Open Europe press summary: 13 October 2008

Europe

New Open Europe research: EU climate package to cost UK families £600 per year - one million extra people in fuel poverty by 2020
Open Europe has produced the first independent estimate of the cost and wider effects of the EU's new package of climate change measures, currently under negotiation. The package, which sets a 20% target for overall emissions reduction by 2020, includes binding targets for 20% of energy to be sourced from renewables and for 10% of transport fuels to come from biofuels. For the UK, the proposals would mean sourcing around 40% of electricity from renewable sources (up from under 5% today). The outcome of the package is of particular concern at a time when Europe stands on the brink of an economic slowdown, and in some member states, recession.

The study estimates that the cost of the package as a whole will be more than 73 billion euro per year by 2020 for the EU 25, and £9bn per year for the UK. If the costs of renewables remain at current levels (technology improvements push down costs), the cost would be over 90bn euro. The package would add £130 - 200 a year to the annual domestic energy bill for a family of four in Britain. This has the potential to push one million extra people into fuel poverty. In terms of its overall economic burden, the package will cost the equivalent of £150 per person per year, or £600 per family of four per year in the UK. This would rise to almost £730 per year if renewable energy technology remains at current levels.

Importantly, the study concludes that the EU's proposals are an overpriced solution to climate change, largely because they artificially drive investment towards very high-cost methods of cutting carbon. This means we will pay far more than necessary in fighting climate change; or put another way, we could spend the same amount of money and reduce emissions far more.

Writing in the Sunday Telegraph, Christopher Booker argued that there are tensions within Whitehall over the plan, with BERR seeing the EU targets for renewable energy as being "wholly unachievable", whilst DEFRA is "vociferously behind" the targets. He concluded that the "BERR 'realists' wanting to keep our lights on may now be fighting a losing battle".

EU Industry Commissioner Günter Verheugen told the Observer that the Commission is considering special treatment for certain heavy industries, amidst concerns that the EU's package would force these industries overseas. Verheugen told the paper he fears a huge surge in unemployment if the world's financial crisis escalates. "Doing nothing on the environment will cost more than taking action ... [But] it makes no sense to force certain industries to leave Europe. They will take jobs and their pollution. As a result, there will be more pollution in the world and we will have fewer jobs. Deindustrialisation does not solve environmental problems."

To read the press release, click here

Download the full report: "The EU Climate Action and Renewable Package - Are we about to be locked into the wrong policy?"

Observer Sunday Telegraph Booker Times-leader

Mandelson in controversy over links with Russian oligarch - will pocket £1m in EU pay-off
Peter Mandelson has come under scrutiny over the weekend regarding his links with Russia's richest man. The extent of their acquaintance remains unclear amid differing reports, but the relationship poses a potential conflict of interest with Mandelson's previous role as EU Trade Commissioner. During his time as Commissioner he sought to cut EU tariffs on imported raw aluminium which greatly benefited Oleg Deripaska, described by the Times as the "Russian aluminium oligarch." Mandelson spent the night on Deripaska's yacht in a series of social meetings between the two men, according to the Sunday Times.

This is followed by news that Mandelson is set to receive a £1 million pay-off from the EU, even though he resigned his post of Commissioner voluntarily, according to the Express. The Mail reports that he is under pressure to turn down the payments at a time when the Government is criticising huge banking and city bonuses.

Open Europe's Hugo Robinson is quoted in the Express, saying: "Hard-pressed taxpayers will be angered to hear their money is being spent keeping Peter Mandelson in the luxury he grew accustomed to."
Mail Independent Guardian Times Daily Express Sunday Times

Eurozone leaders agree on UK-style rescue plan
Eurozone leaders yesterday agreed on a 13-point draft action plan in an attempt to stabilise the financial system, in a meeting also attended by Gordon Brown. The "common basket of instruments," as German Chancellor Angela Merkel called them, includes plans for the European Central Bank to intervene in the financial turmoil to boost liquidity; eurozone governments are to underwrite bank debt until the end of next year and commit to preventing the collapse of "systematically relevant institutions through appropriate means including recapitalisation". The Guardian notes that the three elements - liquidity support, inter-bank lending guarantees and recapitalisation of distressed banks - are the core of the emergency plan unveiled last week by Gordon Brown and Alistair Darling and look set to become the European standard, with national variations to take account of differing systems. The eurozone leaders also agreed to loosen mark-to-market rules. French President Nicolas Sarkozy said Germany, France and Italy would detail their national plans at about the same time today.

Meanwhile, the Guardian reports that the UK Government confirmed this morning that it will inject up to £37bn into Royal Bank of Scotland, Lloyds TSB and HBOS. Separately, the Commission has given the green light to the Danish and Irish emergency guarantee packages for the two countries' banks.

In the Times, William Rees-Mogg argues that "Britain has benefited from its freedom of action outside the euro. We could take our own decisions, some of which, admittedly, proved mistaken. To the irritation of Germany, the Irish Government gave an independent guarantee to the Irish banks; how that could be reconciled with membership of the euro is an outstanding question."
IHT Irish Independent Irish Independent-comment Mirror Times Le Monde Le Monde Euractiv Independent Irish Times Guardian Reuters Guardian Telegraph Waterfield Telegraph Telegraph 2 WSJ WSJ leader FT FT 3 FT 2 EUobserver AFP Deutsche Welle Independent Irish Times Guardian Times-Rees-Mogg

German plea for pause in costly EU laws
Representatives of German business and trade bodies have called for a suspension of EU regulation that could impose higher costs on companies at a time when they are grappling with the fallout from the financial crisis and struggling to get credit.

Hanns-Eberhard Schleyer, General Secretary of the German Confederation of Skilled Crafts, told the FT, "We've got to ask whether certain measures, including environmental legislation, are responsible given the economic outlook". Heavy industry in Germany has echoed the car manufacturers in questioning the proposals that would charge businesses for the carbon dioxide they emit.
FT

Bruno Waterfield: EU's "officialdom, diplomacy and contempt for voters" leave it ill-equipped to handle crises
In the Telegraph, Bruno Waterfield looks at the structure of the EU in light of the financial crisis, arguing "The European Union is learning a painful lesson: that its cosy consensus world of officialdom, diplomacy and contempt for voters, is not up to the mark when dealing with a full blown crisis...For over 20 years, the EU has been an elitist master-class tutoring Europe's rulers in how to do politics behind closed doors without us. This leaves them ill equipped now."
Telegraph Waterfield

Irish to be subjected to "propaganda blitz" if second Lisbon referendum goes ahead
The Telegraph reports that EU officials are drawing up plans to allow an Irish opt-out on defence and security cooperation from the Lisbon Treaty, as part of a plan to allow some parts of the Treaty to be ratified by the Irish Parliament.

Ireland is still under continued pressure to hold a second referendum however, with Brian Cowen expected to explain to a summit of Europe's leaders next Wednesday how he is planning to resuscitate the EU Treaty, and will hear demands from France and Germany to ratify the Treaty before European Parliament elections in June.

The Telegraph says that this second referendum would be presented as a "Put up or shut up" election and that the Irish people could be subjected to a "propaganda blitz".
Telegraph

Around 100,000 Polish workers have left Britain over the past year, ministers said yesterday.
Mail

Traditional light bulbs are to be banned from 2010, EU energy ministers have decided.
Saturday Telegraph

Conservatives ahead in Lithuanian elections
There has been widespread coverage of the Lithuanian election. Exit polls show that the opposition conservative party, Homeland Union, is ahead. High results for two populist groups pave the way for tricky coalition talks ahead.
Bloomberg FT Irish Times EU Observer

Head of EU Monitoring Mission in Georgia: Russian troops must leave disputed territories
EUobserver reports that Hansjorg Haber, the Head of the European Union Monitoring Mission in Georgia, has said that Russian troops must withdraw from districts inside South Ossetia and Abkhazia previously controlled by Georgian authorities.

Asked if monitors are allowed into Abkhazia and South Ossetia, Mr Haber answered "not yet". "But we have always made it clear that we consider Abkhazia and South Ossetia as part of our mandate", he added.
Saturday Telegraph EUobserver

The Czech Republic will adopt the euro later than expected due to the ongoing financial turbulence, the chief of the country's central bank has warned.
EUobserver

World

Russia flexes nuclear muscle
The Irish Independent reports that Russian President Dmitry Medvedev intends to reinforce Russia's armed forces with new weapons. Medvedev oversaw the test firing of an intercontinental Topol missile last night, greatly upping the ante in the arms race with the West. President Medvedev also vowed to commission more new generation weapons for Russia's armed forces.
Irish Independent