Leading article: No time for retreat

The European Union's credibility as a serious economic force has been restored this week by its co-ordinated manoeuvres to rescue the continent's banking sector. The task at hand now for the EU is to maintain its credibility as a serious player in the global struggle to mitigate dangerous climate change.

A coalition of central and east European member states, joined by Italy, has this week been arguing that the financial crisis will make it too onerous for them to meet the Union's collective commitments, made last year, to cut carbon dioxide emissions. But let there be no doubt: it would be folly to tamper with the European-wide target of reducing emissions to 20 per cent of 1990 levels. For one thing, this would be an abdication of the EU's leadership role on climate change. Last year's EU agreement was supposed to be an example to the rest of the world of what a post-Kyoto Protocol global plan would look like. For another thing, delaying the full implementation of the EU emissions trading scheme (ETS), as some nations are urging, is economic madness. At present, the half-implemented ETS is merely delivering a colossal subsidy to the energy sector. Pollution permits need to be distributed through auctions as soon as feasibly possible.

But by far the strongest argument for proceeding is that it is in Europe's direct long-term economic interests to mitigate climate change. As the path-breaking report by Sir Nicholas Stern two years ago made perfectly clear, the costs of acting are vastly outweighed by the costs of not acting. The financial turmoil and the fast-approaching recession do nothing to change that fundamental calculation.

If Europe's leaders are wise, they will see this situation as an opportunity. Gordon Brown's suggestion that the creation of more jobs in the home insulation industry will help offset the pain of rising unemployment has been scoffed at. But jobs in a new, greener economy can be a significant economic stimulus for the developed world.

Recessions and financial crises have historically been met by short-sighted and self-harming protectionism by politicians. This time there is another threat. This crisis must not prompt a retreat from the battle against climate change.