Abstracts for the Seminar of Governmental Experts (16-17 May 2005) submitted by Luxembourg on behalf of the European Community and its Member States
The Climate Change Challenge
The EU holds the view that the impacts of climate change associated with a temperature increase of 2°C or greater, compared to pre-industrial levels, would be severe enough to be classified as dangerous. Recent scientific research has identified increasing risks above this level and indeed suggests that the risks of climate change may be greater than previously reported. Failure to limit climate change would increase the risk of severe negative impacts on all countries, and particularly on those developing countries most vulnerable to climate change impacts. Technological options for reducing emissions at reasonable costs over the long term already exist and will be most effective if applied as part of a portfolio of options. For some options more work needs to be done to turn them into competitive market options. Delays in action would necessitate greater emission reductions at a later date to meet the same temperature target and would increase the costs and the risks of irreversible damage.
EU Policies and Measures to achieve Kyoto targets: The European Climate Change Programme (ECCP)
How to prepare and implement practical policies and measures to achieve Kyoto commitments, while not limiting economic growth? This is the mission of the European Climate Change Programme: to help the EU decision makers identify the most costeffective measures and to drive forward the implementation of EU policies and measures. ECCP measures focus on issues with an EU dimension and complement Climate Change Programmes that Members States are implementing in their own country.
Since the launch of the European Climate Change Programme, a considerable number of EU measures have been adopted. Most importantly, the EU has implemented an emission trading scheme covering approximately 50% of CO2 emissions in the EU-25, notably of the energy-intensive sectors, so as to achieve emission reductions in the most cost-effective and flexible way. In addition, the “linking Directive” establishes the provisions and rules for enabling economic operators to use credits from Joint Implementation and Clean Development Mechanisms for compliance within the emission trading scheme. Other key measures, related among others to the energy supply and demand sectors, as well as to other gases, will also be addressed briefly. The presentation will aim to share the state of play and EU experience in the development of policies and measures, including lessons learnt, good practices and the planned new phase of the ECCP, that will pave the way for further reductions.
The Innovation challenge – Risks, urgency and opportunities
Climate change requires substantial changes in how the world produces and uses energy. As worldwide demand for energy and transport services will continue to grow, the reduction of greenhouse gas emissions will need to be realised through technologies based on lower carbon intensity per unit of service than current technologies. This risk of rapid
further growth in emissions calls for urgent policy responses. Technological change in all economic sectors will be required. How can we make sure that the technological innovation linked to ongoing investment cycles will reflect the needs of tackling climate change? Long lasting effects of today’s investment decisions could cause lock-in effects into high-emission pathways. What are cost efficient options to avoid this? Many technologies to reduce greenhouse gas emissions either exist already or are at an advanced pilot stage. However many promising technologies face very limited market uptake. How can be ensured that these technologies are taken up by mainstream markets? How can we enhance the transfer and diffusion of technologies across the world?
Two main complementary strategies will be further elaborated:
1. Pulling technological change or: how can we ensure the right incentives?
2. Pushing technological change or facilitating technological breakthroughs
Another issue that will be elaborated is how the UN process could open up for technological policy opportunities.
The investment challenge
The International Energy Agency has estimated that meeting global energy demand will require cumulative investment of around $16 trillion by 2030, for production and distribution, about half in industrialised countries, half in emerging economies and other developing countries. Significant investment is also underway in other sectors, notably urban infrastructure, transport, and building stock. The long-lived nature of these investments means that equipment built now will still largely be around in the middle of the century and decisive for long-term emissions profiles. The right choices will facilitate the transition to a low carbon future. However, the choice of inefficient technologies, infrastructures or technologies that are not compatible with future improvements, will lead either to stranded capital, or to “lock in” which will limit future options to tackle climate change. The challenge is to find ways to influence and to facilitate such decisions over the coming 10-20 years.
The international financial institutions have a key role to play in directing investment decisions, through integration of climate change considerations into their appraisal processes, and their influence on bilateral and commercial practices. However, the real challenge is to influence private investment decisions. A global carbon price is at the heart of creating the incentives needed to meet the investment challenge. The European Trading System is already making emissions trading a reality so that business can start to integrate climate policy into investment decisions, with a link to the Kyoto Protocol project mechanisms (CDM and JI) which provide a further innovative tool. However current arrangements appear inadequate given the scale of the investment challenge. We need to explore options (including e.g. mainstreaming of climate considerations in investment decisions in other policy areas) that build on and strengthen existing bases and provide the visibility and certainty needed to influence these globally crucial and urgent investment choices, particularly in sectors where there is a long period for capital stock turnover. A predictable global framework can provide this certainty.
The challenge is to integrate effective and appropriate responses to climate change in all relevant policy areas. Greenhouse gas emissions are related to processes and activities in other policy areas: development, land use, investment, transport and environment. For example: energy use is essential for social and economic development, but often leads to greenhouse gas emissions at the same time. On the other hand, emissions lead to climate change impacts that jeopardize development.
These other policy areas have countless other objectives, beyond combating climate change: e.g. access to energy and technology, economic development, combating air pollution, preservation of biodiversity and combating desertification. Co-benefits of policies on climate change and other areas may well exist. Often emission reductions are being achieved for reasons other than climate change, for example reduction of local air pollution for health reasons. The achievement of sustainable development objectives (for example related to energy, land use and local environmental problems) can go hand in hand with controlling greenhouse gas emissions. Likewise, policies aiming at the reduction of greenhouse gases can have benefits in other areas: e.g. developing technologies can lead to positive employment effects.
Approaches to optimise the positive synergies between climate change and other policy areas should be discussed. In this process key decision makers when it comes to e.g. economic development and investments in technologies must be involved. This implies involving stakeholders – both at the domestic and at the international level – other ministries (e.g. energy, development and transport), private sector, multinational corporations and multilateral organisations.
Adaptation and Sustainable Development
Climate change and its adverse physical effects will further impact on social and economic development prospects of nations and livelihoods of households and can have a strong negative impact on nature and biological diversity. Climate change is already happening. Therefore, addressing climate change should be part and parcel of sustainable development policies, including development cooperation and funding policies, now and in the future. Non-action leads to higher adaptation needs and endangers the achievement of the Millennium Development Goals.
Adaptation needs to be tailored into local, sub-national and national decision making to meet local needs and circumstances. Integration of adaptation concerns into sectoral decision-making is key, rather than developing stand-alone adaptation actions. Synergies should also be strengthened at all levels, including action taken under various multilateral environmental agreements (MEAs).
There is a need to increase awareness of climate change and its impacts among policy makers in all sectors. In addition to publicising the problem, knowledge of approaches, tools and methods to address the impacts effectively and efficiently should be enhanced. There is also a need to strengthen the understanding of cause and effect relations: the more successful mitigation efforts are, the less there is a need to adapt. There are also limits toadaptation.