Ladies and gentlemen
I would like to begin without being nostalgic but rather to be positive about what we have today and in the future. After all, nostalgia is not so good as it used be in the old days.
I must say I do feel a bit like a wind-turbine on a nuclear power plant site everyone knows why Im here but they dont expect much from me. I hope I can surprise you.
I find this moment very interesting, especially as a politician who, for many years, has been wrestling with energy, climate and environment policy whilst keeping an eye on the EUs competitiveness in global markets. During these many years, this portfolio appeared to be, at least for most of my colleagues, something rather unfashionable. All too technical with no votes at election time perhaps. You know, I was never sure if they felt pity for me or were just pleased that I left them with the really sexy stuff like the Constitutional Treaty or straightness criteria for cucumbers.
Well yes, it might be a thankless task, but someone´s gotta do it. Why was it considered even less interesting than the Constitution? Because it was so hopelessly simple. NGO´s just told the people how the things are and politicians just implement their advice. Therefore, environmental politics was, for many years, considered something quite easy, even light, almost "flat". In the governments this portfolio was considered alongside culture or gender related issues – to put it frankly, soft issues. In my country environmental issues were always externalised for the greens big parties thought that this is their case anyway, let them handle it, it is a harmless deal when those, many of them former communists, who had lost their kingdom after the collapse of Soviet Union, concentrate on this rather minor nitpicking.
Therefore, climate and environmental policy has until recently, been dominated by the political approach and the political emphasis of the green movement. It is only really in the last year that climate change issues rocketed to the top of the international political agenda with a huge velocity, that things have radically changed. I am not in the political margin anymore. Every week I get many invitations to seminars and panel debates. Finally my portfolio is getting political even fashionable.
We begin to see that perhaps the green approach is not the only possibility. Maybe the earth is beginning to choose its own friends. In my political family I am the one who has been privileged to set out and guide our climate policy. The European Peoples Party just adopted in its bureau meeting in Madrid last week our first comprehensive climate report, for which I was responsible. Now we start seeing that swallowing the green agenda is not enough it is sometimes even dangerous, because it is a top-down approach, it is bureaucratic, it is stiff, and it is based on scarcity and limitation. The time has come to shake the paradigms of environmental politics and climate politics especially: from the politics of limitation to the politics of possibilities. From dogma to do more! My glass is not half empty it is half full!
What do I mean by politics of limitation? Overregulation for instance. If I look at the bunch of legislation we have, supposedly to tackle the climate change, I am afraid that I see plenty of good will but not enough good skill. One reason lies behind the former commission's addiction to directives: they wanted to be in control like parents of the European family. They tried to achieve greenhouse gas reduction by various legislative measures, such as directives on promoting the co-generation of electricity and heat, promoting renewable energy sources, frameworks for water policy, energy and electricity taxation, as well as energy services and end of use efficiency, and many others.
All these measures had similar goals: mitigating emissions and increasing energy efficiency. The problem is, however, that they pursue the goal with overlapping methods.
If each impact on another is not taken into consideration, it will create double burdens. Cases in point are emissions trading and energy taxation, whose purpose was to include cost of emissions in the end price. Or the fact that the impact of emissions trading on combined heat and power (CHP) was not considered. Lack of coordination between the different Directorate Generals seems to gain a considerable and embarrassing role in European legislation.
I am afraid that we still make similar mistakes. Last March the European summit adopted three 20/20 decisions: triple 20/20. Did anyone other than me wonder at the rhyming tone in their decisions who invented them anyway? Rather than an engineer, I am afraid it might have been a poet.
Don´t get me wrong. I completely agree with the decision to reduce greenhouse gases. It is the necessary target we are having anyway. So do I agree with the decision on energy saving and eco efficiency: we desperately need that, all the clean megawatts we get. But I have huge doubts concerning the decision on the share of the renewables: 20 % – how come? This decision was not about the targets anymore, it was about the means. And I am afraid that this decision to reach this binding target within such a short time frame will disturb our final goal to reduce the greenhouse gases. Why? Because there is a genuine risk that this will lead us to aim at the rule-book rather than the real goal. We don´t have the necessary technological alternatives available yet. There is a risk that it will lead to unsustainable forestry and the binding target will be reached by overloggings. We should not let that happen.
Another problem is that it will overlap with emissions trading. Why not let it do the job, if it is our most important tool in climate policy, as they say? Emission trading as such already rewards those who invest on low-emitting energy sources and favours renewables. Why to disturb that effect with possible feed-in-tariffs on the national level – which may happen if we try to accelerate the growht of renewables.
The EU's Emissions Trading Scheme (ETS) has been our most important tool in climate policy since 2005. It is a brilliant concept in theory however we all know that in practice, as long as it is not a global system, it will punish the energy intensive industries competing on global markets thats all your main customers I think.
For the EU, it is politically important to take the lead hoping that the others will follow. But we know that our unilateral effort reduces our competitiveness in global markets giving the advantage to the polluter. There is a risk that industries will simply move where there is no cost for emitting CO2. This is 'carbon leakage'
But, a pollution shift is not a pollution cut.
A unilateral EU ETS hits the energy and employment intensive industries hardest. So, the "polluter pays" principle becomes a "polluter wins" or "polluter relocates" policy. The Commission has understood this risk – Commissioner Verheugen said recently that it is stupid to export pollution and import unemployment.
He is right. We must devise a market-based mechanism that caps emissions, rewards those who cut them, penalises those who don't and keeps our citizens in work. This is the triangular dilemma of energy supply, environmental sensitivity and retaining globally competitive industries that employ our workforce. In the revised EU ETS Directive, which is now almost in our hands, we have to do some improvement in this respect. Maybe the ideas that the commission has expressed in the preliminary drafts should be carefully considered – for instance, emission allowances for some 'market-exposed, high carbon-leakage risk' imported goods.
I also welcome all the possible structures that allow linking the EU-ETS with other corresponding systems outside the EU provided that they appear one day soon. Though in my opinion improbable within the timeframe of the third trading period (2013-2020), the EU ETS must be aimed at linking with compatible trading schemes based on e.g. sectoral targets in other markets so as to develop a common basis for the carbon market.
Industrial sector specific examinations aimed at defining the theoretical minimum of emissions for a ton of production would provide a genuine incentive for real emission reductions anywhere in the world as this system would reward those in a given sector with the lowest specific emissions. The emissions trading scheme linked up together with this kind of a BAT-approach (BAT = best available techniques) wouldn't distort the markets nor give a competitive advantage to the polluter.
Already, the International Energy Agency supports this approach and some large energy using sectors such as cement, steel and paper, once the problem to define their energy data has been solved, have taken the lead to prove it can be done. We have little time left in our mandate to do it – certainly no time to indulge in the political dogma that has prevented any real progress in the last 10 years. We must work together in the Parliament, the Commission, the Council and the industry if we are to succeed.
Most of all, I am sure you would agree that the European markets need stability and predictability. We need to have a clear price for carbon, in order to create incentives for the investment that the EU energy supply sector needs.