Open Europe press summary: 8 October 2008

Europe

MEPs shrug off economic concerns and back tough green targets; power sector faces 30bn euro bill
The European Parliament's Environment Committee yesterday endorsed proposals to cut greenhouse gases by 20% by 2020, and by 30% if the rest of the developed world agrees to do the same. MEPs also approved a controversial goal of obtaining at least 20% of all EU energy needs from renewable sources by 2020. Avril Doyle, an Irish MEP on the Committee, shrugged aside concerns over the costs of the plan in tough economic conditions: "For all the trouble we have, the single greatest challenge facing us is climate change... We can't wait for the economies to rebound before acting... we have to do so without delay."

The most difficult part of the discussions related to whether to auction carbon permits or to give them away for free. As a result of fears for the international competitiveness of energy-intensive industries such as cement, paper, steel and chemicals, the Committee voted to back a phase-in of auctioning for permits. A total of 15 percent of permits for the sectors will be auctioned in 2013, rising to 100 percent by 2020. Power generators will have to buy all of their credits. The Times notes that this decision could cost the power industry 30 billion euro (£23 billion) a year and trigger a steep rise in electricity bills.

Several industry sectors swiftly denounced the EU Parliament's vote. "Europe will export jobs and import energy intensive products, with no environmental gain," warned Patrick de Schrynmakers, Secretary General of the European Aluminium Association (EAA), according to AFP.

The Committee also backed ring-fencing 100 percent of auction revenues from the ETS (Emissions Trading Scheme), a sum that could be worth as much as 50 billion euros a year by 2020, strictly for climate-related purposes - including 10 billion for carbon capture and storage schemes. The UK is known to be against ring-fencing on the basis that it could distort Government spending priorities.

The climate package will next be considered by EU ministers on the 20-22 October EU Environment Council meeting. EU heads of state and government will also consider the issue of international competitiveness for industries affected by the changes during the European Summit next week. The MEPs expect a rough ride from the Council notes EUobserver. "There will be a battle royale [in the Council]," Ms Doyle told reporters, particularly regarding the ring-fencing of auction revenues for climate purposes. She warned national governments, however: "I have a clear mandate...if we want an agreement there will have to be compromise".

Poland, which relies on coal for more than 90% of its electricity, says the ETS will reduce the nation's energy independence and put up prices. Warsaw is apparently close to assembling a blocking minority against the measures. France wants the process wrapped-up by the end of the year.
Telegraph FT Euractiv Times BBC EUobserver AFP European Voice IHT BBC

End of UK's flexible labour market as MEPs vote for stronger rights for temporary workers
The European Parliament's Employment Committee yesterday approved a controversial directive putting temporary workers on equal terms with their 'regular' colleagues regarding pay and working hours from their first day of employment. The measure had previously been blocked by the UK, as it feared that it could damage its deregulated labour market. It is reported that the MEPs managed to successfully insert guarantees on equal access to employment and vocational training in the text.
Euractiv

New Bill to promote greater EU transparency
Conservative MP Mark Harper will today introduce a new Bill in Parliament which will require Ministers to declare, on the front of every future Bill and regulation, whether it is the result of a European Union decision. The EU (Transparency) Bill intends to make the legislative process and the role of the EU in it more transparent and accountable to the public.
Press release

EU members go their separate ways on deposit guarantees
In the latest developments in the global financial crisis, Chancellor Alistair Darling has today announced a rescue package for Britain's high street banks with a part-nationalisation plan using £50billion of taxpayers' money. The Times reports that Darling has also said there will be extra help from the Bank of England through a £200billion Special Liquidity Scheme to ensure that banks have enough cash to run their day-to-day activities and kick-start the paralysed credit markets.

EU finance ministers met in Luxemburg yesterday to discuss the financial crisis and agreed to harmonise bank deposit guarantees to 50,000 euros. The Times reports that several EU states had called for a guarantee of 100,000 euros but smaller countries said that they could not afford such a large guarantee. The Irish Independent quotes Peter Dixon, an economist at Commerzbank AG in London, as saying ''They can give blanket guarantees. They're almost meaningless, because depositors weren't going to lose money anyway. But it does take some of the heat out of the system.''

According to Le Figaro, EU finance ministers declared: "Europe is united in the face of the crisis and determined to act in a coordinated manner." However, despite the EU agreement in Luxemburg Spain has announced it will "go it alone" by declaring it will guarantee deposits up to 100,000 euros, the Times reports. "If there is anywhere Spaniards know their savings are safe, it's in Spanish banks," said José Luis Rodriguez Zapatero, the Spanish Prime Minister.

In the Times Bronwen Maddox notes that the "EU's slowness to act has merely revealed the boundaries where common interest reasonably gives way to national interest. German ministers have made the point bluntly: they don't want German taxpayers' money to bail out other countries' banks."

Christopher Booker argues in the Mail that the crisis may mean that "it might not be just the euro which falls apart, but that entire over-ambitious experiment in supranational government which the EU represents."

EUreferendum notes that the European Council failed to take crucial steps to adapt an EU directive that is alleged to have significantly contributed to the financial crisis.
Times 1 Times 2 Times-leader Times-Maddox Mail Mail-Booker Mail-Brummer BBC EU Referendum FT Telegraph Trends Irish Independent NY Times Focus Express-McKinstry No link YahooNews CNN Reuters Independent Irish Times WSJ EUobserver AFP Guardian Le Monde Le Monde 2 Le Figaro IHT European Voice Irish Times

FAO: Biofuels drive up food prices without reducing emissions
Svenska Dagbladet notes that the Head of the FAO, Jacques Diouf, has said that biofuels, which the EU proposes to promote through binding targets, could cause severe food shortages in poorer countries, without necessarily reducing global emission levels. He said, "The increasing use and production of biofuels do not necessarily contribute to a reduction in green house emissions...The increased use of biofuels will drive up food prices in the long term", adding that subsidies and tax-relief make it hard for poorer countries to make money from biofuels.
Svenska Dagbladet

Ex-Commission official: Lisbon Treaty should be buried
Pierre Defraigne, formerly a Deputy Director General in the Commission, has a piece in European Voice arguing that "The Lisbon treaty should be buried and new approaches, based on a popular consensus, should be explored."
European Voice

European Commissioner Margot Wallström: don't push Ireland
European Commissioner Margot Wallström has declared in the European Parliament that it is important that Ireland is not isolated nor being pushed in a certain direction. She reportedly believes that by the end of 2008, all countries except for Ireland will have ratified the Lisbon Treaty. "Every solution has to respect the opinion of a great majority of EU member states as being acceptable for the Irish people", Wallström said, adding that it is now practically sure that the Lisbon Treaty won't enter into force before the 2009 euro-elections.
Presse

IMF: US could see recession; the eurozone to face a "slowdown"
In its economic outlook, the IMF says the impact of financial stress will be a lot worse in the US than in the euro area: "The US economic downturn may well become more severe and could evolve into a recession. The evidence for the euro area is more consistent with the pattern for a slowdown than a recession, and the dynamics also appear to be evolving with some lag."
IMF Economic Outlook

Iceland turns to Russia for a 4 billion euro loan
The Icelandic government has asked Russia for a 4 billion euro loan in order to support its currency, the krona, and allow the central bank to refinance some 10 billion euros before the end of the year. According to the Spectator's Coffee House blog, Russia may in return request to get access to Keflavik Airport - previously a US military base - for maintenance and refuelling of Russian planes. The blog also reports that Iceland was forced to turn to Russia having been turned down by the EU, the Scandinavian countries and the US Federal Reserve. Le Monde notes that the financial crisis could lead Iceland to reconsider membership of the EU.
EUobserver Telegraph Spectator blog CoulissesdeBruxelles Le Monde IHT Independent BBC

An analysis piece in Deutsche Welle notes that the financial crisis could lead to a significant downsizing of military budgets in Europe and the US.
Deutsche Welle

EU poster-making competition for children is to inculcate the values of EU citizenship
The campaign aims at "uncovering the eminent role of European institutions in the defence and protection of individuals and particularly children."
Openeurope

Insurance rules divide EU
EU finance ministers failed to reach agreement yesterday on new rules for insurance companies. There are concerns that they could offer privileged treatment to French equities. Financieele Dagblad European Voice