EU to maintain climate strategy

What is in the Commission paper?

If EU leaders agreed on a target to reduce greenhouse-gas emissions by 30% by 2020 the annual bill would be €81 billion, or around 0.2% of gross domestic product, the Commission estimates. These costs would be shared across the economy - industry, transport and housing.

Heavy industry is most concerned about the impact. However, the Commission believes that climate targets are unlikely to result in large numbers of energy-intensive companies quitting Europe, although it acknowledges that parts of the chemicals and metals industries could see small amounts of production shift abroad if the EU adopted a 30% target.

The paper reveals a new tone in respect of the EU's emissions trading system, with the first acknowledgement by the Commission that the scheme is not doing enough to guarantee high carbon prices to incentivise green investment. The Commission's idea to solve this problem is to take 1.4 billion allowances (permits to pollute) out of the system by 2020, to drive up the price of carbon.

The Commission is in favour of carbon taxes and suggests they could help to reduce emissions in heating and transport. However, an earlier endorsement of carbon taxes as “essential” has been toned down to an observation that they “could make an important contribution”.

EU funds for poorer regions could also be used for green investment. The Commission would like national governments to spend more of the EU “structural fund” money on renewable energy, energy efficiency and public transport.

The Commission also reiterates a promise to regulate emissions from international shipping if there is no international agreement by 2012.