US senior advisor for the environment to the White House, James L. Connaughton, put it in a nutshell: "The issue today is not whether we should take action [on climate change] but how."
United States strategy
Speaking on 21 November at the Centre for European Policy Studies (CEPS) in Brussels, Connaughton reiterated that energy supply security remains the top priority of President George W. Bush's climate change policy. The strategy places the onus on technology to reduce the greenhouse gas intensity (a reduction of emissions per unit of economic activity) of the US economy by 18% for the period 2002-2012. The strategy is aimed at 'pushing' the technologies onto US and international markets via:
- an ambitious programme to improve climate change science (around $2 bn a year) and technologies (around $3 bn a year), including:
- clean coal through CO2 capture and storage deep underground
- renewable energy tax incentives and tax credits for hybrid vehicles and clean diesel
- hydrogen fuel initiative
- nuclear power 2010 programme
- bilateral accords with other countries or regions to reduce greenhouse gas emissions, mainly through technology transfers. This includes:
- the Asia-Pacific Partnership on Clean Development signed in July between the US, China, India, Australia, Japan and South Korea (EurActiv, 28 July 2005)
- the G8 action plan adopted at Gleneagles (EurActiv, 8 July 2005)
- other international technology partnerships (Methane to Markets Partnership, Carbon Sequestration Leadership Forum, International Partnership for the Hydrogen Economy, and others.)
Connaughton insisted the strategy is aimed at achieving reductions without hampering economic growth or by shifting emissions away from the US through delocalisation of industries to other countries. However, he admitted that reducing energy intensity will not prevent US emissions from rising, at least in the medium term.
European Union strategy
On the other side of the spectrum, the EU has embarked upon a strategy based on binding greenhouse gas reduction targets agreed under the Kyoto Protocol. It has put in place the world's first international CO2 emissions trading scheme which allows big industrial plants to trade CO2 pollution permits on an EU-wide market for carbon. The scheme is aimed at 'pulling' cleaner technologies by encouraging industry to turn green investments into a profit through a market mechanism.
The Commission argues emissions' trading is the cheapest way of encouraging companies to adopt new technologies. It recently estimated that cutting CO2 emissions annually by about 1.5% would reduce the EU economic output by 0.5% by the year 2025 compared to business as usual.
The EU's 'market pull' approach should later be complemented by a 'technology push' one with the second phase of European Climate Change Programme (EurActiv, 24 Oct. 2005). According to the Commission, the new programme should provide "a strong push for innovation" in climate-friendly technologies and for "the inclusion of all emitting sectors, such as aviation, shipping and road transport". Emissions trading will continue to be the main instrument to achieve emissions reductions, it said. The programme will be finalised in the course of 2006.
On the international scene, the EU is also fostering bilateral cooperation to push technologies through agreements with other major economies:
- the EU-China clean energy partnership which aims to develop 'zero-emissions' coal technology" by 2020 through carbon sequestration and to step up cooperation in other key areas (EurActiv, 5 Sept. 2005)
- The G8 action plan adopted at Gleneagles (EurActiv, 8 July 2005)
However, in this race to push new technologies, it remains to be seen whether the tiny EU budget and scattered national research programmes can compete with the massive, result-oriented R&D projects developed by US. A good illustration of this is the Commission's continued inability to tell accurately how much R&D spending (both at EU and member states level) is earmarked for climate-friendly technologies.