The European Commission is doubling its targets to reduce carbon dioxide emissions by 2030 in a new energy strategy released earlier this year. International energy consultant Dr Frank Umbach explains why climate change policies alone will not work.
This strategy will drive Europe’s energy-intensive manufacturing industry out of Europe to the US and emerging markets where lower environmental and climate protection policies will increase greenhouse gas emissions globally.
The new strategy proposes a binding carbon dioxide emissions reduction of 40 per cent by 2030. The EU maintains its claimed leadership role of the global climate mitigation policies, and is the only region still setting its energy and climate policies to the Kyoto target of reducing global warming to 2°C.
The commission also adopted a binding 27 per cent share of renewable energies in energy consumption. The proposals went before the European Council last month for final approval to be passed into law.
The new energy strategy and targets are an evolutionary development of its 2007 energy action plan and the ‘20-20-20-targets’ for 2020.
The commission believes its 2007 EAP and the current energy and climate policies have made significant progress to achieve its 20-20-20 targets.
This progress includes:
Greenhouse gas emissions decreased by 18 per cent by 2012 compared with 1990 and is expected to reduce to 24 per cent by 2020 and 32 per cent by 2030
The EU’s carbon intensity declined by 28 per cent between 1995-2010
Share of renewable energy grew to 14.4 per cent in 2012 and is expected to increase to 21 per cent by 2020 and 24 per cent in 2030
The EU, with China, is the largest investor in renewable energy
The EU installed 44 per cent of global renewable electricity production – excluding hydro – by the end of 2012
It has created new eco-industries employing 4.2 million people
Its energy intensity reduced by 24 per cent in its economy and 30 per cent in industry between 1995-2011.
The US is becoming increasingly self-sufficient and a net exporter of oil and gas, but in the EU, overall import dependencies will rise from 55 per cent to more than 60 per cent by 2035. Gas import dependence will rise from 67 per cent to more than 80 per cent, and oil import dependence from 80 per cent to more than 90 per cent.
This is despite the expansion of renewables and is due to declining domestic, oil, gas, nuclear and coal production and rising gas consumption. US net energy imports have been reduced by more than 30 per cent between 2006-2012 due to lower demand and increased domestic production.
The US may become the world’s largest oil producer by 2015.
The EU paid more than 400 billion euros for oil and gas fuel imports – 3.1 per cent of the EU’s GDP – in 2012 compared with around 180 billion euros on average between 1990-2011.
The present import bill is expected to increase to 490 billion euros by 2035.
The EU is already the world’s largest importer of energy, which casts doubt on its future economic competitiveness as well as energy supply security.
The EU’s energy system costs are expected to rise to 14 per cent of GDP by 2030 compared with 12.8 per cent in 2010, and its electricity costs will increase by another 31 per cent, before inflation, from 2011 to 2030.
US shale production has reduced natural gas prices by more than two-thirds since 2008.
In the past five years, US carbon dioxide emissions decreased by 13 per cent to the lowest levels since 1994 due to the coal-to-gas switch, new energy saving technologies and a doubling of renewable energy production.
US industrial gas prices have dropped by 66 per cent since 2005 while the EU saw a 35 per cent increase.
EU industry gas prices are now three to four times higher than the US, Russia and India and 12 per cent more than China. This gas price disparity will last for another 20 years, according to the International Energy Agency (IEA).
The energy cost advantage in the US has spurred an industrial renaissance there among energy-intensive industry such as chemicals.
The IEA has predicted that Europe will lose a third of its global market share of energy-intensive industrial exports over the next decade. The EU is moving in the right direction with its new strategy, but these positive steps will be insufficient to enhance the EU’s industrial competitiveness towards the US.
They can only be a first step in redefining Europe’s energy and climate policies to reserve its overall economic competitiveness for future generations. This article was first published in World Review Online. See www.worldreview.info
About the author
Dr Frank Umbach is a senior associate and head of the International Energy Security program at the Centre for European Security Strategies (CESS) in Germany and associate director of the European Centre for Energy and Resource Security (EUCERS) at King‘s College, London.
He is also a consultant on international energy security. Umbach is a member of the International Institute for Strategic Studies (IISS) in London and author of more than 300 publications in 25 countries.He can be contacted by email at umbach@cess-net.eu