Analysis: Europe's climate action plan

Stefan Nicola, UPI Energy Correspondent

United Press International - Jan. 25, 2008

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BERLIN, Jan. 25 (UPI) -- Politicians hail the European Commission's latest energy and climate package as a climate protection milestone, with the fossil fuel-heavy industry warning of job losses.

Earlier this week EC officials announced the individual, concrete targets each country will have to meet regarding the use of renewable energy. The targets are part of a plan that has the European Union by 2020 generating 20 percent of its energy needs with renewables, such as wind, solar and biofuels.

That plan, in turn, is part of a wider set of climate protection proposals that includes country-by-country greenhouse gas reduction targets and a revision of the bloc's emissions-trading scheme.

"I believe that this will be an important moment for Europe," said EC President Jose Manuel Barroso, adding that the EU's pioneer role in combating climate change is hoped to spark similar efforts elsewhere in the world.

Yet until those targets are realized, much still has to be achieved in the 27 member countries.

The commission has said that only 8.5 percent of the EU's energy consumption in 2005 came from renewable sources, with percentages varying widely by country. While some countries have used almost zero alternative energy, such as Malta and Luxembourg, in Sweden nearly 40 percent of the energy in 2005 came from renewables.

The new goals commit developed countries such as Britain, France and Germany to relatively ambitious targets, while granting the new member states in Eastern Europe more time to adopt their energy infrastructure and rake in the benefits of a growing economy. These states may even increase their carbon dioxide emissions until 2020 but are also asked to build up their renewable energy portfolio.

The economically fit countries, such as Britain -- it must go from 1.3 percent renewables to 15 percent -- as well as Germany, which has to increase its share of renewables from 5.8 percent to 18 percent, have to contribute more of the burden.

As the body's climate-protection package was launched during the German EU presidency in 2007, "Germany must especially be bound to realize these measures," German Energy Minister Sigmar Gabriel said Wednesday in Berlin upon release of the targets. "This is a bold and ambitious climate-change package ... and we are happy with it."

France will likely look at the goals more critically. It must increase renewables to 23 percent, but Brussels doesn't consider nuclear energy, which is the predominant French source of power generation, a renewable energy source.

And then there is the murky issue of emissions trading.

Here, Germany and Britain are at odds. Britons, who want to invest in offshore wind parks, are in favor of implementing a laxer emissions-trading scheme that would allow companies to engage in unhindered cross-border emissions trading. That, however, irks Germany, because it fears that its domestic renewable energy companies would rather sell off their expensive certificates to firms in Britain and France, rather than contributing to a clean, green record at home.

As of now, Germany has the upper hand, with the current proposal foreseeing governments to be able to stop producers from selling off their certificates to firms abroad.

No wonder Claudia Kemfert, an expert at the German Institute of Economic Research, a Berlin-based think tank, is happy.

"This package makes a lot of sense," Kemfert, who has advised the European Commission on energy issues in the past, told United Press International in a telephone interview. "I am particularly pleased that the commission has implemented a few critical points that we had suggested when it comes to emissions trading."

EU leadership on climate change will not be cheap. The direct costs alone may amount to some $87 billion, Barroso said. Yet this seems like a bargain compared with the costs connected to inaction, which are 10 times as high, he added.

In Germany, officials from the chemical industry, which is oil-based, have warned that realizing the EU's climate-change goals may cost Germany some 200,000 jobs.

Barroso denied that his package will result in job losses, and Kemfert agrees with him.

"Of course there will be winners and losers," she said. "But the new package will tremendously boost the German renewable energy industry and create jobs there. So I think mentioning job losses is over-dramatizing the situation."

The proposals by the commission need to be ratified by the European Parliament and the Council of Ministers, so expect many more months of tough bargaining.

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