From the Global Warming Policy Foundation
The EU has agreed ambitious climate targets. But who is going to pay for it? Many governments now fear the anger of their citizens. They do not want additional cost burden to motorists, homeowners and businesses. Others should therefore pay. Governments all over Europe now face an uphill battle.
The Turow open-cast lignite mine is one of many production sites in Poland. But the citizens of the small town are angry. They demonstrate because they fear for their jobs. Because the lignite mining in the city faces closure. The neighbouring country of the Czech Republic is pushing for it because the mining causes groundwater levels to sink.
Not only residents and workers of the Turow opencast mine take to the streets against the closure, politicians are also warning. Labor Minister Jaroslaw Gowin, for example, predicted the loss of “tens of thousands of jobs” if the Czech Republic prevailed. In fact, it is about a lot of money, energy security and the income of Polish families.
The angry protests are a foretaste of what could happen in other parts of the country in coming years – and in many other parts of Europe. In December, all 27 EU member states decided to reduce their greenhouse gas emissions by 55 percent by 2030 compared to 1990 levels.
Two weeks ago Ursula von der Leyen outlined suggestions as to how this would work and who would have to pay for it. The plan, called “Fit for 55”, includes, among other things, to ban of the internal combustion engine and stricter rules for airlines.
From the point of view of many governments, the most difficult plan is the inclusion of gasoline and heating in the EU’s new emissions trading scheme. As a result, prices would rise steadily in the years to come. It is a step that Germany has pushed for, because it will place greater demands than before on the countries in southern and eastern Europe, which are lagging behind in terms of emission cuts.
The affected governments in Central and Eastern Europe fear energy poverty, social tensions and protests. The yellow vest demonstrations in France that took place a good two years ago serve as a warning example. The months-long and sometimes violent protests were directed against the French energy transition and higher fuel prices.
They eventually forced President Emmanuel Macron to reverse the gasoline price hike because middle and lower classes of the French province simply could no longer have afforded the trip to work with the eco tax.
Poland’s radical restructuring
Far worse is feared in Eastern Europe. Poland, for example, has to fundamentally reorganise its economy if it wants to achieve the EU’s emissions targets. It is the coal country of Europe – more than 70 percent of its energy comes from coal. It is mined primarily in the south of the country; large power plants supply industry and households in the country with inexpensive electricity.
Many people even heat with cheaper, often particularly dirty coal. Last but not least, tens of thousands of people work in the sector – “Poland stands by the coal” is an old saying here.
In the next few years, however, a number of power plants in the country are expected to shut down. By 2040, Poland wants to reduce the share of coal in its energy mix from more than 70 percent to eleven percent. It’s an ambitious goal. There is great concern for social peace.
The Polish government is now faced with a double challenge: it must transform the energy industry more quickly and more radically than other EU members. At the same time, the government has to take the public with.
The government is not only relying on renewable energy; it is also expanding the natural gas network, and plans to put the Polish-Norwegian pipeline “Baltic Pipe” into operation next year and advance nuclear energy too. At least two nuclear power plants with six reactors are to go online from 2033. The investment volume is 30 billion euros. This type of climate policy is unlikely to meet with the approval of neighbouring Germany.
In fact, EU member states have been arguing for years whether and to what extent gas and nuclear power should be part of the energy supported in the fight against climate change. For France, for example, cheaper nuclear energy is part of it – especially since Emmanuel Macron learned from the yellow vest protests that he shouldn’t expect the French to do too much about climate protection.
Fear of deepening divisions
His experience shows that climate protection can be an acid test even for wealthy EU countries. On July 20, after months of debate, the French parliament passed the new “Climate and Resilience Law”. It is intended to ensure that France is “heading” for a 40 percent reduction in C02 emissions by 2030, as Environment Minister Barbara Pompili cautiously put it.
This means that France is in some ways becoming a European pioneer. Domestic flights will soon be banned if it is possible to get to your destination by train in two and a half hours. The thermal insulation regulations for apartment renters will be tightened, and advertising for fossil fuels or SUVs will soon be banned.
However, the legislature has refrained from making any severe cuts and has been criticised by climate activists and experts alike. A required speed limit of 110 km per hour on motorways, for example, was immediately buried.
The EU Commission never tires of emphasising that the costs of restructuring the EU economy must be done fairly and that the poorest should not have to pay disproportionately high amounts for climate policies. The commission also wants to create a new 72 billion euro fund from which money should flow for those loving in energy poverty. A fund that has already been decided on and worth 17.5 billion euros is also intended to support particularly affected regions; for example Turow or coal fields in North Rhine-Westphalia.
Nevertheless, there is concern in Europe’s national capitals that the EU’s ambitious climate policy could cause social unrest. The Italian government, for example, fears rising electricity prices. The EU climate package calls for EU states to completely abolish subsidies for fossil fuels. This item currently accounts for 35.7 billion euros in the Italian budget – 12.5 billion of this goes to families and over 23 billion to companies. If they fall away, the mood could quickly turn against climate protection.
There was a foretaste of how much the government fears public protest in response to rising energy prices at the beginning of July: The economic recovery after the Corona crisis and the rise in prices for C02 emission certificates drove electricity prices in Italy very high. As a result, electricity bills would have risen by 20 percent had the government not pulled an emergency brake at the last moment to keep the increase to just under ten percent.
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