Commission moving from enterprise to environment

The proposed EU law to cut car emissions demonstrates how the European Commission has undergone a shift in policy, but the union…

The proposed EU law to cut car emissions demonstrates how the European Commission has undergone a shift in policy, but the union's green credentials are set to face tough scrutiny in the weeks ahead, writes Jamie Smyth

When Stavros Dimas and Günter Verheugen shared a platform in Brussels this week to propose a new EU law to cut car emissions, there were few smiles for the cameras.

The Greek environment commissioner and German industry commissioner have been at each other's throats for the past two weeks over the proposal, which will set new legally binding CO2 limits for car manufacturers to meet by 2012.

In the green corner, Dimas blamed industry for failing to meet voluntary targets to reduce emissions and warned that Europe could not meet its Kyoto Protocol targets without cutting car emissions by 25 per cent. In the opposite corner, Verheugen warned of setting unrealistic targets that would fatally damage the European car industry and threaten thousands of manufacturing jobs.

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The heavyweight contest within the European Commission attracted the attention of powerful political, industrial and lobbying interests across Europe.

Chancellor Angela Merkel, anxious to protect the domestic car industry in Germany, weighed into the debate, declaring she could not accept a "one size fits all" mandatory emission limit for cars. Meanwhile, the green lobby warned that Brussels risked losing its credibility as an "environmental champion" if it backed down on emissions.

In the end, a compromise was reached that publicly pleased neither side. Car manufacturers, who may now have to reduce CO2 emissions by 18 per cent by 2012, complained about the loss of competitiveness. Non-governmental organisations accused José Manuel Barroso's commission of failing its first green policy challenge since unveiling a strategy for a "post-industrial revolution" in energy to tackle climate change last month.

Yet behind the spin, Brussels insiders believe Dimas has scored a victory by simply getting a commitment for binding CO2 limits on cars. Until recently, Verheugen, a vice-president of the commission, was warning that legislation would be difficult to implement. And in a sign of the changing political climate, the German commissioner had an uncomfortable time this week, struggling to explain to the media how his BMW can be as fuel efficient as the Japanese hybrid car Dimas favours.

"A year ago it would have been unthinkable that Dimas could be seen on the same footing as Verheugen in the commission. Now it's not," says one EU source, who notes that the mantra of the early Barroso commission - "growth and jobs" - and its Lisbon strategy are barely heard in the corridors of the Berlaymont these days.

"They're moving from a policy of protecting the interests of economic incumbents to standing up for consumers," says Paul Hofheinz, director of the Brussels-based think tank, Lisbon Council. "You see from their [ the commission's] recent energy package proposal that they are now prepared to push environment issues in Europe."

This energy package, which was unveiled in early January, set ambitious targets aimed at combating climate change. By 2020 the commission wants states to reduce CO2 emissions by 20 per cent, save 20 per cent of energy consumption, boost renewable use to 20 per cent of total energy and reconsider any plans to phase out nuclear energy. It also calls for a shake-up of the EU's internal energy market, which could make it easier for renewable firms to connect to national grids.

So what has caused the commission to shift its emphasis from enterprise to environment in the space of a few short months?

"Barroso was looking for a good idea and a policy to create his legacy. Initially he pinned his hopes on competitiveness, but he quickly realised all the powers to carry out reforms remain with states," says Christian Egenhofer, senior research fellow at the Centre for European Policy Studies.

"Climate change is also popular with the public and with big member states that he needs such as Britain and Germany . . . Environmental law and energy can also be used to extend the powers of the commission further and push EU integration further."

This was illustrated yesterday when the commission unveiled proposals for a directive to set criminal penalties of up to 10 years in prison for environmental crime.

Up until now, this power has been the preserve of member states, but the commission is using a 2005 European Court of Justice ruling to try to extend its influence.

Yet in EU politics there is always tension between the various institutions. The Council of Ministers, which represents the interests of member states, is already sending signals that the commission's environmental aspirations have limits. The UK, the Republic and several other states have reservations about giving up sovereignty in the criminal area, while in the fight against climate change, some member states are gearing up to defend their industries.

This week Slovakia indicated it would fight a commission proposal to cut the amount of CO2 that its companies can emit between 2008 and 2012. Other states are also unhappy with cuts ordered by the commission in their national allocation plans (NAPs) for CO2 and lawsuits could follow.

Europe's biggest polluter, Germany, signalled yesterday it would not challenge its NAP proposal, arguing that it stood by the emissions trading system - the bedrock of the EU's fight against climate change.

But it is preparing for a battle to amend parts of the energy plan at an energy ministers' meeting this week. Anxious to protect its energy giants such as Eon, Berlin is insisting that there should be no mandatory separation of network and service energy firms.

Lobbying from Merkel in the weeks before the publication of the proposal has already watered down this part of the plan. "Lobbying by Germany has led to several bad results in the package," says German Green MEP Rebecca Harms.

"We don't have enough emphasis on energy efficiency as the plan concedes consumption will increase overall, while on renewables there is only an overall 20 per cent target, no sector-specific targets."

Yet even the 20 per cent target on renewables this week faced opposition from EU ambassadors, who were preparing for the energy council. Only a few member states - Denmark, Sweden, Slovenia, Spain and Italy - back the binding target and, with a qualified majority of states required to vote in favour, the commission package and the EU's green credentials will face tough scrutiny in the weeks and months ahead.