EU climate concessions but some things never change

10 March 2010

European Union climate commissioner Connie Hedegaard made pronouncements in the European Parliament 9 March that mark an abrupt change of direction for European Union climate policy on a number of points, writes Stephen Gardner. First, she wants to reverse the EU position on the continuation of the Kyoto Protocol. Before the December's disastrous Copenhagen climate conference, the Commission was saying that Kyoto should be scrapped and replaced by a new treaty. This played up to what the US wanted but was a total obstruction when it came to dealing with developing countries. Now, Hedegaard says the US should come up with an acceptable alternative if it refuses to countenance Kyoto. This is a big change. Second, she has put deeper emission cuts by the EU back on the agenda, saying the Commission will prepare an analysis of the options for going from a 20 percent to a 30 percent reduction (by 2020 relative to 1990), in time for the June European Council. It's worth pointing out here that Commission president Jose Manuel Barroso came close to dropping completely even the suggestion of the 30 percent target from his recent EU2020 plan, so Hedegaard's revival of it marks a notable victory. Third, she is talking about starting to make emission reduction plans beyond 2020, with the Commission to produce by the end of the year a paper on "scenarios" until 2030. This is interesting because it forces the powers-that-be to start thinking in serious terms about how very deep emission cuts might be achieved. In principle, if the EU is to keep to its plan of keeping global warming to less than two degrees Celsius above pre-industrial levels, radical action post-2020 will be needed. Will Hedegaard get her way, or will it all be too much to swallow for Italy, Poland and the other reactionaries? We will see. But in the meantime, another Commission announcement today suggests Hedegaard might have a lot to do to change thinking. The Commission on 9 March green-lighted a German subsidy of €30 million to ArcelorMittal so it could install a system at one of its steel plants that will reduce carbon emissions by 16 percent (presumably reduce them in relative, rather than absolute terms, which is fine but of course may make no difference to overall emissions). In the long-run ArcelorMittal will benefit because it will cut its energy costs by installing the technology. Why should ArcelorMittal get this subsidy? The EU is supposed to have a polluter pays principle, and ArcelorMittal made profits of $1.1 billion in the last quarter of 2009 alone. Why therefore should they be subsidised by the taxpayer? It is worth noting that ArcelorMittal reduced its costs in 2009 by $2.7 billion, ie. by closing plants and shedding jobs. Why is the steel giant given a big bung in return? It is worth noting at this point that ArcelorMittal is sitting on a huge reserve of carbon allowances given to it as part of the EU's emissions trading system (ETS). In fact, it has many more allowances than it needs, due to over-allocation and due to the recession, which meant it cut, thus cutting its greenhouse gas emissions. These allowances are transferable to the next phase of the ETS, and can be sold after 2012, which means ArcelorMittal is already sitting on a windfall. The extra allowances freed up by the new technology paid for by the subsidy will boost the windfall even more. Some things never change. A version of this article was originally published on EU Observer blogs.

 

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