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Economic costs of tackling climate change could be too high

By Ian Freeman

The European Union has started to lose any authority it once had as a flag-bearer for the low carbon economy. That was the conclusion of the report The end of EU climate leadership published this week by GermanWatch – an influential think-tank based in Berlin.

For the last two weeks in Warsaw, some 200 countries have been laying the foundations of a ‘post-Kyoto’ global emissions treaty that is due to be adopted at the 2015 United Nations Climate Change Conference in Paris. The conference comes to a close today. It did not help the EU’s low carbon credentials that the hosts, Poland, also ran a two-day event promoting the global coal industry. Poland still generates 90 per cent of its electricity from coal.

The EU, traditionally seen as a pioneer in climate change action, had enjoyed a mixed conference in Poland. Just before the summit started, the German car industry succeeded in watering down carbon dioxide emissions’ targets proposed by the European Commission. Meanwhile, the GermanWatch report acknowledged that there were growing concerns that ambitious EU green targets were costing Europe in economic competitiveness. Member states face the same challenges as other maturing economies including increasing power costs and a lack of raw materials.

Representatives of the poorer nations argued that the financial burden associated with global warming is out of reach for them. They demanded firm commitments from developed countries to help pay for the effects of climate change.

A group of developing countries requested that a 2009 Copenhagen pledge of $100bn for environmental damage up to 2020 be honoured. However, Poland’s envoy Marcin Korolec – chairing negotiations – said that this would be “challenging”. He added, “We could not have predicted the economic darkness that we have all lived through for the past five years.”

The European Commissioner for Climate Action Connie Hedegaard said that €1.7bn will be allocated for the year 2014-2015 but ruled out demands for a UN body tasked with compensating for environmental damage. Hedegaard said, “We cannot have a system where we have automatic compensation when severe events happen around the world. That is not feasible.”

The devastating typhoon that hit the Philippines killing 4,000 people focused minds as delegates gathered for the conference two weeks ago. There is a consensus that environmental damage should be compensated but there are growing concerns, even in the EU, that the costs of global climate change – both in prevention measures but also in paying for its effects – are just too high.

Ian Freeman is a researcher at ResEuropa – a Policy Review partner organisation

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