The EU’s unilateral climate policy: creating an uneven playing field?

— 29.10.15

by Simon Spode

Recent news about cuts in the UK and European steel industry have brought back to the fore the issue of high energy costs for manufacturers based in Europe, leading to a less competitive offer in the face of global competition.

This was the theme behind a talk given at the Sheffield University Management School during the summer by Dr Benny Peiser, Director of the Global Warming Policy Foundation.

Dr Peiser’s contention is that the failure of the European Union’s unilateral climate policy has threatened the global competiveness of EU industry. The policy includes targets to reduce CO2 emissions by 20%, and to ensure that 20% of EU energy is generated from renewable sources by the year 2020.

This results in heavy costs and regulation for the countries adhering to the policies in relation to other countries world-wide which do not operate under these restrictions. At the same time global emission outputs are not affected by the relatively small reduction from the EU.

“We face a systemic industrial massacre. I am in favour of a green agenda, but we can’t be religious about this. We need a new energy policy. We have to stop pretending, because we can’t sacrifice Europe’s industry for climate goals that are not realistic, and are not being enforced worldwide.”

Antonio Tajani, the European industry commissioner, The Daily Telegraph, September 2013

Dr Peiser’s view is that leaders of EU countries are increasing concerned at the potential ‘deindustrialisation of Europe’, as the EU becomes less competitive. Reasons for this include;

  • Resurgence of US manufacturing; aided by the availability of cheap energy in the US (typically 33% of the equivalent cost in the EU)
  • Greater investment from energy-intensive industries (such as textiles & steel) to low-cost energy regions
  • Emerging economies offering both cheap labour and cheap energy alternatives.

His views appear to be backed by key EU officials;

“We face a systemic industrial massacre. I am in favour of a green agenda, but we can’t be religious about this. We need a new energy policy. We have to stop pretending, because we can’t sacrifice Europe’s industry for climate goals that are not realistic, and are not being enforced worldwide.”

Antonio Tajani, the European industry commissioner, The Daily Telegraph, September 2013

“It’s an ambitious compromise and I am a little bit sceptical. The EU was responsible for just 10.6% of global emissions today (2014), a sum that would fall to 4.5% by 2030. To think that with this 4.5% of global emissions you can save the world is not realistic. It is arrogant or stupid. We need a global commitment.”

Günther Oettinger, EU energy commissioner, ‘Industry Matters’ conference, Brussels, January 2014

The EU’s new climate policy (agreed in October 2014) Benny-Crop1sets a reduction target of at least 40% of domestic 2030 greenhouse gas compared to 1990 levels, and a target of at least 27% for renewable energy and energy savings by the same year.

The EU pledge, known as an Intended Nationally Determined Contribution (INDC), was submitted to the UN Framework Convention on Climate Change (UNFCCC) earlier this year ahead of climate change talks in Paris this December. The EU’s Paris Protocol, says UN talks in Paris should set a long-term 2050 climate goal, as part of a legally binding climate agreement applicable to all countries. It proposes a 60% cut in global emissions by 2050 against a 2010 baseline.

“It’s an ambitious compromise and I am a little bit sceptical. The EU was responsible for just 10.6% of global emissions today (2014), a sum that would fall to 4.5% by 2030. To think that with this 4.5% of global emissions you can save the world is not realistic.”

Günther Oettinger, EU energy commissioner, ‘Industry Matters’ conference, Brussels, January 2014

In Dr Peiser’s opinion the likelihood of gaining such agreement is slim. The US opposes such a climate treaty and it is unlikely that such legislation would be ratified by both Houses, given Republican resistance. Meanwhile eastern and central European countries would not unilaterally agree such new pledges without first seeing international agreement in Paris.

At the same time developing countries, including India & China believe that CO2 targets should only be binding to developed countries whilst developing nations should be exempt. Furthermore compensation packages are necessary should they also be required to abide by new, tighter emissions targets. They are likely to resist any end to the distinction between developed and developing countries, and to outside bodies dictating their intended future emission targets.

‘So will the EU proposal be successful in Paris?’ Dr Peiser believes that the EU proposal will be rejected, leaving the EU with a number of options. These include;

  • The current pledge for a 40% reduction is only legally binding if all member states agree (see above). It could therefore abandon or delay the 40% target.
  • A ‘soft exit strategy’; an option whereby the 40% emission reduction targets remain across the EU but are not legally binding, and member states are not obliged to follow them.

Dr Peiser concluded that the second option is that most likely to happen. This option would provide a logical and justifiable exit from unilateral self-sacrifice and would allow member states to decide their climate and energy policies domestically and back in line with their national interest.

Read more about Dr Peiser and the work of the GWPF here.

(Main Image Credit: Dirk Singer on Flickr - (CC BY-ND 2.0) )

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