Colm McCarthy

Tuesday 29 July 2014

Greenhouse gas strategy needs to be more than just a lot of hot air

Ireland is unfairly at risk of fines from the EU over greenhouse gas emissions

Colm McCarthy

Published 01/06/2014|02:30

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Buildings are seen through thick haze at the central business district in Guangzhou, Guangdong province in China. Worldwide, emissions have averaged a 2.7 per cent annual increase
Buildings are seen through thick haze at the central business district in Guangzhou, Guangdong province in China. Worldwide, emissions have averaged a 2.7 per cent annual increase
A couple look inside Toyota's Corolla at its showroom in Beijing

Candidates, the media and voters appeared to agree that issues of European policy were not worth an airing during the European Parliament elections, conducted to general satisfaction as a popularity contest.

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Last Wednesday, the Wexford-based Environmental Protection Agency (EPA) announced that Ireland was failing to meet European targets for cutting greenhouse gas emissions by 2020 and could face fines, possibly running to hundreds of millions, from the European Commission. Not a whisper on this matter was raised during the election campaign.

Both energy consumption and greenhouse gas emissions have been falling in Ireland for quite a while now. Total emissions fell 16 per cent from 2005 to 2012 and it comes as rather a shock that the country faces fines for failing to have a sufficiently deep recession.

Worldwide, emissions have averaged a 2.7 per cent annual increase over the last decade and continue to rise, on which basis the Irish performance hardly merits penalties from the EU or anyone else.

The European Union, responsible for just 11 per cent (and falling) of global emissions, has chosen to pursue a worthy but pointless solo-run policy on carbon reduction in the absence of an agreed worldwide scheme.

Since the earth has just one atmosphere, every tonne of carbon emitted has equal damaging impact and it is futile, even for larger emitters such as the USA and China, each of which has emissions well ahead of the EU's figure, to pursue go-it-alone policies uncoordinated with others.

The EU's solo-run consists of a Europe-wide but faltering pricing regime, called the Emission Trading Scheme (ETS), for a minority of carbon emissions combined with binding and differentiated national targets for the remainder.

The UN-sponsored Kyoto agreement, which had been failing anyway, ran out in 2012 and world leaders declined, in meetings at Copenhagen in December 2009 and later, to agree a follow-up strategy.

As a result there is currently no international policy framework, aside from aspirational targets, for climate policy. But the EU soldiers on with more ambitious binding carbon-reduction targets than anyone else which is why Ireland, which emits roughly one tonne in every 500 of global emissions, a contribution which is falling, is at risk of heavy fiscal penalties a few years hence.

If the EPA forecasts are correct, somebody from Ireland must have agreed in Brussels to 2020 targets which are not capable of attainment even though Ireland will in all likelihood have seen a decade of zero economic growth and significant falls in fossil fuel consumption and in overall emissions.

The result will be a fine, payable to the EU, to go along with the bail-in of Irish taxpayers already so generously made available to help stabilise the European banking system.

The fine, and the policy to which it gives effect, will somehow help to save the planet from a climate catastrophe, including the parts responsible for 89 per cent of emissions not fortunate enough to be EU members.

Policy disasters of these proportions do not happen without serious design work and it is necessary to go back to the beginning.

It has been known for at least 30 years that emissions of carbon dioxide and other greenhouse gases could be warming the earth's atmosphere.

It warms and cools over long periods for natural reasons but the speed of the current warming is unprecedented and the consequences potentially very costly. The United Nations agreed a framework for dealing with the threat in 1994.

Since that time the climate scientists have become increasingly confident that the principal controllable source of emissions, the combustion of fossil fuels (the highest unit emissions come from coal, oil and gas in that order) will have to be curtailed or there could be serious negative outcomes for our grandchildren.

This consensus view is disputed by some Tea Party Republicans in the US and coalminers the world over.

The scientific consensus is strong and has clear implications. Climate change is already occurring and future change can be moderated rather than prevented. Global emissions are still rising, despite the fact that decarbonisation is actually happening too – emissions are rising more slowly than world output.

But greenhouse gas concentrations in the earth's atmosphere, having already risen by almost one-half since the beginning of the industrial age, will continue to rise even if emissions are stabilised at today's levels. So emissions must first be stabilised and eventually reduced.

The ill-conceived Kyoto agreement of 1997, now expired, committed the participating countries (without penalty for failure) to quantitative limits on emissions.

Only the wealthier countries were required to participate, exempting China, now the world's largest emitter. The USA (second largest) also declined to participate and Canada signed up only to withdraw later.

Several countries, including Ireland, did not meet targets but this did not matter since there were no consequences.

A voluntary agreement, with no sanctions, invites governments to pass the buck, letting others bear the costs of cutting emissions. Emission reductions benefit all, since the earth has just one atmosphere.

In the absence of a coordinated worldwide policy, it is up to each state to choose inactivity or its own preferred route. Among the larger emitters only the EU, whose share of world emissions has actually halved over the last 50 years, is now committed to serious emission targets. Emissions have fallen, fortuitously, in the USA in recent years as coal is replaced with natural gas, which has roughly half the emissions impact of coal.

This is a consequence of the shale gas revolution, which has made coal less competitive for power generation. But this has happened because of technological advances rather than as an outcome of deliberate policy.

One side-effect is cheaper coal in Europe as US output gets diverted and the unwelcome restoration of competitiveness to European coal-based generation.

The EU's ETS scheme applies to electricity generation and to some other energy-intensive industries. Permits to emit were allocated (free) and they can be traded. In order to meet targets, the industries affected must cut activity, improve efficiency or buy permits in the market.

Unfortunately, too many permits have been issued and the price has collapsed, so the penalty for, say, coal-burning power stations has turned out to be much lower than was intended.

In Ireland, less than one-third of emissions come under the ETS scheme. The rest, including emissions from transport, homes and agriculture, are subject to quantitative limits specified by the EU Commission.

These limits are arbitrary and are not the result of any economics-based procedure to find the cheapest way to cut emissions.

According to the EPA, in the year 2020 Ireland's emissions from the ETS sector will be 28 per cent below the 2005 figure on current policies. From the larger non-ETS sector, the reduction will be 5 per cent, and Ireland's overall emissions in 2020 will be about 12 per cent below the 2005 level.

Worldwide, and on the most optimistic scenarios, emissions will be 40 per cent above the 2005 figure. The European Union has fashioned a unique instrument in its solo-run climate policy, namely a mechanism to penalise a member state in deep recession for having achieved emission reductions which will be exemplary by world standards. The EPA's policy recommendation is that the solo-run should be embraced and that Ireland should incur further costs of emission reduction in order to stay within the (entirely arbitrary) ceilings contained in the EU scheme.

There is an alternative and it is this. One of Ireland's MEPs should seek a spot on the parliament's energy committee and ask a few questions. The main one is about the fundamental cornerstone of the European Commission's policy, the solo-run. What bargaining power does the EU possess in seeking the necessary worldwide agreement on a new climate policy when it alone, among the major emitters, is pre-committed to behaving responsibly even if others do not?

If there is to be a serious effort over the next few decades to address this global problem, it must be led by the largest countries and blocs. This means at a minimum China, the USA and Europe. The continuing attempts to conclude agreements under the UN umbrella, a body which now has 193 members, have failed because this is a hopeless architecture for finding a solution. If a large-power initiative is commenced, the Europeans should offer to match, and no more, the efforts of others, currently free-riding on the solo-run. It would also be nice to find out if any other carbon-reducing members face EU fines.

Sunday Independent

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