The Heat Is Online

EU Worries Carbon Cuts Could Hurt Its Competitiveness

Green laws "may harm Europe's economy"

The Financial Times, Nov. 23, 2006

Europe is damaging its competitiveness by moving faster than the rest of the world to tackle climate change, the European Union's industry commissioner has warned.

In a letter seen by the Financial Times, Günter Verheugen says: "We have to recognise that ... our environmental leadership could significantly undermine the international competitiveness of part of Europe's energy-intensive industries and worsen global environmental performance by redirecting production to parts of the world with lower environmental standards."  

His comments are understood to be aimed in particular at the economic threat from China, India and other Asian nations.

The industry commissioner wrote to José Manuel Barroso, president of the European Commission, calling for special exemptions for such sectors to state aid rules and backing the introduction of a levy on imports from developed countries that have yet to implement the Kyoto treaty, which has been floated in Brussels.

However, he also believes that European business could benefit if the market-friendly emissions trading scheme is extended to cars and airlines by encouraging it to invest in new technology and reducing emissions in the developing world.

His distress call reflects the increasing priority Mr Barroso is putting on green issues since the publication of the Stern report by the UK and the US debate sparked by Al Gore, the former vice-president. Brussels is set next week to reject several of its members emissions trading plans for the 2008-12 period as too weak.

Mr Verheugen suggests a 10-point plan to form the basis of a review of energy and climate policy expected in January.

 Copyright The Financial Times Limited 2006