The Politics of Climate Change (30 page)

The next round of UN meetings was held in Cancun, Mexico, the successor event to Copenhagen, in December 2010. Expectations at Copenhagen had been high; for Cancun they were the opposite. Few heads of state attended and it was widely suggested beforehand that the chances of making any substantial progress were negligible.

In fact, the outcome was largely positive. The Mexican hosts had done their homework. They had spent months studying the tactical errors made at Copenhagen and were determined to avoid them this time. Since expectations were in any case so low, even relatively modest successes looked impressive. The motivation to keep the show on the road was strong enough to prevent groups of states that were unhappy about how negotiations were proceeding to stop short of undermining the whole enterprise. When a set of agreements was in fact reached on Saturday 11 December, it was greeted with thunderous applause and cheering.

Essentially, the Cancun agreements consolidated the Accord and adopted a reworked version of it as official UN policy. The agreements committed a wide range of countries to targets and actions to reduce emissions by 2020. All the major emitters were involved. The 2ºC target, mentioned in the Accord, was for the first time adopted officially by the UN. The procedures for the monitoring and verification of emissions outlined in the Accord were strengthened. An independent panel of assessors will be responsible for ensuring accuracy of reporting. The fund proposed in the Accord to assist the poorer countries was formally endorsed, together with the ambition of raising $100 billion annually by 2020. In spite of protests from some of the developing nations, the World Bank was named as interim trustee of the fund. The initiative on deforestation – which in fact antedated the Accord, although it was referred to in it (Reduced Deforestation and Forest Degradation, or REDD) – was given more flesh. Finally, a continuing role for the CDM was endorsed, although little detail was provided as to in what guise.

The outcome of Cancun met with widespread approval, and from disparate groups. A spokesman for OXFAM observed: ‘The UN climate talks are off the life-support machine. The agreement falls short of the emissions cuts that are needed,
but it lays out a path to move towards them – crucially moving the world closer to the global deal that eluded the Copenhagen summit.' Chris Huhne, the British Secretary of State for Energy and Climate Change, was even more positive: ‘This is a turning point in the long-running saga of international climate change negotiations. We've got a deal here which, if I had to mark it, I would have said 8 out of 10. It's way beyond what we were expecting only a few weeks ago and, indeed, way beyond what we were expecting at the beginning of the week.'
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Not everyone agreed, however. Kevin Anderson, of the Tyndall Centre for Climate Change Research, compared the international negotiations to astrology. The talks meander on – now for more than 20 years – and their very continuity is perceived as a success. Targets are set and plans made, but with little or no practical consequences in terms of what they are supposed to achieve – namely, containing the impact of climate change:

In the meantime, every molecule of carbon dioxide emitted simply adds to all those emitted over the past century, inexorably increasing the level of warming and consequently the scope and scale of the impacts. This should be a challenging and increasingly uncomfortable message for all concerned. Instead, climate negotiations continue to be informed by the astrological view, where, through either ignorance or a desire to save face, it is assumed the problem will be the same next year as this. The science, however, tells a very different story; next year the problem will have become worse – as it has done each and every day we have failed to reduce emissions since the Earth Summit in Rio in 1992.
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Anderson is right. There is a dislocation between the snail-like pace of the international negotiations and the implacable nature of climate change, given the continuing advance of carbon emissions globally. This is not a reason to abandon the attempt, of course, since some sort of universal, or quasi-universal, framework for carbon reductions would undoubtedly be of great value. But it does strongly imply that we have to look elsewhere for the radicalism demanded in the short term, as indeed I have argued throughout this
book. Moreover, the negotiations thus far put a great deal more emphasis upon the ‘what' of emissions reductions – how much and by when – than upon the ‘how' of the means whereby they may be achieved.

The European Union first set out an integrated strategy for dealing with climate change issues at summit meetings in Cardiff and Vienna in 1998. The objective at that time was to discuss common modes of response on the part of the member–states and to assist them in meeting Kyoto targets. Climate change became one of the priorities in the 6th Framework Programme for Research, lasting from 2002 to 2006. The EU from the beginning recognized its obligations to help poorer countries, not just to concentrate upon its component nations. It has also emphasized that climate change policy must march in tandem with that concerning energy.

In January 2007 the European Commission announced an upgraded strategy to combat global warming. The core proposal was that the EU would cut its emissions by 20 per cent by 2020; that cut would rise to 30 per cent if and when the other industrial countries came on board. Renewable energy would form 20 per cent of the energy mix by then, with (controversially) a binding minimum 10 per cent use of biofuels in motor transport.

For the next 10 years, the developing countries, the Commission proposed, should make every effort to lower their emissions and should start to reduce them in absolute terms from 2020/5. The European Emissions Trading Scheme (ETS), on which more below, was envisaged as a crucial means of allowing the EU countries to meet their commitments – the Commission anticipated at that point that means may be found to link different trading schemes into a single worldwide one.

In early 2008 the Commission put forward a new directive, setting out a framework for the EU in terms of the 2020 targets that member–states would be expected to achieve. The
directive recognized that they start from different positions as far as renewable energy is concerned. Moreover, some have made much greater efforts than others in the past to get their emissions down. Differences in GDP and GDP growth are also taken into account. Member–states that have a relatively low GDP and need high economic growth will be able to increase their greenhouse gas emissions compared to the baseline year of 2005.

Only the 10 per cent target for the use of biofuels was set as a constant across the EU. The Commission recognized the criticisms that have been made of biofuels, but argued that it is possible to produce them without incurring environmental damage, and proposed that stringent criteria would be deployed to ensure that this was so. Most, however, will have to be imported.

Several leading scientists, as well as numerous NGOs, expressed their doubts about biofuels and criticized the EU's plan. They argued that it is a mistake to introduce quotas for biofuels before their effects have been fully assessed. The chief scientific adviser to the British government, John Beddington, commented that rising demand for biofuels in the US delivered a ‘major shock' to world agriculture, producing elevated world food prices. Moreover, if biofuel production were to come at the expense of further deforestation, the outcome would be ‘profoundly stupid'.
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Some major countries at the time, including France and Germany, initially expressed concern over their emissions reductions targets. Nicolas Sarkozy, the French President, at one point argued that France should not be set targets at all because the widespread use of nuclear power has already lowered its emissions levels. Business leaders from various states were critical of the EU acting on its own in relation to climate change. Higher energy costs, they said, would make European companies less competitive in the wider world and lead them to decamp elsewhere. German industrialists were especially worried about the competitiveness of their car, chemicals and steel industries. One in every seven jobs in Germany depends in some way upon the car industry.

The Commission President, José Manuel Barroso, admitted the validity of these concerns. ‘We all know', he stated, ‘that
there are sectors where the cost of cutting emissions could have a real impact on their competitiveness against companies in countries that do nothing.'
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There is no point in Europe setting up demanding regulations if the result is simply that production shifts to countries where there is an emissions free-for-all. International agreements, Barroso argued, would be one way to handle the difficulty, but if these cannot be reached, then the EU should look at compensation for the energy industries. Others have suggested a mechanism such as a carbon tax on imports. Nevertheless, in current proposals such ideas have been left on hold.

As the crisis in financial markets started to bite, a rebellious group of member–states in October 2008 pressed for a deferment of the date at which the EU's plans for emissions targets were supposed to be accepted as binding. Eight countries led the insurrection, including Italy and a cluster of ex-East European nations. The Italian Prime Minister, Silvio Berlusconi, commented that the targets would devastate Italian industry. He and his Polish counterpart, Donald Tusk, both used the argument that they didn't have to stick to a deal that had been struck while they were not in office. Besides Italy and Poland, the governments of Bulgaria, Hungary, Latvia, Lithuania, Romania and Slovakia all said they would resist attempts to railroad the targets through.

At the point at which agreement needed to be reached, late in 2008, France held the presidency of the European Council. Reversing his previous stance, Sarkozy pulled out all the stops to gain a consensus, and was successful. A summit of European leaders held in September 2008 agreed to the Commission's plan. A substantial price was paid, however. The EU is pinning much of its hopes for reaching its targets on the success of its emissions trading schemes. To gain an agreement, the terms of the scheme were weakened. Most companies in the processing industries, such as steel and cement, were for a period exempted from paying for carbon permits, while coal-fired power stations were allocated large discounts on the price of carbon.

As a result of the recession, the carbon output of the EU fell substantially, by more than 9 per cent in 2008–9. Consequently, the target of achieving a 20 per cent reduction in emissions
by 2020 looks considerably more achievable. At the time of writing, the leaders of several EU states were pushing for the target to be elevated unconditionally to 30 per cent.

The case for carbon markets was established at Kyoto, but, like all other aspects of climate change policy, was and is heavily influenced by political considerations. The European Commission originally wanted to impose an EU-wide carbon tax as part of its climate change agenda. It was unable to do so because it lacks the capability to override the wishes of member–states concerning fiscal issues. Several member–states – most notably the UK – were fiercely resistant to any measures that implied tax harmonization. However, environmental issues within the Union can be dealt with by majority vote. Carbon trading, in the shape of the ETS, could be introduced without such battles.

Designing markets to limit pollution had its origins in the US, where they were originally used with some success to control emissions of sulphur dioxide.
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Such emissions, coming from coal-fired power stations, were the main cause of ‘acid rain'. Instead of directly regulating the amount of sulphur dioxide, a market in emissions credits was created. The original proposal of Robert Stavins, the scheme's principal architect, to auction credits to the emitters, thereby establishing a market price, was blocked in Congress. It would have meant that the utility companies would have to pay large sums of money for the permits, money which would have gone to the federal government.
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Permits were in fact issued free to virtually all companies, with a maximum total that could be issued in any one year of 8.9 million tonnes.

In spite of its limitations, the scheme produced significant cuts in emissions and at a much lower overall cost than the industry lobbyists who had opposed it had claimed it would incur. They had argued it would cost the industry $10 billion or more annually. The actual yearly sum turned out to be about $1 billion. The market forces generated helped produce quick
and effective technological innovations in key parts of the industry. The scheme thus achieved a fair degree of success, sufficient to inspire some environmentalists, including Vice-President Al Gore. The Clinton administration commissioned a detailed economic modelling exercise on how it could be extended to cover carbon.

The outline of a possible international carbon market was also drawn up at Kyoto. It was agreed that the industrial countries could sell ‘emissions reductions units' to one another, and could also trade them with developing countries to count towards their reduction targets. In spite of the fact that the US did not sign up to the Kyoto agreements, the idea of carbon trading did not go away. It was taken up first by business. BP set up an internal trading scheme committing the company to reduce its greenhouse gas emissions by one-tenth by 2010 as compared to 2000. It achieved this target very rapidly, in fact within a single year. The ETS started operation early in 2005. It covered about half of the EU's CO
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emissions – those coming from fixed sources of power production, especially electricity, and from certain energy-intensive industries. It did not extend to other greenhouse gases.

The European Commission initially proposed to auction the emissions credits. As in the US, lobbying from industry sank the proposal. A hybrid creature arose from the negotiations between the Commission and member–states. An auction would have established an open market with a single price for carbon. The system that was introduced in its place allowed member–states the right to set up their own national allocation plans. These were supposed to be developed on the basis of criteria established at Kyoto, but they were vague; moreover, some states had no precise measures of their emissions in place. The result was an over-generous allocation of allowances, since it was in every member–state's interest to get the most favourable conditions it could, or at a minimum get a certain amount of wriggle room. A market was created, but one that produced very mixed consequences.