The EU’s internal debate is eclipsing its global leadership

Europe has for a quarter-century been at the forefront of climate change efforts, and the hope was that others would recognise its leadership and follow its example. Sadly, anyone attending international events knows that many non-European countries are finding chinks in Europe’s moral armour. The European Union may still be the global leader on climate questions, but its own internal policies, and its achievements, are falling short of its rhetoric.

First, there’s the question of headline emission levels. The EU’s greenhouse gas emission reduction goal of at least 40% by 2030 sounds the most ambitious of the “intended nationally determined contributions” (INDCs) declared so far to the UNFCCC. But Europe starts in 1990 and spans the years to 2030, while the U.S., with its 26-28% reduction goal started in 2005 and aims at 2025.  Using a 2005 start point, the EU is aiming for a 34% reduction by 2030 and, interpolating between the 2020 and 2030 targets, a 23% reduction by 2025. That sounds rather less impressive.

There is, of course, no theoretically correct baseline year, but the ambiguity makes the case for Europe’s leadership harder to argue. There is also the question of the coherence between the 2030 target and the longer-term aspiration to reduce emissions by 80-95% by 2050. Current targets envisage emissions falling by a fifth between 1990 and 2020, and by a quarter in the 2020s. To reach even its minimum long-term aim would mean emissions falling by a third in the 2030s and by half in the 2040s. It’s far from clear that such an acceleration of effort is feasible. If an 80-95% emissions reduction by 2050 constitutes a fair European contribution to the global effort, then far more attention to the “at least” part of the “at least 40%” target is going to be needed.

The second issue is the energy mix. Europe’s achievement in expanding its renewable energy generation has been truly impressive. But in the last few years, the rise in renewables has for a combination of reasons been accompanied by a switch from gas towards coal. Weaknesses in the EU’s Emissions Trading Scheme (ETS) have resulted in carbon prices that are too low to discourage coal burning. Meanwhile, world prices have been depressed as shale gas has displaced coal at power stations in the U.S., and operators have taken advantage of low coal prices to use up remaining operating hours under the Large Combustion Plant Directive. EU member states with abundant coal reserves have been keen to enhance their energy self-sufficiency and construct new plants, so Europe’s arguments against coal elsewhere in the world have been weakened.

Third, effective carbon pricing is widely seen as indispensable to climate change policies, yet the over-allocation of emission allowances, the promotion of low carbon renewable energies and the effects of economic recession on baseline emissions have together created a perfect storm for the ETS. The backloading decision for Phase III and the proposal for a market stability reserve have been steps in the right direction, but it remains to be seen whether these will rectify the fundamental structural weaknesses of the ETS. As other countries begin to introduce their own trading schemes, some of which may generate higher carbon prices than has the ETS, Europe’s leadership is once again coming under challenge. Some economists have argued for “border carbon adjustments” to compensate for differences in the stringency of national climate policies. It would be a shame if even a theoretical case could be made for applying these against, rather than by, Europe.

Leading by example is the key to effective leadership – and Europe’s halo has been slipping. Striving for internal policies that are ambitious, credible and effective is essential if European leadership is not only to be retained, but reinforced.