Opportunities & Challenges As Europe Sets New Emission Goals

The European Commission wants to build a “low-carbon society” and by 2050 hopes cut domestic emissions by up to 95 percent. To achieve this admirable but obviously difficult goal, the EC has issued marching orders to all segments of the society — individuals, businesses, local governments, and other organizations — to implement policies that restrict the use of high-carbon items and encourage the adoption of low-carbon emission products.

If you manufacture or sell products to the EU region, your company will be affected by this new policy, which offers both profitable sales opportunities as well as enormous compliance challenges. The EU's “transition to a low-carbon society” could boost sales for manufacturers of electric and hybrid vehicles but crimp revenue for companies involved in oil exploration, production, and distribution.

The EU's policy is spelled out in “Roadmap for moving to a competitive low carbon economy in 2050,” which “shows how the sectors responsible for Europe's emissions — power generation, industry, transport, buildings and construction, as well as agriculture — can make the transition to a low-carbon economy over the coming decades.”

I welcome these plans with caution. Renewable sources such as wind power, solar power, hydro–electric power, tidal power, geothermal energy, and biomass are all viable alternatives to fossil fuels. I understand that they will help to reduce greenhouse and other gas emissions and help to diversify energy supply to reduce reliance on fossil fuel markets, in particular oil and natural gas. The issue here is that half of Europe’s electricity consumption is from fossil fuel, and transitioning to alternate supplies is going to be both costly and challenging.

The EU acknowledges the difficulties ahead but insists it is determined to pursue the low-carbon emission policy, which, for businesses, means you should immediately start looking for ways to benefit from it, while at the same time avoiding some of the negative implications. The commission is not emphasizing any negative developments from the policy, though. As far as the EU is concerned, the move towards a low-carbon society would actually be more beneficial than disadvantageous to Europe's economy.

It states: “The transition would give Europe's economy a boost thanks to increased investment in clean technologies and clean energy.”

Yes, there is a bucket load of money to be spent realizing the low-carbon society dream. The EU says it expects a great portion of the money set aside for reaching this goal to be spent on electricity generation. 270 billion euro, or 1.5 percent of European GDP, would be spent annually, on average, over the next decade. The efforts would also add 1.5 million new jobs.

The EU makes its case as follows:

    The key driver for this transition will be energy efficiency. By 2050, the energy sector, households and business could reduce their energy consumption by around 30 percent compared to 2005, while enjoying more and better energy services at the same time.

    More locally produced energy would be used, mostly from renewable sources. As a result, the EU would be less dependent on expensive imports of oil and gas from outside the EU and our economies would be less vulnerable to increasing oil prices. On average, the EU could save 175 billion to 320 billion Euros annually on fuel costs over the next forty years.

    The transition to clean technologies and electric cars will drastically reduce air pollution in European cities. Fewer people would suffer from asthma and other respiratory diseases; considerably less money would need to be spent on health care and on equipment to control air pollution. By 2050, the EU could save up to 88 billion [Euros] a year.

That's the plan, but how will it work in practice? Each EU country is required to develop a national action plan to meet its own targets and set specific objectives for electricity, heating and cooling, and biofuels. Thus, these plans will reflect national circumstances, such as the availability of renewable energy sources in each member state.

To spur investment in the sector, the EU expects to provide public financing and encourage private investors to get involved. I fully expect many companies in the high-tech area to provide some of the investment, considering the plan is being backed by the European Investment Bank and the European Bank for Reconstruction and Development, and dedicated funding will be provided to support the EC's next Multiannual Financial Framework.

Why is the EU going for a mixture of private and public financing? It believes this would help “overcome initial financing risks and cash-flow barriers.”

There are opportunities here for high-tech companies. Get involved.

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