EU puts carbon trading at heart of climate change battle

Ian Traynor in Brussels,
Patrick Wintour
The Guardian,
January 23, 2008

The European commission will tell member states today what they have to do to meet its plan to cut greenhouse gas emissions by a fifth by 2020.

Legislative proposals from Brussels, being unveiled today, will extend and improve the world's first carbon trading scheme as the central element of the package to fight climate change.

The proposals will also increase the EU's power over member countries in trying to set a high price for carbon, and so promote energy efficiency, renewables and other low carbon forms of energy production. The measures set a mandatory target for a fifth of European energy to come from renewable sources, and for biofuels to supply 10% of all road fuel, both by 2020. The overall targets were agreed last year, but today's draft directives put flesh on the bones of the world's most ambitious climate change action plan and dictate what each member country and European industries have to do to make it a reality.

The energy minister, Malcolm Wicks, said yesterday that Britain would be told to increase its energy from renewables by a factor of seven, meaning that up to 40 % of electricity generation in Britain should be from renewable sources by 2020. "We will meet our share of the European target, there's no doubt about that," he told the BBC.

The commitment to biofuels supplying 10% of all transport fuel is contentious, with analysts arguing that this is a counterproductive way to combat climate change, with the rush to manufacturing motor fuel from plants doing more damage than good.

Discussions were continuing last night over the final figures for national contributions to the 20% reduction in greenhouse gases. It is thought that Britain would have to reduce its greenhouse gas emissions by about 20%, although in November the prime minister, in his climate change bill, proposed cuts of about 30% by 2020.

Poorer countries among the new EU members in eastern Europe will be allowed to increase their greenhouse gas emissions since their economic development would be held back by being forced to make swingeing cuts in emissions. At the heart of the package, expected to provide more than 60% of the reductions, is the world's first carbon trading scheme which is to be extended to new sectors. The scheme is currently confined to power generators and refineries, but will be expanded to cover airlines and industries such as cement, steel and paper.

The commission says the climate change package is a bargain, estimating its cost at 0.6% per cent of Europe's economic ouput. José Manuel Barroso, the commission's president, says the scheme will result in savings of €50bn (£37bn) as a result of less oil and gas imports in Europe.

http://www.guardian.co.uk/environment/2008/jan/23/climatechange.eu