Delbeke: EU "auf dem richtigen Weg" bei Klima- und Energieregelungen[en] 

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EU environment ministers met in June to discuss the energy and climate change package, which is scheduled to be completed by the end of the year. Where do we stand now?

The basic architecture of the proposal has been endorsed, not by everybody but by an overwhelming majority. Now, some countries did not endorse it, there are a number of new member states who would like to shift the base year [as a reference date to calculate emissions reductions targets]. We knew we would have this discussion but I think that we could clarify our position. So I would say we are on track, we will have a decision in December. There is still a lot to be done but that's a major issue that was clarified yesterday.

But what was clarified exactly? There was this demand from seven Eastern countries which asked the base year to be shifted to consider the emission cuts they achieved since 1990. How were their concerns taken into account?

There are two elements which I think became much clearer in the debate. 

The first is the attraction of the Commission's new system that makes the ETS [EU Emission Trading Scheme] a common system for the entire EU 27. This makes it easier for the new member states as they do not have to go for national emissions targets anymore. So we are now going for an overall target for the whole EU 27.

That's a very important and deliberate choice by the European Commission because we know that the old member states such as Spain and others have industrialised very fast and their emissions increase was much greater than the generous +15% that they were given. So we hope that a number of these member states are going to have this economic growth and in an EU-27 ETS, that will not be a problem. 

The other element is that, if you go for 1990 [as a base year instead of 2005] and you do what has been proposed by a number of member states, then you will bring in a lot of 'hot air'. De facto, this means that new member states would not have to do anything in terms of policy on energy efficiency, renewables, carbon dioxide reduction, etc. And it's hard to accept that because there is a lot of scope for improvement also in those member states in terms of housing insulation, transport, old technologies in industrial installation, and so on. So there is a tremendous amount of scope for emissions reduction in those member states and the proposal of the Hungarians would not address that. And as a consequence, we would not respect the 20% [emissions reduction target] of the heads of state. 

So at first sight, it may be attractive but when you think it through, it has major drawbacks.

So how can their concerns be addressed in your view?

Well, it comes down to a distribution issue between less wealthy and wealthy member states. And I think that became very clear in the discussion. And of course those who are interested to get more ask for more. And that is what the negotiations now are going to have to look at.

Sigmund Gabriel, the German environment minister, drew a comparison with the global negotiations, with wealthy countries and emerging economies' opposing views about sharing the burden of emissions reductions. Do you think the EU could provide a sort of blueprint that could be replicated at the UN level?

I would hesitate to use the word 'blueprint', but it gives some indications. At the international level, we always talk about common but differentiated [commitments on greenhouse gas reductions]. So we have a common challenge. We all can do something but what we do is different according to the economic circumstances and that's what we are doing in Europe. So the energy-climate package is a translation within Europe of the common but differentiated approach. And it says that everybody should do something also if your emissions levels are relatively low and if your economic standards are not as high as others, we all have to do something – although to a different degree.

Continuing again the comparison with negotiations at global level, are technology transfers to poorer countries a key element of the solution also for the EU?

Absolutely, technology is going to be part of the solution and what we do in fact with the new member states is a quicker modernisation of industrial plants and installations. And that also would be an element at the international level.

Moving on to the specifics of the revision of the EU emissions trading scheme: Poland raised an issue about full auctioning of allowances in the power sector, saying it would raise electricity prices by more than 100%. Is it something the Commission envisaged in its proposal? What can be done about it?

The figures are exaggerated. There is an impact on the price of electricity but we do not see such a high price impact. For Poland, it is higher than for others, you can consult the figures in our impact assessment, but over 100% is exaggerated. 

What is in that figure of the Poles is that they have a power sector that failed to modernise plants over the last decade. And now it all has to happen in a short period of time. The electricity prices of Poland today are regulated, are much lower than for example in Germany. And now Poland is paying the price for it. If you want to have investments in the sector, it has to happen now because demand is increasing, old equipment is still in place, and so on. And all the challenges come at once: the modernisation of the power sector has to happen, the liberalisation of the power sector, and the climate and energy package. 

There is also the coal problem which is more prevalent in Poland than in any other member state…

Yes, but the way you can use coal in power generation is very different. If you do it the old-fashioned way then you have a lot of emissions but there is very energy-efficient technology also for coal-fired power stations. So it is not a black and white "everybody against coal" situation. The real question is what technology you choose when you use coal. 

You’re talking about available technologies, not carbon capture and storage, I guess?

Exactly, there are powerful available technologies already now. Of course if they go for CCS as they seem they are interested to do, we would say "bravo, let's find ways to facilitate that process". 

Some member states are also suggesting increasing flexibility between sectors that are covered by the ETS and those that are not, in order to achieve their national emissions targets. What is your view on that?

Well, we do not like that flexibility very much. That there is flexibility within the non-ETS sectors as is currently the case for sectors already covered by the ETS – that is something we can understand. But we have to make sure that the ETS is trustworthy and acts as an incentive for major emitters of greenhouse gases to cut their emissions. 

Second, we want to prevent that prices go down again as we have witnessed in the first period of the scheme. So, in short, the ETS is responding to another mechanic than other sectors. 

On the other hand, non-ETS sectors are a jigsaw of very different policies that have to be implemented in diverse sectors: transport, construction, agriculture, waste, etc.

But the non-ETS sectors are nevertheless taken into account in the overall 20% overall reduction objective… 

That's true but the calculation is always an approximation. We want to follow a very cautious line and not have an ETS which is disturbed by the failure or success of another policy in the non-ETS sector.

What about countries which have got a lot of scope for emissions reduction in non-ETS sectors but not that much heavy industry covered by the ETS? Luxembourg was raising that point about transport, which is currently not in the scheme… How can this be made to all fit together?

I think that the Commission's proposal fits together. What we said at the environment council in June was that we were ready to give flexibility within the non-ETS sectors of the member states. 

For example, if a country like Romania can increase its emissions in the non-ETS sector by 20% and a country like Ireland has to reduce its emissions by 20%, well perhaps the two can find an interest in shifting part of the surplus of Romania to Ireland.

However, this is a flexibility that is not yet considered in the proposal. There are other ways of improving the flexibility: on the time path, on CDM [Clean Development Mechanism], etc. There are many different ways of increasing the flexibility.

About CDMs, is there a cap that the Commission wants to place on their use? Business groups are pushing for more CDM credits to be made available for example. What is the Commission's view on this?

There are different caps. There is a limitation we foresee in the ETS and a limitation for non-ETS.

However, on CDM, we should put things in the perspective of the international agreement that needs to be negotiated. So, what do we bring on the table for Copenhagen? We bring a potential for buying up a lot of CDM credits. The real question is - if we already incorporate it now in our legislation, then it is already given away. And we want to have it as a negotiation element. 

This means the private sector would be ready to pay for emissions reduction projects outside Europe. This is a very important way of driving technology around the world but it’s also a part of the international negotiation.

Roughly speaking, what percentage of CDM would the EU be prepared to give compared to its overall emissions reduction target? Knowing that if the EU gives away too much, then the carbon market is likely to collapse…

Exactly, but it is too early to say that. For the following reason: in order to prevent a fall in the carbon price, we need that almost every country in the OECD area adopts a cap-and-trade system in which CDM is incorporated. If we have that, then there will be a lot of demand for CDMs and so that would change the picture tremendously. 

However, we don't know yet where we are. We hear for example, and follow with some concern that in the United States, there is a very reluctant attitude towards CDMs. So, it would be a missed opportunity if at last the US goes for a cap-and-trade system but does not allow for CDMs. If that were to happen, all the CDMs would come only to Europe and we want to prevent that. 

So the demand for CDMs really belongs to the international negotiations. And this is where the industrialised world needs to get together with an open mind for buying many more CDMs than they currently do. And if others are more open, then we can afford to be open as well. But if only Europe is open and all the CDM credits of the world go to Europe, then we really have a problem.

About US policy, it seems, they are heading for a cap-and-trade system. How do you see the difference between McCain and Obama as far as climate change policy is concerned?

I observe that both are having a very open mind on climate change. Of course, we haven't seen the small print and we have to see how things develop. But for sure, it will be very different in the future. 

I myself collaborated with McCain in the past and took part in his Senate committee which studied the emissions trading system and where he appeared for a testimony. I know how open the man is to a cap-and-trade system.

About Obama, we hear exactly the same. Where we may have a difference is on the CDM, these international offsets, where it is not yet clear which way he wants to go. It also not yet clear what scope he wants the system to have. 

So, it is too early to say, but I think we will have a very different debate once the elections are over and we look forward to that, we have been in contact with colleagues in the United States already for some time. 

Moving on to the topic of CO2 emissions from cars, it appears that there is broad support among EU member states to go for a long-term target for 2020. This was not part of the Commission’s original proposal, so what do you think about this development?

In the non-ETS discussions, member states seem to come forward saying that unless there are strong community measures, they will not be able to do it. So, many more member states spoke out in favour of the Commission's proposal and also on the long-term orientations.

What I read in this - and that is why we have an open mind on this – is that 120 or 130 grammes [of CO2 per kilometre] is not the end point. We have to go further. What precisely it will be in 2020 - there will be a review - it is very difficult to say. So, we signalled that we are willing to consider a long term target but not giving up the target for 2012.

About European industries' exposure to international competition: some have warned that they might relocate to other part of the world where environmental standards are less stringent. Meanwhile, the Commission said it will review available options in 2010 after the UN meeting in Copenhagen. Are there any no-go areas in this debate as far as the Commission is concerned? The border adjustment tax for example is being heavily pushed by France…

On the border measure, it is in the proposal [put forward by the Commission in its January climate change and energy package]. As is the free allocation [of emissions credits under the ETS] and the possibility for up to 100% free allocation. 

But that is not the point. The point is that we have to agree in Europe on this. And when people look at the border measures, we simply observe only one member state putting the border measures on the table - France. While 26 others did not bring it on the table. So it is still an idea that needs maturing, that needs perhaps more time than was anticipated. And when you think of the politics and the technicalities through – WTO has been mentioned, trade disputes have been mentioned even if they are WTO-compatible, etc.

And I think there is strong support to first look at internal measures first and then see if there is a problem left and go for external measures. 

This is the consensus that I see but people are not ruling it out, they are not saying it is a no-go area but people do not see it as an immediate solution for the next one to three years.

France, which takes over the rotating EU Presidency on 1 July, has a very busy agenda trying to close negotiations on the climate and energy package before the end of the year. How would you rate their chances of success?

I see two good elements. First, there is a strong political commitment by the French which was reiterated at the last Environment Council by Minister Borloo and Kosciusko-Morizet. And a couple of months ago, President Sarkozy came out very strongly, saying this is the priority of the French Presidency. So that's a political commitment.

The second is, when you look at what needed to be done between 23 January [when the Commission unveiled its proposal] and the end of December, I think we are on track: The reading, the understanding, the grasping of the issues and defining the difficulties - all of that now has been done. And we are in June. So, now we have to have very quickly a text with brackets appearing with the precise proposals. The last environment council was still very much policy-oriented but the proposals are on the table and we now need some revised texts with brackets.

That will all be on the table, we can fairly assume, by the start of the French Presidency. So there is a lot of work still to be done, I am not downplaying that, but the preparatory work to really kick-start the negotiations is there in Council, in Parliament. 

We knew there wasn't that much time but I am impressed about how much has already been done and I am impressed as well by how many things have already been cleared up. I think many colleagues at the last environment council would have been able to say where the balance is going to be in December. But of course, politically, the negotiations on where precisely the fine print is, a lot remains to be done. But I would say we are on track. 

Half of it is done, that is what I would say. And at the June environment council, the predominant majority of member states agreed to say that the architecture is there. It is balanced, we need to fine-tune it here and there – find a balance between old and new member states, carbon leakage, specific problems on flexibility, etc. And here and there, there are problems that are specific to certain member states that will have to be addressed – the Irish talk about agriculture and the Estonians have the oil shales, for example. 

These are the specific things that will have to be addressed but we are aware of it. That is the variety and differentiation we have with 27 member states in the EU.