EU climate chiefs in row over future of emissions trading
from The Guardian World News by Fiona Harvey
Ambitious new energy efficiency directive could destroy pioneering greenhouse gas trading system
A row over the future of the European Union's pioneering greenhouse gas trading system is threatening to upset Europe's bid to win the global clean technology race.
Two powerful European commissioners are at loggerheads over whether to strengthen the emissions trading system, in order to maintain Europe's leadership on climate change. The row surfaced on Thursday at a conference in Brussels where the president of the European commission, José Manuel Barroso, lauded the EU's efforts on cutting emissions and called for stronger action in the future.
Next week, the EU's energy chief, Guenther Oettinger, will unveil an ambitious new energy efficiency directive, aimed at forcing businesses to cut the amount of energy they waste. But, while backing the push for efficiency, clean technology experts warn that if the directive goes ahead in its current form, it could destroy the emissions trading market. Under the trading scheme, businesses are awarded a quota of permits to produce carbon, and cleaner companies can sell their spares to big emitters.
The problem is that if companies meet the new energy efficiency targets – which will apply to heavy industry as well as the building and construction sector - they will find themselves with large quantities of unused carbon permits. That in turn will drive down the price of carbon and render the emissions trading system useless.
For this reason Connie Hedegaard, the EU climate chief, favours cutting the number of permits available to businesses, for instance by setting aside a small portion of the permits due to be released from 2013. That would prop up the carbon price and ensure that businesses invest in clean technology as well as energy efficiency projects.
Many businesses are alarmed, arguing that they should be allowed to keep their permits as compensation for the stiff new efficiency regulation. Oettinger is known to be sympathetic to their pleas.
Barroso refused to step into the row publicly yesterday, but in a lively speech – in which the normally sombre statesman wowed his audience by quoting liberally from The Kinks – he insisted that the EU must go further than its current obligations.
He said: "It is clear to us that our current ambitious policy is working. But now it needs to be backed up over the long term. I will be working with my colleagues in the commission and across the [European Union] institutions to ensure we match our words with actions."
Brussels insiders are betting that Hedegaard will win the emissions trading argument, which must be settled by next Wednesday when the new efficiency directive is launched. A compromise would allow a provision in the statement for "adjustments" to the emissions trading scheme, which could include setting aside permits.
Oettinger also made a key public concession to Hedegaard on Thursday, by acknowledging the need to set new targets for renewable energy beyond 2020 when the current 20% target expires. When Hedegaard floated the idea in the Guardian last month, Oettinger insisted that it was too early to think of such longer term targets.
On Thursday he quoted estimates that a 45% renewable target would be needed for 2030.
Barroso also indicated that longer term targets were firmly on the agenda, as he welcomed the latest report from the Intergovernmental Panel on Climate Change (IPCC), which found that as much as 77% of the world's energy could come from renewable sources by 2050, if the right government policies are pursued.
He said: "It was the combination of science with leadership that drove the smog from our cities, reduced acid rain, and closed the hole in the ozone layer. It is also the evidence of science combined with leadership that has helped us fight diseases such as HIV/Aids.We need that powerful combination to swing into action again. Let us use this IPCC report to help fill the gap between our 2020 targets and our 2050 objectives."
Barroso then delighted the conference by going off his scheduled remarks to quote an entire verse from the 1968 track The Village Green Preservation Society, nearly bursting into song as he explained the parallels between the commission and a preservation society.
The IPCC report, first published just over a month ago, has attracted criticism this week from climate change sceptics, who have complained that a scientist from Greenpeace was one of more than 120 authors of the study. They claim that this makes the study biased.
Rajendra Pachauri, chair of the IPCC, dismissed the claims, pointing out that the Greenpeace scientist was one among a large number of voices from across the scientific spectrum, including some who are sceptical of the role of humans in climate change, invited to take part in the IPCC process. He also remarked that he had frequent contact with businesses without attracting accusations of bias.
Executive director of Greenpeace UK, John Sauven, said: "Exxon, Chevron and the French nuclear operator EDF also contribute to the IPCC, so to somehow paint this expert UN body as a wing of Greenpeace is preposterous. Indeed, we've criticised the IPCC for being too conservative over the years. On this occasion our advice was given weight, but that's hardly surprising given that it was developed with the German Aerospace Centre, while Imperial College, Oxford Economics and McKinsey have also outlined the vast potential of renewable energy."
The IPCC report on renewable power is a rare interim study between the landmark comprehensive reports on the state of scientific knowledge on climate change, the last of which was published in 2007 and the next not expected until 2014.
For the curious, Barroso's unscheduled Kinks riff in full went as follows:
"I don't know if many of you will remember a song from 1968 called 'The Village Green Preservation Society' by Ray Davies from The Kinks. The song goes:
"We are the Village Green Preservation Society
God save Donald Duck, Vaudeville and Variety
We are the Desperate Dan appreciation society
God save strawberry jam and all the different varieties"
Sometimes I feel that the commission is like a village green preservation society. But this is not just about preserving the planet we have inherited, it is about what we can do to make this a better place for living."
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