In November 2012, the European Commission published a report stating, “the economic crisis was clearly the major cause of a significant reduction in CO2 emissions; however, a study recently published by the CDC Climat, a group owned by France’s sovereign wealth fund that conducts climate economics research, contradicts this widely accepted theory. According to their findings, the EU’s 1.1-gigaton drop in carbon emissions since 2005 can be largely attributed to the recent rise in popularity of alternative energy sources, such as wind-farms or solar panels, rather than the recession that rocked the continent.
Many claimed that the “silver lining” to the economic downturn was the EU’s plunging carbon emissions that coincided with decreased production within many industries, for between 2007 and 2008 alone, greenhouse gas emissions in the Union dropped by 130 million tons. Moreover, member states that were hit the hardest by the crisis experienced the most dramatic drops in carbon emissions, such as Spain, whose CO2 levels dropped by 12.9 percent. The CO2 emissions savings that resulted from the recession to this date have reached 300 million tons; yet, the savings caused by renewable energy far surpass those figures. Between 2005 and 2011, the Union saw a 6 percent increase in the amount of electricity produced by renewable resources, lending to a savings of 500 million tons of carbon emissions.
These savings have placed the EU on track to meet the objectives laid out by the climate change package adopted in 2009, known as the 20-20-20 targets. This package outlines goals for the member states to reach by 2020, including reducing CO2 emissions by 20 percent, increasing the use of renewables by 20 percent, and increasing energy efficiency by 20 percent. According to a report published by the European Environment Agency in October, Europe is meeting its timetable for these goals in all areas except for energy efficiency. Yet, no member states are on track to meet all three goals, calling into question the effectiveness of tackling these three issues at once. Moreover, the great steps that have been made towards the reduction of CO2 emissions by 20 percent by 2020 have not come without possible adverse consequences on the EU’s carbon market.
The EU Emissions Trading System (ETS) was established in 2005 and is currently the largest international trading system for greenhouse gas emission allowances. The ETS works through a cap and trade system, whereit establishes a limit on the amount of greenhouse emissions that can be produced while allowing companies to buy and trade emission allowances as needed. The cap will be lowered gradually, leading to a global reduction in emissions in the long-term. Furthermore, this system created the carbon market by putting a price on carbon, giving firms financial incentives to reduce emissions.
High carbon prices encourage innovation and investment in cleaner technologies; however, since 2009, the prices for carbon have dropped from 30 euros per ton to the current rate of 6 euros per ton. The unforeseen upsurge of renewables led to the creation of a surplus of emission allowances, for the number of available allowances doubled between 2011 and 2012. The surplus leads to a supply-demand imbalance that could inhibit the proper functioning of the carbon market in the long run. According to CDC Climat, the surplus of carbon allowances is proof that simultaneously working towards all three aspects of the 2020 targets is self-defeating.
The next steps in the discussion on climate change will occur at the 19th annual UN Conference of the Parties held in Warsaw, Poland, next week. This conference is organized to enable those who agreed to the Kyoto Protocol to gather together and create an encompassing approach to sustainable development worldwide.
David Casa will be contesting the MEP elections on the PN ticket