By how much should the EU cut emissions? (I)

The EU must tell the UN by 31 January how far it will reduce carbon-dioxide emissions over the next decade. Here, Madeleine Cobb and Luc Bas of the Climate Group argue that a 30% reduction is right and realistic.

Ask a European politician for an issue on which the EU is leading the world and the chances are they will point to climate change. In the wake of the outcome at Copenhagen, however, Europe faces an important choice. In the absence, as yet, of a firm international agreement, should it move ahead with more ambitious action on climate change and seize the opportunities and benefits this brings?  Or should it surrender its climate leadership and put at risk its hard-earned advantage in a low-carbon economy that was worth $3 trillion (€2.1 trillion) globally last year, a figure that will continue to grow?  

Since the first serious international efforts to prevent further climate change, Europe has deliberately taken a lead in implementing policy, cutting emissions and switching to lower-carbon technologies. This approach has been based on an understanding that leadership in a field that is likely to lead to major economic transformation is more than just an issue of environmental responsibility; it is important for continued growth and job creation.

If EU leaders take the first course of action – and it is clear that many businesses believe they should – the first step must be to raise the region’s ambition level by immediately adopting the 30% reduction target.

We know that this is readily achievable with proven technologies and known policies. And investment in these actions makes good economic and business sense. Recent research published by the European Commission finds that the net cost of achieving a 30% reduction is broadly neutral, with the gains from energy savings outweighing the additional investment costs. One silver-lining of the recent economic downturn is that it has helped curb EU emissions and therefore the overall cost of achieving the 20% target. The cost of achieving a 30% target could now be €104bn cheaper than the original 20% reduction was expected to be when first adopted.

There is a definite advantage in acting first and acting fast. Being at the forefront of new markets creates jobs and attracts investment. For example, by 2008 at least 134,000 jobs in renewable energy were created in Germany as a direct result of its renewable energy law, which gave a big stimulus to investment. The EU estimates that the 20% renewables target alone will create 2.8 million jobs and increase its gross domestic product. Research by Cambridge University published by the Climate Group last year showed that, even if no other country followed, more vigorous efforts to cut emissions in the EU could generate an extra 1% of output and create hundreds of thousands of new jobs by 2020.

If the private-sector investment in low-carbon infrastructure and clean technology is to be scaled up to the level necessary, business needs a strong and clear policy signal. In the absence of a global treaty, this needs to come from national and state legislatures. An EU target of 30% would send a strong signal.

Discussions about the exact ‘comparable’ efforts of other countries, such as China and the US, should not be a reason for the EU to hold back. On the contrary, a more ambitious EU target can help create momentum as other countries establish their own targets and programmes. Furthermore, recent economic analysis in Europe has shown that the potential competitiveness impacts are in reality likely to be small. In the interim, policy design such as allocation of free allowances can help smooth the transition.

A more ambitious climate policy is in the EU’s strategic and self-interest. Moreover, it would send the strong signal to European businesses and investors that they should begin to unlock a new era of low-carbon economic prosperity. It would help sustain the momentum for a global agreement and accelerate the domestic shift to a low-carbon economy, with environmental, economic and social benefits. If the EU were to move to a 30% reduction target, backed by a robust strategy, it could again lead the global race to a low-carbon, prosperous future.

Madeleine Cobb is a policy manager at the Climate Group.

Luc Bas is its head of government relations for Europe.