Environment and transport

For most of 2012, the European Union was locked in a diplomatic battle with other major powers, including the US, China and Russia, over its decision to include foreign airlines in the European emissions trading scheme, which came into effect on 1 January 2012. The non-EU countries said it was illegal to charge for emissions outside EU airspace.

 

Eventually, the European Commission threw in the towel – temporarily at least. Connie Hedegaard, the European commissioner for climate action, announced in November that the EU would ‘freeze’ application of the ETS rules for one year for flights beginning or ending outside the EU. She said the freeze was a response to progress made at the International Civil Aviation Authority (ICAO) towards a global deal to limit aviation emissions. But critics said that the Commission was using the limited progress at the ICAO as a pretext for caving in to pressure.

The ICAO has until its summit at the end of 2013 to come up with a global solution – highly uncertain, according to analysts. If it does not, the Commission says it will once more extend the ETS to foreign flights.

In the shadow of the aviation dispute, the Commission decided in September not to include maritime shipping emissions in the ETS for the time being, even though the ETS directive required the Commission to do so if no global solution was reached by the end of 2012. Negotiations on the issue at the International Maritime Organization (IMO) are continuing.

The inclusion of foreign aviation was not the only controversy surrounding the ETS this year. The Commission’s proposal in July to delay the allocation of a number of emissions allowances in order to raise the flagging price of carbon has proven unexpectedly difficult. The Commission had hoped the measure would be rubber-stamped by MEPs and member states by the end of 2012. Instead, resistance from Poland and many MEPs means the argument will drag on well into 2013. In the meantime, the price of carbon remains far too low to stimulate investment in low-carbon technologies.

Car emissions were also causing strife, as manufacturers in Germany clashed with firms in Italy and France. At the beginning of the year, the Commission was being lobbied by German carmakers who were concerned that the method of calculation for determining emissions would put their larger, heavier cars at a disadvantage. Italian and French carmakers reacted with fury, questioning why the Commission would seek to increase the burden on the smaller cars that they make. In the end, the Commission’s proposal, unveiled in July, did appear to make a partial concession to the German firms by keeping the base year for calculating reduction obligations at 2006.

While the ETS flounders, the EU can at least take comfort from managing to conclude the most contentious piece of environmental legislation in 2012 – the energy efficiency directive. After months of difficult negotiations, a compromise was reached in June that will require

national utilities to make sure that their consumers increase efficiency by 1.5% each year starting in 2014.

But the final compromise is far weaker than the Commission’s initial proposal, meaning member states will not meet a target, set in 2009, of improving energy efficiency by 20% by 2020. With member states anxious about any additional public spending, they were reluctant to take on commitments to make investments in the short term, even if they would bring savings in the long term. Businesses deplored the end result, saying it would not stimulate the investment needed to deliver on the potential for energy savings.