22 Nov 2010 02:11:23
EU to create green investment banks
New report urges EU countries to replicate UK’s Green Investment Bank and to adopt 30% carbon reduction targets.
A new report from environmental think-tank E3G urges the EU to move away from debating whether to boost its carbon emissions target, and provides a carefully designed strategy on how best to deliver 30% carbon reduction target.
The main recommendation from the report is that EU countries should develop financial institutions similar to the UK's planned Green Investment Bank, Germany's national bank KfW, which is financing household retrofits, or the European Investment Bank, which recently issued Green Bonds on Japanese markets to raise funds for European low carbon investment.
The E3G report argues that there is no point raising the EU target to 30% if it is met merely through purchasing cheap carbon emissions reduction credits from abroad. The EU Commission's current plan to reach 30% carbon reduction target would cost European consumers €8bn (£6.84bn) per year by 2020, but would achieve no economic growth, energy security or competitiveness benefits.
The report adds: "In contrast, we believe the most economically sensible shift to 30% would prioritise investment in domestic European energy efficiency, and in the infrastructure and innovation needed to sustain reductions beyond 2020 and maintain European companies' lead in the low carbon race."
The policies to reach 30% carbon reduction targets should be based on energy efficiency efforts, binding sectoral agreements, and a boost to innovation and low carbon infrastructure that prioritises the development of a European smart grid and electric vehicle recharging networks, said E3G.
EU member states are currently debating whether to raise the bloc's carbon reduction target to 30%, on the grounds that the recession would make it easier than expected to meet the 20%carbon reduction target. However, opponents to the adjustment argue that Europe's current economic problems mean firms are not in a position to deliver a more ambitious target and as such the lower cost of the 20% carbon reduction target should be taken as a welcome economic benefit during the recession.
The E3G report argues against this analysis saying that is both empirically wrong and strategically dangerous for European security and prosperity doing that, since investment in European energy efficiency and infrastructure are now profitable, and will be more valuable as oil prices rise.
A final decision on the 30% carbon reduction target is unlikely to be made by the EU before spring 2011, and it is likely to be dependent on the outcome of the imminent Cancun Climate Change Summit.