Europe clinches economic crisis pact and deal to battle climate change

December 12, 2008

(ChattahBox) — Europe has finalized the world’s broadest agreement yet to battle global warming on Friday and a 200-billion-euro ($264 billion) economic crisis pact. The climate pact came together after helping east European states pay for changes that will punish their heavily polluting power sectors and industries. The EU package, the “20-20-20” deal, seeks to decrease greenhouse gas emissions by 20 percent by 2020 compared to 1990 levels, achieve 20 percent energy savings and bring renewable energy sources up to 20 percent of total energy use.

The deal takes on a greater importance coming just before Barack Obama assumes the U.S. presidency, amid hopes in Europe of transatlantic cooperation to tackle climate change.
But green groups said that in their rush to get a deal, European leaders had granted too many concessions to industry.

The rampant economic crisis had at times threatened to derail the European Union’s plans to cut carbon dioxide by a fifth by 2020, but a myriad of concessions to industry helped pin down a deal amid criticism from environmental groups.

Chancellor Angela Merkel and Prime Minister Silvio Berlusconi had fought hard for industries like German steel, chemicals and cement and Italian glass, ceramics and paper, and at one point Berlusconi had threatened to block a deal.

They had already succeeded this year in watering down action to curb emissions from the powerful auto sector.

“We demanded 15 things — we got practically all, and we are very satisfied,” Berlusconi said.

Measures were agreed to reduce the risk that carbon curbs would hurt European industry and reduce its ability to compete with less regulated rivals abroad.

European industries exposed to international competition will receive free emissions permits if they face a 5 percent increase in costs, a measure that is viewed as covering over 90 percent of EU industry.

Critics said the move reduced the main incentive for industry to cut emissions, but a commission official said that a steadily lowering cap on emissions would do the job.

The biggest threat to a deal on Friday was the opposition of nine former communist nations, which feared the deal would ramp up costs for their highly polluting coal-fired power sectors.

To buy their support, two sources of funding will be distributed to them taken from around 12 percent of revenues from the EU’s flagship emissions trading scheme (ETS), which makes industry buy permits to pollute.

The money is partly framed as recognition for the massive drop in emissions they experienced when their industry collapsed in the wake of communism.

Their power sectors were also partially exempted from paying for emissions permits from the ETS, getting 70 percent free in 2013 but those exemptions will be phased out by 2020.

The economic stimulus package, amounting to 1.5 percent of the bloc’s gross domestic product. The EU stimulus pact, which pledges temporary support for sectors such as the auto and construction industry, draws largely on existing national packages and has been greeted with much skepticism by economists.

Britain  played a big role in also brokering the world’s first agreement on curbing the enormous contribution tropical deforestation makes to climate change, which is likely to be signed at the UN climate conference in Poznan, Poland, later today.

It will take the form of a statement of intent by countries with large tracts of rainforest, such as Brazil, and concerned developed nations, mainly in Europe, for a joint approach to halting forest destruction.

The removal of tropical forests is responsible for about 18 per cent of all the carbon dioxide emissions causing global warming – more than all the emissions from the world’s transport sector. Huge amounts of carbon stored in trees are released when forests are cleared, especially if the clearance involves burning.

The agreement, comes against a background of research showing that future deforestation in regions such as the Amazon is likely to be far worse than anticipated even in the most recent reports of the UN’s Intergovernmental Panel on Climate Change.


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