News | Energy Efficiency

http://www.nytimes.com/2011/02/14/business/energy-environment/14green.html?_r=1&partner=rss&emc=rss

BRUSSELS — Connie Hedegaard embodies the way the European Commission would like to be perceived in the 21st century.

Ms. Hedegaard, 50, leads the commission’s efforts on climate change, an issue with global resonance, and she is a confident and telegenic communicator, helping dislodge the commission’s image as a haven for graying politicians who settle fights over fish quotas.
She sums up her job as keeping the European Union “in the front-running position when it comes to being the most energy-efficient, climate-friendly region in the world.”
“That is not a small ambition, I know,” she said.
She has had a challenging start since taking office a year ago.
The realities of projecting influence at a time when economic and political power has ebbed away from Europe, and of managing an unwieldy system for trading emissions among 27 nations, quickly caught up with her.
Even before she took office, she was reeling from the failures of the Union to participate in the initial drafting of a nonbinding agreement at a U.N. conference in Copenhagen and to persuade other nations to set a date for reaching a global deal limiting greenhouse gases.
Ms. Hedegaard, a former television news anchor and a political conservative who was Denmark’s climate and energy minister, started the conference as its president. But she aroused the mistrust of some negotiators who regarded her as too supportive of the industrialized world.
Just days before the two-week conference closed, Lars Lokke Rasmussen, the Danish prime minister, replaced her. Officials said the switch had been planned from the start. But it did nothing to ease criticism that the conference had been a chaotic and acrimonious fiasco.
By the time she joined the commission, strenuous lobbying by industrial interests and Germany had already ensured that her newly created portfolio, climate action, would not include authority over energy and environment policy.
Then, as the sovereign debt crisis engulfed the euro zone, climate policy was downgraded another notch.
Ms. Hedegaard’s suggestion to explore extending mandatory cuts in greenhouse gas emissions to 30 percent from the current target of 20 percent was sharply rebuffed by industry. The commission also favored prolonging subsidies to the coal industry, against her wishes.
In an interview last week, Ms. Hedegaard counted among her victories a positive outcome at the most recent set of U.N. climate talks at Cancún, Mexico. Unlike what happened in Copenhagen, “Europe spoke with one voice” and achieved many of its goals, including getting a commitment to keep warming to less than 2 degrees Celsius above preindustrial levels inscribed into a U.N. document for the first time, she said.
She also was gracious about the increasingly ancillary role for climate policy in Brussels. It was impossible to have a situation in which “the climate legislation is just done in my services,” she said.
Instead, her role was to push colleagues at the commission to shape their policies in areas like road transportation, farming, energy and innovation to take account of curbing greenhouse gases and nurturing cleaner industries, she said.
Besides climate diplomacy, her biggest responsibility is overseeing the E.U. Emission Trading System. But there, her legacy could turn out to be more troubled.
On Jan. 19, a series of hacking incidents led the commission to shut down the 27 national registries that hold the permits that are usually traded daily across Europe.
The market is worth about €80 billion, or $108 billion, annually. The hacking resulted in the theft of emissions permits worth at least €30 million from registries in countries including Austria, the Czech Republic and Romania.
Maintaining the viability of the system, also known as cap and trade, is critical to persuading other parts of the world to adopt similar controls. Many industrialists complain that the laws — which require companies to buy permits if they exceed their pollution quotas — are reducing Europe’s competitiveness.
Initially, the registries were to be shut for “spot” trading, or contracts for immediate delivery, for about a week. But by Friday, only six registries were back online, while the national authorities were still at work on upgrading security. Futures markets have been largely unaffected, but traders still are fuming.
Ms. Hedegaard said she had done what she could to push for improvements in security after an online attack at the registry in Germany last year, and before a single European registry is introduced during the next year.
She said the previous attack had been an isolated incident, while the recent attacks constituted a broader assault that required “drastic” action.
She said she was aware of claims for compensation from traders who, in good faith, had bought stolen permits that turned out to be worthless. She said her staff would hold discussions with E.U. governments in the coming weeks to see if it would be possible to address traders’ concerns.
She also said the commission could introduce a “delay time” before permits were transferred to foil any future attacks.
Ms. Hedegaard already has won agreement from governments to phase out permits earned from projects to destroy industrial gases in countries like China. She said some of those projects were of “doubtful value” and could discredit cap and trade.
Three years ago, the commission called on all developed countries, including the United States, to establish such systems by 2015 and for major developing countries, like China, to do so by 2020.
She acknowledged that the chances of the United States’ adopting such a system within four years sounded “difficult.”
But she noted that California had agreed to start a system, that New Zealand was building one and that leaders in South Korea were still committed to establishing one. She said Switzerland was seeking ways to link its system with the European one, while Australian leaders were continuing to consider the merits of cap and trade.
She said the most substantial vote of confidence in carbon trading was likely to come from China, where leaders could soon announce a large-scale carbon-pricing pilot project as part of their next five-year plan.
“When we were discussing this two or three years back, how many would have thought that it was not a totally crazy idea that China, before 2020, might have something like a cap and trade system?” she said.
“To have a global price on carbon suddenly does not seem that far-fetched,” she said.