* EU toughens energy saving strategy
* Climate chief to say strategy implies 25 pct CO2 cut
* Hedegaard will stop short of setting new CO2 target
(Adds detail, background)
By Pete Harrison
BRUSSELS, Feb 11 The European Union is
overhauling its energy strategy in a way that should put it on
track for a 25 percent cut in greenhouse gases by the end of
this decade, smashing its own 20 percent target, EU sources say.
But it will stop short of setting a new headline target for
now -- avoiding a clash between government and industry -- and
instead opt for rigorous energy-saving measures and low-cost
tweaks to the carbon market, one of the sources said.
The move sets the scene for a debate on binding targets at a
The EU's 27 leaders last week agreed to improve their
enforcement of the EU's 20 percent energy efficiency strategy
after hearing they were on track to fall halfway short.
Next month the EU's energy commissioner, Guenther Oettinger,
is expected to warn member states that he will push for
mandatory energy saving targets in 2012 if they do not improve
their performance. [ID:nLDE7181WV]
That will be backed by new research from EU climate
commissioner Connie Hedegaard showing that the energy-efficiency
strategy could boost carbon cuts, currently at 17 percent below
the EU's baseline, to 25 percent below by 2020 -- way ahead of
the official 20 percent goal.
The recommended efficiency measures include improved
insulation of homes and better design of industrial motors.
Europe's heavy industries such as steel manufacturing have
previously clashed with the Commission over its climate
ambitions, fearing that tougher targets might drive up the cost
for buying emissions permits from the EU's carbon market, known
as the Emissions Trading Scheme (ETS).
The new strategy avoids confrontation with major energy
consumers by seeking to limit the impact on their costs and
could save the average EU household 1,000 euros ($1,356) per
year in avoided energy bills.
"This could be a good thing internationally as it would be
more politically acceptable in the short term," said Emmanuel
Fages, an analyst at Societe Generale/Orbeo. "It doesn't
preclude a 30 percent cut but may allow the EU to do it
Oettinger echoed industry fears that extending the EU's
carbon-cutting goal to 30 percent would force business to
relocate outside the EU's borders.
"If we go alone to 30 percent, we will have only a faster
process of de-industrialisation in Europe," he told reporters in
London late on Thursday.
"We are ready to go to 30 percent if a big global partner
such as the U.S. and China follows us, but not without," he
With countries including Australia, Japan and the United
States recently rowing back on climate action, the option of
moving to 30 percent cuts appears to be off the table for now.
Oettinger's stance was challenged, however, by the Climate
Group, which represents 30 companies that want a unilateral 30
percent goal including big players such as Vattenfall [VATN.UL],
Centrica (CNA.L) and Alstom (ALSO.PA).
"Europe's economy needs a clean industrial revolution to
stay competitive," said Climate Group chief executive Mark
Climate consultancy E3G said the biggest threat to European
competitiveness was more ambitious climate action in China.
"China will pump nearly 1,000 billion euros into lucrative
low-carbon markets through sector targets and substantive
financing in its upcoming five-year plan," said E3G's Sanjeev
Kumar. "By 2020 it will be light-years ahead if Europe doesn't
Although the EU strategy avoids setting a new 25 percent
target, it implies further ratcheting down of caps to emissions
under the ETS.
Failure to do that would lead to an oversupply of carbon
permits as energy-efficiency measures curb the activity of power
producers, and that would lead to further erosion of carbon
The answer is to tweak the ETS in unison with action on
energy efficiency to keep prices level, and that has to be done
before its next trading phase starts in 2013, EU sources said,
without providing further details.
For a FACTBOX on global plans on climate change [ID:nLDE6AD0HW]
For a FACTBOX on energy issues facing the EU [ID:nLDE7130OG]
(Additional reporting by Karolin Schaps and Nina Chestney,
Writing by Pete Harrison, editing by Rex Merrifield and Jane