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EU’s Climate Policy after Copenhagen

posted by eucentresg

25 February 2010

More than two months have passed since the UNFCCC Copenhagen Conference, but the EU seems to be still struggling to find the way forward after the “great failure”, as the Swedish environment minister Andreas Calgren described the climate negotiations in the Danish capital. Apart from the failure to achieve any of its main negotiation objectives (except the agreement on climate financing), the EU had to cope with being left out of the negotiations where the US, China, India, Brazil, and South Africa were drafting the Copenhagen Agreement. This was a diplomatic slap in the face of the EU, which has long aspired to play a leadership role in the international climate negotiations.

The most important lesson to be learned from Copenhagen fiasco is that when the EU’s position is fragmented, it is much weaker than when it acts in unity. EU leaders left some of the important issues concerning the EU’s final offer to the last-minute discussions during the Copenhagen Conference, thus attracting even more attention to the internal squabbles. Besides, leaders of individual Member States competed for international attention with national initiatives and individual bilateral negotiations (for instance, only the United Kingdom and France took part in a finance package presented in Copenhagen to protect tropical forests, while Germany would prefer to act alone in employing its own bilateral instruments). The EU’s actorness was clearly undermined by its fragmented representation in Copenhagen. That “in unity there is strength” has been well-known for years, but now there is a hope that with the new Treaty of Lisbon the EU’s representation could indeed be streamlined. Whether this hope will be realised depends on the new EU’s leadership team. Although climate change issues are not under the exclusive competence of the EU and the Commission is not negotiating on behalf of the Member States as in the trade talks, the Commission, particularly the High Representative of the Union for Foreign Affairs and Security Policy, Baroness Catherine Ashton, and the climate action commissioner, Connie Hedegaard, and the European External Action Service should assume a significant coordination role in climate negotiations. However, much will depend on the political will of the Member States to pool various endeavours into a concerted European action.

The EU can seize the moment to reassess its efforts to play a leadership role in the fight against climate change, to engage more actively in “climate diplomacy”. The EU must deepen bilateral dialogue with important players in the climate negotiations, in particular with the large developing countries, and to try to brokerage an international binding agreement. This will be a difficult task for the new EU commissioner for climate action, since the international commitments that countries can make are clearly determined by domestic politics.

Perhaps more realistically, the EU can stick to its commitments, as underlined by José Manuel Barroso, President of the European Commission.  By maintaining its pledges, the EU could assume normative leadership. Effective domestic climate policies and implementation of its international commitments would give the EU additional leverage in negotiations.

The EU could also try to assume leadership in developing a global carbon market. However, first it will have to deal with problems within its own Emissions Trading Scheme (ETS) which was badly affected by the economic crisis. The carbon price (around €15 per tonne) is too low to encourage the development of new low-carbon technologies. According to the report by the Environmental Audit Committee of the British Parliament, the price should be at least €100 per tonne by 2020 in order to trigger enough investment for shifting to a low-carbon economy (the price is expected to be around €30 by then). According to the report, the problem is that in the first phase of the EU ETS (2005-2007) the “carbon allowances were clearly over-allocated.” Contrary to the intended effect, it resulted in the increase of the overall amount of CO2 emissions in that time period (by 38 million tonnes, from 2012 to 2050 tonnes). The report points out that currently there is also a risk of over-allocation, because economic recession already would diminish the amount of emissions: “the recession has only served to loosen what little constraint the cap provided.” After addressing the price issue, the EU should focus on how to link the ETS with other cap-and-trade systems in the world, in order to make the carbon market an effective instrument in climate protection. The EU has declared that it wants to establish an OECD-wide carbon market by 2015 and to include developing countries by 2020. But the aforementioned political hurdles in the US are not going to ease the task.

It is also expected that the EU will take a second look at carbon tariffs on imported goods. Industry would not allow implementing a 20% emissions reduction target without any kind of protection. This has also reverberated in political circles, with French President Nicolas Sarkozy stating that “I will fight for a carbon tax levied on EU borders.” The new EU’s commissioner for trade, Karel de Gucht, has stressed that he does not agree with the idea of introducing such a “border adjustment tax”, stating that this would lead to “an escalating trade war on a global level.” However, this position could change if more EU Member States would rally behind the tax proposals. It remains to be seen how such tariffs would correspond to the WTO rules. Again, much would depend on the US, because the current climate bill already includes a carbon tariff provision. If internationally agreed, this could be used convince China, India and other developing countries to come forward with higher emission reduction commitments.

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