Will European leaders truly lead on climate change policy?

The EU seems more concerned with economic growth than articulating any strong environmental policies.

The official COP 21 logo.

GENEVA, Oct. 2, 2015 – The revelation that Jean-Claude Juncker, in his recent EU State of the Union Speech, slyly neglected the priorities of environment and sustainable development – with omissions and inconsistencies challenged by green groups and climate diplomacy experts – suggests the troubling view that the Commission’s president is more concerned with economic growth than with articulating any strong environmental policies.

But with the UN Climate Change Conference in Paris (COP 21) fast approaching, EU member states and their leaders more than ever need to be credible on both climate change policy and sustainable development and to re-establish themselves as confident global leaders capable of persuading other nations to get on board. To that end, the outcome of the Sept. 18 EU bloc meeting ahead of Paris, in which member states committed to a united, has been met with cautious optimism – and more skepticism.

EU climate chief Miguel Arias Cañete said the group was “ready to conclude an ambitious robust, binding global climate deal, and [they] will settle for nothing less.”

But much is left to do, with critically high stakes for failure. The policy decisions within the EU and on the global stage at COP21 need to support a level playing field for economic growth  and competition by ensuring that all countries are equipped to meet and maintain the same energy standards and reductions in greenhouse gases.

New to the EU position documents is a formal call that all nations be bound to environmental standards in line with global goals for climate neutrality, with all countries asked to reduce their greenhouse gas emissions by 2020 to stay on target with 2⁰C global warming caps, and binding five-year assessments to keep countries on track. The position statements make clear what many think Juncker sidestepped: EU economic growth depends on sustainable development and its ability to deliver on climate cooperation.

The first reason for insisting on an international mandate is to protect the planet’s future. But only a binding global agreement will protect existing EU industries and encourage future investment. While the EU’s high standards for energy efficiency, emissions reductions and clean fossil-fuel alternatives have made Europe a global leader on climate change, those high standards are costly to industry when they drive business to China, Saudi Arabia and other nations without the same strict regulatory requirements.

The Aluminum Principle

The aluminum industry – capable of becoming a leader in clean energy – serves as an example. “It is a true energy bank,” says European Aluminum Director General Gerd Götz, because 95 percent of the energy used in its production stays in the aluminum and is recyclable. Demand for the metal continues to grow for everything from mobile phones, to lighter-weight cars and ships that are more fuel-efficient and add to the win of using aluminum. But even as demand grows, European producers struggle to compete, and aluminum smelters shut down because of higher energy costs and climate standards.

Electricity costs account for 30 percent of aluminum production, and companies based in the EU bear an 11 percent cost disadvantage relative to their foreign counterparts because of the strict regulatory environment, according to the commission. That threatens the very survival of Europe’s industry – and 80,000 jobs. Nearly half of all EU smelters have shut down since 2007 because of energy costs, costs that are reflected in aluminum prices tied to a global price mechanism set by the London Metal Exchange – in short, unrecoverable costs borne by the producer. But the impact of electricity costs means the loss of new business as well as the old, because investment is lost to Asia, North America and elsewhere when environmental standards aren’t uniformly applied.

The aluminum industry’s struggle leads to two compelling questions on energy policy: Can the EU meet environmental policy targets without destroying its own energy-dependent industries and businesses? And will the EU lead on climate change with enough vigor to create a level playing field, so that its own high standards aren’t contributing to the climate problem by forcing investment into “easier” countries?

Banking on a Paris miracle

Arias Cañete and his EU energy counterpart, Maroš Sefčovič, seem to think so. In a recent Politico interview, Sefčovič said he is confident that European firms are leaders who want to meet their climate-change imperatives. But they also need to see action from the international community, as well as a fair-play stance within EU member states themselves – some of whom, particularly coal-hungry Poland and the fossil-fuel dependent east, are less enthusiastic.  The call for EU action also resonates among environmental and climate diplomacy experts. “Juncker made the Paris climate ‘international regime’ a priority for the EU; now we need to see these words put into action,” said Louisa Casson, EU climate adviser for E3G.

There are encouraging signs ahead of COP21 that Europe’s 2030 commitment to reduce emissions by 40 percent, and other clean-energy goals,will be met by other nations. So far, 62 countries have submitted their plans to align with the effort, accounting for nearly 70 percent of total emissions on earth. That compares with just 14 percent achieved under the initial Kyoto agreement, said Carole Dieschbourg, minister of the environment for Luxembourg, the chair nation of the EU Council. But just to mention Kyoto is a reminder of the decades before Paris that have failed to deliver results on climate change.

The sting of the acrimonious 2009 failure at Copenhagen is still fresh, but there is also much hope. Connie Hedegaard, the former EU climate commissioner at the helm in Copenhagen, believes that Paris can be different so long as leaders deliver “a credible narrative” that also emphasizes economic realities.

“Because if we don’t,” she says, “we will have an anti-growth dichotomy and then people will stand there screaming in each of their corners and not much will happen. So there is really a lot at stake in Paris.”

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