15 july 2010

Ministers toughen stance on emissions

By Fiona Harvey in London, Financial Times, July 14 2010

Europe’s targets for cutting greenhouse gas emissions should be drastically toughened, three of the European Union’s most powerful member states say on Thursday in a surprise development that will leave businesses fuming.

Ministers from Germany, France and the UK come together for the first time in the Financial Times to call for the EU to slash emissions by 30 per cent by 2020, instead of the current 20 per cent target.

They say moving to the higher target unilaterally would not be difficult and would prevent Europe from lagging behind in the global race for green technology.

“If we stick to a 20 per cent cut, Europe is likely to lose the race to compete in a low-carbon world to countries such as China, Japan or the US, all of which are looking to create a more attractive environment for low-carbon investment,” the ministers said.

Research from Bloomberg New Energy Finance this week showed China had leapt ahead in green technology investment, attracting $40.3bn (€31.6bn) of asset finance for clean energy in the past year, compared with $29.3bn in Europe.

But the move by the three countries has reopened a debate most businesses regarded as settled. In May, the European Commission reported a 30 per cent reduction would be €22bn a year cheaper than thought because the recession had trimmed emissions. But an outcry from businesses forced a concession that raising the target would have to wait “until the time was right”.

Thursday’s move marks a U-turn for Germany, which has long opposed a unilateral move to 30 per cent, favouring the EU’s previous pledge to raise its target only if other countries showed similar ambitions, which they did not at last year’s Copenhagen climate summit. France also had strong reservations, but the UK’s Liberal Democrat party scored a coup when the ruling coalition of which they are a part backed the change.

Influential European business groups oppose the higher target. “We believe a unilateral move by the EU could disadvantage manufacturers by subjecting them to higher costs than their international competitors,” said Neil Bentley, director, business environment, at the UK’s CBI employers’ organisation.

Gordon Moffat, director-general of Eurofer, the European steelmakers’ association, said: “It would be absurd to take the economic downturn as justification for more ambitious climate change targets.”

But some businesses, including those with interests in green technology, support the tougher target. Joan MacNaughton, senior vice-president of policy at Alstom, the engineering group, said: “A 30 per cent target could really help to incentivise the low-carbon investment that Europe needs.”

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