EU sets 40 per cent carbon cut for 2030

The European Union has proposed cutting the region’s greenhouse-gas emissions by 40 per cent in 2030 in an accelerated effort to fight climate change.

The United Nations environment chief has hailed Europe’s plan as a “positive” step towards a new international pact against global warming, but environment groups are not so sure.

Bloomberg newsagency reports the European Commission’s strategy to reduce pollution, curb rising energy costs and overhaul renewable-energy policies in the next decade would require an average annual investment of €38 billion in the 28-nation bloc, the region’s executive arm said today in a statement.

The current goal is to cut emissions by 20 per cent in 2020 from 1990 levels, a pace that would lead the EU to a 32 per cent reduction of greenhouse gases by 2030.

“Europe’s pledge is the benchmark for other countries. It is the first party out of the gate with an offer,” Jennifer Morgan, climate director at the World Resources Institute in Washington, said.

“It goes in the right direction, but it is not there yet,” she said.

“That 40 per cent is just at the bottom of what scientists are recommending.”

Christiana Figueres, head of the UN Framework Convention on Climate Change (UNFCCC), welcomed the announcement as a “positive signal for a meaningful 2015 agreement.”

UN members have vowed to conclude a new global climate pact in Paris in December 2015.

The deal, to take effect from 2020, will seek to limit average global warming to two degrees Celsius over pre-industrial levels.

The proposed design of future EU policies pits nations including Germany and the United Kingdom, who are seeking stronger efforts to protect the atmosphere, against Poland and its allies, which rely mainly on fossil fuels to keep their economy humming.

Bloomberg reports it also highlights the divide between energy intensive companies, whose gas and power costs are more than double their United States and Asian competitors, and green lobbies such as Greenpeace seeking deeper emission cuts.

“The 40 per cent greenhouse-gas target is probably the maximum of what can be achievable if you want to unite all these forces,” EU Climate Commissioner Connie Hedegaard said in an interview in Brussels.

“This is the common denominator that we’ve been looking for for years.”

The strategy is the start of a debate among member states, which may lead to a draft law in early 2015.

It also includes an EU-wide target to boost the share of renewable energy in energy consumption to 27 per cent by 2030 and may include a pledge to boost energy efficiency later this year, the EC said.

The proposal is an important first step to restoring investor confidence in the EU’s vision for a low-carbon energy future, according to Stephanie Pfeifer, chief executive of the Institutional Investors Group on Climate Change in London, which represents more than 85 companies with assets of €7.5 trillion.

The EU’s long-term goal is to cut greenhouse gases by at least 80 per cent in 2050.

“Investors need policy fixed for the long-term to plan multi-decade energy investments,” Ms Pfeifer, whose group includes Kleinwort Benson Investors and PensionDanmark, said in a statement.

“The longer policy is delayed the more severe Europe’s energy investment challenge becomes.”

The spending required to meet the targets will be to a large extent compensated by fuel savings, according to the EC’s President Jose Manuel Barroso.

“We show that European leadership in global climate action is beyond doubt and we show that we can do that in a way that is beneficial for economy,” President Barroso said at a conference in Brussels.

“What we’re proposing today is ambitious and affordable.”

The EC asked member states to consider a 2030 framework that focuses on the carbon-reduction target to avoid conflicts with policies subsidising renewable energy, according to the strategy document.

The EU won’t extend legally binding renewable energy targets for individual member states beyond 2020, instead setting an EU-wide goal, according to the document.

Bloomberg reports scrapping renewable energy targets is “good news” for the economy and environment, according to Robert Stavins, director of Harvard University’s Environmental Economics Program.

The renewable energy goal conflicted with the EU Emissions Trading Scheme (ETS) and removing it would lower the cost of achieving the pollution cap, he said.

The European Environmental Bureau (EEB), the region’s largest federation of environmental citizens’ organisations, has called on policy makers to reduce carbon discharges by at least 60 per cent, and set a binding target for renewable energy at 45 per cent.

“The Commission’s proposal falls well short of what science tells us is needed to address the devastating consequences of climate change and shows a serious lack of vision and leadership by President Barroso,” Jeremy Wates, EEB Secretary General in Brussels, said by e-mail.

The EC also seeks to strengthen its ETS from 2021 by making the supply of permits fall when there’s an accumulated surplus of at least 833 million tonnes.

That’s less than half of the glut estimated to be about 2.2 billion permits by the end of last year, according to Bloomberg New Energy Finance in London.

If the surplus drops below 400 million, the bloc would begin returning allowances from the reserve to the market, according to the document.

To align the cap-and-trade system, which puts emission limits on about 12,000 companies, with the proposed 2030 climate target, the annual pace of carbon cuts in the ETS would accelerate to 2.2 per cent from 2021 from 1.7 per cent currently, according to the EC.

No international credits would be allowed in the program after 2020 unless negotiators worldwide reach an ambitious deal at a climate summit in Paris next year.

The cost of emitting a tonne of carbon dioxide in the EU’s $53 billion carbon market slumped to a record low of €2.46 in April but is now trading at €5.16 on the ICE Futures Europe exchange in London.

EU heads of state will discuss the package at a meeting in Brussels starting on March 20.

The EC’s ambition is to have a political decision on the direction of future policy in time for a September 23 summit, where UN Secretary General Ban Ki-Moon is seeking pledges that can underpin a global treaty limiting emissions to be approved in 2015.