Paying for Climate Protection

The EU Commission insisted on Wednesday, Jan. 24, that the countries would pay a far higher price for ignoring the environment.

While the measures would cost consumers 3 euros ($4.37) a week on average, "the cost of inaction is up to 10 times more than what we are proposing," said Commission President Jose Manuel Barroso.

"Responding to the challenge of climate change is the ultimate political test for our generation," he added. "Our package not only responds to this challenge, but holds the right answer to the challenge of energy security and is an opportunity that should create thousands of new businesses and millions of jobs."

Urging EU members to curb their dependency on imports of fossil fuels and to step up their use of renewable energy and biofuels, he also laid out plans to make industry pay for the right to pollute.

Environmental gain, economic loss?

The measures are designed to put into action the aim set by EU leaders last year to cut carbon dioxide emissions by 20 percent by 2020, compared to 1990 levels.

By then, the use of renewable energies like biomass, wind and solar power will have to have risen to 20 percent of all energy forms. Biofuels will also have to make up 10 percent of fuels used for transport.

These targets would wean the bloc off coal and oil, as would a decision that power generators must pay from 2013 for all permits to emit carbon dioxide -- but left industrial leaders wondering about the impact on industry.

German utility RWE said the package called into question the future of coal.

"Coal is threatened in its economic viability," RWE's head of power generation, Ulrich Jobs, told Reuters

Meanwhile, other energy-intensive sectors such as the steel, aluminum and chemical industries have accepted the principles of the plan but voiced similar concerns about the cost and impact on jobs and a drop in competitiveness. The steel industry is expecting the shift to entail the loss of up to 300,000 jobs across Europe.

"We foresee that industry and individuals will be facing a huge rise in the cost of electricity," said Jürgen Thumann, president of the German Association of German Industry in Berlin Wednesday. "The pinch will be felt by energy-intensive industries but also by other sectors."

Compromising competitiveness

Some companies also fear that the stringent emission targets will force them to move production outside the bloc -- and further strengthen the competitiveness of China and India, which so far have no emission limits.

Announcing that the commission will be monitoring any negative repercussions on the labor market, Barroso conceded this was "a risk" and said Brussels would do what it could to counter it.

"An international agreement is our absolute priority," Barroso told reporters. "But let me be clear, if we do not make progress we will protect European companies."

EU Environment Commissioner Stavros Dimas has said that if competitors from the US and China have still failed to establish climate rules by 2011, thereby allowing for cheap production, he would consider lightening the burden for European companies and forcing importers to buy emissions permits.

Germany's concerns

With around 8.5 percent of EU energy coming from renewable forms, future load sharing will be based in part on gross domestic product.

While German Environment Minister Sigmar Gabriel hailed the plan as "courageous," Economy Minister Michael Glos warned that "it will destroy jobs in industries which consume a lot of energy."

Glos also suggested that the commission's plan left Germany carrying an unfair share of the climate protection burden.

"We cannot accept that the EU Commission simply says: Germany wanted climate protection and should therefore do the lion's share of the work."

He was backed up by Joachim Pfeiffer, the Christian Democrats' energy expert.

"The EU Commission proposals are an attack on Germany as an industrial location," he said. "They severely jeopardize jobs."