Leading consulting firm McKinsey has calculated that “on the basis of a balanced, sensible application of the most easily accessible technology…the EU states will face annual costs of between €60 to €80 billion up until 2020.” German finance minister Peer Steinbruck suggested that the EU’s €7 billion a year science and research budget could lead to technological breakthroughs, member states could probably offer tax incentives for renewable- type firms and the 2009 EU budget review should take the climate goals into account.
Earlier this month, member states legally bound themselves to using 20 percent of energy from renewable sources and cutting CO2 emissions by 20 percent by 2020, but it remained unclear who would pay for the revolutionary switch from gas, oil and coal to green power and all the energy-saving measures.
According to McKinsey’s study, it will be easier and cheaper to start with reducing energy use, rather than rushing into pricey solutions such as building CO2-free coal power stations. Insulating a building could save €150 for each tonne of carbon dioxide reduced. Technology such as wind power or energy-efficient light bulbs in street lamps and private households could cut three-quarters of greenhouse gas emissions. More burden should be placed on the forestry industry which is capable of lowering its CO2 emissions share by 7 billion tonnes by 2030 through improved management, the study also suggested.
Speaking to MEPs in the industry committee on Tuesday (27 March) the boss of the European Investment Bank (EIB), Philippe Maystadt, gave some hints about how the enormous cost may be met, with the bank earmarking €800 million a year of lending for renewable energy projects in 2007 to 2010. “There has been a change of attitude in the bank. It’s a deliberate change supported by our board,” he said on plans to relax lending rules to give money to risky new projects such as experiments in carbon sequestration, with part of the cash in such areas to come form the European Commission’s research budget to help spread liability.
He added that his bank is happy to make loans to new nuclear power stations, at a time when Lithuania plans to develop its Ignalina plant with two new reactors. “We will observe the political decision on this – it’s up to each member state whether to go for nuclear or not,” the banker said. But Mr Maystadt added that there are limits to his largesse when it comes to the new energy goals. “We are a bank, we do want to see a return,” he explained. “We have to keep the ratings agencies happy and let the EIB retain its rating so that we can continue to borrow capital on world markets.”