Energy price concerns resonate in EU talks on 2030 climate goals

BRUSSELS -- The European Union should ensure that future climate and energy policies do not undermine the competitiveness of its industry, already weakened by a price gap with the U.S., the bloc’s member states said.

Energy ministers from the EU’s 28 nations had their first debate about 2030 carbon-reduction andrenewable energy strategy at their quarterly meeting in Brussels today. It followed yesterday’s gathering of environment ministers, where countries differed over how ambitious Europe’s emissions-cut target should be and how fast new policies should be adopted. The framework for the next decade will next be discussed by EU leaders at their March 20-21 summit.

“We need to make sure we combine our objectives for setting ambitious goals with increasing competitveness of the industry and safeguarding energy supply,” Greek Energy Minister Yannis Maniatis told reporters after the gathering. His country holds the EU rotating presidency through June.

The challenge for the EU is to reconcile its ambition to lead the global fight against climate change with efforts to help the economy regain steam. The bloc should tighten its greenhouse-gas reduction target to 40 percent in 2030 compared with 20 percent in 2020, according to a strategy outlined in January by the European Commission, the EU’s regulatory arm.

Member states, industry, non-governmental organizations and lobbies are divided over the commission’s proposal. Groups including the Climate Action Network and Greenpeace call for stricter targets, while energy-intensive companies including ThyssenKrupp and Tata urge policy makers to avoid carbon costs for manufacturers prone to relocation of production abroad.

Long-Term Debate

“I think we will have to have a very thorough long-term debate about how we can use our state budgets to reduce part of the burden that now lies on the industry,” Germany Economy and Energy Minister Sigmar Gabriel told the meeting today. Germany supports the 40 percent greenhouse-gas target that would be binding on each member state and an EU-wide goal to boost the share of renewable energyto 27 percent.

Hungary, Poland, Czech Republic, Slovakia, Bulgaria and Romania said in a joint statement that the 2030 carbon goal should be set at a “realistic level” and take into account United Nations talks about a global deal to be agreed in 2015. They also said the EU emissions-trading system should remain the core tool for Europe to meets its emission-reduction goal.

“In order to reach this target cost effectively, intra-EU flexibility mechanisms — including innovative financing schemes — should be introduced, especially in the non-ETS sector, as an integral part of the climate and energy policy framework,” the six countries said.

Energy Prices

The agenda of the meeting today also included a discussion on energy prices in Europe after a report by the commission showed that electricity costs in some regions of the bloc are double those in the U.S., the EU’s main trading partner. Regulatory costs, such as taxes, levies and network costs, are the main reason for the increase in European prices, EU Energy Commissioner Guenther Oettinger said today.

“We’ve got to be able to offer our people lower prices and not with so much of a gap compared to our competitors,” he told reporters. “If member states reduce these taxes and levies, this can take pressure off the people who have to pay for energy.”

To help cut costs, member states should also accelerate efforts to implement energy legislation aimed at breaking down national barriers and develop interconnections to end the isolation of some member states from networks, Oettinger said.

Ministers also discussed the situation in Ukraine, where the crisis deepened after Russia’s parliament authorized President Vladimir Putin to send troops into the neighboring country. Ukraine is a transit point for gas accounting for about 16 percent of European demand. “At this moment, there’s no reason for concern,” Oettinger said. “The gas situation is good. We had a mild winter, we’ve got gas reserves everywhere.”

Copyright 2014 Bloomberg

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