EU in desperate search for climate strategy

by Hughes Belin | 01 March, 2010

The European Union is struggling to find a new direction after the failure of the Copenhagen conference. The mood is gloomy, with the general public feeling let down and the EU unable to agree on its climate change policy ahead of the follow-up to Copenhagen in Mexico at the end of 2010. The fact that there is a new Commission now in place might ...

The new EU Commissioner for Climate Action, Connie Hedegaard

Article Highlights:

- After the EU’s failure to play a leading role in the climate negotiations in Copenhagen, Brussels is groping around for a new strategy.

- José Manuel Barroso, the President of the European Commission, has indicated he is still intent on regaining “global climate leadership”.

- The Commission is now aiming for a global post-Kyoto accord to be reached by the end of this year.

- It has also promised to quickly deliver on its pledge to spend €2.4 billion a year on climate measures in developing countries.

- Internally, Brussels has set up a new Directorate-General for Climate and has resolved to feed climate change policy considerations into all policy fields, including the Common Agricultural Policy and the EU budget.

On 18 February European Commission President José Manuel Barroso wrote a letter to EU leaders to ‘share some thoughts on the work going on in the Commission’. In his letter, he said that ‘working together to maintain our ambitions on climate change will remain one of our most important challenges for this year’.
One wonders what exactly is the challenge according to Barroso: working together or sticking to the EU’s ambitions? It would seem to be both – and there has been little progress on either point.

At the UN Climate Conference in Copenhagen in December the EU failed to achieve results, at least in part because of its own divisiveness. The new EU Commissioner for Climate Action Connie Hedegaard, who chaired the conference, has revealed that, in the last few hours of talks, EU member states were arguing in different directions, which considerably weakened the EU’s position. Some member states, including Denmark, the Netherlands and the UK, were reportedly pushing for the EU to move to an unconditional 30% emissions reduction target while others, such as Italy and Poland, were reportedly trying to sabotage the discussions to reduce the scale of the EU’s ambitions. As a result, the EU press conference which was scheduled to take place at the Bella centre in Copenhagen to announce the EU’s negotiating position simply never took place.

The European Parliament adopted a resolution on 10 February saying that ‘the EU failed to play a leading role in the fight against climate change and was not even involved in the final negotiations with the USA, China, India, Brazil and South Africa on the final draft of the Accord’. The European Commission, which maintains that the EU was part of the talks until the very end, has categorically denied this.

EU’s leadership role undermined

So what is to be done now? How can the European Union regain the ‘global leadership on fighting climate change’ it had claimed for itself before Copenhagen – if that is indeed the EU’s goal? ‘If the European Union does not take the initiative, we may end up driven by the initiatives of others,’ Barroso writes in his letter, summing up the problem the EU is facing.

Despite the fact that the European Parliament found the Copenhagen Accord ‘disappointing’ and that EU leaders (including Barroso) were dissatisfied with the outcome, it would seem to make sense for the EU to build its new negotiating strategy on what was agreed in the Accord. The EU’s chief climate change negotiator, Jos Delbeke, has noted that the EU has given its strong backing to the Accord. Basing further talks on the Accord should be the key to ‘reinvigorating the process’ under the Climate Convention’s ad hoc working groups, which are negotiating the post-2012 commitments, he says.

However, adds Delbeke, while the EU does not intend to move the climate change talks from the UN to another forum, it does expect reforms to the UN process to prevent a small minority of countries blocking an agreement negotiated by most of the world. This view is in line with the European Parliament’s statement that ‘serious reflection on how to make the process more efficient is urgently needed’.

Other voices are calling for a bigger ‘reality check’. At an EU environment ministers’ meeting in Brussels in late December, Sweden’s Environment Minister Andreas Carlgren said ‘this is a decisive moment in choosing whether to continue pushing for a global agreement or going for a fragmented approach’. A fragmented approach would entail every country or region deciding on its own policy without an overarching international legal framework.

For now, however, the EU sticks to the ideal of a global approach, including a new legal framework to succeed the Kyoto Protocol (see box below). More precisely, the EU is aiming for a single, legally binding agreement for the period starting from 1 January 2013 – when the Kyoto Protocol’s first commitment period expires. This would have to be achieved by the time of the Cancun Climate Conference (29 November-10 December 2010). The Commission is sticking to its earlier position that its mitigation targets can act as a ‘powerful lever for others to follow’, as Barroso has said to EU leaders.

External action plan

Following the Copenhagen Conference, the European Commission has repeatedly said that it would act swiftly to enable the EU to deliver on its pledge to spend €2.4 billion per year (over the period 2010-2012) in developing countries. Its top priorities will be to address the problem of deforestation (the so-called ‘REDD-plus’ instrument) and the development and transfer of low carbon technologies, possibly through pilot actions both on adaptation and mitigation.

The EU’s pledge to the UN Framework Convention on Climate Change (UNFCCC)

As required by the Copenhagen Accord, the EU sent a letter to the UNFCCC on 28 January where it restates the EU’s position that keeping global warming below 2°C requires global emissions to peak by 2020 at the latest, to be reduced to at least 50% below 1990 levels by 2050 and to continue to decline thereafter. To this end, and in line with the findings of the UN Intergovernmental Panel on Climate Change (IPCC), developed countries as a group should reduce their emissions by 25-40% below 1990 levels by 2020 and developing countries should achieve a substantial deviation below the currently predicted emissions growth path, in the order of 15-30% by 2020, the letter continues.

The letter states that the EU is committed to an independent economy-wide emissions reduction target of 20% by 2020 compared with 1990 levels and that this reduction could be increased to 30% under the conditions agreed by the European Council. These conditions are that, as part of a global and comprehensive agreement for the period beyond 2012, other developed countries commit themselves to comparable emissions reductions and developing countries contribute adequately according to their responsibilities and respective capabilities.

The EU has not said anything more concrete on this issue other than repeating this goal. Some fear that the member states will ‘engage in accounting chicanery’, as the Greens at the European Parliament call it. By this they mean that member states may recycle funds from existing development aid budgets and relabel them as aid for climate change. Reports from France and the UK indicate that this is exactly what key governments intend to do. A report from the International Institute for Environment and Development (IIED) has already warned that the funding pledges in the Copenhagen Accord may be overly optimistic. ‘It is far from clear where the funding will come from, if it is genuinely new and additional, and how it will be allocated and channelled,’ said co-author Saleemul Huq.

But even if the EU can get developing countries on its side, it will definitely not be enough to secure the ultimate goal of a legally binding multilateral agreement. That is why Barroso has called on EU leaders to rethink their approach to their partners in the talks.
According to EU officials, the incoming Mexican presidency of the UN climate process is keen to facilitate negotiations, with a first meeting possibly being planned for April. The new EU’s Commissioner for Climate Action Connie Hedegaard has therefore been asked by Barroso to consult ‘key international partners to find ways to reinvigorate the international process’.

Barroso has said that he hopes to have some initial thoughts ready by the time of the Spring European Union Summit (25-26 March) and then to feed the results in full into the next round of UN negotiations at ministerial level in Bonn (31 May-11 June) and the EU Summit on 17-18 June. He definitely wants climate change to be high on EU leaders’ agenda.

In addition, European Commission officials have indicated that the EU ‘is to become more proactive in the development of global carbon markets, including a sectoral crediting mechanism’. This negotiating avenue has not fully borne fruit yet but is seen as a way to set up a level playing field among global sectors that is likely to mitigate carbon leakage.

Internal agenda

As to its internal climate policy, the European Commission shows no signs of wanting to temper its ambitions. On the contrary, Brussels has set up a new Directorate-General for Climate (see box below) and has indicated that henceforth climate change policy considerations will feed into all EU policy fields. Transport will be at the forefront of these via an upcoming “transport climate package”, along the lines of the energy climate package of December 2008. But the wholesale “de-carbonisation” of EU policies will also affect the power sector, the budget and the review of the Common Agricultural Policy, the Commission has said. In the longer term, the EU will develop a ‘low carbon development strategy’ vision up to 2050, including mid-term considerations.

Currently, EU leaders are working on a renewed competitiveness strategy, the so-called “2020 Strategy”, which is intended to succeed the rather unsuccessful ‘Lisbon Strategy’. The latter’s aim was to make Europe ‘the most competitive and the most dynamic knowledge-based economy in the world’ by 2010. The new 2020 Strategy proposes the ‘greening of Europe’s economies, making them more productive and more eco-efficient’. This ‘greener growth’, as Barroso calls it, means building a competitive and sustainable economy, tackling climate change, accelerating the roll-out of smart grids and EU-scale networks, modernising the EU’s industrial base and turning the EU into a resource-efficient economy.

Those are the stated goals, but some NGOs and Brussels-based consultants say these are just words and cast doubt on the reality of this ‘greening’ process by pointing to the absence of specific measures.
For its part, industry is eager to have a clear and predictable legislative framework. EU businesses have repeatedly called for a global agreement which would guarantee a level playing field for them internationally. The association BusinessEurope has pointed out that ‘European companies are as exposed to carbon leakage as they were before Copenhagen’, because they have to pay for their emissions under the EU Emission Trading Scheme, while companies in other regions do not face that cost.

‘Copenhagen correctly recognised the long-term challenges but I also believe we need to stop “polishing the 2050 diamond” and instead deliver material action today in the right direction,’ said Iain Conn, Chief Executive of BP Refining & Marketing at a speech in Brussels. He points to a whole range of possible actions that are ‘good for all seasons’: technological innovation, ensuring markets are efficient, setting an economy-wide price for carbon and driving energy efficiency.

The initiatives to promote and encourage a green economy, energy security and reduced energy dependency in the EU have the added advantage of making it easier to fulfil the EU’s conditional 30% greenhouse gas emissions reduction commitment, according to the European Parliament. In addition, due to the recession, ‘the estimated cost of the EU achieving a 30% cut in 1990 emissions by 2020 is now less than the estimated cost of achieving a 20% cut when that was agreed’, the Parliament points out.

There is likely to be more detailed discussion about the EU plans at the next meeting of EU environment ministers on 15 March, although early draft conclusions show no real progress. Many observers in Brussels doubt that sticking to a conditional bid to raise its pledge from a 20% cut in emissions by 2020 to 30% will actually allow the EU to influence its partners in negotiations. It was not considered a great bargaining chip in Copenhagen and it will not be considered a great bargaining chip on the road to Mexico, a key negotiator told EER, suggesting the EU should ‘listen to key countries’ demands’ instead.
Several NGO’s have pointed out that the EU has let long-term financing of investments in developing countries (beyond 2020) slip off the agenda. This further undermines the EU’s position towards developing countries.

Where does this leave us? Clearly there currently does not seem to be a clear prospect of a binding international agreement and the EU faces a long list of obstacles before it can regain its global leadership on climate change policy. These include insufficient pledges from other countries, the complicated formal UN negotiating process, tough internal political agendas and a financial crisis that may get even worse. But the toughest one of all may just be to obtain the agreement of all 27 member states so that the Union can speak with a single voice. The EU needs a new plan that delivers but it is far from having one.

European Commission has set up new climate change department

The EU Commission set up two new Directorates-general (DGs) in mid-February - one for energy and one for climate - shortly after its 27 Commissioners formally took up their posts. DG Energy will be headed up by the British official Philip Lowe and DG Climate Action by the Belgian official Jos Delbeke.

The new climate DG will bring together climate-related units from the existing environment, external relations and industry DGs under one roof. So far, DG Climate Action has around a hundred staff although this figure may double in the coming months. DG Environment will continue to be responsible for industrial emissions and the Integrated Pollution Prevention and Control (IPPC) Directive but ozone layer protection will move to DG Climate Action. Air quality will stay within DG Environment but most of the staff working on transport will move to DG Climate Action to prepare a ‘transport and climate’ package.

Jos Delbeke (53) was the architect of the emission trading system (ETS) and is one of the officials behind the current EU climate change plan. He is regarded as an authority on the economic effects of environmental policy. Delbeke has worked for the European Commission since 1986. He started off working for the social affairs agency before moving to DG Environment, where he was deputy Director General. Prior to that, he spent a year with the International Monetary Fund in Washington and taught economics at Vlekho, the Flemish economic studies polytechnic in Brussels.