Moving to 30%?
In March 2010, the European Commission presented proposals to revive the UN negotiation process, stressing that the EU must continue to exert global leadership by taking determined action domestically (EURACTIV 10/03/10).
Concretely, the EU offered little new, maintaining its earlier commitment to cut unilaterally its greenhouse gas emissions by 20% by 2020 from 1990 levels. The target would be raised to 30% "provided that other developed countries commit themselves to comparable emission reductions and that developing countries contribute adequately according to their responsibilities and respective capabilities".
But there are few signs yet that Europe is ready to make such a move:
In the United States, President Barack Obama announced plans for a 17% cut in US emissions from 2005 levels: a 4% cut from 1990 levels. The figures are seen as too weak to prompt Europeans to raise their target.
In China, the government said it will "endeavour" to cut the amount of carbon produced per unit of economic output by 40 to 45% by 2020 from 2005. Again, this is unlikely to prompt any further steps from the EU.
Connie Hedegaard, the EU's climate action commissioner, argues that this should not deter the EU from becoming "the most climate-friendly region in the world," saying it is "in Europe's own interest" to raise its target to 30% unilaterally.
"If we do it intelligently [raise the target to 30%], it will enhance our competitiveness, strengthen our energy security, stimulate green economic growth and innovation, and by that we will create new jobs," Hedegaard claimed.
But the bloc's possible move to a 30% reduction target is causing internal divisions among its 27 member states (EURACTIV 15/03/10). Eastern European countries argue that the EU must first analyse how other countries' pledges compare before making a move. Other sceptics of a unilateral move include Italy and Finland, EU diplomats said.
By contrast, most Western EU member states including the UK, Denmark, the Netherlands and Sweden, think it is in Europe's own interests to move to 30%. These countries tend to favour moves towards a global carbon trading system based on the existing European emissions trading scheme (EU ETS), which could be linked up with a possible American, Japanese or even OECD-wide scheme.
In fact, the move to 30% might not prove as painful as it seems. Stefan Singer, director for global energy policy at WWF, believes the EU will easily reach its 20% objective, thanks mainly to the de-industrialisation that has taken place in ex-Soviet states since the fall of communism and carbon offset projects in developing countries (EURACTIV 14/04/09). Moreover, emissions have dropped steeply due to the economic recession, making the 2020 objective easier to attain (EURACTIV 02/04/10).
Speaking in the European Parliament in April, Yvo De Boer, executive secretary of the United Nations Framework Convention on Climate Change (UNFCCC), said meeting the minus 20% target was "a piece of cake" and that achieving minus 30 "isn't going to ruin the European economy" (EURACTIV 16/04/10). "So countries in the rest of the world are asking themselves: 'If that's true, then why is this minus 30 now being taken off the table?'".
Carbon tariffs at EU borders?
France, for its part, has positioned itself somewhere in the middle, saying the 20% target can be upgraded if safeguards are put in place to protect the competitiveness of EU industry. Paris has long campaigned for a carbon tax at EU borders to prevent unfair competition from Chinese manufacturers who have no constraints on CO2 emissions (EURACTIV 08/04/10).
Germany, Europe’s largest industrial emitter, shares France’s concerns about competitiveness. But it has not officially backed an EU carbon tariff for fear it would trigger a trade war that would damage its exports. Germany is the world’s second largest manufacturer and exporter after China.
The European Commission's official line is that it does not support border tariffs. In an April working document on innovative climate financing options, the EU executive warned that a carbon border tax has "a considerable number of drawbacks which would need to be addressed".
The tax could lead to trade conflicts and retaliatory measures regardless of design, the paper argued, even if it were compatible with WTO rules. Moreover, it would come with high administrative costs and require additional rebates to avoid increasing the cost of intermediate goods.
But France claims resistance to the tax has been waning. A majority of the 27 EU countries were once opposed to the idea, but it is now contested by just four member states, including Denmark and the Netherlands, according to Environment Minister Jean-Louis Borloo.
Borloo referred to a 2009 WTO report often cited by French President Nicolas Sarkozy, which stated that introducing border tariffs on carbon would not contravene the organisation's rules if they were properly constructed. Three Chinese provinces are already experimenting with such a tax, he said, and the United States is also considering border adjustment measures in its draft climate change bill.
According to the Centre for European Policy Studies think-tank, a carbon border tariff "would be a straightforward way to move towards a global ‘shadow’ carbon price"and would be beneficial from an environmental point of view because it would "always [lead to] lower global emissions". Moreover, it says compatibility with WTO rules and practical considerations are "not insurmountable" and that the proceeds could be used to finance clean tech deployment in developing countries.
One or two treaties?
In Copenhagen, the European Union and the United States, backed by other rich nations, pushed for a new treaty to replace the Kyoto Protocol that would include all countries under a single framework.
But developing nations, represented by the G77 group, disagreed and called instead for extending and sharpening rich nations' commitments under Kyoto. They also called for a separate deal binding the US, which has not ratified Kyoto, and supporting action by poorer countries.
In March, Britain attempted to revive global climate talks by offering to extend the Kyoto Protocol beyond 2012 (EURACTIV 01/04/10). Energy and Climate Change Secretary Ed Miliband said the UK would be willing to sign a new Kyoto Treaty in a unilateral move "provided there is a separate legal treaty covering all other countries".
The European Commission seems to have an open mind on the issue. Climate Action Commissioner Hedegaard said the EU wants to see all other developed nations commit to a binding treaty. But she said it would also be ready to continue with the Kyoto Protocol, insisting that the EU had delivered on its commitments under Kyoto and therefore has no problem with the agreement.
Dealing with Kyoto ‘hot air’
However, Hedegaard said the Protocol would need to be widely reformed if it was to be continued, pointing to a huge surplus of unused carbon emission credits clogging the system.
Russia, Ukraine and other East European countries are holding 10 billion tonnes of unused greenhouse gas emission credits under Kyoto, a result of industry restructuring in the early 1990s following the collapse of communism (EURACTIV 22/10/09).
If this so-called 'hot air' can be banked and re-used under the future agreement, the emission reduction pledges of rich countries would have to be tightened to compensate for the surplus, the Commission warned. The EU executive estimates that developed country pledges on the table for 2020 currently range from 13.2% to 17.8% below 1990 levels. If ‘hot air’ is taken into account, these figures would fall to between 6.4% and 11%, it warned.
Poland, Hungary and other eastern EU member states want to keep their unused credits after 2012, a move which could potentially earn these countries billions of euros if they were able to sell them to Germany or the UK, for example under the EU's Emissions Trading Scheme.
There are further significant loopholes in Kyoto, the Commission said. Under current accounting rules on land-use, land-use change and forestry (LULUCF), rich countries are able to claim emission reduction credits "without additional action" to prevent deforestation, for example, Brussels warns. When taken into account, these rules would weaken the pledges further so that industrialised countries might at worst increase their emissions by 2.6% above 1990 levels, the Commission said.
Farming, land use and forestry
Another major chapter of the UN talks relates to land use and forestry. Combined, farms and deforestation account for a third of all global greenhouse gases, according to the United Nations, making it one of the largest contributors to climate change.
This was one point on which all countries agreed in Copenhagen – the role played by forests is crucial in fighting climate change as 15% of global warming emissions are attributed to deforestation.
The Copenhagen Accord calls for the "immediate establishment of a mechanism"to mobilise financing for reducing emissions from deforestation, the so-called REDD+ mechanism.
As part of the agreement, a fund called the Copenhagen Green Climate Fund was also proposed. Money would be channeled through the fund to support different initiatives for adaptation, emission reduction and technology development.
But the specifics of the mechanisms are yet to be defined. In addition, the US insisted that international funds be made conditional on developing countries agreeing to independently verifiable emissions reductions, something they are currently resisting.
Climate aid to poor nations…and conditionality
A nexus of the Copenhagen negotiations was a demand by the G77 group of developing nations that industrialised countries shoulder their "historical responsibility"for releasing greenhouse gases into the atmosphere.
Developing countries stand to suffer the most from the expected increase in droughts, heat waves, floods or rising sea levels resulting from climate change.
The EU has committed to contributing €2.4 billion annually over the period 2010-2012 in so-called 'fast-start' funding to help developing nations adapt to the unavoidable consequences of climate change. Other developed nations, including the United States and Japan, have promised equivalent sums of money for a total of $30 billion.
The so-called fast-start money will be allocated to poor countries that need to adapt to climate change, but also to reduce their emissions and embark on a low-carbon development path. The short-tem financing will also be used to prevent deforestation.
Altogether, industrialised countries agreed "to set a goal of mobilising jointly $100 billion a year by 2020 to address the needs of developing countries".
However, EU heads of state and government have made clear that longer term financial assistance will only be released if developed countries take "meaningful and transparent action" to mitigate climate change.
The funding will come from a wide variety of sources - both public and private and bilateral and multilateral - including alternative sources of finance, the Copenhagen Accord states. The UN text also established a high-level panel to study the potential sources of revenue for such funding, including alternative sources such as a financial transactions tax.
Verification of mitigation actions
But the aid pledge for developing countries came with conditions linked to reporting and verification mechanisms on how they will use the money to tackle climate change.
In Copenhagen, US President Barack Obama insisted that aid should be tied to the imposition of monitoring, reporting and verification (MRV) requirements on China and other emerging economies regarding their emissions curbs. China has resisted such calls, saying they would be intrusive and violate its sovereignty (EURACTIV 18/12/09).
The final accord takes note of these tensions and foresees that national actions by developing countries "will ensure that national sovereignty is respected". National inventory reports will rely on domestic measurement and verification systems that will be communicated every two years on the basis of internationally-agreed guidelines.
But it also stresses that mitigation actions seeking international funding "will be subject to international measurement, reporting and verification"to be agreed at a later stage.
It remains to be seen, however, how domestic emission curbs will be measured in order to ensure comparability of national statistical systems at international level.
Moreover, it remains to be seen whether the climate cash will be truly "scaled up, new and additional" as stated in the Copenhagen deal. Yvo de Boer, executive secretary of the United Nations Framework Convention on Climate Change (UNFCCC), said developing countries were suspicious that the aid will in fact amount to existing development aid rebranded as climate aid.
"Is that going to be climate-wash or real and additional finance?" he asked. "Quite frankly, the track record is not quite there [to prove it]," he told an April hearing in the European Parliament.
Under existing arrangements, developing countries were asked to produce technology need assessments in their effort to fight climate change, De Boer explained. But these were rarely followed up and the promised funding was kept under wraps for the most part.
"Many among developing nations feel, with some justification, that these financial resources are not being provided. And that if financial resources are provided, they are often 'climate-wash'," he said, meaning development assistance re-labelled as climate aid.
To break the deadlock, De Boer suggests giving developing countries responsibility for managing the aid. "What they would really like to see is that these huge sums of money are going to be distributed according to the priorities of the countries rather than according to the priorities of the donators."
His proposal is to create a financial governance mechanism at the next UN summit in Cancún "that will really give developing countries the feeling that they are in control or in co-control of the money that is intended to help them green their economic growth".
According to the Dutchman, developing countries are ready to accept that the money must be channelled through existing institutions like the World Bank, regional development banks or cooperation agencies.
The Copenhagen Accord agreed to establish a mechanism "to accelerate technology development and transfer"for adaptation and mitigation actions. The mechanism will be agreed on a country-by-country basis according to the agreement.
But there is little detail on how this will take place. One possible approach is to promote agreements in specific energy-hungry industrial sectors, such as steelmaking. Industries benefitting from the scheme in developing countries would gain access to state-of-the-art technology in exchange for pledges to cut their emissions and a commitment to level international competition in the sector.
In addition, the future of the Clean Development Mechanism, which constitutes the Kyoto Protocol’s main instrument for technology transfer, remains up in the air. Indeed, the Copenhagen deal does not mention the future of the CDM, which allows industrialised nations to earn carbon credits from emissions reduction projects in developing countries.
Future role of the UN
More fundamentally, the failure of the Copenhagen conference highlighted the complexity of the multilateral negotiation process, which requires unanimity among the 194 parties to the United Nations Framework Convention on Climate Change (UNFCCC).
Negotiations in Copenhagen were often described as overloaded, dealing with too many issues at the same time. In this context, other forums are expected to play an increasing role in shaping a future international agreement:
The G8 and G20 groupings of major world powers.
The Major Economies Forum, grouping 17 emitters accounting for 80% of world greenhouse gases.
The so-called BASIC group bringing together Brazil, South Africa, India and China.
The G77 group of developing nations.
Other grassroots initiatives such as the World People's Conference on Climate Change and the Rights of Mother Earth, spearheaded by Bolivia's Evo Morales.
But Yvo de Boer, executive secretary of the UNFCCC, warned that the UN process was ultimately the only one to guarantee full democratic legitimacy.
"The core of the problem at the end of the day is that although it is really easy to get things done in a dictatorship, democracy tends to make things rather complicated and slow. And the United Nations unfortunately is the ultimate representation of democracy," he told a recent hearing in the European Parliament.
De Boer stressed that a lack of confidence about "process" in Copenhagen had been at the core of the conference’s failure, with US President Obama holding a press conference on the summit’s outcome before the final text of the Copenhagen Accord had been presented to the other countries' representatives.
"Process is always going to be incredibly important," De Boer stressed, because it is what gives countries the feeling that their voices have been heard
EU 'climate diplomacy'
In Copenhagen, the European Union ended up being sidelined in the last stretch of the negotiations, with the final agreement brokered between the United States, China, India, Brazil and South Africa.
The EU’s failure to drive negotiations in the Danish capital has often been blamed on its excessive representation at the meeting. Indeed, there were no less than eight representatives of the EU in the Danish capital – the Danes who organised the summit, European Commission President José Manuel Barroso, Frederik Reinfelt representing the Swedish EU Presidency, José Luis Zapatero representing the incoming Spanish EU Presidency, EU foreign policy chief Catherine Ashton and national leaders Gordon Brown, Nicolas Sarkozy and Angela Merkel.
As Guy Verhofstadt, leader of the liberal group in the European Parliament, put it, "Copenhagen may well have had a different outcome had Europe been represented by a single person, instead of eight".
However, others argue that the EU would have been sidelined in any case. Christian Egenhofer from the Centre for European Policy Studies (CEPS), a think-tank, says: "It is the US, China and other emerging economies that really matter in any lasting climate solution. There is nothing the EU can do about this."