The PSI Blog
22 October 2014
Why businesses in the EU are arguing for strong action on the climate
This week, the EU will decide on the framework for climate and energy up to 2030. This follows on from the so-called ‘20-20-20’ targets set in March 2007, by which EU leaders agreed to cut greenhouse gas (GHG) emissions by 20 per cent (compared to 1990), produce 20 per cent of EU energy from renewables and improve energy efficiency by 20 per cent. The proposed framework for 2030, announced in January 2014, would be to cut GHG emissions by 40 per cent compared to 1990, produce at least 27 per cent of energy from renewables, and cut energy usage by 30 per cent compared to ‘business as usual’.
According to analysis from Carbon Brief, 22 of the EU’s 28 member states support either a 40 per cent cut in emissions or an ambition of a cut of ‘at least’ 40 per cent. (The UK is among the countries seeking the more ambitious target.) The main opposition comes from Poland, which is worried about the impact on its large coal-mining industry. It has some support from a number of other Eastern European countries. Yet as former PSI director Jim Skea, currently one of the vice-chairs of the IPCC, told the BBC this week, an emissions cut of 40 per cent may not be enough to keep the EU on track to meet its 2050 goals of GHG cuts of 85-90 per cent. This week’s decision has impacts beyond the EU itself, too, providing the basis for the EU’s position at the global climate talks taking place in Paris in 2015.
One of the big questions in the run up to the talks is the effect of climate action on growth. With the EU economy still stagnant six years after the global economic crisis struck in 2008, the idea that growth could be further restricted by ambitious environmental action is clearly a serious issue for EU leaders.
However, a new briefing by CDP suggests these fears are misplaced. In fact, big EU-based companies by and large see climate action as a business opportunity and already taking steps to take advantage. The CDP report notes that among Europe’s 300 largest listed companies:
- 92 per cent of responding Euro 300 companies report that climate regulation presents an opportunity to their business;
- European companies are investing in climate action: 98 per cent of responding European companies are actively undertaking emissions reduction initiatives which result in world leading results;
- European companies are proportionally over represented in CDP’s global Climate Performance Leadership Index. Analysis shows that this index has outperformed mainstream indexes over the last few years;
- Euro 300 companies are disclosing policy positions which call for a strong Climate and Energy Package on the basis that this will enable future investment.
One of the biggest barriers to growth is a lack of investment caused by uncertainty about climate and energy policy. The CDP report suggests businesses would welcome a clear framework to guide investment decisions in the future and are willing and able to act on such signals from the EU.