Green smokescreen

The leaked paper from UK officials suggesting ways for Britain to wriggle out of EU renewable energy commitments is now up on the Guardian website.

The beginning of the document has a fascinating insight into official concerns over the contradictions in EU climate change policy:

“If the EU has a 20% GHG [greenhouse gas] target for 2020, the GHG emissions savings achieved through the renewables risk making the EU ETS redundant, and prices to collapse. Given that the EU ETS is the EU’s main existing vehicle for delivering least cost reductions in GHG, and the basis on which the EU seeks to build a global carbon market to incentivise international action, this is a major risk.

Remedies to overcome this risk will be difficult to agree or ineffective. Expanding the scope of the EU ETS to include aviation emissions would not by itself create enough demand to overcome price collapse. Tightening EU ETS caps to reflect the renewables target imply taking EU wide emission reductions beyond the 20% GHG target which would be difficult to agree in the EU. Relying on later agreement to a 30% GHG target to rescue damage to the EU ETS is risky if 30% is not realised, and if not, clarity in 2009 or so this, would be very late for redesigning the ETS or renewables target in response.”

There is clearly little expectation that the ETS on its own will provide sufficient incentives for the massive investment in renewables necessary to reach the targets – which implies that renewable use will have to be enforced by other means, probably through subsidy or regulation. If this happens, the overall scarcity of carbon credits tradable in the ETS will decline, along with the price of carbon and any resulting incentive to reduce emissions through the ETS.

The paper goes on to say that UK officials have been actively lobbying the Commission to consider the “tensions” between the EU ETS and binding renewables targets – this is clearly a major concern in Whitehall.

The leaked paper illustrates perfectly just how far politicians have managed to botch EU climate change policy. They have essentially agreed to a series of mutually contradictory policies which may play well with the media in the short term, but ultimately undermine the end objective of reducing emissions.

As argued in our last post, there’s only so long politicians can maintain this charade of using ambitious-sounding gestures on the environment to their own advantage. Reality has to eventually kick in, meaning the front page of Monday’s Guardian is probably just the beginning of a long hangover the government will have to suffer for making commitments it can’t keep.