With “unintended consequences” of its ambitious agenda being felt in sluggish economies across the Continent, the European Union on Wednesday made a dramatic retreat from its climate change goals.
Political pressure led leaders of the 28-country bloc to propose significant changes to its once-heralded climate change policy. The pressure stemmed from public resistance to high energy costs as governments across Europe poured money into clean-energy projects.
“It’s a policy that hasn’t worked for a variety of reasons. Energy prices are increasing because of the policies they’ve put in place with extremely generous [renewable] energy subsidies. It’s had all of these not only unintended consequences but the opposite consequences they were aiming for,” said Edward Chow, senior fellow in the energy and national security program at the Center for Strategic and International Studies.
EU leaders still are casting the plan, which is in draft form and must be approved formally by the coalition later this year, as tough on climate change, but the details allow the United Kingdom and other nations much greater leeway to pursue natural gas, nuclear power and other traditional fuels.
Specifically, the European Commission, the EU executive body, proposed ending national targets for renewable energy use. Instead, the EU as a whole aims to derive 27 percent of its overall energy consumption from renewable sources by 2030.
The EU’s renewable fuel target still is ambitious, but it allows individual nations within the union to alter energy policies and potentially cut back on huge investments into renewable fuels that had led to higher bills for consumers.
Retail electricity prices across Europe, for example, went up 20 percent for average consumers and more than 17 percent for businesses from 2008 to 2012, according to the commission, which acknowledged that the single greatest drivers were “taxes and levies.”
Those taxes in part helped fund massive investments in renewable energy, similar to those in the early days of the Obama administration when billions of dollars in taxpayer funds flowed to solar and wind power companies, some of which have gone bankrupt.
Higher taxes and major government investments into clean energy are especially difficult to swallow in tough economic times, said Mr. Chow, and the resulting backlash motivated the EU to change course.
“Some of the political rhetoric they have sold Europeans — that this can all be done without great economic pain — that’s a much more difficult argument to make at a time of weak economic growth,” he said. Wednesday’s steps are “an initial response by the commission to the political pressure they’ve been under.”
In announcing the renewable fuels goal, EU leaders said the revamped approach is “more market-oriented” and allows nations to take full advantage of “emerging technologies” such as hydraulic fracturing, or fracking, the drilling technique that has transformed the American oil and natural gas sector.
“My aim is to make sure that energy remains affordable for households and companies. The 2030 framework sets a high level of ambition for action against climate change, but it also recognizes that this needs to be achieved at least cost,” said Gunther Oettinger, the European Commission’s energy commissioner.