Can Europe cut carbon without cutting growth?

Radical goals for 2020 boost renewable energy and cut emissions sharply.

Europe unveiled a "road map" to a low-carbon future Wednesday – one of the most radical packages the European Union has ever produced – in an effort to position the bloc at the vanguard of global efforts on climate change.

A clump of legislative proposals and directives provided for steep increases in wind and solar power, improved energy efficiency, and higher costs for polluters to meet a challenge outlined last year and dubbed "triple 20."

The aim is to cut greenhouse-gas emissions by 20 percent, boost renewable energy to 20 percent of supply, and improve energy efficiency by 20 percent – all by 2020.

The broader aspiration is to show the world that jobs and growth are not dependent on carbon. The challenge to the likes of China, India, and the United States is to join the effort, in which case the EU would raise its emissions-reduction target to 30 percent by 2020.

But there was skepticism and disappointment in equal measure. Industrial leaders warned that slapping a high cost on carbon would make Europe less competitive compared with countries that do not face such constraints. Green advocates expressed disappointment that the measures did not go far enough, particularly in light of commitments made at global talks in Bali last month.

"It's insufficient," says Stephan Singer of the WWF environmental group. "Europe was in favor at Bali of the declaration that in the future developed countries should cut by 25-40 percent," he says. "Now the ink of Bali is not even dry and they come out with a proposal for 20 percent."

"The key thing is for targets to be delivered on," said Antony Froggatt, a senior research fellow at the London-based Chatham House think tank, noting that emissions are actually rising in some EU countries. "Unless we reverse this trend, the rest of the world will say 'good policy but you're not delivering on it.' "

"It's a pretty important, concrete package with some pretty tough demands," says Tom Burke, founding director of the sustainable development organization E3G. "The clear message from this is the seriousness of the EU's intent to do something about climate change."

"The reason Europe is doing this is that there is a really deep understanding of how important it is to the security and prosperity of ... Europeans," he says. Other countries, he added, may face different economic circumstances, "but they all face the same problem of climate change."

The overall impact on the average European consumer will be palpable, but not punitive. Electricity prices are expected to rise as much as 15 percent, while travelers could pay an extra ¤40 for a long-haul flight, and a premium for gasoline, which will have to contain a 10-percent biofuel contingency by 2020.

EU Commission chief Jose Manuel Barroso said it would cost each of the EU's 500 million people an average of ¤3 a week to implement the plan – a total of around ¤75 billion a year, or 0.6 percent of GDP.

But failure to act, he said, would cost "at least 10 times that and could even approach 20 percent of GDP." And the longer-term benefits of a low-carbon economy with prodigious supplies of renewable energy, efficient buildings, greener driving fuel, and industries that must factor a carbon cost into their bottom line would be enormous.

"Europe can be the first economy for the low-carbon age," said Mr. Barroso. "There is a cost, but it is manageable," he told the European Parliament, which has to vote on the plans. "And every day the price of oil and gas goes up, the real cost of the package falls."

The EU plan sets a framework that will be closely studied in Beijing, Washington, New Delhi, and elsewhere. Part of it revolves around targets for renewable energy imposed by Brussels on member states. To reach the overall goal of 20 percent across the EU, individual countries have been assigned their own goals.

Britain, for example, will have to implement a sevenfold increase in its renewable energy supplies, from about 2 percent currently to 15 percent. France must move from 10 percent to 23 percent; Sweden, from 40 percent to almost 50 percent.

The EU is also fortifying its market-based mechanism for getting industries to cut greenhouse-gas emissions. The Emissions Trading Scheme (ETS) has been criticized since it came into force three years ago for being ineffectual. It was meant to work by making polluters pay for permits to emit greenhouse gases; in fact, too many permits were handed out free of charge.

But under a revamped ETS, more permits will be auctioned, costing polluters more. Power companies will, for example, have to pay for all carbon emissions by 2013. Airlines will also be brought in for the first time. This, say experts, will set a higher "carbon price" that industry will have to factor in. The total cost to polluters by 2020 would be ¤50 billion a year – money governments could use to develop green technologies.

"It is clear that in some shape or form emissions must have a financial value," says Mr. Froggatt.

But industrial leaders have complained that the additional cost would place them at a disadvantage to rivals in the developing world, who face no such constraints.

The EU indicated that some industries may remain exempt, disappointing some environmental activists. It also said it would consider import tariffs on countries that do not match the EU's climate change efforts, a threat that has met with consternation from trading partners. One way of imposing this "carbon fee," Barroso said, would be to require importers to obtain the same permits that Europe companies must acquire under the ETS.