The European Commission has recommended a low greenhouse gas reduction target for 2030, because it says that higher targets would hurt the European economy. But according to its own impact assessment, the opposite is true, writes Brook Riley of Friends of the Earth Europe. According to Riley, the Commission’s impact assessment shows that a more ambitious target has a more positive impact on GDP than a less ambitious one.
To the disappointment of those who are fighting for a strong climate policy, the European Commission in its climate and energy package published in January, proposed a greenhouse gas emission reduction target of just 40 percent by 2030. This is likely to be officially adopted by the European Council later this year.
As many NGO’s have pointed out, a 40 percent reduction is out of line with the climate science. They say at least a 55-60 percent cut is necessary. As my own organisation, Friends of the Earth Europe, argues, the 40 percent target assumes a fifty-fifty chance of exceeding devastating levels of global warming. In addition, this target will hardly provide a solid foundation for a meaningful result at the crucial 2015 global climate talks in Paris.
However, according to the Commission, a 40 percent target is the best that can be achieved in the EU at this moment. The reason for this modest ambition is economic. As Commission President Barroso pointed out when he presented the proposals, 40 percent was the most “cost-effective option” according to the EU”s own low-carbon roadmap.
When discussing the issue with Commission officials, they keep repeating the same argument: “The EU needs to balance environmental protection with competitiveness,” they say.
The problem with this argument, however, is that it is completely false. It is false even according to the Commission’s own figures.
First of all, in its Impact assessment accompanying the communication ‘a policy framework for climate and energy in the period from 2020 up to 2030’, the Commission notes (on page 81 and in table 16) that a 40 percent greenhouse gas reduction leads to a loss of between 0.1 percent and 0.45 percent of GDP. But the Impact Assessment then goes on to state that bigger emission cuts (and targets to save energy and increase the share of renewables) have a positive effect on GDP!
Table 18 on page 82 of the Impact Assessment shows that the so-called GHG45 EE RES35 scenario, which assumes a 45 percent reduction in emissions (the most ambitious scenario the Commission considered) actually leads to a 0.53 percent growth of GDP:
Secondly, officials working on the dossier have admitted that the Commission has only looked at the costs of the emission reduction scenarios for 2030, rather than the balance of costs and benefits.
Thus, for example, health benefits due to reduced air pollution were not taken into account. The economic impacts of climate change – such as flooding and loss of food production – were not even modelled. This made the 40 percent scenario look cheaper than more ambitious policies.
Thirdly, to ‘justify’ the 40 percent target very high costs for energy efficiency were assumed (the Commission’s more ambitious 2030 scenarios rely heavily on reducing energy use). This was done by manipulating the discount rates. A high rate reflects high risk and high costs. It therefore scores badly in the Commission’s cost-is-everything method of selecting the optimal 2030 scenario.
The Commission used a discount rate of 12 percent for the industry sector, 9 percent for the power sector, 8 percent for the public sector, 11 percent for the tertiary sector, but an unjustifiably high 17.5 percent for private buildings, where most of the EU’s energy savings potential is concentrated.
The result: the more ambitious 2030 scenarios with high amounts of energy efficiency had no chance of competing with the 40 percent emissions-only scenario.
Meanwhile, the Commission itself has carried out analysis showing that a 17.5 percent discount rate is too high. This analysis shows that ambitious targets for energy efficiency would mean greater involvement of energy service companies (ESCO’s), which would bring the discount rate down to around 10 percent. (An ESCO helps households by raising awareness of the benefits, providing up-front financing, helping resolve bureaucratic issues, etc).
The two following extracts are from pages 74 and 165 of the 2030 impact assessment:
But this analysis was ignored. The Commission persisted with the 17.5 percent figure when calculating the costs of each scenario (see page 74):
So why would the Commission ignore its own analysis and adopt a lower target than is needed?
What I have been told by senior officials is that 40 percent is the best the EU can do in today’s political climate. “You need to get real,” I was told when I pointed out that a higher target is called for.
In other words, President Barroso and many of the Commission officials working on the dossier are being defeatist. They would rather propose a weak 40 percent target, which they think member states are more likely to support, than fight for action on the scale genuinely needed.
Barroso may also have an eye on his legacy. His mandate runs out in October, and he would no doubt like to have a deal made under his presidency.
Opposition from the heavy industry and fossil fuel lobbies is another factor. Markus Beyrer, the director general of BusinessEurope, declared last year that “climate targets are too driven by climate”. His organization has repeatedly (and without evidence) claimed that ambitious 2030 climate and energy policies will force industry to leave Europe. Commission officials tell me they need to take these arguments into account, even if the threat is imagined.
But I have been told by sources inside the Commission that there is another factor at work, namely opposition from those in the Commission’s climate department who strongly support a central role for the EU Emissions Trading System (ETS) in European climate policy. Apparently they believe the EU will never agree to more than 40 percent emission cuts. They desperately want the ETS – which they created – to be a success. They therefore want to lock in the 40 percent emissions-only scenario (i.e. with no targets for energy efficiency and renewable energy, as proposed by the Commission), and ensure a leading role for their brainchild.
Just a few days ago, I learnt that the Commission’s energy department, which is currently modelling the EU’s energy savings potential for 2030, has been told that it must not recommend scenarios which imply more than 40 percent emissions cuts.
The Commission is setting artificial limits on climate and energy policies, then spinning its proposals as ambitious and cost efficient. People need to know there is nothing legitimate about the Commission’s 40 percent proposal. It’s the worst possible basis for a common EU position on climate action.
But it’s not too late to turn things round.
Commission decision makers have two options. They can bury their heads in the sand and ignore all the evidence against 40 percent (and in favour of a higher target). But this is risky: the press is catching on and the Commission will rightly be accused of sabotaging the fight on climate change.
Or they can accept the facts and find a face-saving way to improve the 40 percent proposal. The Ukraine crisis – and the request from national governments to look into ways to reduce dependency on Russian oil and gas – may provide a way out. As you’d expect, the Commission’s impact assessment shows that increased climate action (i.e. 45 percent emission cuts coupled with energy efficiency and renewables) leads to lower net energy imports and lower net gas imports than the 40 percent reduction target (see page 137).
For this to work, the Commission must scrap its flawed analysis and assess the EU’s real energy savings potential. In February, the European Parliament showed the way by recommending far-reaching energy savings policies which would mean up to 54 percent greenhouse gas cuts. Everything is still to play for, providing the Commission starts fulfilling its duty to act in the long-term interests of Europe and its citizens.
Brook Riley, climate and energy campaigner at Friends of the Earth Europe