Commission’s Copenhagen Blueprint can Break the Deadlock

22 Sep 2009

Joseph Curtin

The European Commission is often considered the de facto engine of international climate change negotiations. The Commission’s formal muscle comes from its ability to initiate legislation. Combined with its ability to seize the policy agenda by strategically timing its announcements and placing its proposals deftly between the interlocutors, it has real power to set the agenda (albeit circumscribe actively by member states and the European Parliament).

Take the January 2007 Energy and Climate change package. When the Commission published its 200 or so pages of proposals, the overall dimensions of the EU policy were effectively set in stone. No member state successfully challenged its mitigation target, nor were the overall parameters of what the Commission proposed seriously altered. Skirmishes around the finer details were in effect all that followed.

Now the Commission’s powers will be tested on a wider stage with only 80 days to Copenhagen. Frustrated with the apparent deadlock, and with one eye on the Pittsburgh G20 Summit, it has struck with its customary impeccable timing.

The Commission has been quietly imagining what a post-Copenhagen world might look like and presented some sketches to the Environment, Energy and Finance Councils over the previous months, and finally to last week’s informal European Council meeting.  

In the words of the newly reappointed President of the European Commission, José Manuel Durão Barroso, “now is the time for putting offers on the table, offers at the outer limits of our political constraints. This is what Europe has done ….”. There are two deal breakers: financing for developing country adaptation and mitigation, and emission reduction targets: the chicken and the egg. 

Financing was always going to be a tricky one. Developing countries rightly demand resources to reduce emissions and to adapt to the negative consequences of climate change, consequences such as drought which the developed world essentially caused with their energy hungry economies.

The European Council had previously promised that it would contribute its “fair share”. With the Commission’s proposal of 10 September, it sought to define “fair” and identify sources of funding. It started out by estimating that a €100 billion would be required by 2020. It reckons that about €38 billion can come from carbon markets, and reiterated its call for a fully fledged OECD carbon market by 2015.

It also wants a sectoral carbon market to be phased in for developed countries from 2012 to meet this objective. This is smart thinking because a global system encompassing the developed and developing world is the long-term objective. This can only happen along sectoral lines with global industries eventually all subject to the same emissions targets (we are looking beyond 2020 now). It’s also smart because it appeals to the Americans who have been banging on about sectoral targets for a decade.

It might not be so popular with developing countries who under no circumstances want their industries operating under the same obligations as in the OECD. That’s where the Commission performs its second sleight of hand: it would make the sectoral targets attractive to developing country’s in the short/medium term in several ways, by, for example, offering “no-loose” targets which are reductions on business as usual, not absolute emissions reductions.

The Commission proposes actually replacing project based CDMs (the key financing mechanism of Kyoto) with a sectoral targets (though it is not clear how this transition might be managed nor how it would work in reality). Sectoral targets would act as a bridge between the current project based support for developing countries and their ultimate goal: global emissions trading.

This is all very European Commission - a sophisticated and delicate balancing act.

OECD governments would be required to stump up another €22 to €50 billion in financing by 2020, with the shortfall coming from private finance. The Commission reckons that wealth and historical responsibility should be used as the two criteria for dividing this chunk among developed countries and estimates the EU liability at between 10% to 30% of the total. 

This opening gambit leaves plenty of room for negotiation.

It also dangles the carrot of “fast-start” finance which would be forthcoming immediately further to a successful agreement at Copenhagen.

Then there is the second issue of emission reduction targets. The EU had already put it up to the world promising a maximum reduction of 30% on 1990 levels by 2020. Now it is calling for all developed countries to put their cards on the table. A huge step forward was made recently when the newly elected Japanese government announced a target of 25% emissions reduction by 2020, a real advance on -9% being offered by the previous administration.

This heaps increasing pressure on the US to make a similar commitment. But if the Commission is the engine, the US has traditionally acted as an effective break on progress. The new administration continues to drag its heals, and has yet to make a formal announcement on mitigation. All President Obama has managed is an informal commitment to a 0% reduction on 1990 levels (-7% on 2005). The Waxman/Markey Bill approved by Congress on June 2009 would equate to an emissions reduction of -7% on1990 levels (-20% on 2005), but this bill has yet to be approved by the Senate and amendments could change the overall target.

Because it’s  Obama, he probably deserves the benefit of the doubt. He knows that agreeing a target that would not pass the Senate is of little use, as former President Clinton found out the hard way after signing the Kyoto Protocol in 1997. The Senate on that occasion caused a major international kerfuffle by passing the Byrd/Hagel Resolution 95-0 which effectively meant that the US could never ratify the agreement. This was something of an embarrassment for the US and one the current administration has not inclination to relive.

This poses something of a problem for international negotiations, with the developing countries in no hurry to set out their stalls in the absence of a clear signal from the US that they won’t be leaving the playing field and take their ball home again.

The European Commission has perhaps realised the predicament of the US and is cutting its favourite President a bit of slack. The Communication focused on financing. Because of the significant sums potentially in the kitty, developing countries may be incentivised to overcome their understandable reluctance to make a move in the absence of progress from the world’s richest and dirtiest country. This would, in turn, make it easier for the Senate to approve an ambitious American target.

This hope was expressed by President Barosso in an address to the Council of Foreign Relations on 21 September when he demanded that: “….developing countries, especially the economically advanced amongst them, have to be much clearer on what actions they are ready to take to mitigate carbon emissions as part of an international agreement”, adding somewhat dramatically that all the negotiations to date would amount to nothing “but the longest suicide note in history” if progress cannot be made. And not a word about the US, and this in New York!  

It remains to be seen what sort of traction the Commission gets in Pittsburgh with its proposals. The clock is ticking.

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