Yesterday I attended a lunch debate to discuss the crisis in the steel industry – just days after the news broke of the problems in Redcar. This morning, a breakfast meeting on the problems of the fertiliser industry, facing revisions to the ETS – the EU’s perverse Emissions Trading System, of which I have often written.
At both events I managed to get my tuppenceworth in – or (with due modesty), maybe a good sixpence’ worth. Our man from the Commission (DG Climate Action) Mr. Jos Delbeke was bullish in respect of the up-coming Paris Climate summit. It differed from the Kyoto process (he said) because it involved countries volunteering their own commitments to reduce emissions, rather than the Kyoto process’s top-down approach, where targets were allocated to major emitters (but only in the developed world).
He said that commitments already tabled covered 60% of global emissions, and he expected that this figure would reach 90% by December. (My colleague Stuart Agnew suggested later that all fertiliser production would end up in the remaining 10%).
Delbeke explained that 57% of allocations of CO2 emissions permits already agreed by the European Council would be auctioned, while the remaining 43% would be allocated to large energy users to combat “Carbon Leakage” – or in plain English, to try to prevent firms from moving abroad to escape the EU’s perverse policies. There would be an on-going process of “benchmarking”, designed to place obligations on companies to achieve and then improve on “best practice” for emissions reduction in their industry.
There would be funding via the EU Investment Bank to finance and support R&D directed to reducing emissions.
In my response, I questioned the rosy predictions for the Paris Climate Conference. There would be a major confrontation between the developed world and the rest, as developing countries went about with their rather large begging bowl, seeking to lay a guilt trip on the West for the “adverse climate impacts on poor countries”, and to demand compensation. Perhaps 90% of countries would submit plans – but did anyone seriously think that those plans would be implemented? Would developing countries sacrifice growth, progress and prosperity on the altar of climate alarmism? I think not.
Delbeke had criticised Kyoto for its “top-down” approach, yet the ETS plan was itself a top-down approach. A predetermined volume of emissions permits were to be allocated – but what if they were not enough? I pointed out that our breakfast debate concerned the fertiliser industry (part of the larger chemicals industry). Vitally important, but only one of many energy-intensive industries. I mentioned that I’d been at the steel debate the day before, and seen exactly the same problem, and I listed some of the other industries in the same bind – aluminium, cement, glass, petroleum refining.
It is not that these industries are threatened with carbon leakage – they have been experiencing it for years, and the pace is accelerating. Jobs are being lost. Plants closing. Investment moving abroad.
The EU’s ETS faces a Catch 22. If it limits allocations, the exodus of industry will continue. If it provides sufficient allocations to maintain competitiveness, the whole ETS will be blown away, and become a dead letter.
But there is a deeper and more fundamental problem, and that is the massive level of regulatory intervention which the Commission is now proposing. Bureaucrats will decide what industries qualify. What allocations they receive. What benchmarks they are required to meet. And what R&D funding they will get.
Think of the bureaucracy. The field day for lobbyists and lawyers. The barriers to entry and to investment – and indeed to innovation.
But it’s even worse than that. The level of regulatory intervention has become so massive and all-consuming that we really can’t pretend to have a free-market economy at all any more. It still retains some of the trappings of a free market, but regulatory control is now so far-reaching and intrusive that we are talking, in effect, a centrally-planned economy, Soviet-style. Five year plans, Commissars in black limousines. It’s all there. And it’s another reason why we shall be better off out!
Stuart Agnew’s contribution: My good friend Stuart Agnew MEP, a farmer and UKIP’s Agriculture Spokesman, spoke after me – we gave them both barrels! He made a brilliant and telling point. While we were discussing fertilisers, he reminded them, we should recall that the most important fertiliser of all is CO2. “Without chemical fertilisers, I should be able to grow a limited crop. Without CO2, I could grow no crop at all”. Nice one, Aggers.