EU Gives Up on Climate-change Regulation! Really?

On January 22nd, the NY Times reported (here) that the European Union (EU) "…proposed an end to binding national targets for renewable energy production after 2020." The reasons given in the article were "high energy costs, declining industrial competitiveness and a recognition that the economy is unlikely to rebound strongly..." from the Financial Crisis of 2007-08. This would appear to be pretty bad news since the EU has been a world leader in addressing climate change. The NY Times concludes that "…now even Europe seems to be hitting its environmental limits."

What is confusing here is that the NY Times article goes on to say that:

Europe pressed ahead on other fronts, aiming for a cut of 40 percent in Europe’s carbon emissions by 2030, double the current target of 20 percent by 2020.

From the standpoint of climate change, the only really important point is that the EU reduce its CO2 emissions since CO2 -> + (Global Temperature). Does it really matter how they get there? More than that, from the graph above you can see that the EU has reduced CO2 emissions by 20% from the peak in 1981 to 2010. My forecast (dotted red line) predicts another 16% decrease by 2020 and a 30% decrease by 2046 (the end of the forecast). By 2050, the EU would be close to 1960 levels of CO2 emissions for almost a 45% reduction from the peak levels of the 1980s.

Environmental groups, such as Greenpeace, have been calling for more rapid and deeper decreases, asking for a 55% decrease by 2030. Partly, these demands are based on the idea that the existing reductions in CO2 emissions have been the result of policy measures. And, if that is true, then we don't want any policy reversals or backing away from hard emission targets. Targets themselves imply that policy goals are driving the reduction in CO2 emissions. But, what if policy pronouncements have nothing to do with reduction in CO2 emissions, at least in the EU?

The EU20 model that was used to produce the forecast in the graph above has no policy variables in it. This is not to say that policy variables are not important, just that policies directed at producing more green energy are not that important to the the overall economic system and it is the overall economic system that is responsible for generating CO2 emissions.

A comparison between the North American regional model (NAC20) and the EU20 model will help make the point. Without policy intervention, the NAC20 will keep producing higher and higher levels of CO2 emissions for ever. There are currently no limits to growth in the NAC20 model while there are  in the EU20 model. Growth will essentially be over in the EU20 model by 2040. The same thing will not happen in NAC20 model unless there are policy interventions or some other external forces limiting growth.

This is not to say that the environmental community should not be holding the EU to its environmental commitments. Even though the EU20 model predicts future reductions in CO2 emissions, no one knows the future and there are alternative futures for the EU, but that will have to be a subject for a future post, as will a discussion of the EU20 and NAC20 models.

NOTE: The CO2 data (CO2 emissions in kilo tons), EN.ATM.CO2E.KT in the plot above,is taken from the World Bank's World Data Bank (here) as is all the data in the EU20 and NAC20 models.