Eastern EU courted to accept 30% CO2 cuts

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A proposal allowing eastern European member states to bank some €3.2 billion of unused carbon credits if they agree to extend the EU’s emissions reductions target from 20% to 30% was made in a policy paper at the Durban Climate Summit last month, seen by EURACTIV.

The Danish presidency views the proposed trade-off positively and may now seek to advance it at the level of EU heads of state and governments.

“The assigned amount unit [AAU] question is one of the elements on the table but we also have other issues such as steadying up the ambitions on the CO2 reduction targets and milestones for 2030, and they are all very closely inter-linked,” Martin Lidegaard, Denmark's climate and energy minister, told EURACTIV.

“We don’t know how far yet we can get with the AAU question during our presidency but obviously it is an issue that we have to look at,” he said.

The proposal at the climate summit held in Durban, South Africa, was made in a highly technical one-page policy paper – the ‘AAU carryover draft’ – dated 9 December.

“If a party individually or jointly increases its level of ambition,” the paper says, “the amount of surplus assigned amount units to be transferred … may be increased.”

The deal was vetoed by a handful of states, but “there is clearly a link to be made because those countries opposing more ambitious European [CO2 reduction] targets are the same ones pushing for banking of AAUs,” Stig Schjølset, a market analyst for Point Carbon, told EURACTIV.

“That is the trade-off to be made and it is in line with how an EU policy would be made,” he added.  

One diplomat from an affected eastern EU country who asked to remain anonymous said his government was “not positive” about the proposed deal.

Surplus credits

Each AAU is an allowance to emit one metric tonne of carbon dioxide equivalent.

Former eastern bloc states were deluged with the carbon credits after the heavy polluting industries they were intended to deter collapsed along with communism.

The issue of the 3.1 billion surplus AAUs left over from that first Kyoto commitment period is supposed to be agreed at the UN Doha Climate talks in December 2012.

But the EU should submit its second binding commitment targets to the UN's climate change body several months earlier, in May.

Analysts say that a new EU CO2 emissions reduction target before then might be too optimistic in a Europe fixated on the eurozone debt crisis.

Point Carbon says that recent discussions have proposed including between 5% and 10% of all AAUs in any east European compact, with a value of around €3.2 billion at current market prices, being carried over into a second Kyoto commitment period. 

Carbon credit influx

However some environmentalists are concerned that a massive influx of carbon credits would allow countries to meet their goal without actually cutting emissions.

“I think it’s good to look at buying up the AAU surpluses of eastern European countries in return for their commitment to move beyond the 20% target, but it should not lead to a situation where a lot of the surplus credits go straight into the system creating a major loophole,” Greenpeace spokesman Joris den Blanken told EURACTIV.

Other figures in the environmental movement have suggested that the surplus AAUs be used as a national heritage endowment for future PR purposes by the leaders of ex-Soviet Bloc nations.

Under the Kyoto Protocol, countries were granted a certain number of permits to release greenhouse gases into the atmosphere, called assigned amount units (AAUs). On average 1.5 billion AAUs are accumulated every year under the Kyoto Protocol, according to European Commission figures circulated among EU member states. 

Projected across the Kyoto period, which runs five years from 2008-2012, the total figures would be in the billions of units. The surplus figures are broken down as follows:

  • Russia: 5.5 billion AAUs (at end 2012)
  • Ukraine: 2.4 billion AAUs (at end 2012)
  • EU-10: 2.2 billion AAUs (at end 2012)

By contrast, the older member states of Western Europe (EU15) have a shortage of 144 million AAUs that they should buy from other countries on the carbon market. The figure adds up to about 720 million units during the 2008-2012 Kyoto period.

  • 9 March 2012: Meeting of EU Environment ministers.
  • May 2012: EU slated to send Kyoto second commitment period details to UN Framework Convention on Climate Change.
  • Dec. 2012: UN Climate Summit in Doha, Qatar, scheduled to take a decision on the future of the AAU’s.
  • 2015: Roadmap for a new UNFCCC compact due to be agreed.
  • 2020: New UNFCCC deal to be signed.
  • 2020: EU to meet target of  increasing the share of renewables in the energy mix to 20% and cutting CO2 emissions levels by 20% - both on 1990 levels - and of increasing energy efficiency 20% (although the latter target is voluntary).

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