The EU will be able to upgrade its 2020 objective of slashing emissions of global warming gases from 20% to 30% only if an international agreement is struck to spread obligations evenly among the global community in order to avoid competitive distortions, the group said in the paper.
"Seen from a European perspective, an effective international framework is one that allows the EU to continue competing in the global market by ensuring that the gap is minimised between those leading on the implementation of emission constraints and those following as their economies build capacity to manage emissions," said Jeroen van der Veer, former CEO of Shell and chair of the ERT's Energy & Climate Change Working Group.
The ERT is a forum of around 45 chief executives and chairmen of major national companies, including E.ON, GDF Suez, Siemens, Nokia, BT and Fiat.
The business leaders see a global greenhouse gas emissions market as the principal tool to deliver emission cuts. Industrialised countries with binding targets should link national cap-and-trade systems together to finance clean technology programmes in developing countries, the group said.
"This will establish a widespread market price for emitting CO2 (and other GHGs) into the atmosphere and deliver the reductions at lowest cost to the global economy," the paper reads.
UN projects to go large-scale
The UN's Clean Development Mechanism (CDM), which allows industrialised countries to earn offset credits by financing mitigation efforts in the developing world, should be redesigned to support large-scale projects - notably in the electricity sector - that are driven by a carbon price, the ERT argues. Lower-cost measures such as energy efficiency would largely be financed by developing countries themselves, it says.
More advanced developing countries, on the other hand, should "stabilise their absolute emissions in the medium term through nationally appropriate actions and thereafter, make a firm commitment to reduce absolute emissions," the report states.
This could be done via sectoral agreements with industrialised countries, the paper argues. The agreements would enable developing countries to adopt emissions reduction programmes in specific sectors like cement or steel to tap into funding and build capacity.
"Each agreement should include the eventual implementation of a long-term binding target for the sector or sectors in question," the ERT says. It adds that the approach could be extended to areas such as deforestation and afforestation. This has been envisaged under the UN's REDD mechanism, which is likely to feature as part of the deal in Copenhagen (EurActiv 20/04/09).
In order to reduce the need for protection for EU sectors that have the price of carbon added to their production costs, each agreement would have to involve at least 80% of world production of products in each particular sector and lead to CO2 reductions comparable to what the EU has set, the paper states.
One of the technologies that the business group would like to see transferred to the developing world through revamped CDM projects is carbon capture and storage (CCS). It calls for an international carbon storage certification, which would deliver a certificate for each tonne of carbon buried underground.
