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Europe Is Still an Example in the Fight Against Climate Change

Europe-bashing is in mode nowadays, be it because of the Eurozone crisis or the European Union's underwhelming military capabilities. Its championing role in the fight against climate change is no exception.

Recent reports about decreasing greenhouse gas emissions in the U.S., while increasing in the EU got much traction in the papers. The US Energy Information Administration reported that energy-related emissions in 2012 were the lowest in the U.S. since 1992. Meanwhile EU emissions have been on the rise since 2010, due to an increase in coal usage -- a contradiction commentators jumped right on.

True, there has been a spike lately in coal consumption in the EU, much to the chagrin of decision-makers in Europe and the delight of many around the word tired of the EU's constant preaching on the need for action on climate change. Coal consumption grew in most countries and particularly in "climate hawk" Germany, mainly due to the closure of the country's nuclear fleet after Fukushima. Cheap coal imports from the U.S. and much higher gas prices did not help either.

But it would be premature to make Europe's efforts the laughing stock of the world and discount EU policies as utter failure. Examining the numbers in absolute terms and in a historical context, and taking a glimpse into the future paint a dramatically different picture.

Indeed the U.S. has achieved emission reductions in the past few years on the back of cheap gas provided by its shale revolution. Increase of the role of gas in electricity generation was the driver behind the decrease (gas emits around 50 percent less CO2 than coal). The share of coal in electricity generation shrinked from above 52.8 percent in 1997 to below 36 percent in 2012, while the share of natural gas increased from 14 percent to 26 percent. That is a welcome development by all means.

But one should not forget that the EU had been at the vanguard of the transformation from coal to natural gas. The gasification of Europe already started back in the 1980s due to cheap indigenous gas in the North Sea and increasing Russian gas shipments to the continent. Between 1990 and 2010 a grand scale substation from coal to gas took place in the European Union. The 460 million tons of oil equivalent (Mtoe) of coal Europe consumed in 1990 fell to 260 Mtoe by 2010 (a share below 25 percent in electricity generation). In contrast, even after the sharp decline the US still consumed around 486 Mtoe of coal in 2011.

Moreover, the recent dash for coal will not last long in Europe. The International Energy Agency's (IEA) Medium Term Coal Market Report 2012 from last December predicts that "the coal renaissance in Europe is only temporary. Low CO2 and high gas prices plus coal oversupply coming from US have made coal more competitive than gas for power generation, triggering coal consumption. However, increasing use of renewables, retirement of coal plants, and more balanced gas and coal prices will decrease coal consumption in most of Europe."

Indeed, the Large Combustion Plant Directive of the EU, which comes into effect in 2016 will retire most of the remaining old coal plants. Part of the reason for the recent spike is the Directive itself: companies must decide now, whether they will close down their plant or install expensive new equipment that limits emissions. In any case they are given a maximum number of hours before they shut down: hence the rush to burn coal while it is cheap and while they can.

EU Member States will also decide -- probably by the end of this year -- to revamp the European Emission Trading Scheme (ETS). The ETS has so far failed to fulfill its purpose to set a carbon price high enough to discourage the use of dirty coal. With the overhaul, carbon prices will rise again so that it will be more competitive to use cleaner burning gas, increasingly renewables and perhaps even nuclear energy.

Lastly, there is a key statistics that is strikingly absent from most public debates and commentaries. Even with the recent slight increase, the EU beats the US by a long shot when it comes to per capita GHG emissions. According the IEA, total CO2 emissions from fuel combustion were 7.3 tons per capita a year on average in 2011 in the EU (down from 8.2 in 1990), while amounted to 17.3 tons in the U.S. (down from 20.1): more than double! That hardly justifies the ire.

Thus before discarding the "Brussels solutions" again, better look ahead and also around. Policies inspired by Europe are all over the place. Just think of the expanding California emission trading system; renewable energy portfolio standards, tax credits and feed-in tariffs in places like China, Turkey or thirty U.S. states modeled upon the EU; energy efficiency targets and so on. European climate policies still lead the pack, even if there are zigzags on the road to a greener future.

Gasification of U.S. electricity generation as well as other adopted measures like enhanced fuel economy standards are good for starters, but the road is long. President Obama's reinvigorated effort and visible determination to combat climate change voiced in his second inauguration speech and his plans outlined in his State of the Union address are welcome developments. The U.S. has been a laggard in climate policy and a spoiler in international climate diplomacy for too long. It is high time it joins Europe to lead the world together.

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