It remains to be seen how effective an example Europe will set. So far, the EU's ambitious plans for emissions cuts have underwhelmed in execution. Most European countries will not meet their Kyoto targets by cutting their emissions; they will have to buy credits from emissions-reduction schemes in developing countries. A carbon-trading scheme, which was supposed to be a pioneering showcase, has so far foundered. Member states issued too many permits, and the price of carbon plummeted. The price signal may have undercut efforts in developing countries to put in abatement measures to sell carbon permits to rich nations. And because the scheme runs only up to '12, businesses have had no idea what the price of carbon will be-or even whether there will be one at all and therefore, no incentive to innovate or invest to cut carbon-dioxide emissions.
But the European Commission is trying to remedy these mistakes. Over the past six months, it has been getting tough. When member states put it in their plans for emissions allowances for their industry last autumn, it slashed them all except for Britain's. Some countries have been pondering whether to take the Commission to court; Germany's recent decision not to may have something to do with the decision of its chancellor, Angela Merkel, to push the green agenda.
The main point of these binding targets is to address the issue of short termism. By making this announcement, the EU is saying that carbon will have a price beyond '12, at least until '20. That should persuade companies to build a carbon price into their investment plans, and to invest in gas-fired plants rather than in coal-fired ones, to spend more enthusiastically on biofuels and to pour R&D money into hydrogen and other dean options.
But the European Commission is trying to remedy these mistakes. Over the past six months, it has been getting tough. When member states put it in their plans for emissions allowances for their industry last autumn, it slashed them all except for Britain's. Some countries have been pondering whether to take the Commission to court; Germany's recent decision not to may have something to do with the decision of its chancellor, Angela Merkel, to push the green agenda.
The main point of these binding targets is to address the issue of short termism. By making this announcement, the EU is saying that carbon will have a price beyond '12, at least until '20. That should persuade companies to build a carbon price into their investment plans, and to invest in gas-fired plants rather than in coal-fired ones, to spend more enthusiastically on biofuels and to pour R&D money into hydrogen and other dean options.
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