Recent developments since the break-down of COP6, including the cancellation of the Oslo ministerial mini-summit, but also the letter of US President Bush to three senators indicating that he opposed the Kyoto Protocol and that, contrary to an election campaign pledge (See Commentary of December 2000 “A Post-Mortem on COP6 in the Hague”), he would not seek to impose mandatory emission reductions for power plants, bring the prospects for early US ratification of the Kyoto Protocol close to nil. A resumed COP6bis in July will not matter much. Even if the US agrees to an outcome then, continued Congressional opposition and unresolved questions concerning developing countries’ commitments make US ratification highly implausible.
This puts the European Union on the spot. The EU has declared on several occasions that if the Kyoto Protocol failed to be ratified by the requisite number of Parties, it would demonstrate its leadership by undertaking a unilateral reduction commitment. Has the EU’s hour of glory finally come? Or is it bluffing? The answer lies in whether the EU is actually able to summon up the courage of its convictions and takes the decision to ratify the Protocol unilaterally. Given the current deadlock, this may be the only way to implement the Kyoto Protocol. Moreover, it may not merely be the only way, but it may also have the effect of speeding up ratification. And speed is now of the utmost importance. The urgent reality of climate change has just been confirmed by the IPCC’s Third Assessment Report. Further delays to implementation will also increase compliance costs.
Would unilateral ratification make sense – politically, legally or economically? The answer is yes, in all three respects. First, EU environmental ministers are on record as having pledged to undertake a unilateral commitment in case of non-ratification. The moment to make good on that pledge is now, given the state of the negotiations and the results of the Third IPCC Assessment Report. A show of commitment and good faith by such a major player as the EU can only have a salutary effect on the proceedings. The legal implications of unilateral ratification are tied to the EU’s burden-sharing agreement, which is the pillar on which all EU climate change policy rests and will become legally binding with ratification. In the absence of ratification, there is a risk that the burden-sharing agreement would unravel, depriving the EU of the very basis of its climate change strategy and it would also undermine its ambitions for leadership. The most difficult part of the equation is the economic dimension. By building alliances and effectively using flexible mechanisms, the potentially harmful economic effects of unilateral action can be minimised and transformed into an advantage, at least in the long term.
The EU should push for early CDM at COP6bis or COP7 to encourage cooperation on the part of developing countries. Some EU member state governments are giving serious consideration to embarking on JI alone with the Central and Eastern European and CIS countries, based on bilateral protocols, until the international negotiations catch up. In any case, domestic EU-wide emissions trading along the lines of the Commission’s Green Paper on Greenhouse Gas Emissions Trading within the European Union (COM(2000)87) can and will be pursued independently of progress at COP6. Additional elements of flexibility could be built in to further reduce costs of implementation. There are also signs that Russia/Ukraine and other CIS countries are interested in stronger cooperation with the EU and that Russia/Ukraine has a strong interest in seeing the Protocol enter into force. People are increasingly realising that the fears over “hot air” are grossly exaggerated. The study of monopolistic behaviour tells us that Russia/Ukraine is unlikely to sell regardless of price developments.
Such an EU-Russia/CIS-developing countries alliance would go some way towards ratification and entry into force of the Protocol. Eventually, Japan and other Umbrella Group countries might become interested in joining rather than staying outside the club. After all, trading opportunities were always meant to act as an incentive to join. This is why the business community has broadly supported the COP process. Although this strategy is ambitious, an analysis of the potential motivations of the various groups of countries to come on board suggests that it is also feasible.
Such a approach however, will necessitate changes within the EU. Rather than chasing the chimera of US ratification, the EU should focus on alliance-building. But to build alliances, the EU must first put aside its internal squabbles. This will be the biggest single task of the current Presidency and even more so for the incoming Belgians. In order to engthen the EU negotiating position, it will also be necessary to more deeply involve ministers dealing with economic and trade affairs via a shared distribution of responsibilities between environment and economic/trade ministers, as occurs for example in Finland. Climate negotiations seem to have outgrown environment ministers. The Hague was as much about economic policy as about the environment. Some additional proposals for improving the EU’s performance in climate change negotiations include the involvement of professional negotiators from the Foreign Offices, redefining the role of the European Commission, and more generally, making better use of COREPER. Their feasibility should be further investigated.
Regarding theimmediate COP6bis/COP7 strategy, it is crucial that the EU endorses flexibility somewhat more but continues to remain strict on compliance so that the Umbrella Group would be obliged to publicly support a loosely binding agreement, if that is what the constituent countries want. There are signs that the EU is moving in the direction of such an approach. At the December Environment Council, the EU was more conciliatory on flexibility (notably sinks) but stood firm on compliance. Equally, the EU should use the conflicting positions within the Umbrella Group on developing countries’ participation as an opportunity to strengthen its ties with Russia and all of CIS and developing countries. Russia and other CIS have an interest in seeing the Protocol enter into force, not least because of the trading opportunities. US-style developing country participation, on the contrary would undermine the dominant position of Russia/CIS in “hot air”. And one should not forget that any Annex I deal should not neglect developing countries’ concerns. A clear EU position on funding has to be worked out which facilitates moderate and isolates hard-line G77 Parties. Any stance that is softer than that taken by the US will incline developing countries to look favourably towards the EU.
At COP6bis, the EU should push for early CDM – on which agreement was almost reached in The Hague. On the domestic level, the EU should – and almost certainly will – move quickly on EU emissions trading, gradually incorporating the CEE candidate countries as they join the EU. This approach will establish efficient flexible mechanisms at the heart of EU climate change policy, which will keep the business community – so far a major driver – on board as well as the developing countries and Russia/Ukraine and possibly some Umbrella Group countries. Time will be working for the EU. Those unwilling will not be able to drag their feet forever. Climate change policy will not go away. Even if the Kyoto Protocol fails, the UNFCCC is still in force.
Christian Egenhofer, Senior Fellow, CEPS and Jan Cornillie, Associate, CEPS.