The EU‘s post 2012 Climate

Change strategy

Towards a comprehensive climate change agreement in

Copenhagen

Thomas Bernheim, DG Environment

European Commission

Mo-Magazine, 22 April 2009 Zuiderpershuis Antwerpen

The global scientific consensus

IPCC Fourth Assessment Report (2007):

• Global temperature is rising: +0.76°C (1.37°F) since 1850 (+1°C in Europe) and the rate is accelerating

• >90% certainty man-made GHG caused most of this rise • Rate of sea level rise has doubled in recent decades• If we take no action average global warming will increase further

by between 1.1° and 6.4°C this century– best estimate +1.8-4.0°C (3.2°-7.2°F) – regional rises could be much greater (e.g. Arctic +6°- 8°C)

• Good news! Deep cuts in global emissions can be achieved at relatively low cost using existing technologies and those in pipeline

A global pathway to stay below 2°C

Global Peak by 2020

Global -50% by 2050 rel. 1990

Developed Countriesto cut by 80-95% by 2050 rel. 1990

Recent Science ?

Why 2°C? Getting into the danger zone

Delay has serious impacts

• To achieve same long-term emission level requires steeper future reductions: 4% vs. 2.6%/yr in 2030-2050

• Adds to cumulative emissions increased risk of surpassing critical thresholds

• Leads to further carbon lock-in more costly transition to low-carbon future

Call on all developed countries to commit to ambitious cuts by 2020 to avoid unrealistic pathways

• To achieve the same stabilisation goal: reduction rate doubles for every 10 years of delay

DC need to participate over time

Figure 1: Projected development of greenhouse gas emissions in different regions of the world

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1990 2050

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aton

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Rest of World

Other annex 1

EU

Source: Greenhouse gas reduction pathways in the UNFCCC process up to 2025, CNRS/LEPII-EPE, RIVM/MNP, ICCS-NTUA, CES-KUL (2003).

... If Annex I alone reduces emissions to zero

... Global emission path compatible with 2°C

EU vision for Copenhagen: targets and actions

Targets and actions:

• Leadership by all developed countries: • -30% emissions by 2020 with comparable national efforts based

on set of agreed criteria• Financial & technical support for mitigation and adaptation in DC

• For developing countries: – Emissions growth 15-30% below business as usual by 2020 – Draw up low-carbon development strategies (LCDS) covering

key sectors as vehicle to identify needs for support from Annex I• Say what can be done autonomously

• What actions require further support

• What actions can be undertaken by he global carbon market

EU’s vision for Copenhagen: reductions are affordable but

carbon markets key to cost-efficiency

30% Annex I reduction below 1990 by 2020 No global carbon

marketGradual global carbon

marketPerfect global carbon

market

Carbon price per tonne CO2 in developed countries ETS,

202072 € 43 € 22 €

Total incremental costs in developed countries

in 2020 (2005 prices)

166 bn € 81 bn € 39 bn €

• GDP effect for group in developed countries around 1% decrease in 2020

• Baseline GDP grows by more than 40% between 2005 and 2020 (incl. economic crisis)

Source: European Commission

EU’s vision for Copenhagen: Towards comparable QELROs

• 30% below 1990 levels by 2020 by Annex I on average and including domestic and international efforts

2020

Average

Country A

Country B

Comparability of QELROs based on balanced set of criteria, such as:

– Capability to pay (domestic and abroad)

– Mitigation potential

– Early action to reduce emissions

– Population trends and total GHG emissions

• Long-term: towards a gradual convergence of per capita emissions among developed and developing countries

Leading through example: The climate and energy

package

March 2007 EU summit

Commitments

• Unconditional commitment to cut GHG emissions by at least 20% in any case and 20% of energy from renewable sources (8.5% today)

• Conditional commitment to reduce GHG emissions to 30% below 1990 levels if other developed countries make comparable cuts

Further objectives

• 20% cut in projected energy use through energy efficiency improvements

10% renewables share in transport fuels (1% today)• Deforestation: halt within two decades and then reverse

Good for the climate, energy security, innovation, jobs and competitiveness!

The climate and energy package at a glance

large industrial installations & aviation Carbon capture and

storage Directive

CO2&cars

Renewable Energy Directive

Fuel Quality Directive

-20% / 30%

technology specific &

product policies

cross-sectoral

targets & instruments

“small emitters”

EU ETS

Effort SharingDecision

Climate and energy package:Approach

Cost-effectiveness and fair distribution

• Fairness: differentiate efforts for Member States according to GDP/capita

• national targets in sectors outside EU ETS

• national renewables targets

• redistribution of auctioning rights

• Cost-effectiveness: introduce flexibility

• EU ETS

• Guarantee of Origin trading for renewable energy

GHG Target by 2020:

-20% compared to 1990

-14% compared to 2005

EU ETS-21% compared

to 2005

Non ETS sectors -10% compared to 2005

27 Member State targets, stretching from -20% to +20%

Overall architecture

EU Emissions Trading System (EU ETS)

Some basics

• Cap-and-trade system – reduces emissions at least cost• Started in 2005• World’s largest ‘cap-and-trade system’• Large industrial emitters and power plants• Reduce or buy allowances• Cap gives environmental outcome• Trading periods: 2005-7, 2008-12, 2013-20, …• Annual compliance cycle with monitoring, reporting, verification,

surrender• Penalties for non-compliance• Major source of demand for Clean Development Mechanism (CDM),

thus channelling investment to DC

Strengthening EU ETS from 2013 (third phase)

• Limited expansion to further sectors and gases • Aviation included as from 2012

• Single EU-wide cap on emissions replaces national caps Cap cut in linear fashion annually (-1.74%) until at least 2025.

This gives investors predictability By 2020 cap will be 21% below 2005

• Much greater harmonisation of rules creates ‘level playing field’ across EU

• Auctioning becomes default allocation method for allowances: At least 50% auctioning from 2013, 100% by 2027

• Offsets (JI/CDM):• Supplementarity maintained: 50% of reduction effort• Quality: comitology to provide a harmonised approach

Effort sharing outside EU ETS: Differentiated national

targets for 2020

• Principle of solidarity and growth– National emission reduction targets determined as a

function of GDP/capita– MS with high GDP/capita to reduce emissions (in

relation to 2005 emissions)– MS with low GDP/capita may increase emissions

• But:– No reduction of more than 20%– No increase of more than 20%

Effort sharing outside EU ETS: National targets for 2020

-20

-15

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LU DK IE SE AT FI NL UK BE DE FR IT ES CY EL PT SI MT CZ HU EE SK PL LT LV RO BU EU

2020 emissions compared to 2005

Effort sharing outside EU ETS: Linear reduction pathway… with

flexibility for compliance

• Binding linear reduction pathway for each Member State• Early overachievements in emission reductions can be

banked• Up to 5% can be borrowed from the year ahead• Transfers of emission rights between MS

– ex post – ex ante : limited to 5%

• CDM credits – 3% of 2005 emissions each year (4% for 12 MS)– Credits not used can be banked

What happens after Copenhagen agreement?

• Three months following Community signature, Commission will submit a report

• If appropriate, proposal will be made covering among others– Tightening of the targets– Increased access to offset credits, but:

restricted to ratifying countries– Review of free allocation rules under EU ETS– …

Final remarks

• Agreed EU legislation – Will deliver on the objectives set by the European Council (-20/-30%)

– Facilitates transition to the low-carbon economy of the future

– Confirms EU leadership and dedication to fighting climate change

• Frame ambitious domestic and international climate policy as:

– Good economic policy, since it avoids catastrophic damages (Stern)

– Good energy policy, since savings from fuel cost will pay back large part of necessary investment, increased energy security (IEA)

– Good development policy since 2 degrees and adaptation are necessary to provide for poor developing countries to develop

– Good security policy, since avoiding dangerous CC helps to avoid triggering of regional security implications

Next steps

Domestic: • Implement climate & energy package through comitology (e.g.

auction design, setting benchmarks, determining sectors at risk of carbon leakage, etc…)

Internationally:• Aim for comparability of targets of developed countries • Aim for nationally appropriate mitigation action by DC• Agree on funding for DC, including technology and adaptation• Global Carbon Markets: develop linking + CDM reform

• Submit to the UNFCCC secretariat additional texts as input to negotiating texts to be prepared by the Chairs

• Outreach to key developed and developing countries to discuss and develop those proposals ahead of next Bonn meeting

More…

• …on the climate and energy package:• http://ec.europa.eu/environment/climat/clima

te_action.htm

• … on the international negotiations:• http://ec.europa.eu/environment/climat/

future_action.htm