A major new study from consultancy giant EY concludes that decarbonisation is a powerful tool to reduce the Europe Union’s energy import dependence and would be an effective driver of economic recovery.
The report says an ambitious decarbonisation strategy will slash the EU’s energy dependence, reduce the multi-billion euro cost of energy imports, and help tackle climate-related risks.
The study, titled Macro-economic impacts of the low-carbon transition and commissioned by the European Climate Foundation group of NGOs, assesses the potential economic effects of the bloc’s planned 2030 energy and climate strategy, which is currently the subject of intense negotiation in Brussels.
The analysis sought to assess the impact of different decarbonisation strategies on the wider European economy, as well as specific sectors such as energy, transport, buildings and industry.
The report concluded an ambitious decarbonisation strategy that delivers an 80 per cent cut in emissions by 2050 would deliver numerous benefits, most notably through reduced energy import costs.
Drawing on the European Commission’s own predictions, the report details how under a business as usual scenario European oil import dependency will climb to almost 90 per cent by 2050, while gas import dependency could soar from 64 per cent in 2010 to almost 80 per cent by mid-century.
In contrast, striving for a long-term decarbonisation target through greater use of renewable energy and shift to electric transport and heating would slash import dependency.
It would reduce the bloc’s annual fuel import bill by between €518bn and €550bn, saving European motorists up to €180bn in 2050, and reducing households energy costs by up to €474bn over the next 40 years.
EY also details how decarbonisation will deliver a host of other economic benefits, including a €38bn a year reduction in health costs by 2050 relating to improved air quality.
It would further create 1.25 million additional jobs by 2030 under a scenario where the EU cuts emissions 40 per cent by 2030, while complying with new renewable energy and energy efficiency targets.
The report draws on EU modelling to show how an ambitious decarbonisation scenario will have a negligible impact on GDP and could even lead to higher levels of economic activity in 2030 than under a business as usual scenario.
The EU’s climate and energy targets for 2030 are currently the subject of intense debate, with leading powers such as Germany, France and the United Kingdom calling for a 40 per cent target, while Poland continues to lead calls for a less ambitious goal.
At the same time countries are also split on whether specific energy efficiency and renewable energy targets should be adopted or whether countries should be free to comply with overarching emissions targets in the way they see fit.
Opposition to a more ambitious climate target rests on concerns that rapid and deep decarbonisation will lead to higher costs for industry, undermine the bloc’s competitiveness, and damage the economy.
Australian Prime Minister Tony Abbott and his Canadian counterpart Stephen Harper have voiced concerns that global climate policies could harm their economies and reasserted that they would prioritise economic growth.
Poland has similarly repeatedly warned that EU decarbonisation policies could harm its coal industry and industrial base.
However, the EY report largely rejects these fears, arguing that in the case of the EU, opponents of action to decarbonise the economy are working with the flawed assumption that business-as-usual will offer a lower cost scenario.
Tom Brookes, managing director of the Energy Strategy Centre at the European Climate Foundation, is reported as saying the synthesis of the latest expert research on the economic impact of European decarbonisation “makes clear the unparalleled opportunity energy efficiency and renewable energies offer to reduce Europe’s dependency on imported fuels”.
The full EY report is here.
