Britain’s carbon crusade suffers a blow

By Elisabeth Jeffries

Date: 14/04/05

This week the European Commission formally rejected a British application to amend its national allocation plan (NAP) - the quantity of CO2 emissions allocated to major industrial users. The UK is challenging the Commission at the European Court of Justice.

At the same meeting the Commission decided to approve the Czech Republic's NAP and to launch legal action against Luxembourg, Malta and Poland for not submitting NAPs by the January deadline.

But it is the UK decision that will grab most attention because the dispute undermines the UK's attempts to lecture the world about climate change, from the vantage point of its bully-pulpit chairing the Group of Eight (G8) and, from July to December, presiding over the EU's Council of Ministers.

Nicola Saltman of environmentalist group World Wide Fund for Nature said: "It is hypocritical that the UK government has consistently made bold promises on battling climate change on an international as well as national level, and at the same time consistently undermined their own position and the most effective market mechanism for reducing carbon emissions."

The Commission says that the increased allocation is illegal.

A UK official said: "The current government made clear that the figures sent in April 2004 were subject to change, and as such the proposed amendment is compatible with the relevant Community legislation."

The UK has already indicated, during a G8 conference hosted last month, that it favours more help for developing countries to reduce carbon emissions and believes that European companies could benefit.

"Carbon saving is now a way of making money…businesses across the continent have an unprecedented opportunity to benefit from carbon reduction," Gordon Brown, the UK's finance minister, told delegates, who were drawn from both G8 and developing countries.

The development of new environmental technologies, "one area in which Britain and Europe excel" would, he suggested, create significant business opportunities while helping developing countries avoid a path of high growth and high emissions.

The capture, or sequestration, of carbon dioxide, is becoming increasingly sought-after as a technology that would permit the continuing use of CO2-emitting fuels.

"Cleaner fossil fuels, including the capture of carbon dioxide and its long-term storage underground, are likely to become crucial elements of carbon reduction strategies over the next few decades, particularly for emerging economies," Brown said.

Carbon sequestration is the most recent addition to the list of options. Others include vehicle energy efficiency measures, combined heat and power, renewable energy technologies, advanced power grids and nuclear power generation.

China, which is investing heavily in energy, has a particularly urgent need for energy efficiency, carbon capture and other environmental technologies. With gross domestic product (GDP) currently growing by around 9-10% per year and with rapid population growth, it needs to build several hundred new power stations. There are 20 million farmers without access to power.

Energy efficiency levels are low, though China's National Development Reform Commission (NDRC) has a policy to reverse this. Yet, as Chinese minister Liu Jang declared at the London conference, "There is no such precedent in the world that one country can realise a high level of per capita GDP while at the same time maintaining a low level of per capita energy consumption… It is a challenge for China to blaze a new trail in building a new mode of consumption and production in line with sustainable development."

For Europe to take a lead developing environmental technologies overseas and selling them to countries like China, two issues need to be addressed. One is the rapid development of expertise in energy technologies. The other is the launch of trade policies that would promote those technologies overseas.

Carbon storage is in its infancy and only a handful of EU-based companies are developing equipment which can be installed at power stations. These include Alstom and Mitsui Babcock. BP has also carried out pilot projects, including a sequestration trial at an Algerian plant where it is reinjecting captured natural gas (which has a high carbon dioxide content) into reservoirs. "It's not a mature business but it is up and running; people are beginning to look at it," observed a spokesman at its London headquarters.

But many developing countries have expressed concern about technology not being passed on, not just in carbon-capture technologies but also in well-established energy industries such as certain renewables and energy efficiency mechanisms.

According to Liu Jang: "The technology and patents of renewable energy are mainly controlled or owned by developed countries, and the hefty fees for technology transfer have constituted a barrier against diffusion and application of these technologies worldwide, which harms the growth of the low carbon economy."

Other trade barriers, acknowledged by Brown, include high import duties which are imposed generally and make no distinction between energy efficient technologies and standard, less efficient, technologies. According to a report produced at the end of the London meeting, obstacles will be addressed through the Global Environment Facility, an organisation which provides grants to developing countries, and the development of improved and wider-ranging frameworks to combine financial instruments. Such action would meet the European Commission's desire to removing barriers to technology transfer professed in Winning the battle against climate change, a report released in February.

• Elisabeth Jeffries is a UK-based freelance journalist

The European Commission on 12 April 2005 formally rejected a British application to amend its national allocation plan (NAP) - the quantity of CO2 emissions allocated to major industrial users. Author suggests that this came at a bad time considering that the United Kingdom planned to take the lead on climate change, holding both the chairmanship of the G8 and, from July to December 2005, the Presidency of the Council of the European Union.

European Commission: Press release: IP/05/424 http://europa.eu/rapid/pressReleasesAction.do?reference=IP/05/424&format=HTML&aged=0&language=EN&guiLanguage=en

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