The Eurasian Union turning into a Mirage

Posted by Eberhard Rhein on 15/04/14

On 2 October 2012 Vladimir Putin published an article, entitled “A new Integration Project for Eurasia” in which he set out his visions for the future of Russia and the former Soviet Republics.

His vision was simple and optimistic. He hoped to establish a powerful association of independent states capable of becoming one of the poles of the modern world that would serve as an efficient bridge between Europe and the dynamic Asia-Pacific area.

Its member states would be linked by a customs union and cooperation reaching from services to capital flows, free labour movement, technical standards, patents, economic and currency policies, a development bank, a court of justice, a joint Commission and other supranational components.

Basically, the vision mirrored the EU. No surprise therefore that it also aimed at joining hands with the EU to establish a huge free trade area reaching from Lisbon to Vladivostok. But the EU did not pick up the “offer” being not allured by Putin’s vision which contrasted too much with the real policies pursued by him.

Though the idea goes back to the 1990 s the EAU has not progressed the way the Kremlin had hoped for.

The number of member states has not increased beyond the three founding countries, Russia, Belarus and Kazakhstan. Under pressure from Moscow tiny Armenia, heavily dependent on Russian security, had to accept joining in 2013. The central Asian countries – Turkmenistan, Kyrgyzstan, Tajikistan and Uzbekistan- are still not keen on membership. Nor are Georgia, Azerbaijan and Moldova, let alone Ukraine, seen as a crucial element.

Cooperation has not advanced much beyond free trade. No comparison with the internal EU market, which is huge compared to that of the three EAU countries.

For Putin it must have been painful to see how the former Soviet Republics refused to accept his courtship in favour of the much more attractive European Union, where small countries have nothing to fear from big ones bullying them or ignoring their interests. Feeling himself as a “modern zsar” Putin failed to address the structural fault lines of the EAU, the overwhelming Russian dominance, the absence of the rule of law, independent judiciary and democratic governance.

No doubt, his pride must have been hurt by the lacking success of his “geostrategic baby” which was to replace the Soviet Union, in his eyes the biggest geostrategic catastrophe of the 20th century.

This may also explain his reactions to the Ukrainian shift toward Europe. If he succeeded to “recover” the Donetsk basin, Ukraine’s industrial core, he might succeed in winning even more support from the nationalist majority at home. But at what costs for him and Russia? And how often can he play that trick?

Rather than pursuing the mirage of a Russian-dominated Eurasian Union his successors would be well advised to follow a more realistic approach of a Eurasian free trade area with the EU, fully based on the rule of law, independent judiciary, personal freedoms and democracy. But for this to happen Russia would have to undergo profound political and constitutional changes that are not in view.

Eberhard Rhein, Brussels, 15/4/2014


Will humanity take effective action against climate change?

Posted by Eberhard Rhein on 14/04/14

In the fall of 2015 the international community is set to adopt a comprehensive action plan to combat climate change. Paris having been chosen as the meeting place the French government is showing more interest in climate issues and trying to mobilise the EU on a rapid agreement of its 2030 climate objectives.

The UN preparatory machinery keeps running full steam to obtain a successful outcome.

This goes above all for the scientific aspects.

In the last seven years, Humanity has accumulated a huge amount of scientific data on the climate change that has taken place during the 20th century and is likely to occur during the 21st century. Never have human beings known so much about the climate. It is therefore no longer possible for anyone to deny climate change taking place and being mostly man-made.

There is also a consensus on its main causes: C02 and methane emissions from burning fossil energies for heating, cooling, transport, industrial processes and massive deforestation are the principal villains.

If Humanity were able to contain these major causal factors within the next five decades it would still have a chance of mitigating climate change.

Theoretically this is possible.

Humanity can do without burning as much fossil energy as it does. This goes in particular for the wealthy West and China.

Wind, solar, biomass and waves can substitute fossil energy, provided storage facilities and long-distance grid interconnections are in place.

As long as they are still more expensive than coal and gas temporary subsidy regimes should offer incentives.

But why should the 2015 “big bang” in Paris be any different from the 20 preceding “Conferences of the Parties” and lay out a convincing path for Humanity to throw off the burden of climate change that will weigh so heavily on the shoulders of the coming generations?

The 195 countries that will attend the COP 21 remain deeply divided on the nature of the commitments and the burden sharing they will have to accept for a successful outcome. So far they are likely to agree only on the necessity to contain global warming within the critical margin of two centigrade; but that would be nothing new and rather meaningless without firm and verifiable commitments as to the actions to be taken.

But the international community is less than ever concerned about climate change. According to the last assessments the impact of climate change on the global economy is likely to be much lower than projected only six years ago by the Stern Report. And how many politicians care already about the impacts on biodiversity, natural catastrophes or even a steep increase in the numbers of “climate refugees”!

It is therefore not surprising to see the emphasis shifting from mitigation to adaptation. Humanity seems to prefer the costs for adaptation rather than invest in mitigation efforts, even if that will be risky because of the irreversible effects of climate change.

It is fully in line with this trend that:

  • big polluter countries like Japan, Australia, Canada or Russia are anything but keen combating climate change;
  • all major fossil energy producing countries refuse phasing out their massive oil and gas subsidies;
  • EU climate policy suffers from the global indifference. The EU rightly underlines that its efforts matter less and less as its share of global emissions is approaching 10 per cent. Contrary to the wishes of the UN Secretary General, it is not likely to play the role of a powerful locomotive in Paris, however regrettable this may be.

China and USA, the two emission giants, accounting for about half of global emissions, might be a glimpse of light in the gloomy picture.

But China will take another 20 years or so before its emissions might start falling; and the US objective of reducing its emissions by 17 per cent until 2017 compared to 2005 will not be a glorious achievement, considering its extremely high per capita emissions of 14 tons and the EU scheduled reductions and by at least 40 per cent until 2030 over 1990.

In conclusion, it looks presently unlikely that the COP 21 in Paris will turn out to be a thrilling success.

It would be a great progress if:

  • the 20 major emitter countries responsible for about 75 per cent of global emissions committed themselves to formulate 20-year strategies within a UN framework and to submit annual performance reports;
  • all rich countries, including the oil/gas exporters, offered the World Bank the financial means – say $ 100 billion per year – to help finance a big programmes for wind, hydro and solar energy;
  • the tropical forest countries were to curb illegal wood cutting and receive appropriate compensation for these efforts.

Eberhard Rhein, Brussels, 11/4/2014

Combating climate change will be a long difficult haul

Posted by Eberhard Rhein on 07/04/14

While the international community is due to finally take serious action against climate change it is worthwhile having a look at Denmark, Sweden and, to a lesser degree, Finland and Norway that have succeeded to generate two thirds of their electricity from renewable sources, mostly from wind and water.

But despite intensive efforts and favourable conditions – zero population growth, large forest areas, a very big hydro power potential and ideal wind conditions – they are still miles away from a fossil-free energy supply which Denmark aspires by 2050.

Still, the international community might learn a few lessons from their experience:

  • build a strong political and popular support.

Without such a support technical efforts will go nowhere. This support is there in each of the countries.

  • set long term objectives, buffered by short-time targets on which to focus concrete action.

    Thus by 2020 Denmark aims to cover one third and until 2050 its entire energy needs from renewable sources.

Similarly the EU operates with 2020/30 targets within a 2050 horizon.

  • put in place a strong institutional framework: a climate and energy ministry and energy agency.

    Denmark has led the way.

  • introduce cost-effective support schemes for accelerating the shift from fossil to renewable energy.

    Denmark has tried a panoply of measures, strongly focused on wind power, its principal renewable source, investment grants to enterprises shifting their energy supply from fossil to renewable sources and recently also premiums for solar power.

    Unlike Germany which has wasted huge amounts of subsidies for photovoltaic installations, not ideal in a country lacking sun during much of the year, the Scandinavian countries have concentrated their efforts on wind energy of which they have plenty. Such a focus on the most effective source of renewable energy is crucial for obtaining cost-effectiveness.

  • offer subsidies only for a limited period (10 years) and adapt them to falling production costs.

    Here too Denmark is a better example than Germany that has offered premiums unchanged for 20 years.

  • invest from the start in energy storage and interconnections for periods without wind or sunshine.

    Here Germany has also failed for a long time.

  • begin with renewable electricity even if heating and transport are more important energy consumers.
  • do not forget pushing for more effective thermal insulation of the building stock, where the Nordic countries have also been outstanding.

  • do not renounce mandatory action, for example energy efficiency standards if you can monitor their implementation.

  • last not least, phase out all direct and indirect subsidies for fossil energy.

In conclusion, if Humanity is serious with reducing green house gas emissions every major energy consuming country must without delay put in place the institutional and legal bases for reducing its fossil energy consumption.

To be effective it must draw up an appropriate strategy containing a long term vision and short term operational measures.

It is up to the UN to invite its most appropriate institution to help countries in that exercise and make sure that those countries implementing effective climate strategies will benefit from the financial assistance that has been promised by the international community.

But even with the most devoted efforts the Nordic countries` experience shows that it will take decades before such policies will produce strong results. Homework should therefore start without any further delay.


Ukraine must put its House in Order

Posted by Eberhard Rhein on 25/03/14

The debate over Ukraine has essentially been centred on Russia’s shrewd and illegal take-over of the Crimea and the risk of Russia destabilising the eastern parts of Ukraine with a large share of Russo-phone citizens.

Crimea having formally become part of the Russian Federation there is no point shedding tears. Crimea will not come back to Ukraine in any near future, if ever; Ukraine will have to do without, which should not be difficult.

It should focus all its energy on transforming into a vibrant society and becoming a democratic, prosperous country.

This is a monumental challenge, as the acting prime minister has acknowledged when taking office a month ago.

The “Maidan Revolution” has for the first time laid bare the deplorable state of the country. Pervasive corruption, worse than anywhere else in Europe, the absence of an independent judiciary, a largely non-competitive business, a non-functioning administration, too much collusion between government and “oligarchs” etc. have left the country with a sham democracy where the rule of law is non-existing and citizens have completely lost their confidence in the government.

The country lacks a capable political elite, committed to the well-being of its citizens. Its party structure needs profound reforms.

The interim government faces almost insurmountable difficulties in meeting the extraordinary challenges the country faces.

Whatever its shortcomings it has no choice but to restore law and order throughout the fragile country and, as least as important, a sense of unity among all its citizens. This must be remain its main priority for the coming months.

The fight against corruption must be another priority. All those who have committed major acts of corruption during the past 10 years must urgently be indicted and convicted in open and fair trials, demonstrating the beginning of new era of justice.

The presidential election scheduled for May 25 should become the first test for the new democracy and the strengthening of Ukrainian identity, anything but easy to achieve in the present political and economic climate.

But Ukraine being formally a parliamentary democracy it is the prime minister and the parliament that matter politically. Parliamentary elections should therefore be held urgently allowing for a democratically a legitimised government to start work as soon as possible.

This elected government will have to take harsh measures putting Ukraine’s finances and economy in order. Considering the abysmal situation the government inherits from many years of mismanagement this will require enormous courage, not least phasing out the unsustainable gas subsidies.

Ukraine will therefore have to tighten its belt during the very period when Russia might make life for Ukrainian exporters excessively difficult.

Unfortunately, the EU can only be of little help to the new government. Its recipes will produce positive effects only in the long run. It cannot offer budget assistance. Its market opening will not produce miracles; to be effective Ukrainian industrial and agricultural products must be highly competitive in price and quality. Moreover, most of the industrial products have already enjoyed free access to the EU thanks to the general system of preferences.

Ukraine will have to engage in a long and difficult reform process from which the average citizen will not reap material results over night.

Ukraine would do best to enter in a profound ”apprenticeship” with the three Baltic countries and Poland which have successfully implemented the recipes leading to higher economic prosperity and political freedom.

Eberhard Rhein, Brussels, 24/3/ 2014


The EU should invest more in urban mobility

Posted by Eberhard Rhein on 21/03/14

Urban mobility is bound to become one the most pressing global issues in the coming decades. By 2050, three quarters of Humanity are expected to live in urban regions, with detrimental consequences for mobility, pollution and greenhouse gas emissions.

Europe scores substantially better than most other regions on earth; but even in Europe mobility and air pollution have kept deteriorating in recent decades. The most recent smog alarm in several French cities and Brussels should have been an alarm signal for European governments neglecting the issue.

Within Europe mobility and air qualities vary widely between cities and regions, with Denmark, Finland, Sweden, Netherlands and, to a lesser extent, Germany faring much better than Italy, Greece or Portugal.

The time necessary to get to work exceeds more than 30 minutes in most European cities and tends to lengthen rather than shorten, as it should.

About one third of the people continue to use individual cars to get to work. No surprise that 40 per cent of all C02 emissions from transport are generated in urban areas and C02 emissions per person exceed one ton in most cities.

The costs of urban traffic (congestion, pollution, noise, health impact, damage to buildings) in Europe are estimated to amount to € 100 billion annually, one per cent of the EU GDP and almost the equivalent of the EU budget. That is far too much to ignore!

The EU must therefore step up its efforts to ease urban mobility and lower emissions.

That requires courageous measures. The number of European cities having done so and offering examples is impressive.

Urban mobility and pollution do not fall under EU competences. It is therefore impossible for the EU to intervene directly.

This may explain, at least partially the lack of progress during the last 20 years, notwithstanding the Commission’s efforts in producing white papers, green papers and action plans.

In early 2014, 40 per cent of European city dwellers complained of air pollution, congestion and transport costs. That is an unacceptably high percentage.

Copenhagen, Europe’s 2014 green Capital, deserves praise for having established a long-term strategy addressing mobility and pollution: it aims at half of its inhabitants using the bicycle to go to school or work next year, and by 2025 it wants to be C02-neutral!

All European cities should follow Copenhagen’s approach and elaborate their strategies for improving mobility and air quality.

The EU can support such efforts in two major ways:

  • by making available long-term financing. The EIB should make such financing a top priority until 2030.
  • by encouraging municipalities to engage in an intensive exchange of experience , whether through the existing “ Mayors` Covenant” or a new expert group for urban mobility, as recently suggested by the EU Commission.

The big investments necessary for the improvement of urban mobility and air quality will contribute to the creation of jobs in the next years.

Whatever the ways of tackling the issue, it would be a shame if Europe were unable to successfully address a vital issue for its citizens` well-being, starting with good health!

Urban mobility and clean air should become a political top priority for the next Commission and European Parliament.

Eberhard Rhein, Brussels, 17/3/2014

USA tackles coal-fired power plants

Posted by Eberhard Rhein on 20/03/14

President Obama will enter history as the most committed and successful US President in the fight against Climate Change. His goal is to reduce greenhouse gas emissions by 17 per cent from 2005 to 2020. He will do essentially by exploiting the executive powers of the Environmental Protection Agency (EPA), against tenacious resistance of the Congress.

The EPA has introduced increasingly stricter fuel-efficiency standards for passenger cars which have turned American gas-guzzlers into modern cars with low fuel consumption, comparable to European and Japanese ones.

It is engaged to do the same with heavy-duty trucks in the next few years.

Even more important, it has started tackling emissions from power plants.

The USA has already achieved big progress in reducing CO2 emissions by switching from coal to shale gas.

In parallel, the EPA is presently engaged in issuing rules for reducing CO2 emissions from new and existing coal-fired power plants, which will have a deep impact on power generation in the USA.

New coal-fired power plants will have to reduce their C02 emissions to no more than 0.5 tons per MW electricity generated compared to 0.8-0.9 tons per MW for the most efficient power plants currently in operation. That requires a big efficiency jump through investing in technologies like combined cycle (power +heat) or carbon capture and storage (CCS), which is, however, still expensive and unproven.

Investors will therefore be likely to shun away from coal-fired power and rely even more on shale gas as the main feed-stock for electricity generation, certainly as long as shale gas remains as cheap as during the last few years.

The same standards becoming also applicable to existing power plants many old ones which are no longer suited for refitting will be decommissioned in the coming years.

Imposing a cut of CO2 emissions from coal-fired power plants by roughly half through improved technology constitutes a courageous act by the US Administration.

Hopefully, it will set an example for the rest of the world. Indeed, coal still accounts for some 40 per cent of global inputs for electricity generation. It is the single major source of C02 emissions and Humanity will increasingly turn to coal as oil and gas reserves will deplete in the course of the century.

The 20 biggest emitter countries should therefore urgently get together and explore the most suitable ways of following the American example and introduce similar fuel emission standards. That would be a giant step in the fight against climate change.

Eberhard Rhein, Brussels, 12/3/2014


China’s ‘war’ on air pollution will be the litmus-test for its climate policy

Posted by Eberhard Rhein on 18/03/14

China has a long reputation of a country severely plagued by air pollution. In 2013 China registered its worst record on air pollution; Beijing is considered the second most polluted city in the world.

The air pollution has been the consequence of two decades of super-rapid economic growth without the government addressing its negative by-effects on air and water quality. All eyes were fixed on growth, ignoring its devastating impact on the quality of life.

Rapid growth was not possible without fast increase of power generation, cement and glass production, all responsible for high air pollution and C02 emissions.

China has,of course, introduced environmental legislation ;but without imposing the appropriate technical standards against dust particles, sulfur dioxide or nitrogen oxide, and attaching effective enforcement mechanisms and severe penalties for infringement.

This will change if the National Peoples` Congress is serious in implementing the stern pledges of its chairman, Zhang Dejiang, at its session in early March, after the Chinese Prime Minister had “declared the war” on pollution a few days earlier. The smog spell in February affecting 15 per cent of the country and provoking more and more  complaints from the urban population has no doubt added urgency to the issue.

We should therefore normally expect serious actions to be taken starting in 2014.

Among these should be the strengthening of existing legislation on air pollution, including stricter supervision and harsher punishment.

But this will not suffice. The government will have to address the two main sources of air pollution: coal-fired power generation and car traffic in big cities.

New coal-fired power plants and cement factories must become subject to more stringent emission standards for dust, sulfur dioxide and C02. Only low- emission cars must be be allowed for registration; and their numbers should be reduced in big cities in favour of more metro, trams and buses.

The seriousness of these measures will reflect the willingness of the Chinese elite to effectively tackle climate change. We should not expect much from China for the 2015 Climate Conference if it proves unable to start seriously eradicating the most visible forms of pollution with their devastating health impact on the urban population.

Eberhard Rhein, Brussels, 12/3/2014

Insatiable French appetite for major EU commission portfolios

Posted by Eberhard Rhein on 14/03/14

The two front-runners for EU Commission President plead for a leaner Commission focusing on more political missions and less on technical paraphernalia.

To that end, the number of Commissioners should have been reduced from 2014 onwards to only 21 (two thirds of the number of member states), in conformity with Article 17 of the Lisbon Treaty. But the European Council has so far never seriously thought about implementing this constitutional rule.

Thus the Commission will continue to suffer from too many Commissioners and portfolios.

In this situation, the recent suggestion by the French Economics and Finance minister, Pierre Moscovici, to give France a super- portfolio encompassing Economics, Energy, Industry, Foreign Trade and Competition sounds more than dazzling. Mr Moscovici would not disdain being in charge of such a giant portfolio, which would account for roughly a quarter of the Commission’s responsibilities.

Unfortunately, Mr Moscovici has not indicated how the other portfolios would be shared among his 26 colleagues.

His presentation illustrates how many French politicians continue to believe in French “grandeur” without caring about other member states, whether big or small.

This is first time in 56 years since the formation of the Commission that a national minister has the chutzpah to “pick” for himself five portfolios more than half a year before the Commission President, who is finally responsible for the distribution of portfolios, has been formally installed.

Any national politician with the ambition to serve on the Commission should show more restraint and respect for his future colleagues. His super-appetite disqualifies Mr Moscovici to become a Commissioner.

Eberhard Rhein, Brussels, 13/3/2014


Major countries tackle C02 emissions from trucks

Posted by Eberhard Rhein on 13/03/14

When talking about climate change we usually think of electricity, passenger cars, airplanes, but hardly ever of heavy-duty trucks. That is a mistake, for heavy-duty trucks account for a substantial share of C02 emissions from the transport sector, which is second among the key emitters after electricity.

So far only Japan has introduced heavy-duty truck fuel consumption standards that are in force since 2005.

This is bound to change in the near future. USA, China, Canada and EU are in the process of adopting, implementing or reinforcing fuel-efficiency standards.

The US has adopted such standards for the first time in 2011, and President Obama has just announced a more stringent set of standards applicable for 2014-18.

Canada will apply standards based on the American ones as of model year 2014. China has also adopted fuel efficiency standards and start implementing them in 2015. So will the EU, based on C02 emissions.

Major automotive countries are thus tackling the most important source of C02 emissions after electricity, industry and passenger cars.

They do so in the interest of the users and their truck industries, which have to compete internationally and are therefore willing to support their governments` approach. Obama has been careful to emphasise the advantages of tougher standards for innovation and lower fuel cost and has earned more praise than complaint when presenting his latest proposals, which cost the industry $ 8 billion but save truck users $ 50 billion during the life time of the trucks through improved fuel efficiency.

The EU has not been on the forefront in this sector, probably because its trucks enjoy already high fuel efficiency. But this should not impede it from inviting major producing countries in view of harmonising standards internationally. After all, this should be an important aspect for the forthcoming negotiations on the international climate agreement to be concluded in the autumn of 2015.

Eberhard Rhein, Brussels, 7/3/2014


Abolition of German subsidies on renewable energy is overdue

Posted by Eberhard Rhein on 04/03/14

While the Government is busy rewriting legislation on the promotion of renewable energies a High-level Group of Scientists appointed by the German Parliament has come out with a radical proposal to abolish the legislation altogether.

In recent years, the German legislation has increasingly come under attack because of its high cost for business and normal electricity consumers who have to bear the brunt of the high feed-in electricity rates guaranteed during 20 years to producers of solar, wind and biomass energy.

As a result, German electricity costs are among the highest in Europe. This has forced the government to grant exceptions to companies exposed to international competition generating distortions on the electricity market.

The frenzied promotion of renewable energy by Germany has, however, not helped to reduce green house gases, the proclaimed objective of climate policy. This has been obtained through the EU emission cap and trading system, which forces major C02 emitters like power stations to curtail their emissions by a fixed percentage every year.

The subsidies on renewable energy have created an oversupply of solar and wind energy, without driving utilities and other power consumers to turn to it, due largely to the absence of reliable grids and the availability of cheap lignite and coal. Rather they have preferred to buy cheap coal and lignite, the worst they could do from a climate perspective. The solar and wind subsidies have therefore had counter-productive consequences.

The scientists also accuse the German subsidy scheme of not having had a positive impact on technical innovations. This goes certainly for solar panels imported for direct assembly from the Far East countries but not for and wind farms and bio-gas installations where German and Danish companies fully control the supply chain. But the early German hopes of the subsidies becoming a forceful catalyst for a competitive solar industry in Eastern German have failed to materialise because German companies failed to reach the economies of scale of their Asian competitors.

Last not least, there are the ever surging costs, which exceeded € 22 billion in 2013 and keep rising exponentially by the very nature of the system which guarantees the subsidies for 20 years.

The authors are therefore right in calling for a complete suspension of the system: Without doing so subsidies would continue to be paid beyond the 2030s, and at a progressive scale.

It is unlikely that the government will have the courage to abolish one of its most cherished policies, and this against the opposition of Greens and beneficiaries in Bavaria and northern Germany, where the bulk of renewable energy is being generated.

Phasing out the over-ambitious subsidy programme does not mean the end of solar and wind energy in Germany. Being on the point of competitiveness it will continue to thrive without subsidies, most of which will continue to run more than 10 years.

Germany should, however, focus more on the completion of the crucial north-south high-tension grid and switch more subsidies to energy-efficiency where much is still to be done to renovate the housing stock.

Eberhard Rhein, Brussels, 3/3/2014

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