The transport sector once again takes centre stage, as the European Environment Agency criticizes the green credentials of motor vehicles, freight transport and rail networks. Highlighting the need to shift investments in the current economic climate to more sustainable and energy efficient modes, Professor Jacqueline McGlade, EEA executive director, added that

“…trends in transport are pointing in the wrong direction and will continue to contribute to air pollution, rising emissions of greenhouse gas and many negative environmental impacts.”

Jaguar Land Rover has just received a £330m bailout from the European Investment Bank to safeguard its 15,000 jobs an make investments in low emission technologies. The loan, the repayment of which will be guaranteed by the British government, is for a research and development project on reducing emissions. Jaguar Land Rover has been seeking Government assistance for some time and has recently put its workforce on a four-day week to avoid job losses.

The UK government received renewed pleas for an industry bailout from the motoring industry this week. Lobby groups are hoping April’s budget will include a ‘scrappage scheme’ – where car owners are given a financial incentive of about £2,000 to swap their old vehicle for a new greener model.

Whilst no decision has been announced, it is believed the scheme, which increased sales by 40% in March, attracting half a million buyers when it was introduced in Germany; is being taken seriously by MPs.  Statistics showed yesterday that sales of cars in the UK have dropped almost a third year on year. However, environmental campaigners highlight that the transport sector has been slow to introduce more environmental vehicles, and said that the money could be better used to fund sustainable transport solutions. There was also a fear that funds could be diverted from existing budgets set aside by the government for investment in green technologies, such as the £400m earmarked in the pre-budget report for an “environmental transformation fund”, which supports the development of new low-carbon energy and energy efficiency technologies in the UK.

A new report, The State of Green Investing 2009, by Progressive Investor, a green investment newsletter, has increased confidence in green investments, backed by positive signs from the stock market. The US report adds that the green industry is “at the nexus of stimulus support by governments around the world”.

The British automotive industry is to receive more than £2bn in soft loans under a new deal which was announced by Business Secretary, Peter Mandelson last week.

The European Investment Bank (EIB) will only provide loans to businesses who agree to fund projects that ‘further the UK objectives on low carbon and green technology’ (Source Edie.net).  These ‘Green’ conditions which form part of the loan deal will aim to meet the government’s wider commitments of reducing CO2.

The package includes:

1. Guarantees to unlock loans of up to £1.3bn European Investment Bank (EIB) guarantees for investment in lower carbon initiatives; and

2. Loans or loan guarantees to support of up to £1bn of lending for lower carbon initiatives for non-EIB backed projects  (Source: Edie.net)

The UK Business Secretary, Peter Mandelson comments:  “The car industry can and should be a vibrant part of that future…The steps we are taking will help companies speed their way to becoming greener, more innovative and more productive. This is the route to securing jobs for the long term as we build a more balanced economy for Britain’s future.”

Furthermore, the ‘Green Deal’ would unlock loans of up to £1.3 billion from the European Investment Bank while the government would guarantee a further £1 billion in loans for investment in environmentally friendly cars.

Given the recent financial bailouts that have cost the UK government, and its tax payers dearly, provokes a lot of debate about the usefulness of this proposed deal.   “This industry is not a lame duck and this is no bailout,” he said. “There is no blank cheque on offer, no operating subsidies. We are committed to ensuring that anything backed by the scheme offers value for taxpayers’ money, enables us to green Britain’s economic recovery, delivers significant innovation in processes or technologies for the long term, supports jobs and skills in Britain.”

The EIB is instrumental in brokering the deal, in granting medium and long-term loans and guarantees for investment projects to assist the development of the European Union.   Within its remit, the EIB aims to protect the natural and urban environment, by ensuring that projects submitted for funding comply with national and Community environmental legislation.  

In the last five years, the EIB it has invested EUR 26 bn in water and waste management, public transport facilities, urban planning and reducing atmospheric pollution.   The ‘Innovation 2000′ (i2i) initiative, launched at Small and Medium size businesses in March 2000 also aims to build a Europe based on knowledge and innovation. It is clear that the EIB role is encouraging investment in green automotive designs. 

However, the Conservatives have already criticised Mandelson’s plan to unlock loans for car manufacturers and increase investment in “greener” cars.   Kenneth Clarke has claimed to have suggested a similar deal of offering loan guarantees for the finance arm of car companies last November.  This debate may be yet another battle of the Commons to win votes, but perhaps the proof of the new deal is in the EIB’s track records to stimulate the green innovation which is much need in the automotive industry. 

Cities love climate change. Well, they don’t exactly love climate change itself, obviously. But they love doing something about it, at least if you measure their enthusiasm by the number who’ve signed up to take action against global warming at a local level.

Under banners that include Cities for Climate Protection, Energie-Cités, the C40 Cities Climate Leadership Group, hundreds of cities have made a commitment of some kind to addressing the problem, either by mitigation, adaptation, or both. These commitments have often been made at international conferences, and with the support of high-profile figures like Bill Clinton and Arnold Schwarzenegger.

But what can this plethora of commitments, conferences and coalitions actually achieve, other than making local politicians feel good about making themselves known on the world stage? At first glance, it may seem that the short answer to this question is ‘not much’. City authorities typically have little control over energy generation and regulation of large industry activities, and lack the tax-raising powers and other policy levers used by national governments to induce large-scale changes in greenhouse gas emissions.

Energy-guzzling: 70% of energy consumption occurs in cities. Image: mischiru at Flickr.

This week, however, Mayors from over 350 European cities set out to demonstrate that they could take measurable action against climate change. The Covenant of Mayors, signed on Tuesday, commits the cities to meeting and exceeding the EU’s 20% carbon reduction target by the year 2020. To do so, they will all produce a sustainable energy action plan, which will outline how they intend to achieve this, and report on progress every two years.

Even as the ink was drying on the newly-signed Covenant, concerns were being voiced about the amount of money available to fund the commitments. A cross-party group of MEPs claimed that the Commission’s President, José Manuel Barroso, had promised €500m for this initiative as part of the EU’s economic recovery plan, but that this has now been withdrawn.

To coincide with the signing, the European Investment Bank announced that it was developing a financing facility to assist cities to mitigate greenhouse emissions. The facility would be made available to two types of initiative that fall naturally into cities’ policy remit: public transport and energy efficiency in buildings. But the grant funding available in the first year is only €15m: not significant in infrastructure terms (Transport for London alone will spend around a hundred times this amount in the current financial year). The initial grant fund is accompanied by an intention on the bank’s part to spend more money on these types of project in its ordinary lending portfolio. How well city-based climate initiatives will fare among the Bank’s many other priorities remains to be seen.

The signing of the Covenant this week is a reflection that it’s not just national governments who feel they have an important role to play in addressing climate change. But it will be some time before we know whether this city-level initiative is capable of delivering real cuts to carbon emissions.