Split over surge in energy prices overshadows EU climate strategy


Split over surge in energy prices overshadows EU climate strategy

Viktor Orban claims bloc’s approach is ‘utopian fantasy’ that will increase prices and ‘destroy the middle class’

The Hungarian prime minister, Viktor Orban, in Brussels

in Brussels

Last modified on Thu 21 Oct 2021 11.59 EDT

European Union leaders have exposed their differences over how to tackle a surge in energy prices, as Hungary’s prime minister, Viktor Orban, dismissed some of the bloc’s plans to confront the climate emergency as “utopian fantasy”.

Ahead of crucial UN climate talks in Glasgow, EU leaders plan to issue a declaration saying it is “essential to keep the 1.5C global warming limit within reach” and calling on all countries “to come forward with, and implement, ambitious national targets and policies,” according to a leaked draft of the summit communique.

Separately, leaders of three small EU member states – Belgium, Denmark and Estonia – urged the world’s 20 biggest economies, who are meeting in Rome at the end of the month, to increase their emissions reduction plans and pay their share of a promised $100bn a year climate fund for poorer countries.

“Our message is very clear that we need the G20 to step up and to raise their ambitions before we meet in Glasgow,” said Denmark’s prime minister, Mette Frederiksen, outlining the main points of an open letter from the trio to the G20. Referring to the world’s leading authority on climate science, the Intergovernmental Panel on Climate Change, she said: “With the new IPCC report, it’s very clear that we are lagging behind already now and it will be more difficult [to make changes] than what we thought.”

Yet the consensus on the EU’s international climate diplomacy risks being overshadowed by internal splits over how to manage soaring energy prices.

Arriving at the two-day summit on Thursday, Orban stepped up his attack on the EU official in charge of the bloc’s green transition, Frans Timmermans.

“What Timmermans and others propose will kill the middle class of Europe: raising prices, having new regulations, rocketing prices to the sky, destroying the middle class everywhere in Europe, not just in the east, but in the west as well,” he said.

“Utopian fantasy kills us, that’s the problem with energy prices as well,” he added, citing controversial European Commission proposals to curb emissions from transport and housing.

The commission wants to drive down emissions in transport and buildings with a cap-and-trade scheme, an idea that many climate change activists oppose because they fear it will load too many costs on poorer consumers.

The German chancellor, Angela Merkel – attending her 107th EU summit during 16 continuous years in power – pushed back against Orban’s critique, saying that energy prices were a separate discussion to broader climate change issues.

On the eve of the summit, Poland called on the EU to consider revising or postponing any aspect of the green deal that could have “a negative impact on the energy price”, including plans to increase taxes on fossil fuels, and a proposed overhaul of the bloc’s emissions trading scheme, which puts a price on industrial pollution.

The green deal, unveiled by the EU executive in July, is a landmark set of legal proposals to meet the bloc’s goal of reducing emissions by 55% by 2030 compared with 1990 levels. It includes plans to scale up renewable electricity, phase out petrol and diesel-powered cars and promote a dramatic improvement of energy efficiency in buildings.

The laws have to be agreed by a weighted majority of the EU’s 27 member states, although the law on energy taxes will need unanimous agreement.

In recent weeks, Orban has launched repeated attacks on the commission, blaming “those fine bureaucrats” in Brussels for the global rise in energy prices – an account at odds with all independent analysis.

Pascal Canfin, a French MEP who leads the European parliament’s environment committee, told the Guardian he was not concerned these views would spread to other member states. “If we should wait for Orban to deploy the green deal we will have a world of 4C. Actually it doesn’t change the line. When you look at the key countries supporting the green deal, none of them have this line because of the gas price rise.”

Wholesale gas prices in Europe have risen by 250% since the start of the year as surging Asian demand for gas has collided with depleted stocks across the continent. At the same time carbon prices have more than doubled since January to about EUR60 a tonne.

The carbon price, governed by the EU’s emissions trading system, is one of Europe’s key policies to curb greenhouse gases from industry. EU officials have said the surge in gas prices has had a nine times greater effect on electricity costs than the carbon price rise. This analysis is backed by Ember, a thinktank that promotes the transition away from coal.

“The rise of the gas price has very little to do with the carbon price, the ETS,” said Canfin, an ally of the French president, Emmanuel Macron. “Those who are pushing that argument are just using in an opportunistic way the gas crisis and try to use it to counter climate policies. But actually it’s exactly the opposite: if there is a rise in the gas price, it’s an additional reason to move out of gas and be less dependent on gas. And the only way to be less dependent on gas is to go for more renewables.”

The standoff with Hungary and Poland is not unusual, as both countries at first held out against the EU’s legally binding target for net zero emissions by 2050, but eventually gave in.

Peter Vis, a former senior commission official, said all EU member states had now committed to legally-binding targets. “So, it’s a question of how to meet those very ambitious targets. If member states don’t want one part of the Fit for 55 [climate] package, another part will have to be strengthened.”

Less ambition in cutting industrial emissions via the EU’s ETS could mean asking for deeper greenhouse gas reductions in housing and transport, he suggested. “Will member states like that more?” he said. “There are no ‘easy’ fixes any more. It’ll maybe take a while for this to sink in.”


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