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May 22, 2009 – 3:15PM

The European Union’s goal to reduce global-warming emissions may have to be curtailed because of a less-ambitious plan working its way through the US Congress.

The 27-nation bloc has asked all industrialized countries to reduce greenhouse gases an average 30 per cent over 30 years. The US bill seeks a 5 per cent cut by American industry in that period, posing a potential conflict when global talks on a new climate-protection treaty resume June 1 in Bonn.

Lower targets ease costs for coal-burning utilities such as RWE of Germany and Ohio-based American Electric Power. At the same time, United Nations scientists have said gas output should peak by 2015 or temperatures may rise more than 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels, adding to the risk of droughts and flooding from climate change.

“The US bill is clearly an advance on the past,” said James Cameron, vice chairman of London-based fund manager Climate Change Capital and a former treaty negotiator. Still, “the middle ground of scientific opinion tells us we need to make reductions in a much larger amount over a shorter period.”

The UN-led talks are scheduled to produce a climate agreement by year-end in Copenhagen.

The US is “unlikely to take on more aggressive reduction targets” for itself than Congress is now considering, said Ben Feldman, an environmental markets analyst in New York with JPMorgan Chase.

The EU, the largest group of developed countries at the UN negotiating table, will try to bridge gaps with envoys from the US and more than 150 other countries in the June talks that run for 12 days. President Barack Obama has endorsed the bill in Congress led by Democratic Representative Henry Waxman, chairman of the House Energy and Commerce Committee. The panel approved the measure on a 33-25 vote.

Europe defends goals

The EU defended its more ambitious goals, saying it hasn’t lost hope for reconciling US and European stances.

“The US position is evolving,” said Barbara Helfferich, environment spokeswoman at the European Commission, the EU’s executive arm in Brussels. “We hope to see an improvement in the targets that have been put forward by industrialized countries generally so that the 30 per cent goal can be reached.”

A split now among wealthy nations will threaten their strategy to present a united front to emerging economies including China, the world’s biggest producer of greenhouse gases. China has been pushed by the EU and the US to join in adopting limits in heat-trapping emissions.

The EU is on course to slash gas output 20 per cent by 2020 from 1990 and aims to deepen the cut to 30 per cent over the period, provided other wealthy nations make comparable efforts.

`Not promising’

The draft US law would trim discharges 17 per cent in 2020 from 2005. That’s a 5 per cent drop from the internationally accepted base year of 1990, according to EU calculations.

“It doesn’t look very promising what’s coming out of the US,” said Christian Egenhofer, head of the energy and climate program at the Centre for European Policy Studies in Brussels. “I don’t see how the EU can go to 30 per cent” in negotiations.

The cuts Congress approves will form the foundation for US proposals at international talks. The legislation would enforce new limits through a so-called cap-and-trade system similar to the European program, which began in 2005 and is the world’s biggest greenhouse-gas market.

Cap-and-trade requires companies that exceed their emission quotas to buy spare permits from businesses that emit less. The EU program covers companies from RWE, the biggest greenhouse-gas producer in Europe, to steelmaker ArcelorMittal of Luxembourg.

The US plan targets such businesses as Chevron, General Electric, Caterpillar and American Electric, the largest US power generator from coal.

Possible compromise

Europe accounts for about 14 per cent of global emissions. It needs help from China and the US, the second-largest emitter, to prevent irreversible environmental damage from climate change, scientists say.

One possible compromise is for the US to give more aid to poor countries to fight global warming in return for a weaker American emissions-reduction goal. Developing nations may need as much as 54 billion euros ($96 billion) a year by 2030 to adapt to climate change, UN projections cited by the EU show.

“The less of a reduction you make, the bigger the climate check you write,” said Sanjeev Kumar, a Brussels-based emissions-policy analyst at environmental group WWF. “That’s where the politics are going.”

In return for aid, poorer countries should commit to limiting emissions growth in 2020 to 15 per cent to 30 per cent below “business as usual,” the EU proposes.

`Let’s see leadership’

“Let’s see some leadership from industrialized countries and let’s see some clarity on stable and predictable financial support for developing countries,” said Yvo de Boer, executive secretary of the UN Framework Convention on Climate Change, which is guiding negotiations. “Then we can talk about what developing countries are able to do.”

The US refused to ratify the 1997 Kyoto Protocol, whose limits expire in 2012. Senators said it gave an advantage to factories in China and elsewhere by sparing those businesses from pollution controls. Obama reversed eight years of US opposition to emissions curbs under former President George W. Bush and has pledged action to fight climate change, heartening EU leaders such as German Chancellor Angela Merkel, U.K. Prime Minister Gordon Brown and French President Nicolas Sarkozy.

The recession makes it harder for Obama to seek a stricter cap in the draft law. Republican Representative Mike Pence of Indiana called the plan, which also needs the Senate’s support, “an economic declaration of war on the Midwest,” which relies more than coastal states on power from burning emissions- intensive coal.

“Nobody wants a repeat of Kyoto,” said Jake Schmidt, the Washington-based international climate policy director at the Natural Resources Defense Council. “They don’t want the US to come in and commit to something it can’t deliver at home.”

In addition to the June session, other rounds of talks are scheduled for September and November.

“I’m confident the numbers will be improved on by December,” said the UN’s de Boer.

http://business.watoday.com.au/business/emissions-plan-at-risk-20090522-bi4e.html?page=-1

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