For Eastern Europe, the cost of going green will be a challenge

Although Europe has developed a reputation as one of the most green-minded regions in the world, in some European countries it appears that environmentalism has a price limit.

A year ago, European leaders cheerfully announced a bright, green future: a 20 percent reduction of greenhouse-gas emissions, a 20 percent increase in energy from renewable resources, and a 20 percent increase in energy efficiency by 2020.

But when European Union (EU) member states met to finalize the plan last week in Brussels, the mood had changed considerably.

Amid the global economic meltdown, Italy and eight former communist countries now complaining that the financial cost of meeting these green targets could place undue strain on their economies.

As they weigh the financial cost of being green vs. the intrinsic value of environmental stewardship, the episode could pose the first test case for whether developing nations are willing to fight climate change even if it means making financial sacrifices.

“If Europe hesitates further this would have a tremendously negative effect on the global negotiation on climate change” says Tonia Mastrobuoni, a journalist at Il Riformista progressive daily.

In the past the EU has been internationally regarded as the role model for combining economic growth with environmental friendly policies.

However, says Antonio Missiroli, the director of studies at the European Policy Center in Brussels, the EU will lose its reputation, unless it resolves this issue by the end of the year.

Italy threatens to veto the plan in December, unless the European Commission agrees to lower the proposed standards.

Together with eight former Soviet bloc countries, Italy has requested less severe greenhouse-gas emissions standards in order to facilitate industrial productivity.

However, Germany, Spain, and France say they don’t intend to back down on the so-called 20-20-20 plan.

Italy’s environmental minister, Stefania Prestigiacomo, says the EU target unnecessarily penalizes the entire  EU, while economic powers like the United States don’t adhere to similar standards.

“Europe would like to eliminate the world’s carbon dioxide production all by itself,” she said last Friday in an interview with the Italian daily newspaper La Repubblica. “But the price is prohibitive.”

Prime Minister Silvio Berlusconi estimates the impact of such regulation amounts at 18 billion euros ($23 billion) each year, or 1.14 percent of the national gross domestic product.

Stavros Dimas, European commissioner for the environment, however, says the cost is below 12.3 billion euros ($15.7 billion).

Italy, along with Poland, Bulgaria, Estonia, Hungary, Latvia, Lithuania, Romania, and Slovakia argue that they are disproportionately affected by EU ecological regulations, as their economies rely largely on industry.

Postcommunist countries in Eastern Europe are also still struggling to adapt to the market economy and have been hit by the financial crisis.

Although Italy has a mature capitalist system, it is one of the least productive industrialized nations, according to the Organization for Economic Cooperation and Development in Paris.
Poland’s prime minister, Donald Tusk, said the European Commission should “be tolerant of the poorer member states” when setting sustainability standards.

French President Nicolas Sarkozy, who holds the rotating EU presidency,  replied that the environment must be a priority, regardless of its economic impact:

“The ambitious energy package is based on the belief that the world is a disaster. It would be tragic to abandon [it] on the pretext that the financial crisis occurred” he said on Tuesday, speaking at the European Parliament in Strasbourg, France.

An environmental expert at the European Commission dismissed the division as merely political.

“All member countries agree on the target, but everybody now realizes we can’t afford to reach it that quickly” says the expert, whose is withheld because the expert is not authorized to speak to the media.

“As it was originally planned, the transition was supposed to be fast, and thus too expensive. Everybody is aiming to dilute the policy, but France and some other nations could not say it out loud, because they feared losing face” says the expert.

Germany, who fears for its own industries, would like to slightly lower the carbon dioxide target. But is also pushing for the package to be finalized as soon as possible.

German Chancellor Angela Merkel wants the EU to take a leading role in the world conference on climate change that will take place in Copenhagen in November 2009.

At the Copenhagen conference, world leaders will discuss a new sustainability regulation that is set to replace the Kyoto Protocol signed in 1997 by nearly 180 nations.

The protocols set limits for greenhouse-gas emissions, while allowing prosperous countries to buy quotas from less industrialized nations.

The rule is meant to help poor countries that limited industrial production and therefore produce fewer emissions, while enabling industrialized economies to pursue further growth.

Mr. Missiroli says there is still a good chance that the EU will find a common ground before the Copenhagen conference, possibly slightly lowering its targets while keeping its overall goal of significantly reducing carbon emissions by 2020.

Yet the recent episodes may shed a new light on the image of Europe as the “good giant” of environmental policies.

“Were it to step back [from its own green targets] because of the economic crisis,” says Missiroli. “Europe would cut a poor figure for sure.”

Indeed, how Europe handles this current disagreement will determine how the world continues to view the Continent as an environmental leader.

“Now, the European Union’s credibility is at stake,” says Missiroli.