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European energy

Hot air
Jan 24th 2008 | BRUSSELS
From The Economist print edition


The start of big arguments over Europe's emissions targets

THE European Union revealed on January 23rd how it plans to save the world. A mammoth climate-change plan spells out in detail how much pain each of its 27 members will have to bear if the EU is to meet ambitious targets set by national leaders last March.
The aim is to cut greenhouse-gas emissions by 2020 by at least a fifth, and more than double to 20% the amount of energy produced from renewable sources such as wind or wave power. If fuel from plants proves green enough, 10% of the fuel used in transport must come from biofuels by the same date. The new plan turns these goals into national targets. Cue much grumbling, and no doubt months of horse-trading, as the European Commission's recommendations are turned into binding law by national governments and the European Parliament.
Countries with greenery in their veins are being asked to take more of the burden than newer members. Sweden, for example, is being invited to meet 49% of its energy from renewables. At the other end, Malta gets a renewables target of just 10%. It is a similar story when it comes to cutting greenhouse gases: by 2020, Denmark must cut emissions by 20% from 2005 levels; Bulgaria and Romania, the newest members, may let their emissions rise by 20%.
EU leadership on climate change will not come cheap. The direct costs alone may be €60 billion ($87 billion), or about 0.5% of total EU GDP, by 2020, said the commission's president, José Manuel Barroso. But this is still presented as a bargain compared with the cost of inaction, which Mr Barroso put at ten times as high. Oh, and leading the world in the fight against climate change need not cost jobs, even in the most heavily polluting branches of heavy industry. “We want to keep our industry in Europe,” insisted Mr Barroso.
The trick to squaring that circle is the EU's emissions-trading scheme (ETS). This obliges big polluters such as power companies or manufacturing giants to trade permits that allow them to emit CO2 and other climate-change nasties, within a steadily tightening overall cap. If countries such as the United States and China do not sign up to binding international agreements by 2011, then the heaviest greenhouse-gas emitters inside the EU may be given these allowances free, the commission suggests. Or, it threatens, firms outside the EU could be forced to buy ETS permits. They won't like that.