CHAIR OF UK ENVIRONMENT MINISTRY ACADEMIC PANEL: EU CLIMATE POLICY PROFOUNDLY FLAWED

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4 september 2009

British economist tears EU climate policy to pieces

ENDS Europe, Friday 4 September 2009

The EU's 2008 climate and energy package is in danger of turning into a "grossly distorting and expensive" piece of legislation like Europe's common agricultural policy, an influential British economist has warned.

Dieter Helm, a professor at Oxford University and chair of the UK environment ministry's academic panel, says the climate and energy package is profoundly flawed because its targets are entirely political and do not make economic sense.

The EU's overarching goal of reducing its greenhouse gas emissions by 20% by 2020 is a "deceptively" simple target, professor Helm says in a paper published this week by Oxford University's Smith School of Enterprise and the Environment. Europe has remained vague about what will be required to achieve it, he adds.

Its plan to increase the 2020 target to 30% in less than a decade if other developed countries commit to comparable emission reductions is "not credible". The European Commission provides no serious analysis on how it intends to achieve this, says professor Helm.

This is very damaging for Europe's proclaimed climate leadership and sends the wrong signal to other industrialised countries, he continues. "Only a major long-term global recession would make this sort of target plausible".

Choosing a short-term target "induces a very powerful technology bias". There are only two candidates to meet EU energy targets: renewables and energy efficiency. Wind power will to be the main route because others such as hydrogen will not be ready before 2020. This means meeting the targets will be costly.

Another fundamental problem with EU climate policy is that it fails to set a carbon price floor and ceiling. This would have solved many of the economic and political problems with Europe's emissions trading scheme (ETS), says professor Helm. Consultancy PricewaterhouseCoopers has backed the idea.

The economist calls for a radical overhaul of the policy, including setting a carbon price floor through a carbon tax. Europe needs a long-term price to support low carbon technologies, he says. The renewables target must also be modified "before its costs… have serious consequences".


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