EU Climate Chief Says Financial Crisis Threatens Vital Innovation Risk

By Emma Graham-Harrison | April 30, 2010

Innovation vital for Europe’s future is at risk, because the global financial crisis has turned once-challenging emission reduction goals into easily achievable targets, the European Union’s top climate official said.

Connie Hedegaard, European Commissioner for Climate Action, said the continent should be wary of tough competition from rivals among emerging economies, which have generally bounced back faster than the industrialized European countries.

“Because of the crisis, emissions have gone down and we have not had to innovate as much,” Hedegaard told Reuters in an interview late on Thursday, during a visit to China. “The challenge is that our competitors — not only in China but also in South Korea, Brazil, Mexico, South Africa, many places — they are innovating at a rather high speed right now.”

The European Union has pledged to cut emissions by a fifth by 2020 from 1990 levels. The target was intended to help spur a green revolution, but economic woes have slowed industry so much that the target can be reached with little effort.

At the end of May, the European Commission will unveil an assessment of the cost and possibility of moving the target to 30 percent cuts. It will conclude that the transition would be one third cheaper now than before the economic crisis, EU sources say.

With the sovereign debt crisis that has enveloped Greece threatening to spread to other parts of the continent, there are questions over how much Europe can afford to spend on investing in green technology that often brings longer-term savings.

“In such a time of crisis…then that could sort of speak against doing anything more here,” Hedegaard said.

But the cost of waiting may also be dangerously high, in an increasingly globalised world, she warned. “In Europe we cannot compete on wages, we cannot compete on working hours per week, we have earlier pension age than most other regions that we are competing with… We just have to consider, what are we going to live from in the future?”

While in China, Hedegaard met with her Chinese counterpart, Xie Zhenhua, to set up a China-EU dialogue on climate change and a ministerial level hotline for the issue. China accepted a Danish suggestion to set up a group of experts to look together into setting a price on carbon emissions in China, she added.

“Our experts will get together as a start and try to think about this. Can we do things in the sectoral area for instance? Aluminum, steel, cement — they have huge challenges in these sectors,” Hedegaard said.

They also agreed to step up efforts to reach a deal in global climate talks in Cancun, Mexico, at the end of the year, although Hedegaard said a binding agreement looked unlikely.

“It would be very good if we could have a legally binding agreement by Mexico, and by the way Europe is ready for that, but unfortunately we can hear that many other parties will not be ready for that,” she said, adding that she will push to seal deals in areas where there is more consensus.

“Instead of blocking everything because we cannot agree on the form, we suggest let’s focus on substance and content and… then maybe as a next step it will be easier to agree on form.”

She highlighted rich-nation promises of funding for developing countries, forestry and some areas of technology as areas where “Cancun can deliver substantial decisions”.

(Editing by Ken Wills)

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