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Are Europe's Low-Carbon Ambitions Realistic?

Posted by: Mark Scott on January 22, 2009

The European Union loves to set targets. Never more so than when it comes to tackling climate change. Yet sometimes, you have to wonder whether the Old World really believes it can meet the increasingly ambitious goals to curb its CO2 emissions. Take the lawmakers in the European Parliament. On Jan. 21, they called for a reduction in European greenhouse gases by 80%, an improvement in energy efficiency by 35%, and a target to produce 60% of the EU’s electricity from renewable sources — all by 2050.

These goals come on top of already announced plans dubbed ‘20-20 by 2020.’ In short, Europeans have legally committed themselves to a 20% reduction of CO2 emissions and the use of renewables to meet 20% of energy consumption by the end of the next decade. Yet without dismissing the plans outright, there’s already some uncertainty whether Europe can pull off its transformation into a low-carbon economy. And by outlining even more ambitious goals for 2050, Europe may have taken on more than it can handle.

Without getting into the minutiae of the legislation, a quick scan over the renewables targets (20% of energy consumption by 2020, and a proposed 60% by 2050) shows how much Europe is dragging its feet. Sure, some countries, such as Denmark and Portugal, already have hit the 20% figure -- and are expected to produce roughly a third of their domestic energy from renewables by 2020. But others are way behind schedule.

Hungary, for example, generated just 4.3% of its electricity from green sources back in 2005 (a year after it joined the EU). But by 2020, that number is mandated to hit 13%. For Britain -- one of Europe's largest emitters of CO2 -- the country's 2005 figure of 1.3% is legally obliged to reach 15% by 2020. Yet despite multi-billion dollar investments in renewable energy, there’s a real doubt whether these countries can meet their legally-binding targets. Indeed, estimates predict Britain will produce just 6% of its energy from green sources by 2020 under current investment plans. (For a full list of the targets, check out page 41 of this EU report.)

To get around this issue, the European Union's 20% goal is an aggregate of all 27 member states' targets. The idea goes that if Portugal can produce 31% of its electricity from renewables by 2020, then that will counteract Hungary's (optimistic) 13% figure. That's all well and good, but it doesn't address the underlying issues of getting all EU member states to the 20% target (let alone the 60% proposal by 2050).

And with utilities already cutting back on investments due to the illiquid money markets, the low price of oil making investments in renewable projects less cost effective, and European economic stimulus money still not filling the void left by dwindling private capital, the question whether Europe will be able to meet its low-carbon commitments has yet to be answered.



BusinessWeek correspondents John Carey and Mark Scott, cover the green scene, keeping on top of the business aspects of energy, the environment and climate change, as well as the technologies, policies, markets and people that are shaping how the earth's resources will be used in the century ahead.

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