed as a miracle solution 18 months ago is now being damned," French Ecology Minister Jean-Louis Borloo said after debating the issue with EU environment chiefs this month.

Ministers now believe -- not least due to high oil prices -- that the biggest opportunity for a quick win in the battle against global warming lies in energy savings.

Constructing more environmentally friendly buildings, making idle appliances consume less electricity and installing energy-saving lighting in homes, offices and streets are the New Great Hope for saving the planet and saving money.

As a result, an indicative objective adopted in March 2007 of reducing the 27-nation bloc's energy consumption by 20 percent by 2020 from current levels may be made mandatory.

With both candidates in the U.S. presidential election vowing to join a global drive to curb greenhouse gas emissions, pressure is mounting on the EU to live up to its leadership claims by enacting its climate change legislation by March 2009.

That means that EU governments must reach political agreement on the package in December -- a tough challenge.

BAD FOR CREDIBILITY

"It would be very bad for our credibility if Europe, that took the lead in this very important file (policy) for the future of our planet, was now to send a signal of stepping back, now that others are changing," European Commission President Jose Manuel Barroso warned last week.

Second thoughts about biofuels are not the only problem facing the EU package. Energy-guzzling industries from steel to chemicals and paper are in revolt against the prospect of having to buy carbon dioxide (CO2) emissions permits at auction, while competitors elsewhere in the world may face no such constraint.

New central European members are rebelling against plans for their electricity sector, heavily dependent on burning coal or importing Russian oil and gas to generate power, to have to pay for 100 percent of emissions allowances from 2012.

The Polish government says that would force up household electricity prices by some 70 percent -- a figure contested by Brussels -- risking a political backlash.

Borloo's solution to the newcomers' problems would be to use some of the forecast 55 billion euros ($86.36 billion) revenue from emissions trading to help the new member states clean up their power sector and improve energy efficiency.