EU Govts Agree CO2 Emissions Cut By 2020

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BRUSSELS -(Dow Jones)- European leaders unanimously agreed Friday on a historic deal to slash greenhouse gas emissions by 20% by 2020 and set an example for similar initiatives worldwide, French President Nicolas Sarkozy said at a press conference.

The deal shows Europe wants “to change our economic models, go towards a sustainable economy,” said Sarkozy, whose country holds the European Union presidency until Dec. 31, noting no other continent is setting such ambitious targets. The E.U. has made the fight against climate change a top priority so that the bloc can lead global negotiations at an international summit in Copenhagen next year.
The European Parliament will still have to approve the accord.
The pact, aimed at modernizing the existing E.U. system to cap and trade allowances to emit CO2, would force power plants to buy all their allowances starting in 2013. It would also mean that some industries would have to pay for their CO2 emissions.
However, the effort to appease national concerns ended up watering down an original E.U. Commission proposal by giving out large amounts of allowances for free.
“I was hoping for more regarding the auctioning because it not only provides money but it’s also an incentive” to invest in low-carbon technologies, E.U. Environment Commissioner Stavros Dimas told reporters in Poznan, Poland, on the last day of a U.N. environment meeting. He was overall happy about the accord, as the 20% reduction target by 2020 compared with 1990 was maintained.
The 27 heads of state and governments agreed to give heavily coal-dependent and carbon dioxide-emitting eastern European countries some free permits for their electricity sector because the cost of CO2 would more than triple electricity prices in countries such as Poland, Sarkozy explained.
These countries would only have to buy 30% of their permits in 2013, to reach 100% in 2020. A Polish-led group of nine eastern European countries opposed to the deal until the last minute to get such concessions.
Industries for which buying allowances would increase production costs by more than 5%, and whose products are heavily traded internationally, would get up to 100% of permits for free. This likely includes heavy industry such as cement, steel, and aluminum, marking a win point for countries such as Italy and Germany, keen on protecting their key national industries.
“We welcome the effort of several (E.U.) member states to protect the competitiveness of the European industry,” said Gordon Moffat, director general of Eurofer, the association representing the European steel industry.
“We have opened the door for a fairer treatment of our industry,” he added.
Other sectors would have to pay for only 20% of their allowances to emit CO2 dioxide in 2013, and the obligations to buy all allowances will be delayed to 2027 from 2020.
It does look like the industry won,” said Wim Vandenberghe, an energy and environment lawyer at DLA Piper in Brussels.
The European Parliament is expected to vote on Friday’s agreement next week, after informal talks over the weekend.
By Alessandro Torello, Dow Jones Newswires;
(Marek Strzelecki in Poznan contributed to this story.)

Source : Dowjones Business News