Download Business Perspectives on International Climate Policy

Business Perspectives on
International Climate Policy
Dr Nick Campbell
Chairman of the UNICE Climate
Change Working Group
Chairman of the ICC Task Force on
Climate Change
1
Outline
•
•
•
•
•
Introduction
Background
The EU Situation
Business Actions for Climate Change
Ways Forward for the future
– EU
– International
• Some Concluding Thoughts
2
Background – Setting the
•
•
1
2
1
Scene
World primary energy demand is projected to
expand by almost 60% between 2002 and 20302.
Two-thirds of this increase will come from
developing countries.The average Carbon
content of energy will hardly change.
Meeting projected demand will entail cumulative
investment of U$16 trillion from 2003 to 2030.
IEA, World Energy Outlook, 2004 and 2006
IEA Reference Scenario
3
4
5
6
7
Cumulative Energy Investment
2003-2030
OECD North
America
OECD Europe
OECD
Pacific
Transition
Economies
China
Other Asia
Middle
East
Africa
Latin
America
0
500
1 000
1 500
2 000
2 500
3 000
3 500
billion $ (2000)
Coal
Oil
Gas
Electricity
Power sector absorbs 62% of global energy investment in
the period 2003-2030
8
The European Union Situation
• EU-15 bound by Kyoto Protocol obligation to reduce emissions from 6
GHGs by 8% in the period 2008-2012
 Emissions Trading Directive (ETD) establishes basis for GHG
regulations in two periods: 2005-2007 and 2008-2012
 Regulations for 2005-2007 are largely in place
- Establish an allowance-based emissions trading scheme (ETS)
- Facility based: cover CO2 only from select sectors: Power, Refining, ...
- Transport not included (addressed via voluntary “CAFE-like” agreements
with auto manufacturers and bio-fuel standards)
 EU-ETD will not significantly change for 2008-2012; NAPs are
currently under review by the European Commission
 2006/7 Review of ETS will produce significant changes
 EU also developing strategy for Post 2012 international negotiations
9
10
European Environment Agency, 2004
Business Actions for Climate
Change
• EU companies have already reduced their
greenhouse gas emissions by implementing
technological improvements and
management systems.
• Many companies have taken action as a
result of the EU ETS, in particular,
monitoring, reporting and verification.
11
12
European Environment Agency, 2004
Ways Forward for the Future
• The European Union and Beyond 2012
– Commission Communication: ‘Winning the
Battle Against Global Climate Change’,
February 2005
– Commission Green Paper on post-2012
commitments expected early 2007
– EU Spring Council 2007
13
Some Perspectives from UNICE
• Climate protection is a long-term challenge:
global participation, technology R&D, ongoing
scientific research and flexibility will be
essential over the coming decades.
• The EU cannot solve the challenge of climate
change on its own. Only global solutions will
work – regional absolute caps will lead to
considerable carbon leakage, and associated
loss of investments to regions without caps.
14
Some Perspectives from UNICE (2)
• Cost-efficiency is the key - climate protection will cost
money. Real costs are incurred now, while the
associated policy benefits will materialise later. The
short and long-term wealth creation capacity and
competitiveness of EU industry will be instrumental in
making the necessary environmental investments.
• Industry needs an investment friendly environment,
where objectives are set with a long-term perspective
and revised following new technological
breakthroughs and scientific evidence. A long term
perspective, with non-binding medium-term
milestones, can signal to the market what kind of
investments should be undertaken.
15
Some Elements for post-2012 (1)
• Establish a long-term, well functioning, market-based
policy framework with full participation extending
through to 2030 that will give investors confidence in
the long-term value of their investments. A
significantly improved version of the EU Emission
Trading Scheme (ETS) may provide the basis for
such a framework.
• The architecture has to be economically feasible,
based on respective capabilities and fair in order to
avoid leakage and to safeguard the level playing field
for all the actors competing on the same global
markets. Climate and development diplomacy must
aim to persuade key developing countries also to
open themselves to an international climate
protection, adaptation and mitigation policy with clear
16
objectives.
Some Elements for post-2012 (2)
• Significantly increase public support for
research, development and demonstration to
encourage solutions to the problem, including
public private partnerships and the removal of
barriers to market-driven innovation.
• Expand and expedite the use of flexible tools
such as Joint Implementation (JI) and Clean
Development Mechanism (CDM) for post2012 for the transfer and deployment of new
and existing technologies.
17
Some Elements for post-2012 (3)
• Actively support low-carbon energy
technology in EU, and partnership with other
developed countries and industrialising
countries including renewable energies,
carbon capture and storage (CCS), clean
coal with CCS and nuclear.
• It is also essential that other sectors of
society, such as households and transport
contribute to reduction efforts.
18
Way Forward for the Future (2)
• The International Arena and Beyond 2012
• UNFCCC, Bonn, May 2006 – The “Dialogue on
longer-term commitments” starts, along with the
Ad-hoc Working Group(AWG) on post-2012
under the Kyoto Protocol
• COP-12, Nairobi, November 2006 – further
Dialogue and AWG
• COP-13, November 2007 – a mandate to negotiate
post-2012 commitments?
19
Positions of the Main Players
• The European Union
– Involve all Parties – differentiated approach – ‘deep cuts (60-80%)’
required by 2050-60.
• USA
– Commitment to technology approach and research and
development – wait and analyse impacts of current national
policies and measures.
• Canada/Japan
– Struggling to meet current Kyoto commitment – against further
absolute reduction commitments – other policies and measures
needed.
• Developing Countries
– Concentrate on adaptation and development – against discussion of
developing country targets.
20
Twelfth session of the Conference of the Parties to the Climate
Change Convention (COP 12) and second meeting of the Parties to
the Kyoto Protocol
United Nations Office at Nairobi, Gigiri, Kenya, 6-17 November 2006
Major decisions were not expected…
…but a number of significant decisions were taken
• primarily to aid developing countries:
Decision detailing activities for the next
few years under the “Nairobi Work
Programme on Impacts, Vulnerability
and Adaptation”
• Principles for the management of the Adaptation Fund under the Kyoto
Protocol agreed
• Discussion on ways to increased penetration of CDM projects in many
countries, i.e. in Africa.
21
Twelfth session of the Conference of the Parties to the Climate
Change Convention (COP 12) and second meeting of the Parties to
the Kyoto Protocol
United Nations Office at Nairobi, Gigiri, Kenya, 6-17 November 2006
Results:
Commitments of industrialized countries for post-2012 under the
Kyoto Protocol concluded with the agreement on a detailed work plan (no
timeline specified)
New meeting in September/October 2006, attempt to conclude a mandate
to negotiate new commitments at COP-13 in 2007.
It is generally thought that such a deal on new commitments will be
concluded end-2009 or 2010.
22
Twelfth session of the Conference of the Parties to the Climate
Change Convention (COP 12) and second meeting of the Parties to
the Kyoto Protocol
United Nations Office at Nairobi, Gigiri, Kenya, 6-17 November 2006
Sir Nicolas Stern presented his review on
the “economics of climate change”
He stressed urgency of action in the next 10-20
years; economic costs of strong and early
action to stabilize atmospheric levels of
greenhouse gases would amount to 1% of
global GDP.
Importance of long-term goals and short-term
flexibility.
He warned of the serious economic impacts of
delaying action, and noted that the costs of
curbing emissions are consistent with growth.
23
Twelfth session of the Conference of the Parties to the Climate
Change Convention (COP 12) and second meeting of the Parties to
the Kyoto Protocol
United Nations Office at Nairobi, Gigiri, Kenya, 6-17 November 2006
Peter Carl, DG Environment, announced that
the EU will announce an 'autonomous target
somewhere below 30%' in the light of expected
non-action by other nations. Bjorn Stigson
from WBCSD (also member of the High Level
Group) stressed that the global challenge
needs a global solution and pointed out the
importance of the business community in
delivering such solutions.
24
The International Situation –
Some Concluding Thoughts
• The post-2012 Climate Change regime is
likely to look very different from Kyoto
– Differentiation by countries/regions (?)
– Differentiation by sectors (?)
– Differentiation by targets (?): e.g. absolute,
intensity, GDP, per capita (?)
– Technology and R&D (?)
25
The International Situation –
Some Concluding Thoughts (2)
• The negotiation will be tough – it will be
about the three pillars of sustainability –
environment, social and economic.
• Development and adaptation needs of
developing countries will be to the
forefront.
• WE MUST NOT LOSE SIGHT THAT
THIS IS A POLITICAL NEGOTIATION
26
The EU Situation – Some
Concluding Thoughts
• Vital to continue the focus on competitiveness
• Monitor and assess the impacts, both
environmental and economic of current policies
through thorough and comprehensive cost benefit
analyses
• Continuity is important for business
– Long-term horizons help long-term business planning.
• The EU cannot solve the challenge of climate
change on its own –GLOBAL PARTICIPATION
IS VITAL
27
Thank you for your attention
28