ANALYSIS: The EU's climate laws: a good deal for the world?

Brussels - As European Union leaders congratulated themselves on approving a set of laws on climate change, analysts around the world were asking themselves if the package would work. The answer is most likely to be: yes, but not nearly enough. The laws aimed at cutting Europe's emissions of greenhouse gases to 20 per cent below their 1990 levels by 2020 are 'not going to produce a 20-per-cent cut in Europe, it's going to be something much, much weaker,' Delia Villagrasa, climate policy expert at environmental group WWF, told Deutsche Presse-Agentur dpa. The package of laws is aimed at cutting EU emissions and boosting energy efficiency and the use of renewable energy such as solar power by 20 per cent before 2020. It is the most ambitious attempt to limit climate change ever agreed, putting the EU in a strong negotiating position ahead of United Nations talks in Copenhagen in December 2009. 'This is historic ... You will not find another continent in the world that is giving itself such binding targets,' French President Nicolas Sarkozy, who chaired the talks, said. Analysts say that the package will certainly cause European consumers and industries to trim their emissions. This is largely due to a plan to make industries obtain permits to emit greenhouse gases, and to reduce the number of permits year by year. 'The whole point is to cut emissions as cheaply as possible ... the important thing is that the overall allowance is low enough to force a reduction,' Stig Schjolset, senior analyst at expert group Point Carbon, told dpa. Taken together with the pledges on renewable power and energy efficiency, the package certainly gives the EU a fighting chance of hitting its self-proclaimed targets. 'We have guaranteed 20-per-cent cuts by 2020,' European Commission chief Jose Manuel Barroso said at the end of the Brussels summit. Politicians say that the targets will compel industry in Europe to invest in new, revolutionary low-emissions technologies by making it simply too expensive to emit greenhouse gases. The 20-20-20 goals 'will force us to restructure our industry so that we can pollute less and be ahead of the game,' Sarkozy said. But analysts say that Sarkozy's compromise offers so many cost-cutting concessions to so many industries and countries that they fear it will destroy the incentive which it was intended to create. Even industries facing no threat of competition from foreign states with less-stringent climate goals will only have to buy all their emissions permits at auction from 2025, while branches faced with such a threat will get all their permits for free. And clauses allowing member states and companies to get credit for sponsoring emissions-reduction projects abroad are also seen as weakening the incentive to create new, low-emissions technology. 'From 2012 to 2020, industry has to make cuts of about 14 per cent. They can do half of it externally, so that leaves a 7-per-cent cut within the EU, or about 1 per cent per year. It's not wildly impressive,' Villagrasa said. And that is a critical flaw, because the whole point of the climate package is not just to cut emissions in Europe, but to galvanize a 'third industrial revolution' based on a new, low-emissions model of doing business. Experts say that that is vital if rising powers such as India and China are to continue their spectacular economic growth without boosting their per-capita emissions to Western levels. The two countries are so populous that if their emissions rise to the per-capita levels seen in the West, global emissions will more than double at a time when they should be cut in half. But neither state is rich enough to fund the sort of low-emissions revolution which is needed - putting the onus on rich powers such as the EU to make the huge investments needed. And with Sarkozy's deal awash with concessions aimed at making it less expensive for EU firms to emit greenhouse gases, Europe looks unlikely to rise to the challenge. The EU climate package may well be enough to hit the 20-per-cent goal. It is certainly not enough to galvanize the kind of low-emissions revolution which the world so desperately needs.