EU leaders claim historic leap towards low-carbon future

Ambitious climate change pact makes generous concessions to the big polluters in European heavy industry
Ian Traynor and Nick Watt in Brussels
guardian.co.uk, Friday 12 December 2008 17.56 GMT

European leaders tonight announced they were leading the world towards a low-carbon future after sealing an ambitious climate change pact by making generous concessions to the big polluters in European heavy industry.
A two-day summit of 27 government leaders in Brussels ended a two-year effort to agree mandatory reductions in greenhouse gas emissions in Europe and came as a triumph for President Nicolas Sarkozy of France in the closing days of his six-month presidency of the EU.
Not noted for his understatement, the French leader declared: "This council will go down in the history of Europe."
The French navigated a route through conflicting claims from Poland, Hungary, Germany, and Italy to finalise a deal that keeps the EU's key carbon dioxide reduction targets intact, while easing the costs of the package for European manufacturers and heavy industry.
The climate accord orders Europe to cut greenhouse gas emissions by 20% by 2020 compared with 1990 levels. This is to be achieved through national reduction targets which vary among the 27 countries and through a Europe-wide carbon trading scheme in which industries and power plants buy permits to pollute from 2013.
The rules for the emissions trading scheme (ETS), however, were relaxed under German pressure to exempt most companies in the processing industries, such as steel and cement, from paying for the permits and power stations in central Europe, mostly coal-fired, were awarded large discounts on the price of carbon.
"To address the specific concerns of some countries, we had to accept some changes," said Jose Manuel Barroso, president of the European commission whose draft legislation on the package was much stiffer than that agreed yesterday.The decisions, to be turned into law by the European parliament next week, also cut CO2 emissions from cars by 19% by 2015, set binding national targets for renewable energy to total 20% of the European energy mix by 2020, encourage the use of "sustainable" biofuels, and order 20% greater energy efficiency by 2020.
Gordon Brown said: "This is a major advance. Europe, after these decisions, remains the leader on climate change."
But critics complained that the package was too little too late, that EU leaders had capitulated to fierce lobbying from European industry, that the loopholes in the system and the awarding of pollution permits free to most non-energy firms in the scheme would trigger a bonanza in windfall corporate profits.
"Industry has to do next to nothing," said Claude Turmes, a Green MEP from Luxembourg who helped draft part of the legislation. "If they are honest, these leaders know they haven't agreed something really ambitious."
Robin Webster, climate campaigner for Friends of the Earth, said: "This could have been one of Europe's finest moments. But huge loopholes allow big energy-users to carry on polluting."
Barroso admitted that the terms of the deal could bring windfall profits for industry, reversing the logic of the polluter pays principle that is supposed to underpin the carbon trading scheme.
But he and others stressed that these concessions did not affect the overall targets. The accord was the first such agreement in the world and put Europe in a strong position to strike a broader pact with the incoming Obama administration in the US ahead of the effort to reach a worldwide global warming agreement in Copenhagen a year from now, Barroso said.
"This is a message especially to our US partners," said Barroso. "Obama is still far from what we are proposing…The idea that this has been watered down is nonsense."
"Combined with the spirit of engagement from president-elect Obama, there is now everything to play for as we put the pieces in place for a global climate deal in Copenhagen next December," said Ed Miliband, the energy and climate change secretary.
The package also includes provision for 12 pilot projects on carbon capture and storage — using novel technology to collect CO2 emitted from power stations and bury it underground.
The projects are to be funded from the proceeds of the carbon trading which is supposed to generate tens of billions in revenue by 2020. Under pressure from the British, the summit agreed to double the funding available for these projects.
"This is a transformational funding stream for a transformational technology," said David Miliband, the foreign secretary. "Nowhere else in the world has got that."