Official talks on future transatlantic co-operation on climate change were officially launched in April this year with the visit of an EU troika to Washington (EurActiv, 21 April 2005). But as EU and US climate negotiators claim they are making progress, it clearly appears that strategies on both sides of the Atlantic remain far apart.
At stake is the shape of the future international climate change regime for the period after 2012 when the Kyoto Protocol comes to an end. While the EU is strongly supportive of a binding multilateral Kyoto-style framework with GHG reduction targets proportionate to each country's level of industrial development, the US continues to refuse any such scheme.
The reasons behind this are not just the neo-conservatism of the Bush administration. "When you look at the US, energy and climate policy are really framed in a security of supply context. In Europe, it is framed in an environmental context," says Christian Egenhofer, senior climate and energy policy researcher at the Centre for European Policy Studies (CEPS) in Brussels.
The problem, Egenhofer says, is that 50% of US electricity generation comes from coal. Any climate change policy which includes reduction targets will tend to undermine this production vital for the US economy. "If you look at it from a security of supply perspective, the US will not accept anything which undermines its coal in the power generation sector," says Egenhofer.
In contrast, Europe has about 80% of the world's natural gas reserves, Egenhofer points out. Considering Europe has long started to phase out coal with massive mine closures starting in the 1960s, you understand why it was so bullish at supporting Kyoto - it came at a much lower cost to its economy.
However, not all of the US is rejecting Kyoto. A growing number of cities and states including California and New York are now adopting Kyoto-like GHG reduction targets, pledging to cut their emissions by 7% compared to 1990 levels. If it becomes big enough, the rally might even end up persuading the federal government to take action. At some point, the situation may become so fragmented that the federal may level step in. But such a move is currently being held back by business reluctance, says Egenhofer.
Speaking in Brussels on 18 May, President Bush's senior adviser on the environment James Connaughton said the efforts of states are "critical" to the objective of reducing the GHG intensity of the US economy. "We welcome all of that activity, but we're hopeful that they will not make choices that are economically damaging," Connaughton warned.
"The kinds of reductions we don't want are the ones that occur by putting people out of work. Intensity is a measure of reduced GHG with economic growth and creation of jobs. Those are the kinds of reductions we want to value here in Europe and in the developing world," he added.
The European Commission has been highly critical of the US energy intensity approach. Even if the US achieves its 18% target for energy intensity reduction in 2012, it says current growth projections will push total emissions 30% above that of 1990.
US's Connaughton actually admits to this: "Because of growing population, because the biggest challenges are in the transport, housing and office building sectors, we will experience in the near future a continued rise in GHG. But they will rise at a much slower rate than the rise in GDP and population". "Now, absolute numbers matter too, he added, but the first step has to be the decoupling".
As signing up to Kyoto proved too great a challenge, the US instead opted for research in low carbon technologies. After energy intensity reduction, this is the second component of the US climate change policy announced for the 2005 fiscal year - an ambitious 5.8 billion dollars a year programme to drive investments in climate change science and technology as well as tax incentives for cleaner energy in the near term.
Connaughton explains that current US activity is focused on identifying the most effective opportunities in existing and future technologies to reduce GHG in the short and in the long run. These include plans designed in 2004 for capturing methane from coal mining and sanitary landfills to turn them into energy (methane-to-market), zero-emission coal-fired power plants, clean diesel and bio-energy programmes. Other long-term research plans are being developed on hydrogen, nuclear energy, carbon sequestration and storage and more.
US efforts - and budgets - on research and technology indeed look impressive. It certainly dwarfs the 2.5 million euros proposed for environment and climate change in the Commission's 7th research programme due to start in 2007. Combined with the research funded by the member states, the figure would amount to 3 billion euros, according to Environment Commissioner Stavros Dimas (EurActiv, 31 May 2005). However, a precise Europe-wide R&D figure could not be confirmed by the Commission.
America's focus on technology has gone down badly in Europe, explains CEPS's Christian Egenhofer because it was seen as trying to postpone the issue for the long term and wait for another 50 years.
Egenhofer agrees this could partly explain the US attitude but he believes there is merit in developing technologies. "If you look at the targets that need to be achieved under the UNFCCC, then you will need breakthrough technologies by 2050. And you don't get these without putting money into research and collaboration projects. They do not develop on their own."
In the EU, the approach has been to "push" new technologies by putting a cap on industry's CO2 emissions and setting up a market for individual plants to buy or sell the CO2 emission allowances they were granted. The Commission says the scheme also has a "market pull" component in the sense that it makes low carbon technologies more competitive compared to the more polluting ones.
"You get a lot of improvement of existing technologies the EU way by increasing the price of carbon which pushes technology improvements, but you do not get the breakthrough technologies in this way," comments Egenhofer. With their long-term research programme and massive investments, Egenhofer believes the US "has got something right there".
In the EU, the CO2 constraint placed on individual industrial plants have so far been too low to give enough incentives for breakthrough technologies, because they come at a too high a cost, Egenhofer continues. "In that sense, it does not get you there, you really need breakthrough technologies," he says.
There are of course renewable sources of energy which are being pushed by the EU with the aim of increasing its share of electricity production to 22.1% by 2010. But they will not play a big role, even in 20 to 30 years, Egenhofer points out.
Renewables are of course important, but their cost needs to be brought down and "the only way of doing this is by getting them onto the market" thanks to appropriate support. "But obviously, if you put subsidies into coal, the renewables will become competitive later, he adds, saying EU countries are still subsidising coal to the tune of 20 billion euros a year. "In the US, this is not an issue, they are exporting."
