EU compliance with Kyoto "affordable"

Studies for European Commission suggest put net costs of cutting emissions at under 0.1% of GDP

The EU could cut its greenhouse gas emissions in line with Kyoto protocol commitments at an annual cost of under 0.1% of GDP, says a study released by the European Commission. The estimated cost is considerably lower than previous figures and will strengthen the EU's hand in the global argument over the "affordability" of responding aggressively to climate change.

Based on two years' work, the consultancy study calculates costs of cutting all six greenhouse gases covered by the Kyoto protocol across the EU economy. It suggests an annual net cost during the 2008-12 Kyoto "commitment period" of just euros 3.7bn, equivalent to 0.06% of predicted GDP.

In the report, Ecofys of the Netherlands, AEA Technology of Britain and the national technical university in Athens, Greece, combine "top-down" and "bottom-up" approaches to identify and cost the total "technical" reduction potential in all economic sectors. Some sectoral reports have already been published by the Commission.

Almost two-thirds of the overall savings potential could be realised at a profit or at no cost, the study found. Approaching the Kyoto goal on a "least cost" basis would lead to EU-wide costs of euros 3.7bn - or euros 20 per tonne of carbon equivalent. That is the cost if the cost of reductions is spread throughout the bloc, but it would almost double, to euros 7.5bn, if member states were to act individually.

The Commission previously estimated the same costs at euros 6bn and 9bn respectively in its green paper on emissions trading (ENDS Daily 8 March 2000), though the figures were arrived at using a different methodology (ENDS Daily 26 June 2000).

Another aim of the study was to determine how far different economic sectors should reduce emissions from 1990 levels to ensure the cheapest implementation of Kyoto. Under this scenario, the biggest contributors would be the fossil fuel extraction sector (46% reduction), waste management (28%) and industry (26%). Transport emissions would fall by only 4%, reflecting the generally high cost of technical abatement measures (ENDS Daily 10 January).

The study's authors stress that some of the abatement options identified, though cheap, might not be adopted because they are "not politically or otherwise feasible". However, they also point out that "non-technical" abatement measures, such as increasing taxes and charges to reduce energy demand, were not included in their calculations.

Follow Up:
European Commission, tel: +32 2 299 1111, climate change pages, and the study.

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