New EU energy plan creates carbon scare
A new EU energy plan causes controversy as it threatens carbon market that “could cost billions”, says steel manufacturer.
The energy plan released last week caused a surge of uproar from steelmakers and the European Commission. They argue they will lose billions due to the “excess pollution permits over the next decade, which will cut [carbon] prices in half.”
Carbon experts argue that the EU’s plan to decarbonise Europe will lead to carbon prices plummet and will create major job losses. They also argue that governments will lose billions in tax revenues.
The report sets out an objective to achieve EU decarbonisation in order to reduce greenhouse gases emissions by 80-95 per cent by 2050.
It notes great potentials in innovative solutions such as the underground storage of CO2, hydrogen or heat in order to circumvent carbon emissions.
It stresses that a relevant, overhauling EU legislation should be applied by 2014 to ensure that steps are being taken and that EU members are aligned and committed to the policy. This will be governed by the The Emissions Trading Scheme (ETS).
The ETS, which oversees more than 11,000 factories and regulates sales of pollution permits for every tonne of CO2 they emit.
The energy efficiency plan will reduce demand for cabon credit, with some experts saying this could be about 400m tonnes by the end of the decade. This reduction is due to the plan’s aim to reduce the cap on CO2 emissions and simultaneously makes them harder to get.
A leaked study predicts that as a result of these new measures carbon prices will fall to 14 Euros per tonne, compared to the current price of 25 Euros.
Carbon market experts, including those in the Commission's climate department, say it would be a mistake to put a further layer of regulation on top of the EU's main tool for curbing greenhouse gas emissions
The EU Commission's climate department says that to make the transition to a low-carbon economy the European community would need to invest an additional 270 billion pounds. This constitutes 1.5 per cent of its GDP annually, on average, over the next four decades.
Some experts argue that major job losses will be caused by decreasing billions in government’s tax revenues due to the diminishing carbon industry. One expert said said: “The energy services directive could potentially wipe out billions of Euros for governments across the EU, unless EU ETS allowances are set aside,"
"[Even tough] investments would be displaced, adequate measures were taken in the EU ETS to avoid this so-called carbon leakage," an EU official said.
The report comes as the Department of Energy and Climate Change (DECC) is being attacked by heavy industry for its radical implementation of the "energy services directive".
TATA (which bought British Steel) which announced 1500 job cuts last month, blamed it on the plummeting carbon prices, supported by the DECC.
With increasing pressure on European manufactures to adapt to the new policies and pressure by the environmental European commissions to take more drastic steps to promote energy efficiency, future clashes are imminent.
Image: joguldi | Flickr
