August 29, 2008 / 12:06 PM / in 9 years

Climate fight hit by global slowdown

LONDON (Reuters) - The fight against global warming is in danger of being downgraded on more urgent fears over energy security, heightened by a Russian war with Georgia, and a global economic slowdown.

<p>A U.S. flag flutters in front of cooling towers at the Limerick Generating Station in Pottstown, Pennsylvania May 24, 2006. REUTERS/Kevin Lamarque</p>

Added to the mix -- politicians are faced with a rising clamor of complaints from voters over record fuel bills, and racing gas and oil prices have sparked new interest in high-carbon coal as well as cleaner alternatives.

“A few years ago it was all about climate change. Now energy security has come up too. The problems arise when the two come into conflict,” said Michael Grubb, chief economist at the Carbon Trust think-tank.

Ensuring energy security can clash with the fight against climate change. In particular, the cheapest, most available energy source is coal, which also emits the most greenhouse gases when burned to generate electricity.

The sight two weeks ago of Russian tanks rolling into Georgia, a key energy transit route to Western Europe, has raised anxieties about Europe’s dependence on Russia for a quarter of its natural gas and thrown a spotlight on alternatives such as coal, wind and nuclear.

Poland said last week that the Russia-Georgia dispute had made gas a less attractive source of electricity.

“The key issues are now defined by what are coherent responses to these twin concerns,” said Grubb. “Where there are conflicts it would be dumb to do something which is entirely one at the expense of the other. But there are signs of a drift in that direction,” he told Reuters.

That shift has alarmed environmentalists who have also accused European Union lawmakers of weakening emissions curbs from cars and planes.

“There is clear evidence of backsliding. It is our job to make sure they don‘t. This is no time for short-term expediency,” said WWF’s UK chief executive David Nussbaum.

Presidential nominee Barack Obama on Thursday promised to invest $150 billion over the next decade to develop affordable, renewable energy sources, touting that as a long-term energy solution rather than new offshore oil drilling.

TANKS

Climate policies add to the cost of producing electricity, through taxes or penalties on carbon emissions, and guaranteed higher prices for more expensive solar and wind power.

Utilities pass these costs on to consumers. Industry and household fuel bills are already at record levels as a result of racing oil prices.

The trick is to balance the three issues of climate change, energy security and fuel poverty, said Welsh socialist MEP Eluned Morgan, who is guiding legislation to liberalize EU power markets through the European Parliament.

“Until very recently, climate change has been top of the agenda, but with issues in Georgia and increasing energy prices due to increased global demand, security of supply will come more to the forefront,” she said.

British Business Secretary John Hutton, whose brief covers energy, told a British newspaper this week that the “first and foremost” energy priority was providing affordable and secure supplies, not climate change.

“We cannot afford to say no to new coal, new gas or new nuclear,” he told the Daily Telegraph in an interview.

Hutton added that gas-rich Russia’s brief war with Georgia and unilateral recognition of two breakaway regions highlighted the need for energy importing nations to reduce their dependence on single and unpredictable suppliers.

European parliamentarians urged caution on draft EU rules to slash the bloc’s greenhouse gas emissions by up to a third by 2020, in proposals seen by Reuters on Thursday.

The EU Industry Committee members were also considering amendments to the EU’s flagship Emission Trading Scheme so it had less impact on the energy bills of industries operating in global markets like steel.

A renewable energy industry which just months ago was celebrating a rocketing oil price, because that sparked more interest in energy alternatives, now sees resulting high fuel bills as a threat to climate policies and wind, solar subsidies.

In Accra, Ghana, the United Nations this week expressed optimism that agreement on a new global climate treaty would be reached in Copenhagen end-2009, on time, despite an economic slowdown and the collapse of world trade talks in July.

“Governments are very committed to this process. I feel sure that the train will reach Copenhagen as planned,” said Yvo de Boer, head of the U.N. Climate Change Secretariat.

But chief U.S. climate negotiator Harlan Watson said that the slowing economy would hinder efforts by either Obama or Republican rival John McCain to do more on climate change.

“Anything that raises the price of electricity is going to be a political problem,” he told Reuters in Accra.

Additional reporting by Pete Harrison in Brussels and Alister Doyle in Accra; writing by Jeremy Lovell; editing by James Jukwey

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