Jose Manuel Barroso, president of the European Commission, promised us a “new industrial revolution” last year and it looks as though he might just deliver.

Barroso seized on climate change as a new raison d’etre for the bloc on its 50^th birthday, now that war between its members was a distance memory. An economy built on fossil fuel would have to be weaned off it, he said.

No one really believed him, though the club’s 27 members were dragged far enough along, with differing levels of enthusiasm, to endorse fairly stiff targets for greenhouse gas reductions – a fifth below 1990 levels by 2020.

The potential gains are great, but the pain is also becoming clear, and as the Commission prepares to deliver its medicine on January 23 howls are growing louder around Europe.

The legislation will set out how to boost renewable energy generation to 20 per cent of supply – a near-tripling from current levels - how to cut carbon emissions to 20 per cent below 1990 levels and how to ensure plant fuels make up 10 per cent of vehicle fuel.

Key to it all is a tightening of the emissions trading scheme, which governs how industry can buy permits to discharge carbon. It will likely be extended to other greenhouse gases such as nitrogen for some industries.

More permits will be sold rather than given away and 21 per cent fewer made available compared with 2005. Around one-quarter of the reduction can be achieved by paying for mitigation projects or planting forests in poor countries.

Research shows that while the broad impact on the economy will be minimal some specific industries – aluminium, steel, cement and chemicals among them – will see profits almost dry up.

Now the unions have joined companies in those areas warning that hundreds of thousands of jobs are at stake.

The signs are Mr Barroso will not budge, leaving it to Europe’s leaders to haggle over numbers for the next few months. His aides point out that such lobbying is par for the course.

“We are not chasing industries out of Europe,” says his spokesman. He says that growing demand has raised the cost of fossil fuels and industries will have to adapt. “We are creating jobs that are sustainable for the future.”

He added that the Commission has indicated it could take special measures for the industries that will suffer if there is no global climate change agreement. The industries and unions want something more concrete.

One diplomat says the haggling over final figures will be similar to that over the multi-annual budget of the Union. Tradition there dictates that Germany, the Union’s chief paymaster, usually digs into its wallet for a few more euros to keep everyone happy.

However, with Berlin complaining about a trading system for renewable energy that could negate its massive investments, and still angry about pollution-cutting laws on cars agreed by the Commission just before Christmas, Berlin may not be in the mood to pay out this time.

January 16th, 2008 in Environment | Permalink