NEWS | Wednesday, 23 January 2008

The hot potato on 2020 targets

David Darmanin

The EU Commission today will be issuing proposals on how to best revise ambitious green measures it set out last March for the next twelve years. While preparing amendments, EU commissioners have had to take in and react to persistent pressure from France, Germany, Spain and factions of Europe’s business community.
The targets are aimed at reducing CO2 emissions by 20 per cent and increase the use of renewable energy in order to have it account for 20 percent of European energy production by the year 2020.

Controversy on biofuels
EU Environment Commissioner Stavros Dimas has recently addressed the sustainability criteria of Biofuels, which are so far aimed at taking over 10 percent of road fuel use across Europe.
Scientific reports issued by the commission itself have warned that biofuel production (particularly the type using palm oil), barely decrease CO2 emissions at all. The report also revealed that the biofuel industry is also leading to deforestation in Indonesia, is causing food prices to rise and is prompting business institutions to buy off poor people’s lands and convert them into fuel crops. Dimas has been reported admitting that he would prefer missing the targets rather than achieve them at the expense of the poor or the environment. This evening, we are likely to expect the EU to clamp down biofuel production using palm oil as well as issue stricter certification schemes aimed at controlling CO2 emissions from biofuel plants.
On BBC, British Farmers’ Union Peter Kandall explained that agriculture in the UK easily caters for the current demand for biofuel “without prejudicing food production capacity.”
Among other discussions over this issue in the UK, Dr Jeremy Woods of Imperial College London argued that “Only about 0.7% of palm oil used in the EU is used for biofuel production.”
The palm oil clampdown in fact, should not affect Malta in the least since biodiesel produced locally is made of Soya bean oil and other recycled edible oils.
On 15 January EU energy commissioner Andris Piebalgs issued a draft proposal suggesting measures by which private firms may easily trade in renewable energy. Supported by Latvia and Slovenia, German and Spanish governments complained on grounds that the proposal could threaten their “feed-in” system – an incentive structure that ultimately restricts the purchase of renewable energy sources by making them available at above-market prices.

Sarkozy critical
The unveiling of legislative proposals this evening are expected to up the EU’s share of renewable energy production target to 20 percent from the current 8.5 percent. French daily Le Monde recently reported that French President Nicolas Sarkozy sent a letter to EU commission chief Jose Manuel Barroso in which this aim was criticised for being “neither effective, nor equitable, nor economically sustainable.” France is lobbying for special consideration to its widespread use of nuclear energy.
Barroso Monday responded to pressure imposed by EU business leaders on alleged revisions to the system by which permits for CO2 emissions are allocated.
Emissions trading, or “cap and trade”, works by means of an allocation to each EU nation capping CO2 emissions. Consequently, it is up to the government of each country to translate its capping into credits and in turn assign them to companies and institutions that to some level emit pollutants in their operation. Companies that need to exceed the cap must purchase credits from other companies who pollute less. Needless to mention, the purchasing and selling of these credits marks a trade of its own.
Further to a speculation on the shift from the allocation of permits free of charge to the sale of permits by auction, Shell Chief Executive Jeroen van der Veer and British Airways Chairman Martin Broughton wrote a letter to Barroso in an appeal to consider generosity with emission traders. “Environmental objectives are not advanced by arbitrarily destroying shareholder value in existing firms”, the letter said.
In a speech last Monday, Barroso reassured the business community by saying that “we should be ready to continue to give the energy-intensive industries their allowances free of charge - or to require importers to obtain allowances alongside European competitors.”

Hard and expensive change
The insignificance of Malta’s contribution to global warming does not exonerate us of best practice in environmental policy. In fact, considerations on alternative and renewable energy sources are being made, also in view of European directives such as the 20,000 hour limit imposed on the operation of the Marsa Power Station before it’s pensioned off.
Besides, even in the event of international business regulations not, or barely applying to Maltese realities – green policy adopted by businesses in the EU will automatically have a direct influential effect on Maltese pricing, produce, services and business operations. Federation of Industry President Martin Galea describes the affect of climate change on the European business community as a “complex problem.”
“On one hand the business community in Europe wants to be at the forefront of change, recognizing that climate change is one of the biggest issues facing mankind and one which will have far reaching implications on the eco structures of this planet. On the other, business in Europe is made up of millions of small enterprises and fewer larger companies which should not be unfairly disadvantaged by not having a level playing field - perhaps not least because the changes undertaken would be negated by increased emissions from developing countries,” Galea said.
“These countries argue however that their per capita emissions are far below those of developed countries. The EU is looking into new mechanisms to safeguard this, however such systems are not yet proven to work. We have seen for instance that the implementation of biogas may in fact increase emissions as forests may be cleared for the planting of biomass fuel plants - the opposite effect of what was intended.”
Referring to a report issued by the Confederation of British Idustry (CBI), Galea explained that while CO2 reduction targets are supported, there is still a level of debate on the matter.
The CBI report on climate change looks at many options which Galea feels they may be adopted, including new product designs which make household appliances 40 percent more efficient, also cars – with a target of 30 to 40% of increased efficiency by 2020, better insulation for housing (hot and cold also using passive heating and cooling techniques in building).
“With power generation, alternatives such as wind, hydro, solar and including the controversial nuclear sources of energy should be considered,” he added.
The report also states that benchmarks should be set for carbon emissions and companies should report on their emissions as they do their statutory accounts, as well as their efforts to reduce them.
When asked on how Malta fits into the equation, Galea said : “Domestic use, air and land transport, and poorly insulated housing are all major components of the carbon footprint. There are no real heavy emission industries in this country - which is not to say that industry must not change. Indeed quite the reverse. Maltese industry must follow the best practices set out in Europe so that the dangers of climate change, which will have a massive monetary impact if nothing else, is averted.”
“It is likely that Maltese companies will have to report their emissions, have targets set and trade on carbon emissions in the future. They will have to invest in carbon reduction technologies, new lower energy equipment and possibly change the way they do business. However many issues of how and when, as well as targets need to be debated both at a European and world level and ultimately stakeholders will need to come to an agreement, which will be no easy task. Malta being part of Europe will adopt European legislation, and the change will be hard and expensive. We have been through this before with taxation, environmental legislation, waste, health and safety and so on. We must now adapt to climate change legislation,” he concluded