EU faces costs of emissions reduction

Canberra Times
23/01/2008 Page: 11

European Union plans to cut greenhouse gas emissions could cost at least 60 billion euros ($A100 billion) a year, European Commission president Jose Manuel Barroso said yesterday. "Taking action is not cost-free, although we think we can limit the cost of our proposals to around 0.5 per cent of gross domestic product," he said, according to remarks prepared for delivery in London. Mr Barroso's total estimate, which will apply for the next 12 years, counts on the 27 EU nations undertaking all the commission's recommendations, in a package to be unveiled today, in an extremely cost-efficient manner.

The bill for reducing carbon dioxide emissions by 20 per cent by 2020, compared with 1990 levels - the baseline goal of EU leaders - was previously estimated to be 1 per cent of European gross domestic product, or $A200 billion a year. EU Leaders agreed in march last year that this target was the best way to contain global warming to less than two degrees above preindustrial levels, as recommended by UN climate experts.

On the positive side, Mr Barroso said,"Our proposals should reduce Europe's reliance on imported gas and oil by around 50 billion euros [$A83.2 billion] by 2020. These are figures with a real impact on our growth and prosperity." The cost of inaction, as calculated by one of his key climate advisers,"could even approach 20 per cent of GDP. The longer we delay, the higher the costs of adaptation and mitigation." The commission's package aims to strengthen the EU's emissions trading system, set targets for renewable energy use and review rules on national aid for environmental purposes.

When the bloc's leaders set their goals last year, they offered to go 10 per cent better than their own target, cutting emissions by 30 per cent over the same period it others were prepared to match it, as an incentive to big polluters. They also set a binding target for renewable energy to provide 20 per cent of Europe's needs by 2020, compared with 8.5 per cent currently, and agreed that this should be achieved by some countries doing more than others. But less than a year later, many EU countries have criticised the package they had asked the commission to draw tip to reach their goals as either being too costly or too damaging to certain sectors.

Mr Barroso said he hoped reaction today would be positive,"as we have worked closely with them in its formulation, and, I stress again, we are following the lines set unanimously by the EU's political leaders." "Europe must set the right policies in place to continue to set the pace on climate change," he said. "Procrastination is no longer an option for anyone."