Poland, Hungary and Latvia have gone forward from warnings to action. Lithuania, Estonia, the Czech Republic and Slovakia are to shortly follow suit. So is Bulgaria. It has joined a newly-minted display of character that the Central and East European (CEE) members of the EU started within the union. All of these countries have challenged – or threatened to challenge – in court the radical cut in greenhouse gas allowances for 2007 and the 2008-2012 period, respectively.
On October 26 2007, the European Commission (EC), the executive arm of the European Union, slashed Bulgaria’s annual CO2 emissions quota by an average of 37.4 per cent. The EC measure, an impediment to many rushing-to-grow economies, has been similar in all of the CEE members of the EU.
The common argument
For this reason, viewing Bulgaria within context of the group of Central and East European countries to have recently joined the EU is essential, if only because similar EC criticism has produced an similar set of arguments from each of the said member states. To see the story as a compilation of face-offs between the EC and each individual member state would be too simplistic. Though the discourse runs on a two-party level, between the EC and the individual country, any victory for a country on the issue would trigger a chain reaction because the EC is expected to treat all countries with same arguments equitably.
To complicate things further, the new EU member states have raised a more fundamental issue, namely how expedient the Kyoto Protocol is in mitigating climate change and, therefore, whether the EU should be as steadfast in its implementation.
Furthermore, it is a battle to persuade the EC to be more syncretic in treating EU member states. EU newcomers, for example, are economies that have seen fast-track development for the past 20 years. As they play catch-up with the more developed economies of the long-standing member states, they generate economic growth that is much faster than that of the older members of the EU. Therefore, a tailor-made approach in calculating greenhouse gas quotas of old and new member states is vital, the EU newcomers argue.
At present, the EC uses 2005 as the benchmark year to calculate quotas for the years up to 2012. The EU newcomers believe that fast-track changes in developing economies predicate a more recent date as a benchmark. Besides, in view of structural reforms, the structure of the gross domestic product (GDP) is also changing from agriculture- to industrial-dominated one. Therefore, the shift is toward more carbon-intensive production processes, a fact that has been sidelined by the EC, member states argue.
There is yet another facet to the shared argument. The new member states argue that the EU has failed to set the CO2 emissions quota exchange on the successful streak. While a ton equivalent was expected to trade for 23-24 euro and reach 30 euro, its price at present hovers in the 0.3-0.4 euro a ton because of large national emissions’ surpluses. Therefore, the EC is said to have been trying to reduce greenhouse gas quotas’ supply at the expense of smaller allowances for EU newcomers. The measure, EU newcomers say, means that the EC is hoping to push prices at the CO2 exchange to intended levels.
United we stand
Bulgaria has joined the chorus of challengers to the quota cut. The challenge has shown a rare degree of cohesion at ministerial, expert and business level. Experts from ministries, alongside representatives from a number of business associations, including the Bulgarian Industrial Association (BIA), Bulgarian Confederation of Employers and Industrialists, the Energy Institute and others, have been acting in concert and the arguments have been disseminated among the public through round tables, declarations to the legislative and executive authorities both in Bulgaria and abroad, and technical talks with the EC in Brussels.
On November 22, a team of Bulgarian experts from the ministries of environment and waters, the economy and energy among others, alongside industry representatives, persuaded policy officers in Brussels to revisit Bulgaria’s quotas to look at technical and statistical inconsistencies. The team of Bulgarian experts believes the EC has ignored the fact that two of Bulgaria’s nuclear reactors are no longer in use; that the share of industrial output – which inflates the carbon-intensive production – in the GDP pie-chart is growing by the year; that the EC’s GDP growth estimates for the 2008-2012 period widely diverge from Government forecasts (5.2 per cent vs 6.8 per cent), among others.
All the more, Bulgarian business would suffer 770 million euro in extraordinary spending as it will have to buy emissions to continue operations, Bulgaria emphasised at the meeting with EC policy officers. All the more, the quota cut will stampede the growth of Bulgaria’s economy.
Bulgaria scored an interim victory. The EC promised on November 22 to revisit Bulgaria’s technical and statistical parameters and will do so on sector-by-sector basis.
Bulgaria threatened to turn to the Court of Justice of the European Communities in Luxembourg on EC reluctance to narrow the cut to permissible levels. Warsaw has already won its case and the EC would hardly wish to suffer a defeat once more given that common law is a reality in Europe.
The EC is expected to come up with a new decision on Bulgaria in the latter half of January 2008.
