Climate credibility at stake, warn economists[fr][de] 

The group, led by Professor Michael Grubb from Cambridge University and Dr Ottmar Edenhofer from the Potsdam Institute for Climate Impact Research, submitted a statement  to Environment Commissioner Stavros Dimas calling for the EU-ETS to be strengthened.

Speaking at a joint press briefing with Commissioner Dimas and environmental group WWF on 9 November, Grubb said the second phase of the ETS, which runs from 2008-2012, will be a "credibility test" in the EU's pledge to reduce emissions of global warming gases.

But Grubb said that planned allocations for 2008-12 were currently inadequate: "Our estimate is that for the EU-ETS…to be consistent with EU obligations under the Kyoto Protocol, the current allocations need to be cut back by about 10%."

Grubb criticised the German plan for "subsidising in effect the construction of new coal-fired power plants" by granting them free carbon-pollution credits. "That is simply inconsistent with everything that we know about climate change and indeed with what the German government says about the need for steeper reductions," Grubb said. 

In contrast, he praised the Spanish and Italian plans for being "serious" and "consistent" with Kyoto obligations.

In line with the conclusions of the UK Stern Report, the 50 economists say that the costs of tackling climate change are "much lower than the ones caused by climate change impacts, such as floods, droughts or new infrastructures". They argue for:

• Tightening CO2 emission limits under the second phase of the ETS (2008-2012) in order to create scarcity on EU carbon markets and push CO2 prices up;
• auctioning excess allocations in order to push carbon prices upwards, and;
• harmonising the scheme "in order to reduce competitive distortions created by…each member state granting emission allowances in different ways".

Commissioner Dimas  officially signed the economists' statement on 9 November, promising that he "will ensure a rough and fair assessment" of National Allocation Plans (NAPs). "I am going to apply exactly what is needed to achieve our Kyoto objective," he said.

A host of EU countries are planning to emit more CO2 in 2008-2012 than they would if they followed a downward trend from their 2005 emissions. "Taken together, the first 17 NAPs notified to us propose an emissions cap that is about 15% above the actual emissions level in those member states last year," Dimas said earlier in October. "I cannot let that happen," he added.

On the same day, environmental group WWF presented an assessment  of NAPs submitted by the EU's six largest countries - France, Germany, Italy, Poland, Spain and the UK - for the second phase of the ETS. 

According to the WWF, the six NAPs, which together represent 73% of overall EU emissions, is "not encouraging". Poland is described as having "Europe's most ridiculous cap" while France is slammed for having "zero ambition" and inflating its emissions projections. Germany is termed "a paradise for climate killers" with new high-polluting coal power stations being encouraged, a "weak cap and overallocation".

Only the UK is praised, because it decided to auction 7% of total allowances. But its cap for phase two is described as only "passable" with "a mere 3.5% reduction" compared to phase one.

"WWF hopes that the Commission will reject the underperforming NAPs and ensure that the EU ETS becomes what it is supposed to be: a cost efficient tool to significantly cut CO2 emissions in the European Union."

Also on 8 November, the World Business Council for Sustainable Development - an organisation representing some 180 corporations around the world with a combined annual turnover of US$ 6 trillion dollars - outlined its preferences for a future international framework after 2012 when the Kyoto targets expire.

The WBCSD said that a future international framework to tackle global warming should include a long-term goal to reduce CO2 emissions expressed in quantifiable annual terms. The WBCSD said that such a long-term goal, which could be spread over 50 years, would "assist in reducing current levels of uncertainty" on future carbon prices and become "a point of reference for the development of national energy and climate policy".