Curb your emission targeting enthusiasm

The European Commission is getting ahead of itself about carbon targets again. We must be realistic if we want reliable, affordable energy.

Emissions and Commissions...
David Merlin-Jones
On 30 June 2011 10:51

The EU is very good at inventing environmental targets. It is not so good at making sure these targets are feasible or desirable.

At times, it appears as though target figures are generated entirely at whim, with no underlying rationality - as though there is a fruit machine: the EU Commission pulls the lever, the reels tell it to ‘reduce X gas by Y percent by Z year’ and the Commission imposes this target on member states.

This is certainly true for the latest target to be discussed in the European Parliament: a thirty percent reduction of CO2 by 2020 on 1990 levels, acclerating the twenty percent already enshrined in EU law.

The vote on the thirty percent target, tabled for earlier this week, has now been delayed until July. This is a good thing: it gives MEPs, especially those from Britain, more time to realise just how foolish this goal it is.

In theory, the target will deliver greater uniform emission reductions throughout the EU, with each state bearing an equal share of the burden, thus avoiding any single European country suffering disproportionate economic disadvantage. However, whilst perhaps sound in theory, the practical outcome will be very different.

From the UK’s perspective, the target is meaningless. We have unilaterally promised to reduce our CO2 emissions by thirty-four percent by 2020 courtesy of the 2008 Climate Change Act. This is fourteen percent more than any other EU country, so however hard the rest of Europe punishes their economies through environmental regulation, we are hurting ours more, and our competitive advantage will suffer accordingly. On that basis, the thirty percent target may seem a great idea, narrowing the competitive disadvantage gap between the UK and Europe, but this relies on countries actually acting on the new goal.

Clearly, Britain takes emission cuts seriously, and will adhere to any new EU targets set, whatever the cost. However, the UK is in the minority for doing so. Many states do not take reductions seriously and evidence suggests some countries will just ignore any new target.

Past regulations, such as the 2007 Integrated Pollution and Control Directive, have been happily disregarded by eleven EU states. The European Commission’s reaction to this has been slow. ‘Strongly worded letters’ are ineffective and eventual legal proceedings take time. The eleven countries now face infringement actions, but in the meantime benefit from not imposing extra costs on their industries.

In terms of the extra ten percent emission reductions, there is the added question of just how these can be made. Even meeting the twenty percent cut has meant that countries are simply pricing industries out of existence; based on twenty percent emission reductions, in the UK, the average energy-intensive company’s bill will rise from £3m now to £17.5m in 2020. This is bad enough, but companies will be unable to adjust if the goal posts are already being shifted against their favour, especially on an unrealistic timescale.

The thirty percent target will mean that for many businesses, it would make better sense to jump ship, and relocate to India or China, where none of these regulations and costs bite. On a European-wide scale, the economic penalties this will generate are horrendous, in terms of job losses, larger deficits, soaring consumer good costs - and this just means emissions become someone else’s problem.

The need to import the products made by these émigré industries back into Europe means emissions will also rise. This has already been seen in the UK: while production of carbon fell fifteen percent in 1990-2005, taking imports and transport into account, actual carbon consumption rose nineteen percent! It would appear the European Commission would be happy to let net global emissions increase, if it means the EU appears environmentally concerned.

It is also highly naïve to assume that if the EU ‘leads the way’, those benefiting from the European over-ambition will follow – why would they, when cheap energy and low regulation is the root of their economic success?

It is high time MEPs realised that the pace of environmental regulation is unsustainable. Higher targets cannot continue ad infinitum, and they are not the vote-winners politicians think they are.

People care less about having the ‘greenest government ever’ than whether they can afford to heat their home. A move to thirty percent will inflict such inflated costs on consumers, that the EU risks creating a backlash that will unravel the whole green agenda. A balance is needed. If we do need a target, stick to twenty percent.

David Merlin-Jones is a Research Fellow at the independent think tank Civitas. He specialises in economics, energy and British industry

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