While much of the European Council’s focus was taken up by the Ebola Crisis and the news that the UK is on the hook for another £1.7 billion in fees, the EU agreed on a new Climate deal ahead of the next UN conference in Lima. The new deal means that Greenhouse gas emissions are to go down by “at least 40 percent” by 2030, EU Council head Herman Van Rompuy told press.
“About half” of the reduction will be achieved via the current Emissions Trading System (ETS), which puts a price on polluting by auctioning emissions allowances. The other half is to be achieved by new measures in sectors not yet covered by the ETS, “like transport (excluding airlines which are already incorporated), agriculture and buildings”.
The expansion of the emissions scheme is likely to begin with an initial free allocation of carbon credits for the new sectors which will act as a free win subsidy for ship operators and hauliers, developers and farmers, but then will be followed by an auctioning process of emissions credits by the member states. The costs of buying these mandatory credits will be, in the final analysis, passed onto the consumer. In other words, we can expect that all prices in products touched by any one of these sectors to rise. Anything brought in by ships, or by road, all new buildings, and all of our food will all become more expensive. We can also expect a ‘poll tax’ on all new cars.
If that was not bad enough, the second part of the deal makes it binding for 27% of our electricity generation to come from ‘renewable’ resources. At current prices this will make the UK’s generating costs almost £20 billion pounds a year more expensive, ensuring that what remains of our manufacturing sector departs our shores, and will cripple the lives of many millions of the less well off in our society.
The third part of this package aims for energy savings to reach 27% by 2030. Efficiencies are always hard to qualify because one cannot predict the Business as Usual cost, but the key tool in this target will be the Energy Efficiency Directive that mandates 3% of all public buildings to be refurbished per year. The UK has 180,000 publicly owned buildings worth an estimated £385 billion. To refurbish these properties will cost up to £100 billion.
The final part of the package is the creation of an EU-wide grid. This means that all countries must be able to export 15% of their electricity to balance the grids elsewhere. For the UK this means that we have to build transmission lines to the continent that can carry 10 GW of power, or the equivalent of 20 gas-fired power stations. The UK grid is collapsing as it is thanks to the Large Combustive Plants Directive, and now we have to have sufficient capacity to supply other European grids. Moreover, the idea of supplying power from a distance will drive prices up as the transmission losses will be greater than more localised generation. Finally it is worth noting that the highest costs of building transmission lines will be worn by the UK as we have to cross the channel.
No wonder this was signed at 1am.