The EU’s Sanctimonious Climate Bluster

When it comes to global warming mitigation, the European Union is full of sound and fury, but signifies nothing.

Leaders and officials from the 27-nation bloc frequently claim to occupy the moral high ground on climate change policy, due to the fact that the EU has adopted unilateral targets to reduce greenhouse gas emissions 20 percent below 1990 levels by 2020. While it is true that the EU is more than halfway to achieving this goal, a close look at the numbers shows that the EU’s emissions cuts to date are largely the byproduct of historical happenstance. Also dubious is the EU’s contention that it is implementing “unilateral” emissions reductions. In fact, the EU is trying to coerce international burden-sharing before it makes any real sacrifices of its own on behalf the climate.

Regarding the EU’s “success” in fighting climate change to date, consider this inventory of EU greenhouse gas emissions from 1990 to 2008. During that period, EU emissions declined 11.3 percent below 1990 levels. Within the EU-15 (i.e., nations that joined the EU in or before 1995), emissions decreased in Belgium, Denmark, Finland, France, Germany, Luxembourg, the Netherlands, Sweden, and the United Kingdom, but they increased in Austria, Greece, Ireland, Italy, Portugal, and Spain. Overall, emissions reductions exceeded emissions increases, such that emissions decreased 6.5 percent from 1990 to 2008 across all 15 nations. Yet 92 percent of the emissions reductions in the EU-15 took place in Germany and the United Kingdom, and these cuts had nothing to do with climate policy. Restructuring of the UK electricity sector in 1990 facilitated a “dash to gas” from coal power, which engendered a precipitous decline in greenhouse gas emissions. In Germany’s case, greenhouse gas emissions fell with the Soviet Union; when East Germany reunited with West Germany, much of the former’s obsolete industrial base was shuttered.

A similar dynamic took place in the 10 Central and Eastern European countries (Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia) that joined the EU in 2004. These nations had been in the Soviet bloc, and in the course of their collective transition from centrally-planned to market-oriented economies in the 1990s, their GDPs tanked, which caused their greenhouse gas emissions to plummet. This post-Soviet experience accounts for the rest of the EU’s “success” in reducing greenhouse gases from 1990 to 2008.

No doubt, EU emissions since 2008 have fallen further, but again, this has had little to do with climate policy. Instead, any such decrease in greenhouse gas emissions is primarily attributable to the global economic troubles that started in late 2008 and continue today.

In fact, the EU’s primary climate policy, the Emissions Trading Scheme (an EU-wide cap-and-trade), doesn’t call for significant sacrifice among member states until 2013. Until then, the preponderance of energy-rationing coupons are given away, rather than auctioned, which spares industrial suppliers and users of energy from having to change their behavior. Almost all emissions reductions through the Emissions Trading Scheme have been obtained through the use of international carbon ripoffsets in lieu of domestic measures.

Starting with “Phase 3” in 2013, the Emissions Trading Scheme is supposed to require auctioning of more than 60 percent of energy-rationing coupons, in addition to restricting the use of international ripoffsets. These changes would make the policy much more onerous, but the EU is indicating that it will weaken its cap-and-trade rather than burden its businesses.

In early June, the European Commission’s climate envoy Artur Runge-Metzger told Bloomberg that the EU would protect domestic industries from losing international market share to industries in countries that have not implemented expensive energy schemes. In particular, Mr. Runge-Metzger stated that energy intensive industries in the EU likely will receive free energy-rationing coupons and state aid. Of course, these policies defeat the entire purpose of a cap-and-trade. It remains to be seen what good can come of climate policy that effectively ignores high-emission sectors.

In late June, Poland included free emissions allowances for 13 new coal power plants into of its plan to achieve Phase 3 of the Emissions Trading Scheme. Although Poland wields little power in the EU, I suspect the European Commission will approve this seemingly flagrant flouting of the EU’s foremost climate policy, at the behest of Germany, which is the most powerful EU Member. In the wake of the Fukushima disaster in Japan, Germany pledged to shut down thousands of megawatts of nuclear power. It will have to replace that electricity generation somehow, and importing coal power from Poland is a lot more palatable to the influential German Green party than is building new coal power plants.

Tellingly, as the EU moves away from self-sacrifice to mitigate climate change, it is attempting to force international burden sharing. In a controversial policy* that is set to start on January 1 2013, the EU will force all airlines operating to or from European airports to participate in the Emissions Trading Scheme. This policy would raise billions of dollars annually, and make international airline companies the second largest participant in the EU cap-and-trade.

* Last week, the Obama administration issued its “strong objection” to the European Union’s policy, starting January 1, of forcing all airlines operating to or from European airports to participate in the Emissions Trading Scheme, the EU’s cap-trade-trade energy-rationing scheme. The U.S. joins China and Russia in contending that the EU doesn’t have the authority to regulate companies based outside its borders. In addition to alleging that the policy violates international law, China backed up its complaint by blocking the order of 10 superjumbo A380 aircraft produced by Airbus, the EU’s leading aircraft manufacturer. The deal had been worth $3.8 billion.