Paris, London and Berlin agree on setting a 30% GHG emissions cut goal

Jean Louis Borloo, Chris Huhne and Norbert Röttgen, respectively the French, the British and the German minister in charge with the environment have agreed on the necessity to set more ambitious GHG-emission reduction targets. Here is a brief summary of their case.

This crisis and the economic turmoil downturn that the world and Europe faced should be seen as an opportunity to take a new orientation in our model of economic development. What we face now is a crisis of capitalism, as Braudel described it . In order to preserve itself, it has to make room for change. Greenness, sustainability embody this change. They allow to mitigate the risks linked to the volatility of all fossil fuels’prices not to mention the threats of an instable climate and the potential disasters it may lead to.
We are here at a watershed of the EU’s economic development, and we have this great opportunity to seize : strenghten our economic recovery, secure our energetic needs and fight climate change. All this can be achieved through the promotion of low-carbon energetic fields and the exploitation of new employment and export sources .

Europe is not the only one to embrace this challenge of a greener, more sustainable economy : many of its economic competitors are already taking bold steps in this direction. Will Euope be up to the challenge ? Will it be a leader in the area of low-emissions growth, or a mere follower ?
For us, there is no room for doubt that Europe can be a leader. Still, there is still a lack of incentives to spur the development of new investment models.
Paradoxically, the EU’s current reduction target – a 20% cut of GHG emissions levels by 2020 compared to the 1990 level – is what prevents it from getting farther. This objective appears now to be far too insufficient to allow the transition to a low carbon consuming model. The GHG emissions of the EU’s trading sector are already down by 11% compared to the period before the crisis. This results in carbon prices being much too low to incite significant investments in green jobs and technologies.

We fear that if we stick to that 20% target, Europe will lose the race for a low-emissions model to countries such as China, Japan or the US.

These countries are indeed trying hard to create an environment that would attract investments, notably by adopting policies promoting low-emissions models and by focusing the financial resources of their plans de relance on investing in low-emissions sectors.

That is why we are truly convinced of the necessity for the EU to adopt a GHG emissions reduction target that would genuinely push innovatioan and action on an international context : a reduction of 30% by 2020.
That would represent a genuine attempt a limitating the temperature rise at 2 degrees – namely the critical threshold beyond which climate hazard would be important-, would reinforce the will of those that already advocate for an ambitious action and would incite more less involved countries to catch up with the others in the green area.
That would also constitute a very wise economic choice.

By setting such an ambitious goal, not only would the EU directly influence the evolution of the price of carbon until 2020 but it would also send a strong signal regarding its willingness to set a political frame favoring the emergence of a low-GHG emissions model.
Thus, we must not forget that the private sector will account for the overwhelming majority of the required investments to set this model. The 30% goal will then insure investors more certainty and more previsbility.

European companies are already leveraging these new opportunities. Their international market share accounts for 22% of the low-carbon goods & services sector, thanks to the early leading position of Europe in the fight against climate change. But the rest of the world is catching up.
The engagements taken at the Copenhaguen Summit, however Small and less ambitious, have lead to a generalized effort , especially for China, India and Japan.

Carrying out early actions is all the more necessary that it also allows to cut costs. The recession-caused emissions reduction led to the annual cost of the 20% reduction target réalisation decreasing from 70 to 78 billion euro. The estimated costs of a 30% reduction is higher by 11 billion , a mere 0.1% of the UE’s economy.
Furthermore, postponing EU’s engagement would only result on further costs : according to the International Energy Agency (IEA), the cost of a single year of delaying the investment in low-carbon energy sources is somewhere between 300 and 400 billion euros on a global scale.

Moreover, these costs are calculated based on a very prudent hypothesis of an oil barrel price set at 88 dollars in 2020. But, given the constraints on the supply-oriented investments, the rapid growth of the Asian consumption and the fallouts of the Mexican Gulf oil spill, the petrol prices could flare up. According to a scenario designed by the IEA, it could even reach 130 USD. The rising oil prices would lead to a lower réalisation cost of the GHG emissions reduction target, which would even end up having positive economic fallouts.

Some energy-intensive sectors will have to face higher costs. We are already trying to protect those sectors through the free allocation of emission quotas when considered useful, but alternative measures could be necessay to avoid carbon evasion. Still, the real threat these sectors are facing is not the carbon price but the collapse of the demand in the from the european building industry. The best way to boost demand from this sector would be to set investment incentives in high scale, low-carbone infrastructures – steel, cement , aluminium and chemicals -guzzlers . Our ministries in charge with industry work closely with these sectors so as to insure they handle thie transition with efficiency, and we try really hard to preserve the chances of the European industry. We must give our compagnies the possibility to develop on the national scale and in the same time be able to face international competition.

Avoiding the necessary talk on the 30% reduction target would impede our progress in the race towards cutting GHG emissions. Our compagnies would gain a precious first-mover advantage if we could take necessary decisions quickly.
This is why we strongly believe that setting a 30% reduction goal is the right thing to do for Europe.
This policy will boost job creation and economic growth, help achieve energetic safety and fight climate change.
In a nutshell, it is a policy that will help the future of the EU.,