EU strategy for a new climate change agreement in Copenhagen

On 28 January 2009, the European Commission (the “Commission”) published a communication, which sets out a proposed EU approach to the forthcoming Copenhagen Convention in December 2009 (COM (2009) 39/3, the “Communication”). The aim of the Copenhagen Convention is to secure an agreement to act as the basis for international action on climate change as a successor to the Kyoto Protocol, which expires in 2013. The Communication acknowledges that a successful conclusion to the negotiations is a key priority for the EU.

The Communication which has yet to be debated by European leaders and may therefore change is divided into three areas; (i) targets and actions, (ii) financing and (iii) building an effective global carbon market. It contains detailed proposals for an international financial mechanism which could support any agreement reached in Copenhagen. The Communication is premised on the need to limit global warming to less than 2 degrees above the pre-industrial temperature averages. The Commission has calculated that in order to contain temperatures with this range, a 50% reduction in emissions compared to 1990 levels will be required by 2050.

The Communication sets a 30% greenhouse gas reduction target for developed countries by 2020 (compared to 1990 levels) and a 15-30% reduction target for developing countries. It also highlights the Commission’s aim to include the shipping and aviation sectors within any new international agreement, and proposals are included for reform of the Kyoto Protocol’s Clean Development Mechanism and replacement by sectoral crediting mechanisms and cap and trade systems.

Key Proposals

The key proposals within the Communication are:

• Developed countries should continue to lead international efforts to combat anthropogenic climate change. It is suggested that developed countries as a group, should commit to a 30% reduction in emissions (compared to 1990 levels) by 2020. Specific criteria should be taken into account when setting national reduction targets to ensure that countries may have comparable burdens. These include parameters relating to countries’ GDP per capita, greenhouse emissions per unit GDP, population and past emissions reduction efforts. The EU have already committed to reduce emissions by 20% compared to 1990 levels by 2020 irrespective of whether an agreement is reached in Copenhagen.
• Developing countries should be given a target reduction of between 15 – 30% by 2020. In order to achieve these reductions, developing countries should commit to producing national low carbon development strategies by 2011. These strategies will form the basis of discussions at an international level regarding the adequacy of actions and the provisions of external financial support. A new Facilitative Mechanism for Mitigation Support should provide a platform to match proposed actions with the appropriate bilateral and multilateral support mechanisms. Developing country actions should be entered into an international registry. The least developed countries should not be required to reduce emissions, since these are already at a low level.
• Any agreement in Copenhagen should set a framework for adaptation to climate change. To this end, all countries should be required to produce national adaptation strategies, and there should be financial and technical support provided where required.
• Emissions from international aviation and shipping should be included in any Copenhagen agreement (they are currently not included within the Kyoto Protocol, but aviation will be included in the European Union Emissions Trading Scheme (EU ETS) from 2012). The Commission have not proposed any concrete figures but suggest emissions should be below 2005 levels by 2020 and significantly below 1990 levels by 2050.
• A commitment towards research and development of low carbon and adaptation technologies. Global energy related research and development should be at least doubled by 2012 and quadrupled by 2020 with a significant shift in emphasis towards low-carbon technologies and especially renewable energy sources. At an EU level, the European Strategic Energy Technology Plan (SET-Plan) will be implemented and a Knowledge and Innovation Communities on climate mitigation and adaptation. The Commission is also in the process of preparing a Communication on the financing of low-carbon technologies.
• A focus on the financing of low carbon development. The Commission calculates that a global net investment of around Euro175 billion will be required per year by 2020 in order to meet emissions reduction targets. A significant proportion of this will need to be concentrated in developing countries.
• The EU should explore innovative sources of international funding. The EU should seek to build, by 2015 an OECD- wide carbon market which links the current EU ETS with comparable cap and trade systems globally. This should be expanded by 2020 to include major emerging economies, with a view to building a global carbon market.
• Two principal options are proposed for creating an innovative source of funding. The first option is that developed countries should commit to providing a certain level of financial support through bilateral and multilateral channels, calculated on the basis of income levels and allowed emissions. The second option required developed countries to set aside a certain proportion of emissions rights and submit these into an international auction.
• The Kyoto Protocol’s Clean Development Mechanism (“CDM”) should be reformed, and eventually phased out and replaced with sectoral crediting mechanisms and cap and trade systems.
• An international phase-out of hydrofluorocarbons (“HFCs”). It is anticipated that if a phase-out is not agreed, use of HFC would otherwise increase rapidly because of the Montreal Protocol which contains an agreement to phase-out hydrochlorofluorocarbons (“HCFCs”), since HFCs are often used as replacements for HCFCs.
• The fifth assessment report by the Intergovernmental Panel on Climate Chance (IPCC) in 2016 should review progress towards the new climate goals.

Proposals for Agreement

The Communication concludes that the EU should:

• Reaffirm its determination to reach a comprehensive and ambitious international agreement in Copenhagen in December 2009.
• Engage with other developed countries with a view to agreeing on a set of GHG reduction targets, ensuring comparable efforts, based on the criteria in the Communication, in order to collectively deliver 30 % emission reductions in 2020 compared to 1990.
• Engage with developing countries, especially with the economically more advanced, so that they take appropriate actions that will deliver collectively a deviation of 15-30% below business as usual in 2020.
• Acknowledge that staying below 2°C will require significant financial resources for emission reductions and adaptation, but that this will also stimulate innovation, economic growth and lead to long-term sustainable development. Express readiness to provide a substantial financial contribution in support of actions by developing countries, in particular for the most vulnerable and poorest, for instance through the Global Climate Financing Mechanism.
• Propose to enter into bilateral partnerships with the US and with other developed countries to share experience on designing domestic emissions trading systems and to facilitate the creation of a robust OECD-wide carbon market by 2015. This market should be further extended to economically more advanced developing countries by 2020.

Next Steps

The Communication is addressed to the EU Council, Parliament and certain consultative bodies for their consideration. The Commission has invited the Council to approve the conclusions and note the orientations set out in the Communication. The Council is expected to respond in March 2009.