The next twelve months will be critical in shaping the European Union’s position on climate change, ahead of the all-important UN climate negotiations which start next November in Paris. But will the UK be a help or a hindrance to delivering ambitious action on climate change?
At the UN Climate Summit in New York this month – a forerunner to the big event next year – David Cameron was in an unequivocal mood stating that climate change is one of the most serious threats facing our world. This suggests that climate change should be a political priority. But the recent actions of the Government tell a different story.
A new package of laws to ensure that the EU cuts its carbon emissions by 40 per cent by 2030 (compared to 1990 levels) has been provisionally agreed by the European Parliament. Under burden-sharing arrangements this is likely to mean a target of 50 per cent for the UK, a figure consistent with the UK’s fourth carbon budget.
But how this target will be delivered has proven to be a contentious issue. The UK Government wants flexibility into how the target is met, whether it’s by renewables, nuclear, gas, carbon capture or energy efficiency. Concerns have been raised that this kind of hedge betting doesn’t offer the certainty needed by investors or the innovation framework required to drive down technology costs, and experts suggest this uncertainty could prevent the UK from staying within its carbon budgets.
It might also allow the UK to reduce its emissions by exporting these abroad. Nearly a quarter of all carbon emissions are generated in the manufacture of products which are then exported and “consumed” in another country. These “consumption-based” emissions are not captured within global climate policy and are rising rapidly in countries like the UK, where they are expected to grow by a third over the next 35 years.
Cutting the emissions which aren’t exported will undoubtedly require a significant increase in the use of renewable energy and within the new emissions legislation there is a target to boost the use of renewable energy to 27 per cent by 2030. This figure is almost double the amount of energy in the EU that came from renewable sources in 2012. But the target has been criticised for its lack of ambition and won’t be legally binding for individual member states, making it difficult to see how the target will be enforced and leaving countries vulnerable to price shocks as a result of an over-reliance on fossil fuels.
Without a nationally binding renewable energy target, support will be subject to political whims and that could prove to be a problem for investors. Investor confidence in the UK has already deteriorated following plans to cut subsidies for large-scale solar sooner than expected, and diminishing budgets for future projects under the new Contracts for Difference Feed-in Tariff has seen a number of offshore wind projects scrapped.
These events have been set against a background of rising energy bills which has intensified scrutiny of renewable energy subsidies, not least of all from the eurosceptic UK Independence Party who have been vocal opponents of renewable energy subsidies and, lest we forget, now hold more seats in the European Parliament than any other UK party.
If cost is the main driver in climate change policy then there should be no argument against an energy efficiency target. After all the cheapest unit of energy is the unit you don’t use. Yet on this issue as well, UK support has wavered. The European Parliament had proposed a 40 per cent energy demand reduction target by 2030 (compared to 1990 levels), but following pressure from countries like the UK, the target was revised downwards in the latest Commission proposals to just 30 per cent. And again the target won’t be nationally binding.
The proposal has come under criticism from some energy policy experts who argue that it will discourage investment, innovation and slow the realisation of the economic and social benefits of better insulated homes. And they are not alone. Countries like Germany want a higher target that is nationally binding and even the new President of the European Commission Jean-Claude Juncker has said that “a binding 30 per cent energy-efficiency target is for me a minimum”. The issue seems far from settled.
While there is agreement in principle on the new climate package, legislation will need to be jointly agreed by the new European Parliament and the Council of the European Union, which could take twelve months. And much can change in twelve months, especially in the world of politics. So now is the time for UK to show ambition and leadership on climate change.
After all the UK has the best wind, wave and tidal resources in Europe. Growing financial prosperity will ease pressure on the funding available to finance the transition to the low carbon economy. And let’s not forget there is a general election on the horizon. The UK’s Labour party have already laid down the gauntlet and made decarbonisation of the electricity grid by 2030 one of its manifesto pledges. Mr Cameron we await your response.