February 21, 2011 / 6:23 PM / 8 years ago

Tougher EU climate goal could boost GDP - study

* Emissions cut of 30 percent vs 1990 would add to growth

* GDP growth up 0.6 percent/yr with tougher goal -study

By Alister Doyle, Environment Correspondent

OSLO, Feb 21 (Reuters) - A tougher European Union goal for cutting greenhouse gas emissions could create jobs and boost economic growth by 2020, rather than slow it down as many EU governments fear, a study said on Monday.

A shift to emissions cuts of 30 percent below 1990 levels by 2020, from the EU’s existing 20 percent target, would help spur innovation and investment in a low-carbon economy after the financial crisis, it said.

“Post-crisis Europe can revitalize its economy by tackling the climate challenge,” according to the study, led by the Potsdam Institute for Climate Impact Research and commissioned by the German Environment Ministry.

It said a 30 percent cut could boost EU gross domestic product (GDP) growth by 0.6 percent a year, create up to 6 million extra jobs in Europe by 2020 and increase European investments from 18 percent of GDP to up to 22 percent.

By 2020, that would increase European GDP by 620 billion euros ($847.4 billion), or by 6 percent above business as usual trends, it said.

The study said many countries had recovered from a global crisis in 1929 with a surge of investments, especially in the military. Now, investment in cleaner growth could drive recovery after the financial crisis of 2007-08, it said.

Britain, like Germany on target to make deep cuts in emissions by 2020 unlike many EU countries which have been struggling to clean up fossil fuel use, hailed the report.

“Until now, studies have worked on the basis that new resources to tackle carbon emissions would have to come from competing uses, and would therefore cost a small amount,” British Energy and Climate Change Secretary Chris Huhne said.


“This study is arguably more realistic in showing how green growth can create work for the unemployed and generate new income and prosperity,” he said in a statement.

The 31-page report assumed there would be no legally binding climate treaty beyond what it called “modest pledges” made at a summit in Copenhagen in 2009 to avert more floods, droughts, heat waves and rising sea levels.

EU governments have agreed to deepen cuts to 30 percent if there is a strong global deal. Many EU countries oppose a unilateral shift to 30 percent, believing it would hit growth and jobs, especially in industries dependent on fossil fuels.

In the United States, President Barack Obama has failed to persuade the Senate to legislate a cut of between 3 percent and 4 percent in U.S emissions by 2020, from 1990 levels. Many Republicans fear curbs would give an advantage to emerging countries led by China.

Separately in Nairobi, a report by the U.N. Environment Programme said channelling 2 percent, or $1.3 trillion, of global GDP into greening sectors such as construction, energy and fishing could start a move toward a low-carbon world.

The investment would expand the global economy at the same rate, if not higher, as under present economic policies, it said. (Editing by Andrew Dobbie) (For Reuters latest environment blogs, click on: blogs.reuters.com/environment/ )

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