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West-to-east cash transfer shapes Europe's climate goal tussle
October 1, 2014 / 5:33 PM / 3 years ago

West-to-east cash transfer shapes Europe's climate goal tussle

LONDON (Reuters) - Western European nations are preparing to divert tens of billions of euros in revenue to help cut greenhouse gas emissions in eastern Europe to ensure the bloc sets the world’s toughest targets for tackling climate change.

The 28 European Union leaders meet on Oct. 23-24 to agree on a package of 2030 targets to cut emissions, deploy renewable energy and improve energy efficiency but are divided over how to share the related costs and efforts.

To broker a deal, officials are examining ways to appease reluctant eastern states by scaling up current support measures which environmental campaigners say are too lax and risk wasting billions of euros by doing little to help cut emissions in the longer term.

But fault lines are already appearing over whether the exact details of support need to be agreed this month.

Germany, the EU’s economic powerhouse likely to foot much of the bill, admits “solidarity for low income member states will play a role” but says agreement isn’t needed upfront, according to an environment ministry spokesman.

“Foremost the overall ambition level of the package needs to be ensured before talking about solidarity,” he said in response to emailed questions.

But the so-called Visegrad 4+ group -- Czech Republic, Hungary, Poland, Slovakia, Bulgaria and Romania -- on Tuesday insisted a 2030 deal required the same basis of west-to-east funding as under the current 2020 climate package.

“The Visegrad 4+ countries share the common view that the final agreement ... is conditioned by fair effort sharing and solidarity mechanism,” said a joint statement, following a ministerial level meeting in Bratislava.

WISE SPENDING  

The financial aid could raise more than 30 billion euros ($38 billion) of additional funds for east European governments and big emitting industries, up from the 21 billion euros under the current support package, according to a report by green groups CAN Europe, Greenpeace and WWF.

The current concessions came after eastern states -- reliant on highly polluting coal to power their economies -- feared they would suffer disproportionately under the bloc’s Emissions Trading System (ETS), which regulates around half of Europe’s emissions by forcing companies to surrender a carbon allowance for every tonne of CO2 they discharge.

It gives them a higher proportion of allowances to sell and also allows certain states to give away a separate allocation to their power companies if they invest to upgrade their fleet and diversify supply.

The campaigners warn against repeating the policy they say has wasted billions meant to be spent on cutting emissions by failing to tighten up on rules that have already allowed eastern states to extend the lifespans of highly polluting power plants and plug holes in their national budgets.

“As they stand, these mechanisms do not adequately support decarbonisation, despite political commitments to ensure they would,” said Julia Michalak of CAN Europe.

Some 7.5 million euros of the 12 billion euros-worth of allowances to be given to utilities for free are in Poland, where 82 percent of the 378 investments are to modernise existing coal and gas-burning plants and none are for solar or wind power generation, EU documents show.

“The rules of derogations elaborated by the European Commission do not favour renewables development or any other technology,” said a spokeswoman for Poland’s environment ministry, adding the country faced a separate EU target for 15 percent of its final energy use to come from renewables by 2020.

The bloc’s centralised climate change policy is often divisive because it overlaps with energy and spending, areas EU members have agreed to be largely determined at national level.

The European Parliament was defeated in its efforts to require governments spend at least half of the revenue from selling allowances on tackling climate change.

While most governments, including Poland, intend to meet that level, there is very little transparency over which projects will get funding, according to CAN Europe’s Michalak.

Peter Liese, a senior MEP from Germany, vowed the parliament “will again insist on earmarking and will monitor the progress of spending under the 2030 package.”

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