European recession slashed 2009 carbon emissions

Pete Harrison and Michael Szabo, PlanetArk 19 May 10;

The European recession last year slashed more than 11 percent off climate-warming emissions from heavy industry, the European Union's executive said on Tuesday.

The EU said carbon dioxide emissions from more than 12,600 installations regulated by its Emissions Trading Scheme fell by 11.6 percent to 1.873 billion tonnes.

The decrease was also helped by low prices encouraging greater use of natural gas, which emits less carbon dioxide than the coal it replaced to generate electricity.

"Because of the crisis it suddenly became easier to reduce emissions," European climate commissioner Connie Hedegaard said in a statement.

"Unfortunately that also means that European business did not invest nearly as much as planned in innovation, which could harm our future ability to compete on promising markets," she added.

Discounting incomplete data from Cyprus and Liechtenstein put the 2009 drop at around 11.4 percent.

The scheme, worth an estimated $100 billion last year, caps the carbon emissions from plants and factories across 27 states, and doles out carbon permits which participants can trade.

This marked the second year in which the ETS contributed to falling emissions, and followed the three difficult years of its infancy during which too many permits to emit carbon were handed out and the scheme failed to have any impact.

EU carbon permit futures held steady after the news, trading at 15.3 euros a tonne, up 20 cents or 1.3 percent.

OUTSOURCING CARBON CUTS

Companies surrendered 82 million offsets last year, meaning they outsourced 82 million tonnes of CO2 cuts to developing nations, where they are cheaper to achieve.

The data comes during an EU debate on whether to increase planned emissions curbs beyond the current target of 20 percent below 1990 levels over the next decade.

Environmentalists say that goal is now so easy to achieve that it has become meaningless and that permits to emit carbon have become too cheap to spur green innovation. But much of industry disagrees.

"This proves the scheme is functioning, with prices falling in a crisis and expected to rise during the recovery, so there is no need to change the system or deepen emissions cuts," said Folker Franz of industry group BusinessEurope.

"In our view, heavy industry has innovated more and improved energy efficiency more than other sectors of the economy such as agriculture and transport," he added. "Between 2000 and 2008 industry improved its energy efficiency by almost 14 percent."

Tuesday's final EU data came a week after two U.S. Senators introduced climate legislation that would kick-start an emissions trading scheme in the world's biggest economy and second largest polluter.

Democratic Senator John Kerry and independent Senator Joe Lieberman unveiled their American Power Act bill, which was quickly backed by President Barack Obama and aims to cut U.S. carbon emissions by 17 percent below 2005 levels by 2020.

The bill faces looming deadlines, with mid-term elections set for November, and fierce opposition from Republicans and even some Democrats.

Governments from around the world will be watching the U.S. closely, as the fate of a new international pact to combat global warming hangs largely on Washington's actions.

(Writing by Pete Harrison; editing by Sue Thomas)