The euro zone crisis is dragging climate change down in the EU priority list.

Spain's solar industry — one of the most successful and supported in the world — received a surprise hit last year when the government announced plans to cut its subsidies by up to 3 billion euros as part of a wider austerity drive. While many believed reform of that sector was needed, it highlighted how the euro zone crisis could alter Europe's approach to climate change.

The full extent of the euro zone crisis' impact on environmental policy in Europe is, of course, still not fully apparent, though recent studies suggest it could be pretty drastic. A $45-billion gap in investment in everything from renewable energy, to environmental protection and environmental tax credits, could emerge as a result of the euro zone crisis, according to a report published by Ernst & Young last month.

The report focused on 10, mostly European, countries that are among the biggest climate change investors. Germany, which devotes 1.6 per cent of government spending to climate change, could see its funding gap reach $2.1 billion between now and 2015 — or rise to as much as $8.3 billion should the debt crisis worsen, the report predicted.

In Spain, the best-case scenario would leave a funding gap of at least $5.1 billion. “The combination of a high debt burden and austerity measures means that many governments will face funding gaps that could see investment in climate change mitigation fall down the priority list,” the report warns.

This is already happening. The EU Climate Policy Tracker, which monitors the progress made in the EU's 27 member countries, notes a marked deterioration in policy in certain member states, compared with a year ago. In the Netherlands, the government has cut subsidies for the solar and wind industries, and has cut from 20 per cent to 14 per cent the amount of domestic power it hopes to consume from renewable sources by 2020.

The Slovak Republic, the Czech Republic, Italy, France, Britain, Estonia, Germany and Belgium have also all cut support for the photovoltaic solar energy industry, while Spain also cut support for electric vehicles.

Missed opportunity

Environmentalists fear that the opportunity to use green growth as part of the solution to the crisis — helping introduce efficiencies in the system, and relieving the pressure imposed by sky-high oil prices — is going to waste. “European countries are looking at the crisis and what they can do for the economy in a very short term way…we believe green energy policy should be connected to the crisis but they tend to separate it,” says Magda Stoczkiewicz, director of Friends of the Earth Europe.

“We have seen a lot of words about green growth — as a way to get out of the crisis — but not much convincing action yet,” says Niklas Hoene, director of Climate Change policy at environmental consultancy ECOFYS.

There are other reasons that this would have been an opportune moment for Europe to push forward on the green agenda: in the aftermath of Fukushima fears about nuclear power have surfaced across Europe, with Germany planning to phase out all nuclear power, the need to find green alternatives is even greater.

“It is quite obvious that some part of the nuclear capacity is going to be replaced by conventional power stations,” a German official said recently. Even France, the home of nuclear titan Areva, and a country that currently depends on nuclear power for nearly three quarters of its energy needs, is debating the future of nuclear power, with the Socialists and Greens pushing for a closure of 24 nuclear reactors by 2025.

Widening chasm

The past year has been something of a damp squid when it comes to climate change policy on an EU level too. An initiative to prompt Europe to target a 30 per cent cut in emissions by 2020, instead of its current 20 per cent commitment, as well as the 2050 low carbon road map failed to make headway under Poland's Presidency of the European Commission. (The country's eagerness to wean itself off Russian gas has meant it is less eager to reject coal as a solution than others).

Hopes now rest with Denmark, which will take over Presidency in the New Year. However, while some are optimistic, others fear that the push towards the 30 per cent target under Denmark will be contingent on support from one of the bigger European nations, with pushing for the roadmap taking priority.

Also attracting criticism ahead of the COP-17 UN Climate Change Conference in Durban are the pledges made by wealthy nations, many from Europe, to put $30 billion into a “fast start” fund for poorer countries — rising to $100 billion a year by 2020. Matthew McKinnon of DARA International, a Spanish NGO, described the current situation as essentially one of “default” with the rate of dispersal of funds amounting to little more than 5 per cent. “There is a tremendous amount of frustration,” he says.

With the $30-billion commitment proving so hard to meet, the $100-billion commitment seems a long way off. “There is an ever-widening chasm between the support developing countries need, to adapt to climate change, and the funding promised and delivered by wealthy nations,” concludes a recent report by the International Institute for Environment and Development.

Renewal of Kyoto commitments

In this context, it's unsurprising there is little optimism among European activists and environmental campaigners in the run-up to the crucial Durban summit, where the renewal of the Kyoto Protocol commitments — which expire at the end of 2012 — are among the issues that need to be thrashed out, alongside plans for a new green fund. “A major breakthrough will not happen here. Many countries don't want to change their fundamental position right now,” says Hoehne.

Susann Scherbarth of Friends of the Earth Europe believes the EU's target of having a roadmap with a clear timeline when it comes to renewing the Kyoto Protocol is far from ambitious.

“It means not fulfilling agreed obligations by developed countries,” she says. “It means delaying action and fleeing from real emission reductions and their historical responsibility and instead including developing countries and putting a big burden on them.”

All this is happening at a time of an alarmingly fast growing mountain of evidence on what the future will bring. In its recent World Energy Outlook, the International Energy Agency warned that under the world's current pattern of energy consumption, C02 emissions would rise another 20 per cent until 2035, leading to a 3.5 degree Celsius rise in temperature.

And the Intergovernmental Panel on Climate Change's recent report predicts that extreme weather conditions — from heat waves, to droughts and destructive cyclones — will only increase.

It couldn't be a worse time for climate change to have sunk down the priority list in the way it has.

(This article was published on December 4, 2011)
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