European Climate Commissioner Connie Hedegaard observed the fine balance Europe must strike with China and other swiftly developing regions, sometimes as trade rivals and other times as partners in tackling climate change.
“Europe must do whatever we can to protect and develop our stronghold within the energy-efficient and renewables sectors,” she told reporters in an interview.
“There’s a growing recognition that our strong position is not automatic in the next decade,” she added. “We must fight for it.”
Hedegaard spoke amid a tense European debate over whether to deepen planned cuts to carbon dioxide emissions over the next decade to 30 percent below 1990 levels, compared to current plans for a 20 percent cut.
Europe’s powerful business lobby has successfully fought off the prospect of deeper cuts, saying they would make traditional heavy industries such as steel and cement lose market share to less-regulated overseas rivals – so-called “carbon leakage”.
But many of Europe’s greener governments are starting to worry that staying at 20 percent would undermine the EU carbon market, which makes industry pay for permits to pollute and provides the main incentive for green innovation.
France, Britain and Spain are among them.
“Yes, there can be carbon leakage if you are too ambitious, but you can also lose jobs if you are standing still while your competitors are moving … if you are not innovating enough,” Hedegaard said. “We must find the right balance point.”
Border tariffs
She declined to speculate on whether Europe would deepen emissions cuts on its own if international climate talks fail again to reach a deal in Cancun, Mexico in December.
But she raised the difficult question of Europe’s growth prospects if it does not increase the pressure for innovation in the face of strong competition from China, Japan, Brazil and South Korea.
“What are we going to live from in Europe?” she said. “There are so many things we cannot compete on. We cannot compete on taxes, wages or pension ages. Here we have one area where we still have a worldwide front-runner position and we should take care to keep that.”
Some European countries, notably France and Italy, have raised the prospect of protecting European industries by placing border tariffs on imports from bigger polluters. But Hedegaard said premature action could damage global talks and the threat was enough in itself.
“Border tax could be one of the tools in the toolbox,” she said. “I think it should stay there. If we did it right now, how likely is it we could get a result around the negotiating table? It’s difficult already.”
Technology transfer
An alternative is to pursue sectoral agreements on cutting greenhouse gases, and Hedegaard said China was proving to be a valuable partner in this area.
“They know they particularly have to address the challenges within cement, aluminium and steel,” she said. “They mentioned these sectors. And where do we have the biggest threats of carbon leakage in Europe? Cement, aluminium and steel. We could cooperate in finding solutions.”
Sectoral crediting would allow European companies to offset their emissions by funding cuts in developing countries, focused on sectors rather than individual companies.
“Some experts from my services will go to Beijing and work with Chinese experts,” she added. “This is really happening. Just two years back it would have been unthinkable.”
But while China is a partner in some areas, it is clearly also a competitor in manufacturing.
So-called “technology transfer” has become a mantra in international climate talks for poor nations, which say they need technical help to cut emissions. The latest UN negotiating text lists it as a top priority.
But Hedegaard described a more nuanced approach.
“Technology cooperation has been more in focus in recent years, and technology dissemination,” she said. “Nobody foresees we should just give away our technology and make it even easier for China or others to compete with us.”
