The European Union’s climate commissioner Connie Hedegaard is pushing to increase the 2020 emissions reduction goal from the current twenty percent to thirty percent. The heavy industries, including cement and steel, have lobbied the EU against such drastic cuts successfully in the past (ever since the United Nations talks in Copenhagen failed this previous December) on the basis that it would be economically untenable in the current global economic situation. However, the EU’s climate commission has performed a cost analysis of increasing the emission reduction and found that such a move would only result in a fifteen percent increase in cost (11 billion more Euros from the already agreed 70 billion). In a paper released earlier this week, the commission said, “Both the international context and the economic analysis suggest that the EU is right to continue preparing for a move to a 30 percent target.”
Europe’s heavy industry, though, is threatening ‘carbon leakage’ if concessions are not made for them, two proponents of which are Arcelor Mittal and Lafarge. Carbon leakage is the act of moving plants and jobs from highly regulated regions to areas with more relaxed rules and regulations. Arcelor Mittal specifically told the EU Commission that under the new regulations ninety thousand jobs might be eliminated in Germany alone due to the harsh economic backlash of new regulations.
There is no doubt that ‘leakage’ is an important issue given that CO2 emissions are a global (versus local) problem. A report from the Corporate Europe Observatory, however, claims that companies like Lafarge and Arcelor Mittal have exaggerated the negative effect that such environmental regulations have on European business. In addition, others have argued that the industrial giants stand to make considerable profits from the excess carbon dioxide permits already granted to them free of charge by the Commission. Arcelor Mittal alone stands to make approximately one billion pounds profit from the sale of its permits.
The debate in Europe is shaping up to be the OK Corral of the emissions battle overseas.