Czech industry grapples with EU climate and carbon proposals

Photo: Alena Palečková

If you want to get a Czech industrialist really inflamed, just mention the word renewables and you should succeed. Manufacturers and the Czech government are now preparing for a fight over European proposals seeking more efforts by countries to curb their carbon footprints and increase their use of renewable energy sources. The outcome looks far from clear.

Photo: Alena Palečková
Czech industrial bosses got a chance to confront European climate change and energy policy officials in person at a conference in Prague mid-February. And they made the most of it. New European Commission targets penalizing polluters made a mockery of the Commission’s simultaneous talk of reindustrializing the continent, said one member of the audience to loud applause.

For many Czech industrialists, the latest Commission climate change and carbon proposals are the equivalent of a diet and gym sessions for the starving. One company approached to sponsor the Prague conference hosted at the foreign ministry’s Prague palace, said that it would, as long as the participants appeared naked on the roof and jumped off it.

Large slices of Czech industry are already angered by the Commission’s previous goals, which have saddled them with massive electricity surcharges to pay for the country’s ill-conceived support of renewables energy. While they are paying millions of crowns, across the border in Germany, heavy energy users don’t have to pay any renewable support. Brussels has started to investigate the anomaly but the German system is still in place and Czech industrial bosses say there is no real hope of clawing back the German aid.

The proposals to continue the fight against climate change will be one of the biggest battlegrounds over the next weeks ahead of meeting of heads of government in March. That meeting should give an important signal whether the European Commission proposals can proceed as they stand.

Czech state controlled energy company ČEZ just over a week ago one of around a dozen big European power companies which were lobbying in Berlin to get German Chancellor Angela Merkel to take their side in the debate. But disappointment appears to have been the main outcome of that encounter. Germany at the moment appears to be putting its weight behind the broad Commission proposal and against anything that might undermine its energy switch to renewable power.

Many decisions in the Czech Republic, from the rewrite of the country’s long term energy policy plans to ČEZ’s faltering plans for two new nuclear units at its Temelín site are on hold until the fog round these climate change targets are fixed. Power companies are far from the only ones lobbying furiously away.

The Commission’s proposal to set a target for a 40 percent drop in carbon emissions for 2030 and a 27 percent contribution of renewable power to energy needs is crucial for the manufacturing oriented Czech Republic. While industrial companies argue for the smallest burden possible, environmentalist and some EU countries say the Commission goals might be too modest to have the desired impact on curbing climate change.

Photo: Miloš Turek
One of the main driving forces of the European proposals is the ambition to set meaningful climate change targets which economic heavyweights China and the United States can sign up to for the first time as part of a global package.

Head of EU policy for climate change at the British Department for Energy and Climate Change, Stephen Bennett, told his Prague conference audience last week that there are real signs that 2015 is a crucial window for getting such commitments out of Washington and Beijing.

With US mid-term elections this year, and a US presidential election in 2016, he says 2015 provides Washington with an ideal opportunity to announce climate change targets. In China, air pollution has become a major political issue in big cities such as Beijing with social unrest threatening as a result. Bennett says the issue has now become a threat to the regime with its credibility depends on dealing with air pollution and smog.

The British official argues that the EU target of a 40 percent cut in carbon emissions might even be too timid and something like 47 to 50 percent might be needed if other countries, like the US and China, are brought on board required and if global temperatures are not to climb beyond the agreed two degrees Celsius.

The British and Czech governments, and most Czech manufacturers, at the moment seem united in resolute rejection of any new renewable energy targets however they might be shared out between EU member states.

That renewables share out is still shrouded in some mystery. Commission officials explained in Prague that they will ask for national plans for boosting renewables with some countries expected to offer more and some less than needed to meet the 27 percent goal. Those countries that appear to be dragging their feet will be asked to try again. If they still fall short, the plan seems to be for them to be drafted into supporting cooperative renewables projects in countries that have exceeded Brussels’ expectations. Whether they will jointly finance projects or buy electricity from them once they are completed, is as yet unclear.

Czech officials believe some sort of compulsory national targets for more renewables are the inevitable outcome of the Commission’s proposal however much they might be dressed up at something else at the start.

Petr Zahradník,  photo: Noemi Holeková
I spoke to former Czech government advisor Petr Zahradník, now working at power company ČEZ’s Brussels office and asked him about the prospects for a deal on climate change at the heads of government meeting in March.

“I think that the current situation among individual EU countries is very diversified depending not only on their current energy preferences and current energy structures, but also on their general economic structure and the ratio of manufacturing in these economies etc. I think that the current proposal of the European Commission within the framework of the 2030 climate change proposal is on the one hand a relatively good basis for discussion. However, I am convinced that especially as regards the targets themselves, the figures, and the obligation to fulfill these targets, will be the subject, I would say, of very hot debate and discussions. In addition, if we add to this paradigm the current discussion in the European Parliament which wants to make obligatory not only the carbon dioxide and renewables targets but also the energy efficiency targets, or energy savings target, I think the situation could be very complicated.”

One of the main problems is the renewables target, the 27 percent, are there any states that are clearly in favour of this? In particular, what is the position of Germany, because Germany is a key player in this?

“Of course, I fully agree. I think that the German’s attitude is the strongest factor behind the relatively ambitious renewables source target. As well as Germany, I think we could identify several other countries that have identical or very similar positions, like Austria, maybe some of the Nordic countries, maybe some Benelux countries. But there is no majority conviction about the obligatory renewables target now, there is no majority for that within the European Union for that now. However, Germany’s position, as the strongest economy and its geographical location in the real centre of Europe is a key parameter and I think that even the opponents of the renewable target could not, I would say, ignore the German attitude. In my opinion, some kind of compromise or consensus would be the best choice.”

Could you maybe describe how important all this debate is both for ČEZ as a power company and more widely for the Czech Republic as a whole?

“I think that is rather extraordinarily important. I would not like to present some official kind of statement of ČEZ, it is rather my personal opinion. But for a country for which the energy sector represents, I would say, one of the three or four most important branches of industry and is a very important exporter of energy, and for a country with an extraordinarily high proportion of manufacturing industry out of GDP, it is quite clear that energy issues and some targets and some energy policy parameters are quite vital not only for ČEZ but for the whole country. ”

In fact, the carbon and climate change package was one of the issues raised by Czech Prime Minister Bohuslav Sobotka on his first working trip to Brussels last Thursday. The meeting of heads of government takes place in the Belgian capital on March 20 and 21. But that will be far from the last word on this emotive issue with the debate likely to drag on throughout the year.