Despite facing various economic and political crises, a new study shows that the European Union has the financial means to lead the rest of the world in adopting climate action plans to reduce greenhouse gases. Costs for the EU would be low because it already has strict climate and energy policies in place.
“The crisis-stricken EU is asking itself whether it can still afford climate leadership,” says Elmar Kriegler of the Potsdam Institute for Climate Impact Research. According to a recently published study, the answer is a clear ‘yes’.
Additional costs to the EU of leading by example are estimated to be low because it has already implemented significant climate and energy policies that are expected to reduce emissions by 30 per cent in 2030. EU heads of state are meeting in Brussels this week to discuss even higher reductions of 40 per cent by 2030.
Another reason is that overall carbon leakage is projected to be small. One big fear of economies cutting greenhouse-gases is that energy-intensive industries migrate to parts of the world with much lower environmental standards, which would negate some of the frontrunner’s efforts. However, the study found this effect to be small, with leakage rates around or smaller than 20 per cent.
If China joined the EU in leading the way to a global climate regime, early action could reduce emissions until 2030 by a multiple of what the EU alone would achieve. However, China’s short-term measures would cost significantly more than for the EU. However, if China were to join a global climate region later, it would face higher transitional challenges.
“The risk of being locked into fossil fuel infrastructure is a major argument against delayed action,” says co-author Keywan Riahi of the International Institute for Applied Systems Analysis. This refers for instance to newly built coal fired power plants. “Today’s energy planners are making investment decisions in the order of hundreds of billion dollars, which can turn into stranded assets once climate policies are introduced. This is why delays are costly, besides increasing the risks that stringent climate objectives might get out of reach.”