Secret plan to impose EU-wide carbon limit

Secret plan to impose EU-wide carbon limit

By Stephen Castle

24 November 2006

Europe should set a new, unilateral, target for cutting CO2 emissions, agree legally binding plans to boost renewable energy and bring cars into its carbon trading scheme, according to a European Commission document.

The blueprint, drawn up by the Commission's vice-president, Gunther Verheugen, marks a significant shift in thinking as officials in Brussels seek to "green" their economic policy. While the Commission, led by José Manuel Barroso, has sought to boost "growth and jobs", environmental policy has so far been seen as a separate policy area.

In a letter to Mr Barroso and other Commissioners obtained by The Independent, Mr Verheugen, who is responsible for industrial policy, suggested several controversial plans, including the idea of bringing car drivers into the EU emissions trading scheme.

His intervention has sparked a vigorous debate in Brussels. One critic of the European Commission vice-president accused him of "trying to jump on the green bandwagon without knowing the issues very well."

However, his defenders say that Mr Verheugen is one of the few senior figures in Brussels trying to reconcile the need for economic growth with growing concerns over the environment.

Citing the findings of the recent report by Sir Nicholas Stern on the economics of climate change, Mr Verheugen calls for the EU to adopt a "realistic, unilateral target" for cutting CO2 emissions by 2020.

No specific figure is mentioned though the document hints that a reduction of 10-15 per cent on 1990 levels might be tolerable for the EU. This type of target would imply "electricity price increases in Europe of some 10 per cent". The cost of CO2 per tonne in Europe's emissions trading scheme (ETS), currently around €8 (£5.40), and expected to rise to €17 from 2008-12, would be increased to "up to €30".

By contrast, research "suggests that 2020 unilateral targets of more than 15 per cent off 1990 levels could imply significant costs", the document says.

At present the EU is struggling to meet its international commitments. Projections suggest that the EU countries will only just meet their Kyoto targets of cutting CO2 emissions by 8 per cent of 1990 levels by 2012.

Beyond unilateral action by Europe, Mr Verheugen also argues that the EU should agree to "a second, more ambitious, set of targets through international agreements if the other main emitters are willing to equally take substantial commitments to act against climate change".

While environmentalists agree on the principle of a unilateral target, they see the 10-15 per cent reduction on 1990 levels as far too low.

However, Mr Verheugen takes more risks with his call to include car use in the EU's emissions trading system. Plans are already under way to include aviation in the scheme, but the Commission vice-president goes further.

He argues: "We need to extend the system to bring in other sectors - eg cars - as well as other gases. There is no justification for excluding these from the ETS - we must avoid the proliferation of stand-alone schemes."

The document does not make clear how drivers would be brought into the scheme and the idea marks a departure from existing Commission policy. This is directed at forcing car manufacturers to improve fuel efficiency and curb CO2 emissions.

Mr Verheugen also argues for a "binding European target for all renewables". He adds: "We should not fall into the trap of attempting to 'pick the winner' and we should, therefore, provide incentives, in a technology-neutral fashion, based on the environmental benefits of different renewables."

The letter is timed to influence the debate in Brussels before the launch of a package of energy proposals next year, and a decision on what Europe's post-Kyoto target should be for the period after 2012.