May 26, 2010 / 5:06 PM / 8 years ago

EU wrangles over whether to deepen CO2 cuts

* Hedegaard - 30 pct CO2 cut would cost 81 bln euros a year

* Recession made current 20 pct goal 22 bln euros cheaper

* Green groups and industry battle over the implications

(Adds detail, quotes)

By Pete Harrison

BRUSSELS, May 26 (Reuters) - Europe’s climate chief presented an analysis of the risks and rewards of deepening cuts in harmful emissions on Wednesday, sparking new quarrels between industry and environmentalists.

The economic crisis has knocked 22 billion euros ($27 billion) a year off the cost of plans to cut emissions by 20 percent, taking it down to 48 billion euros.

Deepening the cuts to 30 percent is now expected to cost around 81 billion euros a year by 2020, but would help Europe by spurring innovation and creating an extra 65,000 green energy jobs.

Industry leaders objected to the cost-benefit analysis by climate commissioner Connie Hedegaard, with some suspecting her of laying the groundwork for a forthcoming campaign to move to 30 percent cuts. [ID:nLDE64P1PG]

But there is little prospect of such moves happening during the worst recession in 80 years and with U.N. climate talks deeply divided.

Hedegaard said the crisis had lowered the cost of carbon permits, making emissions cuts cheaper, but also removing the main incentive for green innovation.

"We have not done as much innovation as foreseen," she told reporters. "Competition for green growth is becoming fiercer all around the world. I hope that our analysis will inspire the debate."

That debate is already becoming heated. "We see this as a fanatical fixation with numerical targets," said Gordon Moffat, director general of steel industry group Eurofer.

"Industry has suffered in the recession, and it is absurd to say industry would therefore find it easier to meet the target ... There would be a loss of jobs and a movement of manufacturing outside Europe."


Environmental groups said traditional heavy industry was holding back green technology companies, which need tougher curbs to spur innovation and help them compete with rivals in Japan, China and South Korea.

"There is no evidence to back up industry’s scaremongering," said Sanjeev Kumar of environment think-tank E3G. "European industry has the opportunity to capture climate investments, or it can sit still and watch the world change around it."

Climate change topped the EU’s political agenda until the bloc became sidelined at U.N. climate talks last December, and since then it has been consumed by economic contagion spreading through the euro zone from Greece.

The United Nations warns that pledges made in global climate talks so far are not enough to keep global temperatures from rising by more than 2 degrees Celsius -- a limit beyond which the climate could spiral out of control.

But a cold winter and a series of embarrassing errors by U.N. scientists have reduced politicians’ sense of urgency.

"If a 30 percent target is agreed, we’ll be closer to the crucial 40 percent figure that should give us a better chance of keeping global warming below 2 degrees," said David Heller of Friends of the Earth Europe.

Hedegaard has had a difficult job persuading EU colleagues such as industry commissioner Antonio Tajani and energy commissioner Guenther Oettinger to match her enthusiasm for new climate regulations.

Britain’s new coalition government, however, spoke in favour of deeper cuts.

"Global climate change is the biggest challenge the world faces," said UK Energy Secretary Chris Huhne. "That’s why we will push for the EU to demonstrate leadership by supporting an increase in the EU emissions reduction target to 30 percent."

But even if Britain won some backers in the EU, it would still face opposition from cash-strapped Hungary, coal-dependent Poland, and Italy, which has been a vociferous opponent of climate curbs since Silvio Berlusconi came to power. (Editing by Timothy Heritage and Anthony Barker)

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