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The EU and Climate Change

Scientific Background

Although doubts have been expressed by some, the majority of climate scientists agree that man-made greenhouse gas emissions are having a marked effect on the earth's climate. Globally, the ten hottest years on record have all occurred since the beginning of the 1990s. Current climate models predict that global temperatures could warm from between 1.4 to 5.8oC over the next 100 years, depending on the amounts of greenhouse gases emitted and the sensitivity of the climate system. Rising sea levels are already a problem for some countries but the situation is likely to deteriorate further, potentially causing significant land loss in areas like Bangladesh and Florida and even greater disasters for low-lying islands such as the Maldives.  Large areas of cultivated land are continuing to turn into desert and food and water shortages are a serious possibility in parts of the developing world.  The social, environmental and economic costs associated with a significant level of climate change are likely to be catastrophic.  The security consequences could be significant as well, with conflicts emerging within and between countries as shortages of food and water become a significant problem in parts of the world. 

The EU has been the world leader in promoting effective measures to deal with the problem and has used both its collective weight and its example to bring pressure to bear on other countries to take action.  In arguing for measures to prevent or reduce the impact of climate change, we are stronger as an EU block than we are as individual nations; the UK has been an ardent supporter of EU action on climate change. 

Events at the Copenhagen summit in 2009 may be a harbinger of change to come however.  Increasingly it will be the USA and China that are the most important players in the debate on climate change issues.  In one sense this is a positive development – the EU has been trying to engage US interest and commitment since before the Kyoto Treaty for example – but it may have negative consequences as well.  The EU will have to work hard to maintain its global influence on climate change policy in the light of increased US and Chinese engagement. 

The EU Climate Change Programme

The EU began to tackle the threat of climate change in 1991 but, after the signing of the Kyoto agreement at the 1997 UN Summit, realised that far-reaching measures would be needed if EU Member States were to meet their Kyoto obligations to reduce carbon emissions.  The EU Climate Change Programme was launched in June 2000 in order to identify all the necessary elements of an EU strategy to implement the Kyoto agreement.  The key result of the first Climate Change Programme was the EU’s emissions trading scheme (see below).

The EU took things a stage further when, at the March 2007 European Council, Member States agreed on an ambitious plan to further reduce greenhouse has emissions by 30 per cent from their 1990 levels by the year 2020 and agreed to increase the use of renewable energy sources to 20 per cent of EU energy needs by the same date.  This led, after detailed discussions of legislation, to final agreement on a number of measures at the December 2008 European Council.  The significance of this step was it put the EU in the leading position in terms of its willingness to cut greenhouse gas emissions in advance of the UN negotiations due to take place at Copenhagen in December 2009. 

<h1 style="MARGIN: 0in 0in 0pt">Emissions Trading Scheme (ETS)</h1>

The EU established a market in CO2 emissions on 1 January 2005; it caps the overall level of emissions allowed but enables the trading of allowances.  About 12,000 large industrial plants in the EU were covered by the original scheme.  Enterprises have a financial inducement to reduce their emissions because they will face an increased cost if they exceed their historic levels and have to buy a permit. 

Each Member State government produced a national allocation plan, giving the total carbon dioxide emissions permitted for that country and the allowances for industry and power generation.  The UK Government submitted its proposed allocations in April 2004 but later revised this figure upwards by 20,000 tonnes because of fears that the original proposal was too restrictive and would undermine the competitiveness of UK industry. 

The 2008 directive agreed by Member States and the European Parliament increased the coverage of the ETS from the power stations, oil refineries and several heavy industries, including glass and brick manufacture originally covered, to include further industries, notably aluminium and ammonia production and petrochemicals. 

In the first period of the ETS scheme, 2005-12, allowances have largely been allocated free of charge but from 2013 the electricity power generation sector will have to pay in full for its allowances.  In the case of manufacturing, auctioning of allowances will be phased in with 80 per cent of initial allowances allocated at no cost but decreasing to 30 per cent by 2020.  The price of carbon in the ETS has been too low according to some critics; this is partly the consequence of global economic crisis, which has left companies with carbon allowances bigger than they need, thus depressing the price.

In order to deal with the danger that manufacturing industries that generate a large quantity of emissions would move out of the EU area to avoid being caught by the new rules, the Council and the Parliament agreed that industries at risk of what is known as “carbon leakage” should be covered by exemptions of up to 100 per cent of their allowances.  This rule would apply until there is an international agreement and is subject to certain conditions.  Shipping will be included in the ETS scheme if the International Maritime Organisation has not agreed reduction targets – as is intended – by the end of 2011.  The existing system for aviation will remain in place, that is, it will continue to receive 85 per cent of its allocation for free.

EU Member States will be able to offset emissions in their countries by buying credits from third countries but these will have to be verifiable and will be restricted to a maximum of 50 per cent of the EU-wide emission reduction target. 

Other EU Measures

The Council and the Parliament also agreed on a directive in December 2008 concerning carbon capture and storage (CCS).  This will allow a substantial portion of the income from the ETS to be used to pay for large-scale CCS commercial demonstration projects.  It is expected that these resources will enable between six and nine such projects to be funded.  All new power stations with an output of 300 Megawatts or above to will have to assess whether storage sites are available and the feasibility of fitting CCS equipment to the power station.  A further regulation to reduce the amount of CO2 produced by cars was also agreed.  This will reduce the current limit of 160g CO2 per kilometre down to 120g CO2/km by 2012.  This will be done through improvements in technology, for the first 130g CO2/km and the remaining 10g will be achieved through other aspects of the car’s operation, such as use of biofuels or better tyres. 

Global Action on Climate Change

The EU has not been working on ways to tackle climate change in isolation; from the beginning it has worked hard to make a success of global attempts to address the issue through the United Nations.

Although UN countries agreed at Kyoto in 1997 to reduce their greenhouse gas emissions by 5.2% by 2012 from the baseline of 1990, and the treaty came into force in February 2005, the United States never ratified that treaty.  Talks to find a new way forward that would be acceptable to the United States and to the developing countries included the UN Climate Change Conference in Montreal in 2005.  That meeting agreed to start looking at commitments beyond 2012 for developed countries that were signatories to the Kyoto agreement and wider discussions were continued afterwards, involving China, Brazil, India and the United States, through the medium of the G8, and at Bali in 2007.   

The Copenhagen UN meeting in December 2009 failed to reach the kind of binding, international treaty involving the United States and the major countries of the developing world that the EU had wanted.  Nonetheless, the elements agreed in the “Copenhagen Accord”, were significant:

·        global warming must be limited to less than two degrees centigrade above pre-industrial levels;

·        developed and developing countries were invited to table their national action plans to reduce greenhouse gas emissions by 31 January 2010 – over 100 countries have done so;

·        procedures for monitoring and verification of national emission targets were agreed;

·        a global fund of $100 billion per year to help developing countries cope with climate change will be established by 2020.

Valuable though these steps were, they are not adequate to deliver the objective of keeping the global increase in temperature to below two degrees centigrade.  It is intended that the points agreed at Copenhagen be turned into legally binding obligations.  A series of meetings in 2010, culminating with the UN Conference at Cancun, in Mexico, in December, are intended to take this process forward and hopefully conclude it.  In reality, such are the differences still outstanding between the parties, agreement is more likely at the 2011 UN Climate Conference in South Africa.

Next Steps

Reports on the Copenhagen summit suggested that the EU had played no significant part in the final agreement.  This was misleading: without EU support, and the leadership it gave over the years since the Kyoto agreement, no accord would have been possible.  The EU having adopted a forward-looking position before Copenhagen, the obstacles to an agreement came from some of the newly industrialised countries, notably China, who were reluctant to concede that they had a major part to play in reducing greenhouse gas emissions.  It was essential to President Obama – in order to get any final treaty ratified by the US Senate – that he secured Chinese agreement to monitoring and verification of national targets.  This he did, although the details are yet to be agreed.

In the run up to the Copenhagen Conference the European Council agreed that a more substantial target of developed countries collectively reducing greenhouse gas emissions by 80-95 per cent by 2050 needed to be adopted.  This position, which is based on advice from the UN’s Inter-governmental Panel on Climate Change, is beyond anything tabled so far.   Nonetheless, it shows the scale of the EU’s determination to become the most climate change friendly region of the world that it should have taken this position.  So far, although the 100 or so countries who have developed national action plans following Copenhagen amount to some 80 per cent of global greenhouse gas emissions, the cuts they have offered fall well short of meeting the objective of staying below two degrees centigrade.

At the March 2010 European Council meeting the Member States reiterated their support for what had been agreed at Copenhagen; called for those measures to be swiftly implemented; and suggested that a step-by-step approach should be followed in order secure the necessary “global and comprehensive legal agreement”.  The said that they were committed to a 20 per cent reduction of greenhouse gas emissions, compared to 1990, and to move to 30 per cent by 2020 if other developed countries agreed.

Achieving agreement at Cancun or in South Africa will be difficult.  The goal of legally binding and effective obligations must remain as the core objective of the UN process. 

April 2010

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