The Great Climate Giveaway

(Update: this has now been reworked and crossposted)

Aside of my own neuroses, EU climate change policy is probably the issue I have spent most time both studying and thinking about. As such, I should write about it more often.

The interface between my thoughts and the public discourse is, however, difficult.

I find many of the objections of environmentalists to European climate change policy understandable in the context of shifting the 'overton window'. That means, criticising policy in order to shift the political centre towards your position. The 'centre', in that context, is a social construction mainly formulated through the mainstream media. For more, read this post by Jamais Cascio.

There are downsides to overton window politics which are being ignored in the discourse on the left. Mainly, that it is easy for opponents to start painting your movement as irrational extremists. As we have by now successfully started doing to conservative Republicans in the United States. To avoid this trap, one should at least try to avoid bullshit. And, in the context of policy, one should put a focus on offering concrete alternatives to avoid being seen as merely critical.

Now, that's my perception, born mainly out of an elitist preference for truthfulness, nuance and realism, as well as observing how environmentalism has been sidelined and declared 'dead' in the mainstream during the past 9 years. To the extent that 'environmentalist' is now seen as a pejorative by otherwise reasonable people like Nate Silver. It might be, though, that we are on the brink of a more progressive age and I merely lack the audacity of hope.

How has this played out in the context of the EU's recent climate package?

The European Union has unilaterally declared that it will cut its emissions by 20% by the year 2020, and offered to up that to 30% if other countries also offer a serious commitment in global climate change negotiations. These numbers are with regard to the baseline of the year 1990 that is used in the Kyoto protocol; the EU is now slightly (1 to 2%) below that baseline. This declaration was already made by the EU's national goverment leaders in 2007 and the EU has recently adopted a package of laws that back up the 20% goal.

That package includes a 20% share of renewables in the overall energy mix. The 20% energy efficiency target is being implemented through a broader set of laws and policies, only one of which was included here. The fact that those two targets have been upheld in the current economic climate is laudatory. However, there are a few elements to the package that have weakened the European commitment:

• Car makers are now obliged to meet the carbon dioxide emissions standards in 2015, instead of 2012, and might still get preferential loans for doing so
• The package includes a giveaway to the coal industry in the form of support for 'Carbon Capture and Storage'.
  
• The third phase of European Emissions Trading Scheme (which lets companies trade emission rights and covers industrial installations, power plants and from 2013 also aviation) will still mainly be based upon handing out emission rights for free rather than auctioning them
• EU Countries have the option to meet up to three quarters of their national targets by investing in third countries (mainly developing countries), under something similar to the current 'Clean Development Mechanism'.

The last point is especially worrying, for political reasons. Many European countries used to be opposed to the Clean Development Mechanism, and the EU had strongly restricted the use of credits gotten through that tool for achieving national targets under the Kyoto protocol, and had similarly restricted their use in the Emissions Trading Scheme. Backtracking by Europe means that there is now no more real opposition to expanding the tool. Promising this kind of boon could also prejudice developing countries in ongoing climate change negotiations against taking on real commitments. Not that I think the boon will turn out to be real.

Let's go over some of the reactions. The WWF has written that the EU has adopted a 'poisoned' climate package, because of the extent to which the targets can be met by importing credits:

Last week, at the UN climate summit in Poznan, the EU urged all industrialised nations to cut emissions by 30% by 2020 below 1990 levels. “The EU decision today is far below that ambition and is cheating both the climate and the people,” says Stephan Singer, Director of the WWF’s Global Energy Programme.

WWF calls on European countries to undertake maximum reductions domestically and to not use external credits. With strong regulations on energy efficiency and renewable energy the 20% target is easily achievable within the borders of Europe.

Greenpeace, meanwhile, doubts whether the 20% target will even be met:

Greenpeace believes EU leaders meeting in Brussels last week weakened the ambition of the original Commission proposals by giving in to pressure from industry lobbies and to accommodate the short-sighted interests of several member states. The climate parts of the agreed text are filled with exemptions which threaten the EU´s ability to even reach its inadequate 20% target. The legislation also ignores the polluter pays principle by handing out many free credits to high emitting industry. The most positive element of the package was the law to boost the share of renewable energy to 20% by 2020.

There is a bit of truth and a bit of BS in both of these statements. The truth can be read between the lines in the WWF statement. Under normal expectations of economic growth, resource prices and demographic patterns, the EU should easily meet the 20% greenhouse gas reduction target domestically merely by meeting its renewable energy and energy efficiency targets. The question is rather: who pays?

Under this package, that would be the consumer and the taxpayer. And this represents a shift from an implicit corporatist understanding within EU climate policy - that each sector has to pay for a proportional share of emission reductions. Greenpeace frames this in environmentalist terms by saying that polluters now don't have to pay. I'd rather say it's a huge giveaway to companies in those industries that don't face heavy global competition and especially to those in the energy sector. These companies will be able to continue reaping windfall profits by pricing in the cost of emission rights in their products, even though they did not have to pay for most of them.

That is a message that needs to be pushed more. We will all still pay the higher electricity prices. And there is a simple way we could deal with this nationally, that doesn't distort the emissions trading market: tax the windfall.

As the package signified a significant retreat on some elements of the EU's climate policy, further retreat can not be ruled out. These things are now law, and that makes them more secure. But a lot of elements of the energy efficiency action plan still need to be implemented.

In spite of that, the EU is not under threat of giving up its 'climate leadership' - at least not to anyone else. Last time I heard Obama talking about the United States, he was saying he wanted to go back to 1990 emissions by 2020, meaning a 0% decrease. Australia's Kevin Rudd is offering 15% if other countries also commit, half of what the EU offers. Japan and Canada are still far above their Kyoto commitments. And no developing country is doing more than waiting and seeing.

This is a potentially disasterous situation. The EU's estimation is that industrialised countries need to reduce their emissions by 30% in order to stabilise the atmospheric concentration of greenhouse gases at 550 parts per million of carbon dioxide 'equivalents', which it thinks to be necessary for avoiding dangerous climate change (above 2 degrees Celsius). However, current science suggests that there is already a significant amount of risk for dangerous climate change at levels over 450 ppm. So... that's where we are today.

(A set of thoughts, it's going to be made a bit more compact, focused & then crossposted)