CLIMATE CHANGE HIGH ON 2007 GLOBAL AGENDA

The European Commission recently released a comprehensive new energy strategy, seeking to launch the union onto a climate-friendly, low-carbon path. Meanwhile, a consortium of major Asian economies agreed to cooperate on ways to enhance energy security and address climate change, in parallel with efforts to further integrate their trading sectors. Both initiatives took place in early 2007 as meteorologists were taking stock of the unusually warm weather in 2006, and warning that 2007 may bring even more weather anomalies in its wake. Overall, the year will see a number of major climate-related events, including discussions under the German G-8 presidency and the release of a comprehensive assessment of the body of scientific knowledge on climate change.

EU energy overhaul set to improve sustainability, security

On 10 January, the European Commission launched its new energy strategy, coined "Energy for a Changing World." Efforts to combat climate change are the centrepiece of the energy package, and Commission President José Manuel Barroso stressed that "the challenges of climate change, increasing import dependence and higher energy prices are faced by all EU members. A common European response is necessary to deliver sustainable, secure and competitive energy." The strategy seeks to trigger a new "industrial revolution" in terms of developing a low carbon economy.

In concrete terms, the strategy sets a new and unilateral European target for cutting greenhouse gas emissions: the EU would cut its emissions by 20 percent under 1990 levels by 2020, or by 30 percent if other major polluters come onboard. In 2020, 20 percent of European energy would be produced from renewable sources, and biofuels would make up 10 percent of vehicle fuels. Energy efficiency would be enhanced by 20 percent in the same period. In addition, the new strategy would boost funding for research and development of new technologies, seeking to make Europe the market leader in the area of green energy technology. Funding would also be provided to improve the sustainability of existing options, such as carbon capture and storage.

Whether to use nuclear energy would be up to individual member states, although the strategy specifies that their dismantling should be accompanied by efforts to bring new renewable power online so as not to work against the climate goals.

The strategy would also improve the functioning of the internal market, and includes options for unbundling energy utilities and increasing continental inter-connections.

Energy security is another cornerstone of the new energy strategy. Currently the EU imports 50 percent of its energy, a percentage set to jump to 65 by 2020 if no action is taken. Disputes between Russia and its neighbouring countries through which gas is transferred to Europe have led to interruptions both in 2006 and this year. External Relations Commissioner Benita Ferrero-Waldner commented that this served as a "wake-up call" to treat energy security as a "strategic question." Europe will need to find a unified voice in its dealings with the outside world in this regard, notably with its main suppliers such as Russia, which so far has dealt with Europe in a piecemeal approach. The EU has also begun to include energy cooperation as part of its wider external trade policy (see Bridges Trade BioRes, 3 November 2006, http://www.ictsd.org/biores/06-11-03/story2.htm).

The new energy strategy received mixed reviews in Europe. Business lobby group UNICE commented that "business needs predictability but far-reaching unilateral EU targets for reducing emissions of greenhouse gases are unacceptable." Friends of the Earth on the other hand said greenhouse gas emissions should be reduced by a minimum of 30 percent by 2020, and called for sector-specific renewable energy and efficiency targets.

Overall, the EU's emissions are on the rise, and without new action would increase by five percent by 2020. The union has set as a goal to limit climate change to a two degree Celsius increase, although there is now a 50 percent chance that warming will amount to 5 degrees by the end of the century.

The energy strategy must now be endorsed by the European Parliament and members states, and turned into legislation.

Energy part of EU trade policy

Prior to the release of the EU energy strategy, Trade Commissioner Peter Mandelson touched on some of the core issues, albeit from a trade perspective. He outlined his vision on trade and climate change in a speech on 18 December, noting that while action to address climate change can lead to upfront costs and competitiveness challenges vis-à-vis trading partners, it will also spur technological development and position early movers as market leaders with regard to new and green technologies. He advocated "selling more green goods, shifting the whole base of our economy onto a sustainable footing; showing others how to do it, and exporting the means to do so." Citing the Stern report on the cost of climate change, he said that the costs of inaction would be many times higher than the costs of taking action now (see Bridges Weekly, 1 November 2006, http://www.ictsd.org/weekly/06-11-01/inbrief.htm#3). He suggested looking at the Kyoto Protocol as a trade and investment agreement, saying that "an important hidden imperative behind Kyoto is the creation of an open global market in environmental technologies."

Mandelson provided some suggestions for how to harness the power of trade to help reach climate change goals. Firstly, he suggested reviving WTO negotiations on environmental goods and services (EGS) "in light of the climate security challenge," and advocated the phase-in of zero tariffs for industries and technologies that are key to fighting global warming. Mandelson said he would contact WTO Director-General Pascal Lamy, asking him to spearhead efforts in this regard. While noting that Europe is a market leader in green technology, he also pointed to the growth in South-South trade in the sector.

Second, Mandelson said Europe should use all bilateral trade agreements to directly address trade and investment in green technologies. "These steps will encourage a better functioning global market in green goods and services. This must be trade policy's initial contribution to stabilising our climate," according to Mandelson. He strongly focused on how freer trade can provide incentives for clean technology that is needed to combat climate change, and distanced himself from the idea of imposing a climate border tax adjustment on countries that have refused to ratify the Kyoto Protocol. He questioned the legality and political wisdom of such a move, proposed by French president Jacques Chirac and more or less cautiously embraced of several other European leaders.

Asian nations to cooperate to address climate change

Action to address climate change has recently come to fore in Asia as well. A meeting between the Association of Southeast Asian Nations (ASEAN) countries - Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam - agreed not only to deepen integration within the bloc and expand trade liberalisation, but also ended with a Declaration of East Asian Energy Security. The declaration, which Australia, China, India, Japan, Korea and New Zealand also signed onto at the ASEAN annual summit on 15 January in Cebu, the Philippines, deals directly with climate change.

The declaration stresses the urgency of dealing with climate change, as well as noting the growing energy needs in the region. As such, it recognises the need to strengthen the development of the renewables sector, including biofuels. The signatories agree to promote open trade and cooperation in the energy sector, and will encourage the development of both renewable energy and cleaner conventional sources, as well as energy efficiency. Specifically on biofuels - with several members being potentially large producers of both sugar-based ethanol and palm oil - they agree to "work towards freer trade on biofuels and a standard on biofuels used in engines and motor vehicles."

While the declaration set aspirational goals rather than hard targets, New Zealand prime minister Helen Clark pointed out that it serves as a useful first step, given that "Up until [now] the motivation for discussing these issues has been more on the problems arising from the price of oil and the volatility and the security questions of the issues." Clark was reportedly one of the driving forces behind getting climate change solidly on the meeting's energy security agenda. Climate change was also discussed at the energy segment at the trade meeting between the Pacific rim (APEC) nations two months earlier (see Bridges Trade BioRes, 1 December 2006, http://www.ictsd.org/biores/06-12-01/story1.htm).

What global climate action in 2007?

According the World Meteorological Organisation, 2006 is the world's sixth-warmest year since record-taking began 150 years ago. Mainstream media has reported extensively on anomalies worldwide, including droughts and flooding in the greater Horn of Africa, the mild autumn in Europe and record wildfires in the US, and linked these and other events to human-induced climate change. While negotiations under the auspices of the UN Framework Convention on Climate Change (UNFCCC) in November last year gave scant results (see Bridges Trade BioRes, 1 December 2006, http://www.ictsd.org/biores/06-12-01/story2.htm), talks will continue at the next Conference of the Parties in Bali at the end of this year. The current phase of reduction commitments under the Kyoto Protocol ends in 2012, and the world urgently needs the security of a replacement agreement that will follow in order to keep investments in both power production and carbon trade regimes on track.

Germany will also host talks on climate change at the Group of Eight (G8) industrialised nations summit in June, and in February the Intergovernmental Panel on Climate Change (IPCC) will be releasing "Climate Change 2007" - its fourth comprehensive assessment report on the scientific body of knowledge regarding climate change. Meanwhile, UNFCCC Executive Secretary Yvo de Boer, has asked the new UN Secretary-General Ban Ki-moon to organise a special, high-level meeting between governments on climate change this year.

Additional resources

Speech by Commissioner Mandelson http://ec.europa.eu/commission_barroso/mandelson/speeches_articles/sppm136_en.htm.

Cebu Declaration on East Asian Energy Security http://www.aseansec.org/19319.htm.

ICTSD reporting; "Commission proposes an integrated energy and climate change package to cut emissions for the 21st Century," EU RELEASE, 10 January 2007; "EU Business Slams Emissions, Renewables Targets," REUTERS, 11 January 2007; "Brussels Bows to Global Warming," DER SPIEGEL, 10 January 2007; "Asian Leaders Sign Energy Pact at Landmark Summit," REUTERS, 16 January 2007; "2006 to be sixth-warmest year on record--WMO," REUTERS, 14 December 2006.