Dare and Care

Briefing Note For Workshop XIV
This Briefing Note has been prepared for Workshop XIV of the 2009 European Business Summit. The workshop will run between 10.45 and 12.15 on Friday 27th March 2009. This Briefing Note has been prepared by EurActiv.com. The session will be moderated by Frédéric Simon, Editor of EurActiv.com.

1. Introduction

Every year in December, parties to the United Nations Framework Convention on Climate Change (UNFCCC) meet for a major Conference of the Parties (COP), as part of an ongoing international diplomatic process designed to avert catastrophic climate change by reducing countries’ greenhouse gas emissions.
The Copenhagen conference will be the 15th COP and represents the last stop in global talks, launched in December 2007 in Bali, to clinch a successor to the Kyoto Protocol, which expires in 2012. The post-2012 global climate-change policy regime will provide the international framework for action.
With energy-related CO2 accounting for 61% of global greenhouse-gas emissions today, the energy sector will have to be at the heart of discussions. The target that is set for the long-term stabilisation of greenhouse-gas concentration will determine the pace of the required transformation of the global energy system.
A major challenge is to find a way of sharing global emissions reductions between rapidly developing countries like China and India and more industrialised countries like the US and Europe, which are responsible for the bulk of historical CO2 emissions.
The conference in Poznan last December, a key milestone between Bali and Copenhagen, achieved little progress. Developed countries were supposed to submit proposals on emissions reductions, finance and technology but little has actually been achieved.

2. Facts and figures

• Without a change in policy, the world is on a path for a global rise in temperatures of up to 6°C (International Panel on Climate Change).
• According to the International Energy Agency (IEA-2007), global energy-related CO2 emissions, which account for 61% of global greenhouse gas emissions, show no sign of decline. The latest complete data of CO2 emissions indicate a 33% rise between 1990 and 2006. Energy-related carbon dioxide emissions will increase by 45% from 2006 levels by 2030.
• Between 2005 and 2006, all of the growth in CO2 emissions took place outside the OECD region—three quarters from China, India and the Middle East alone. Three quarters of the projected increase in energy-related CO2 emissions arises in China, India and the Middle East, and 97% in non-OECD countries as a whole.
• In the non-OECD world, vibrant economic growth but also subsidies that shield consumers from substantial energy price increases have led to emissions growth. Energy subsidies amounted to a staggering USD 310 billion in 20 non-OECD countries representing 80% of total non-OECD primary energy demand in 2007.
• Emissions in OECD countries are expected to reach a peak soon after 2020 and then decline. Only in Europe and Japan are emissions expected to be lower than today in 2030, according to the IEA.
• The bulk of global energy-related CO2 is expected to come from cities, their share rising from 71% in 2006 to 76% in 2030 as a result of urbanisation. The power generation and transport sector contribute to over 70% of the projected increase in world energy-related CO2 emissions to 2030. The projected increase in power sector emissions in the OECD – 0.4 Gt between 2006 and 2030 – is less than the increase in emissions from China’s power plants in the past two years alone.
• According to the UNDP, by 2015, developing countries will need $86 billion annually to adapt to changed weather. The UNFCCC says that between $28 and $67 bn is needed to each year to build flood barriers and strengthen infrastructure.

3. EU position in international negotiations:

• The EU as a whole and most member states individually are on track to meet the targets set by the Kyoto protocol, which came into force in 2005.
The 15 older EU countries pledged that they would cut emissions by 8% by 2012 compared to 1990 levels, while ten of the 12 new Member States have individual targets to reduce emissions by 6% to 8% (at the exclusion of Malta and Cyprus). According to an EEA report published in October 2008, only Denmark, Italy and Spain will fail to meet their targets. The rest are on track, with France, UK, Greece and Sweden having passed the 2012 targets in 2006.

• The main instrument for the EU to reach its target is the EU Emissions Trading Scheme, which caps industries emissions and allows them to trade any potential surplus among themselves.

• EU countries can meet part of their targets through flexible mechanisms designed by the Kyoto protocol. Since 2005, two mechanisms have been put in place but their contribution to actual emissions reduction is so far limited:

o Clean Development Mechanism: it allows developed countries to finance projects in poor countries;
o Joint Implementation system: whereby countries invest in emission-reducing credits in other developed countries)

• To further the EU’s commitment on Kyoto, EU leaders reached an agreement over an energy and climate change ‘package’ to deliver more ambitious objectives of slashing greenhouse-gas emissions and boosting renewable energies by 20% by 2020 and by 30% if other industrialised countries, especially the US agree on a global deal. The package is designed to reduce the Union’s dependency on imported fuels and set the pace of “a new global industrial revolution”.

4. Issues and challenges:

The disappointing outcome of Poznan

Last December, ministers at the United Nations Climate Change Conference in Poznan took a series of decisions including a work programme for 2009, which will accelerate the negotiations, concrete targets for emissions reduction were not agreed unresolved. Instead many developed countries tried to shift the focus on developing countries calling for cuts in China and India. Described as a “blue-collar conference,” the meeting in Poznan did deliver a few results :

• Work programmes for 2009 which calls for proposals in February and a negotiating document by June 2009. Heads of State and Government will meet in September at opening of the UN General Assembly to bring the negotiations at a higher level ahead of Copenhagen.
• An improved framework for the Kyoto Protocol’s clean development mechanism (CDM)
• Despite the lack of agreement to scale up funding for adaptation, parties agreed to make it easier for developing countries to get direct access to the Kyoto Protocol’s Adaptation Fund, fed by a share of proceeds from CDM and voluntary contributions. The share of proceeds amounts to 2 percent of certified emission reductions (CERs) issued for a CDM project activity.
• Progress made on an agreement to reduce emissions from deforestation and forest degradation (REDD).
• A summary document of the ministerial round table on a shared vision on long-term cooperative action on climate change, giving political direction on how to move towards an agreed outcome in Copenhagen.
• The endorsement of the Global Environment Facility’s “Pozna? Strategic Programme on Technology Transfer”, which is seen as a step towards scaling up the level of investment in technology transfer in order to help developing countries address their needs for environmentally sound technologies.

Policy scenarios for a “responsible deal”:

? IEA World Energy Outlook (WEO 2008) puts forward possible policy scenarios to stabilise greenhouse gas (GHG) concentration at 550 and 450 parts per million (ppm) of CO2-equivalent, which would stabilize temperatures rises respectively by about to 3°C and to 2°C increase.

These lower carbon scenarios would require a substantial shift in investment patterns and a major transformation of the way investment decisions in the energy sector are taken – requiring additional investment in power plants and more energy efficient energy-related capital stock.

Such a greening of the energy system would require additional investment of USD 3.6 trillion in power plants and USD 5.7 trillion in energy efficiency over the period 2010 to 2030 in the 450 ppm scenario. These additional investments correspond to 0.55% of GDP per year, but they bring energy bill savings to consumers of USD 5.8 trillion from 2010 to 2030.

According to the IEA, OECD countries alone cannot put the world onto a 450-ppm trajectory, even if they were to reduce their emissions to zero.

? While technological progress is needed to achieve some emissions reductions, efficiency gains and deployment of existing low-carbon energy accounts for most of the savings. According to the IEA, the power sector would need to undergo a dramatic change, with Carbon Capture Schemes (CCS), renewables and nuclear each playing a crucial role.

? The European Union is expected to agree at a Spring Summit in March 2009 on providing financial aid to the least developed countries to help them tackle climate change. At the moment there is no agreement on where to get the financial means. Negotiators will have to decide on whether to use proceeds from the Emissions Trading Scheme or the Joint Implementation mechanism to scale up funding.

Balancing act of major polluters:

• The new US administration will have a decisive role on global negotiations. President Barack Obama has promised to set ambitious targets to reduce emissions to their 1990 levels by 2020 and by an additional 80 percent by 2050. By the end of the year, Washington is expected to launch its own carbon trading system, with global carbon market linkages, including between US states and the EU ETS, possible in the post-2012 period.

• More than half of US states have already adopted formal green-energy goals. It is expected that the U.S. Congress and the new administration may impose a mandate that the nation get 10 or 15 percent of its electricity from renewable sources within a few years.

• Some analysts in Washington believe it is unrealistic to expect a new global deal to replace the Kyoto protocol by next December. At the most, what can be achieved is a framework for a final agreement. Obama, experts say, will need to focus first on pushing for “clean energy” legislation at home.

• Meanwhile, China and India have adopted last year their first national national plan to tackle climate change, giving priority to renewable energy sources. Considered among the world’s biggest producer of greenhouse gases, they both refuse to accept binding targets for emissions, saying wealthy developed nations must take the bulk of the responsibility for the problem.

• Brazil has instead focused its action on reducing deforestation.
The plan promises to make the country a more influential player in global climate-change discussions, helping to push the United States and the European Union to agree to emissions cuts and head off the adverse effects of climate change. It could also encourage more pledges from wealthy countries seeking to essentially pay Brazil to preserve the forest for the good of all humanity.

• The real challenge will be Russia. Experts fear the Russian government will be uncooperative in the negotiations. There is widespread view in Moscow that the costs of even moderate climate change actions would be higher than the possible gains. Without a significant shift in the government’s line, Russian negotiations are likely to argue for a compensation scheme in Copenhagen.

5. Possible questions for the thematic session

• What is a realistic outcome at the Copenhagen COP at the end of 2009?
• Will economic worries divert attention from strategic energy-security & environmental challenges?
• Will negotiators at COP-15 in Copenhagen in 2009 have the political support needed to push forward a Clean Energy New Deal?
• What kind of adaptation measures do we need to limit the unavoidable impacts of climate change, especially in developing countries?
• How can we share the burdens of climate change but also the chances offered by a progressive climate and energy policy?
• How can we design a post-Kyoto protocol, and which actors can and should take what kind of responsibility?
• In the globalised economy, there is a lack of adequate funding for helping poorest countries to tackle climate change. Would a levy on carbon trading be a viable solution?
• How to finance new technologies? Some advocate for a Tobin Tax (sales taxed on currency trades across borders). Would such a measure solve some of the financial hurdles?

6. Further reading

• EU policy documents:
o Limiting Global climate change to 2 C: The way ahead for 2020 and beyond, 10 January 2007
o Impact assessment, 10 January 2007
o Impacts of Europe’s changing climate – 2008 indicator-based assessment (European Environment Energy report), April 2008
o Stakeholder conference on post-2012 climate change agreement, 15 October 2008
o EU Energy and climate change – Elements of the final compromise of the European Council, 12 December 2008
o EU Energy and climate package, texts adopted by the European Parliament, 17 December 2008

• IEA:
World Energy Outlook 2008
Options for a Cleaner, Smarter Energy Future

• United Nations Framework Convention on Climate Change
(general website)
Decisions adopted by COP 14 and CM4 in Poznan (Poland), 12 December 2008
Dates and venues of future sessions ahead of Copenhagen

• Pew Center on Global Climate Change
(general website)
Adaptation to climate change: international policy options, November 2006

(general climate change pages)
Feeble EU and group of laggard countries stymie UN climate talks
Copenhagen, December 2009 – Decision time: we need a new global climate deal!

• Oxfam:
Analysis of the Poznan Conference outcomes
Delay kills: Disappointing climate negotiations leave millions vulnerable people at risk

• Germanwatch:
Climate change performance index 2009Lawrence Berkley National Laboratory

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