Big business supports low-carbon ambitions of the European Commission

After the chaos made by Poland at the EU negotiations on the objectives to reduce greenhouse gas emissions, big business comes as an unexpected ally of the European Commission, taking the view that locking into fossil fuels creates the danger of stranded assets when a low-carbon grid looks more and more likely. Representatives of environmental NGOs hope that the viewpoint of big business in Europe will motivate Russian entrepreneurs to invest more in greening the economy.

During a recent meeting of environment ministers in Brussels, Poland vetoed the plan of the 26 other EU Member States on the objectives of reducing greenhouse gas (GHG) emissions in the period after 2020. The negotiations lasted a week, but failed to persuade Poland, whose energy production is still heavily dependent on coal.

Recall that in 2008 European leaders "officially" agreed to reduce GHG emissions by 20% by 2020 as compared to 1990 levels. Most of these goals seem quite doable, with additional “help” from the economic crisis. For the later time period, the European Commission proposed to approve the long-term plan to reduce emissions by 80% by 2050, which included 40% reduction by 2030 and 60% reduction by 2040.

In this situation, big business with its own plans for "green energy" comes as an unexpected ally to the European Commission in its ambitious climate plan. Namely industrial corporations implement real efforts to reduce emissions. Business, unlike politicians, builds its plans, focusing on clear and realistic settings.

Many business leaders, regardless of official policy of the European Union, are of the opinion that locking into fossil fuels creates the danger of stranded assets when a low-carbon grid looks more and more likely. "We should have clear plans until 2030 right now, not only short-term plans for three or four years" - explains David Hone, climate change adviser to Shell.

“We are starting to see corporates take longer-term decisions and drive ambitious policies around energy. It’s getting to a stage where we can forget what the policy says, it can almost become irrelevant. Corporates will drive change for the long term,” Ben Warren, energy and environmental finance leader at Ernst & Young, said to Reuters.

Most European companies have already developed their own plans for green development. For example, in 1998, Shell has set in its five-year development plan a goal of 10% reduction of GHG emissions by 2002 as compared to 1990. This goal has been achieved. This was made possible by elimination of the release and reduction of gas flaring in oil fields and by implementation of measures to improve energy efficiency in refineries and petrochemical plants. In the absence of these measures, the company's activities after 1990 would inevitably lead to increase in GHG emissions from 114 million tons to almost 140 million tons of CO2.

According to advocates of the plan of the European Commission, the continuing uncertainty about emission reductions commitments is one of the reasons for the prices collapse on the European carbon market. According to the head of the UK Climate and Energy Secretariat Ed Davey, "it is necessary to redouble efforts to explain to Poland, that the transition to a low carbon economy is part of a long-term economic growth in Europe."

"Many international and European companies operate in Russia. - Says Olga Senova, head of the Climate Secretariat of the Russian Socio-Ecological Union. - Among them, Ernst & Young, Shell, and many others. The RSEU Climate Secretariat hopes that the long-term plans and decisions of these companies will include measures to gradually reduce the use of fossil fuels, to reduce GHG emissions, including at the facilities in the territory of our country. This should create the motivation for such actions for Russian companies too."

Despite disagreements on the issue of emissions targets, European ministers in Brussels succeeded to agree on a statement endorsing the controversial decision about "carbon" tax for airlines that still causes outrage and threats from the United States, China and Russia.