Vox: The EMEA Blog

This month, the EU is set to debate a potential increase in its carbon reduction targets from 20% to 30% below 1990 levels. While a decision on whether or not to do so seems far off, it is worth considering the implications of such a decision for businesses both within Europe and also those trading with Europe.

The recession has had a dual impact on greenhouse gas emissions in Europe. Lower economic growth and a drop in production has reduced emissions from businesses but paradoxically, the economic crisis has left businesses ill-equipped to fund innovation in processes and technology that would help to reduce their emissions in the longer term. So, while stronger emissions targets might look realistic now, progress towards them could slow as the effects of lower levels of green investment are felt.

Another concern of those pressing for more challenging emissions goals is that of ‘carbon leakage’ – industries with high energy consumption shifting production to countries outside the EU with more relaxed emissions regulations. There are no benefits here environmentally or economically, so the EU has worked to prevent this; current measures include giving free allowances to energy-intensive industries, for example. In future, tackling the problem could mean that even products imported into the EU from businesses outside Europe could be factored into the carbon reduction calculations. It is not clear how this would work in reality but it would certainly have an impact on many businesses trading with the EU.

What is obvious is that businesses operating within the EU cannot afford to take their eyes off the ball where reducing carbon emissions is concerned. Until the recession ends, continuing to strive for operational efficiencies that reduce the organisation’s carbon footprint might be all that a company can commit to. Beyond this, investing in innovation in technologies or processes that will drive down emissions in the future could be critical to staying ahead of EU environmental regulation.