Approaches towards a framework and a long-term target of the post-kyoto period. Christian Egenhofer

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1 ERSI International Collaboration projects 2009 International Forum Approaches towards a framework and a long-term target of the post-kyoto period Christian Egenhofer Senior Fellow, Centre for European Policy Studies (CEPS), Brussels; Visiting Professor College of Europe (Bruges & Natolin) LUISS University, Rome MITA Meeting Hall, Tokyo, 24 February 2009

2 Are EU targets a guide for international negotiations? - 20% greenhouse gas emissions (unilateral); if other countries join: - 30% + 20% better energy efficiency (nonbinding) 20% renewables in overall energy consumption (10% renewables in transport) Up to 12 large-scale carbon capture and storage (CCS) plants & new fossil fuel power plants to be ready for CCS No guide but some relevant lessons

3 1. Analysis, data and consensus building 2001 European Climate Change Programme (ECCP I): multistakeholder group identifying potentials according to costs ECCP II CARS 21 (Competitive Automotive Regulatory System for the 21st Century) integrated approach to CO 2? Auto-Oil II (+ Auto-Oil I) was first of this kind More difficult internationally but fora exist

4 2. Settling distribution conflicts ( equity ) ETS cap/effort sharing (non-ets cap): efficiency approach (leastcost) + ability to pay (No equal-per-capita, No equal reduction) ETS allocation: redistribution of 12% of allowances based on simple metric: from high per capita to low per capita income member states. Lesson: Sectoral targets are easier to settle than economy-wide ones Renewables target: technical potential + per capita indicators EU is intergovernmental but extreme high degree of interdependence (EU budget) and role of European Commission makes it easier. UNFCCC secretariat is different.

5 But application of sectoral targets has limitations Technical Data availability Sector definition (boundaries) Complexities of sectors (steel) Political Benchmarks as back-door targets for developing countries Does not include lifestyles Does not include trading?

6 Reduction target in sectors not covered by the EU ETS compared to 2005 Share Renewables in the final energy demand by 2020 Austria -16.0% 34% (23,3) in 2005 Belgium -15.0% 13% (2.2) 3. Technology targets are easier Bulgaria Cyprus Czech Republic Denmark Estonia Finland 20.0% -5.0% 9.0% -20.0% 11.0% -16.0% 16% (9.4) 13% (2.9) 13% (6.1) 30% (17) 25% (18) 38% (28.5) Renewables: 20% share in energy technology leadership security of energy supply France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxemburg Malta -14.0% -14.0% -4.0% 10.0% -20.0% -13.0% 17.0% 15.0% -20.0% 5.0% 23% (10.3) 18% (5.8) 18% (6.9) 13% (4.3) 16% (3.1) 17% (5.2) 40% (32.6) 23% (15) 11% (0.9) 10% (0) Netherlands -16.0% 14% (2.4) Poland 14.0% 15% (7.2) Portugal 1.0% 31% (20.5) Romania 19.0% 24% (17.8) Slovakia 13.0% 14% (6.7) Slovenia 4.0% 25% (16) Spain -10.0% 20% (8.7) Sweden UK -17.0% -16.0% 49% (39.8) 15% (1.3)

7 3. Technology targets (cont d) Also confirmed in CCAP, CEPS etc. sectoral approach study * China is more interested in technology than economy-wide commitments More examples? - US - CCS? * ectoral%20study%20and%20exec%20overview.pdf or: sectoral study

8 4. Free allocation in (EU) ETS : Still sectoral Free allocation to all industry has been price for accepting for ETS (cap) Free allocation to industry has been price for industry to agree on new ETS windfall profits

9 Recent EU ETS lessons EU debate was about distribution of costs and benefits (between member states, between sectors): EU ETS creates value of between 27 billion (at 15/CO 2 ) and 90 billion (at 50/CO 2 ) No member state & no industry challenged the cap (-21% compared to 2005 in 2020) after a 14% reduction by 2005 compared to 1990.

10 5. Enabling conditions (Kjellèn 2008) EU energy & climate package is EU domestic low-carbon strategy to transform Europe into a highly energy-efficient and low greenhouse-gas-emitting economy Increase security of supply (reduce dependency) Ensure the competitiveness of European industry and the availability of affordable energy (technology leadership) Promote environmental sustainability and combat climate change (long-term sustainability)

11 6. Political will Politics were right with Merkel, Chirac/Sarkozy, Blair/Brown, Prodi, Barroso and Bush

12 EU and target setting developed countries 2º C target translated into long-term target to reach ultimate objective including a 25-40% reduction by developed countries in 2020 and 80-95% by 2050

13 Criteria for developed countries targets GDP per capita GHG emissions per unit of GDP (intensity, indicating domestic GHG reduction potential) Early action between 1990 and 2005 Population trends?? No reference to marginal abatement costs and sectoral

14 Developing countries actions are sectoral GHG emissions level Developing country actions: new CDM, sectoral crediting, no-lose targets, NAMAs Baseline Own action autonomous Own action supported Actions generating credits Actual emissions Source: European Commission 2009, p. 6 Time

15 20% renewables Why Political targets approach? 20% efficiency 20% GHG 10% biofuels 12 CCS demonstration plants EU system can handle least-costs achievement of targets but no scientific target setting

16 Conclusions Data, analysis and consensus are precondition Settling distributional conflicts is easier at sectoral level Technology targets may be more acceptable Free allowance for ETS remains helpful National preferences and strategies are driven by domestic political and geopolitical context (example EU: economic collapse Central and Eastern Europe, Russia, energy dependence, EU preference for political targets ) Is alignment of all national preferences into one coherent set of framework possible? Alternative may be focus on national low-carbon strategies with independent technical assessment, regular review, multiplicity of targets, strong compliance mechanism and possibly accompanied by flexible mechanisms to ensure leastcost abatement.

17 Egenhofer,, C. & Fujiwara, N., Global sectoral industry approaches to address climate change: The way forward,, CEPS Task Force Report, April Making the most of the G8+5 climate change process: Accelerating structural change and technology diffusion on a global scale,, CEPS Task Force Report, June Fujiwara, N., On the way to Copenhagen via Pozna : Preliminary thinking about a post-2012 climate deal CEPS Policy Brief, No.179, November Available free of charge at: christian.egenhofer@ceps.eu