Wednesday, January 20, 2010

Carbon Tariffs Update: EU Meetings Produce Nothing; UN Deadline "Softens"

The latest EU meeting of climate ministers produced no new mandates and demonstrated a logjam over emissions reductions targets and border measures. This turn of events should come as little surprise to those of us used to watching the glacial pace of EU policymaking, but it's still worth noting because the last time we checked in with EU ministers, they were loudly and angrily squawking about the collapse of the UN Climate Conference in Copenhagen. Well, they're still squawking, but so far the ministers' frustrations have not resulted in a new push for carbon tariffs (aka "border adjustment measures") on imports from countries that have less severe climate change mitigation policies. Here's The Economic Times with the "news":
The European Union failed to arrive at a consensus on the quantum of its emission reduction commitment. At the meeting of EU ministers in Spain, there was disagreement over whether the 27-member bloc should commit to cutting its emissions by 30% by 2020 from its 1990 levels.

While Britain, France and Germany have called for scaling up the bloc’s commitment to 30%, the move was opposed by Poland, Hungary and Italy. Ambassadors from EU members will continue discussions on emission target in Brussels on Wednesday.

The reduction of greenhouse gas emissions by 30% is conditional on “comparable” offers made by other rich nations and “economically more advanced developing countries contribute adequately according to their responsibilities and respective capabilities”.

Sidelined at the Copenhagen climate conference held in December, the EU is attempting to regain its influence in the global climate debate. The bloc, which has been the most pro-active, seeks to pressure other nations to increase the level of ambitions by setting a higher target for itself. Those supporting a higher target like the UK have argued that the offer is conditional on other developed countries follow suit. In doing so, the EU hopes to reassert its influence in the climate debate.

There has been some heartburn within the EU over the way the US, which has been rather unambitious in its climate efforts, and the world’s target emitter China took over the Copenhagen summit. Germany, another proponent of a higher conditional commitment, argued that a 20% reduction was no longer ambitious, and that the European economies could afford to take on a 30% reduction. However, in Seville, Poland, Italy and Hungary wanted to omit any reference to the 30% target.

Going by the offers made by developed countries in Copenhagen, the reduction in emissions would be about 13% on average in 2020 from 1990 levels. Given this, it is being argued that a commitment to a deeper cut by the EU cannot be justified. The 20% reduction goal is underpinned by recent legislation that tightens carbon dioxide caps on energy and manufacturing companies in Europe’s emissions-trading system and that requires each EU nation to limit discharges from industries outside the programme. A move towards a deeper cut in emissions would mean a tightening of curbs in the emissions trading programme.

France, which is also pushing for a higher commitment, would like the EU to consider tariffs on imports of manufactured goods from countries with weaker climate-protection rules as a way to protect European industry from unfair competition. France has suggested that the 30% reduction target could require a carbon inclusion mechanism, to protect the European industry.

The northern member states are sceptical about a trade mechanism that included the price of carbon dioxide. However, the failure by other developed countries to match a 30% reduction in emissions by the European Union could once again open the door to considering protecting European industry with measures such as taxes on products imported from nations that block adoption of binding reduction targets.
The EU deadlock continued today, highlighting a growing rift between EU members about what to do on climate change, particularly where it looks increasingly likely that the US won't pass any sort of climate change bill in 2010.

Meanwhile, the UN announced today that the January 31 deadline established in Copenhagen for countries to announce their carbon emissions targets is no longer, well, a real deadline:
The UN has dropped the 31 January deadline by which time all countries were expected to officially state their emission reduction targets or list the actions they planned to take to counter climate change.

Yvo de Boer, UN climate change chief, today changed the original date set at last month's fractious Copenhagen climate summit, saying that it was now a "soft" deadline, which countries could sign up to when they chose. "I do not expect everyone to meet the deadline. Countries are not being asked if they want to adhere… but to indicate if they want to be associated [with the Copenhagen accord].
So far, only 20 of 192 countries have announced their climate change plans. That's not good, and it's far from certain whether 2010 will produce anything tangible on the multilateral front, or whether everything will get punted to Mexico City at the end of the year.

Regardless, I'll certainly be here keeping an eye out for sneaky (likely French) protectionists dressed in pretty green clothing.

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