Sandbag is a UK based not-for-profit organisation campaigning for environmentally and economically effective climate policies, with a focus on the EU Emissions Trading System (ETS).
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Two quotes that should change the world - and European industry must take note.
posted by Rob on 22nd Jan 2013

We often hear the EU’s energy intensive industry lobby lament developments in climate regulation and the burden they claim it brings to their organisations. Again and again we’re told that the EU’s progressive policies are costly and reducing EU competitiveness. The ‘level playing field’ and ‘legally binding international agreement’ have become fabled prerequisites for industry accepting any increase in ambition. Only once these are in place, we are told, should the EU consider upping its climate ambition. In their latest position paper, delivered to the Industry Committee of the European Parliament, the Alliance of Energy Intensive Industries again pays homage to its two fables of the moment. It’s perhaps of little surprise that here at Sandbag we’re not convinced by these arguments.

Firstly, is there really such thing as a level playing field given the differences in land and commodity prices, labour, currency value, interest rates, corporation tax across the EU, let alone the world? Furthermore, far from being an unnecessary burden, we argue that for large swathes of the industrial sectors the EU ETS has provided them with an additional revenue source. We fully accept, this has come largely due to the unforeseen economic downturn, but it has meant that many companies have been totally insulated from any additional financial burden levelled by the EU ETS.

Secondly, claiming that only an international climate agreement will do does a disservice to the great efforts being made by countries at a national level. Without wanting to undermine the importance of an international climate agreement, it only takes one look at China and its work on emission trading pilots – currently seven, but more are rumoured - to see the pace at which national policies are developing.

It’s difficult, then, to understand why the energy intensive industry lobby in the EU would be so content with short-termism. By pushing back on efforts to improve climate legislation they may well be saving money in the short term, but such short-sightedness is likely to cost them dear in the future as delayed investment decisions start to hit home. To draw on a simplistic analogy: avoiding the dentist will save both money and anxiety in the short-term, but one day in the future it’s going to be expensive and hurt like hell.

In fact it already is. The EU’s low carbon price is already hurting fuel switching investment. New gas-fired power plants are being shelved for coal, locking in high carbon investments. Of the five gas-fired power plants Czech Power Company CEZ recently planned to build, only one project went ahead. For sure the carbon price was not the only factor, but the uncertainly certainly contributed to the final decision. And as Commissioner Hedegaard recently said, marginally lower energy costs do not guarantee competitiveness - but innovation might.

Other countries are not waiting for the EU to slow down or speed up: they are moving ahead with developing their own competitive low carbon economies. The recent Globe International Climate Legislation Study lists in detail the progress being made on climate legislation by the world’s leading and emerging economies. Perhaps the below quotes from President Obama and Chinese Ministry of Industry and Information Technology (MIIT) will resonate with those charged with deciding the fate of the EU's flagship carbon pricing policy and help them to block out the shrill voices of certain industrial lobby groups whose frame of vision is short term and blurred by self-interest:

President Obama:

“The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition, we must lead it. We cannot cede to other nations the technology that will power new jobs and new industries, we must claim its promise.” Inauguration speech 22nd January 2013

Chinese Ministry of Industry and Information Technology (MIIT): “We must seize the opportunity to actively explore with Chinese characteristics to address climate change, promote low-carbon development to implement energy conservation, improve energy efficiency, implement to transform and upgrade traditional industries, the implementation of the adjustment and upgrading of industrial structure, to improve the international competitiveness of industrial products, and strive to build a low carbon industrial systems and promote an industrial low-carbon transition - a win-win situation - for China's industrial sustainable development and for combating climate change.” Industrial Areas Response to Climate Change Action Program, 9th January 2013

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