EU Climate Bill
January 23, 2008
Consumers will not escape the costs either, which Commission chief Jose Manuel Barroso said would amount to a total of around 60 billion euros ($86.6 billion) a year -- 0.5 percent of gross domestic product.
"That amounts to about three euros ($4.35) a week for everyone," Barroso said.
The package is an attempt by the EU executive to translate into action the aim of EU leaders, announced last March, to cut emissions of the gases that cause climate change by 20 percent by 2020, compared to 1990 levels.
The measures, including a new look at state aid for environment projects, will set the 27 nations specific targets for renewable energy use, to ensure that 20 percent of the bloc's energy in 2020 comes from these forms.
The commission has come under attack from virtually all sides, including in-house, even before the plans are examined by EU countries and the European Parliament, a process Brussels hopes to conclude by the end of the year.
Environment Commissioner Stavros Dimas tried to make the plan more palatable to business, saying that it "gives Europe a head start in the race to create a low-carbon global economy that will unleash a wave of innovations and create new jobs in clean technologies."
Industry gets a break
Carbon dioxide emissions from industry totaled more than two billion tons in 2005, around half of the greenhouse gases produced in the EU. Much of the other half comes from transport and agriculture.
Under the EU's emissions trading scheme, set to expire in 2012, EU member states issue carbon dioxide (CO2) emissions permits to industrial users, such as steel mills or power stations, largely for free. Plants can buy or sell permits if they emit more or less CO2.
With the new plan, the European Commission would set a single EU-wide number of permits from 2013. Companies from within the EU would be able to bid for them at auction. The system would also be extended to other sectors like aviation, petrochemicals, ammonia and aluminum. Sectors not included in the trading scheme would be required by 2020 to cut their emissions by 10 percent based on 2005 levels.
But in deference to the powerful industrial lobby, energy-intensive industries would receive free permits, to prevent them from being at a disadvantage compared with non-EU rivals.
Some companies have complained the requirements to cut emissions cuts could force to move abroad, taking jobs with them.
"If we were to relocate our industries outside Europe we would then have to transport steel to Europe, adding emissions," said Philippe Varin, president of the European Confederation of Iron and Steel Industries, and chief executive of Anglo-Dutch steelmaker Corus, owned by India's Tata Steel.
Barroso: Delay unacceptable
The threat to employment is a powerful argument, but Barroso has warned that the energy and climate status quo is unacceptable.
"Taking action is not cost-free," he said Monday. The price of inaction "could even approach 20 percent of GDP. The longer we delay, the higher the costs."
The EU plan also foresees the bloc covering one-fifth of all energy demand from renewable sources by 2020. Those states that are unable to meet mandatory targets would be allowed to pay other EU countries to produce renewable energy on their behalf.
Currently around 8.5 percent of the bloc's energy comes from renewable forms, like biomass, wind and solar power, but future load sharing will be based on GDP; simply put, on a nation's wealth.
This has particularly angered Sweden, which already derives around 40 percent of its energy from renewable sources, but could, according to Green party calculations be asked to raise that to 52.7 percent.
Stockholm argues that it is being punished, rather than rewarded, for the eco-friendly efforts it has already made.
In Germany, 18 percent of energy would have to come from renewable resources, according to the proposal, doubling the current percentage. Germany would also have to reduce its CO2 emissions by 14 percent below the 2005 level.
German Environment Minister Sigmar Gabriel welcomed the plan, saying that the target set for Germany was ambitious but reachable.