The current European Union climate policy could be “futile” if an ambitious climate deal is not the end result of the upcoming Paris climate conference.
This is the stark conclusion from a policy brief published by European think tank, Bruegel, which addresses the European Union-specific concerns in the lead-up to the Paris 2015 United Nations Climate Change Conference.
According to the policy brief, “the [European Union (EU)] has limited instruments to act to advance an ambitious agreement” at the Paris conference (COP21), “as its domestic mitigation efforts — while setting a good example — only represent a tiny fraction of global emissions.” The International Energy Agency, in a separate study published in June placed European Union CO2 emissions from fossil-fuel combustion at 3.2 gigatonnes (GT), of which 60% was covered by Emissions Trading Schemes (ETS) or CO2 prices. This compared remarkably favorably against other countries and regions in terms of both relative emissions per capita and the policies attempting to compensate for their emissions. For example, the European Union has a population of 503 million, while the United States, with 318.9 million people, pumps out 6.2 Gt and only covers 4% with ETS or CO2 prices.
However, as was pointed out by Bruegel Director Guntram B. Wolff, and Bruegel research fellow Georg Zachmann, at the ECOFIN meeting in Luxembourg on 11 September in an extended version of the policy brief (PDF), unless the EU can present a “strong and unified” front which is “backed by common resource” at COP21, the “strong interest in an ambitious deal” held by EU citizens and industry may come to naught, meaning “much of the EU climate policy will be futile.”
Bruegel’s belief is that “climate finance [“defined as a financial flow targeted at mitigation or adaptation in developing countries”] will be an important element in the ongoing climate negotiations,” and that the EU has a strong position from which to bargain and make itself heard on this issue, as it “currently contribute[s] an above-proportionate share.” According to the policy brief, the European Union represents more than half of the resources provided by all Annex II countries pledged to the Green Climate Fund (GCF), to multilateral development banks, and in total climate-related official development assistance (ODA), while only representing fewer than half of all Annex II countries in terms of responsibility and capability. Therefore, Bruegel presents several means by which the EU can “increase the predictability and credibility of [its] climate finance,” increasing “the EU’s ability to shape the emerging international climate institutions and their governance, to ensure that climate finance is used to reduce mitigation costs, and to ensure that European industry benefits from the opportunities related to climate finance.”
Specifically, Bruegel suggests “that dedicated resources, collected through a revamped emission trading system and a carbon tax on transport and heating fuels, would increase the predictability and credibility of EU climate finance. A redirection of domestic deployment costs for mitigation would reduce the burden on taxpayers.”
Bruegel’s conclusions are in line with the views of French President Francois Hollande, who in a press conference earlier this month commented, “If we are to succeed in Paris it will require not only political commitment, but also financing,” adding that, “without $100 billion, there will be no deal in Paris.”
European Union climate finance is already impressive, but more is required. Bruegel defines four different “commitment periods and levels” for climate finance: public money committed at the Copenhagen (2009) and Cancún (2010) climate conferences for immediate action; public and private money committed at the Copenhagen and Cancún conferences to be raised by 2020; long-term financing decided at the Warsaw COP (2013); and the next stage of commitments, currently non-existent, and waiting on COP21.
Existing climate finance commitments
Given the European Union’s a) existing contributions, and b) increasingly attentive interest in achieving an ambitious climate deal in Paris by both citizens and industry, Bruegel concludes that “a consistent EU position on climate finance would be instrumental for reaching a deal in Paris.” Specifically, “Backing up past pledges with taxpayers’ resources and with a proper strategy for private funding would increase the EU’s credibility, while joint EU funding would provide predictable future flows.” And as can be seen below (and as we saw above), the EU is already well ahead of the game in terms of its climate financing, especially in comparison to its relative share of emissions.
The ultimate conclusion from Brugel’s policy brief is the need for the EU to approach climate negotiations and climate finance as a whole, rather than as its individual constituent countries. The European Union’s focus must be on climate finance, not least because of the potential benefit to EU industry as well as a way to meet the expectations of the EU citizenry. Climate finance can also act as an efficient means to reducing Europe’s mitigation costs, while additional resources could be fed back into the Union from ETS auction revenues and an EU carbon tax on sectors that are not currently covered by the existing ETS.
From an outsider’s perspective, watching the European Union and its constituent members in the lead up to COP21 will presage the likely direction the negotiations will head. With some of the world’s most prominent global leaders at its head, not to mention the above-specified leverage exclusive to Europe, the EU’s role at COP21 is hard to understate, and will have a heady impact for the world as a whole.
All non-sourced tables and charts courtesy of Bruegel