The European Commission released its historic proposal today to drastically reduce greenhouse gas emissions over the next 12 years. Announced by EC President Jose Manuel Barroso, the plan (PDF) is designed to make Europe "the first economy for the low-carbon age" (BBC). The broad proposal includes targets for renewable energy, biofuels, and emissions trading.

President Barroso also mentioned that the EU may consider placing taxes on imports from countries without emissions reduction goals, such as the United States (more below).

Reactions to the proposal have been mixed, so read the basics and draw your own conclusions.

The goals

The proposal sets out individual goals for each EU country, with the goal of a 20% overall cut in emissions throughout the EU by 2020. Barroso noted that a global agreement (such as the one that will hopefully emerge from the talks in Bali) could allow the goal to extend as high as 30%.

Each individual country was given its own set of goals, in accordance with its unique economic circumstances. Some poorer countries will be allowed to increase emissions, even by as much as 20% in the case of Bulgaria. Richer countries, on the other hand, have stricter targets, with a 20% reduction required by Denmark and Ireland. Sweden, already a leader in renewable energy, has been asked to increase its proportion of renewable energy from 40% to 55% in the same timeframe (see Worldchanging for a good article on Sweden's role).

In addition, the Commission proposed to increase the overall share of renewable energy in the EU to 20%.

Finally, the existing goal of running 10% of Europe's transport with biofuels was retained. This came at the same time that the UK shied away from first generation biofuels.

The Process

The member governments of the EU, as well as the Members of the European Parliament (MEPs) still have to approve the targets. If they did so, targets would begin in 2009.

The cost

Barroso estimated that the new targets would raise electricity prices 10-15%. This will translate to roughly 3 euros (currently, $4.35) per week for each citizen. Though significant, Barroso said this cost was "a real commitment, but not a bad deal," since the decreased reliance on energy imports will soften the price increases. In total, the plan is estimated to cost consumers 60 billion euros annually until 2020. Imagine a U.S. President offering a climate solution by explicitly telling us that each citizen will have to pay an extra $4.35 per week. How do you think that would go over?

The Polluters

We have written before about the dangers in giving allowances to polluters for free, and the EU ETS, Europe's emissions trading system, has done exactly that in the past. Today's announcement includes major changes in the EU ETS in the next stage, which will start in 2013. If the proposal is adopted, the vast majority of power-industry polluters will be forced to purchase allowances beginning immediately in 2013, and will no longer reap the same windfall profits they have gained during the beginning stages of the EU ETS.

Other changes to the EU ETS were suggested as well. The failure of the European emissions trading to date is often attributed to the practice of allowing each nation to set its own emissions cap. The new proposal eliminates that practice in favor of setting a single, EU-wide cap. Finally, new sectors such as transport, buildings, and agriculture will be included.

It may be too late to hope for the EU ETS in this stage, but these look like good, substantive changes for the post-2013 system. The question is: will they be made in time?

The U.S.

In perhaps the most controversial (or at least, most likely to be contested from my side of the ocean) announcement, President Barroso said on Sunday that the Commission is considering imposing a tax on importers from nations that do not have carbon limits (Gristmill). Rather than a standard tax, the requirement would force importers into the EU to purchase emissions permits for their imported goods.

The intention of this proposal was to level the playing field between European companies that are forced to purchase permits as a part of the mandatory EU ETS and non-European countries that have no such restrictions. According to Barroso, "There would be no point in pushing EU companies to cut emissions if the only result is that production and indeed pollution shifts to countries with no carbon disciplines at all."

This is potentially a monumental decision. If adopted, it would effectively be the first penalization of countries like the U.S. that have refused to commit internationally to significantly fight climate change.

The Reaction

Reactions to the European Commission's proposal were mixed (see Forbes). Many environmentalists claimed that the targets were too weak, noting that a 20% reduction by 2020 will not be sufficient to avoid the disastrous 2 degree celsias global temperature increase. Some business leaders, not surprisingly, complained about the economic strain they believe it will place on them.

The real question, in my mind, is what the U.S. will do. Will they fight the import requirements, or finally step up to the plate?