European commission proposals start gun to find Kyoto successor

Race is on to negotiate global climate change deal – but will Europe's ideas cross the finish line at Copenhagen?
Bryony Worthington
guardian.co.uk, Thursday 29 January 2009 11.49 GMT

The European commission's proposals add some significant new ideas and have fired the starting gun in the race to negotiate a global climate change deal to succeed the Kyoto protocol.
As well as being comprehensive and largely sensible, the ideas in the document include how to pay for the reduction of emissions and deal with climate change, an issue that will result in very hard bargaining at Copenhagen in December.
Also raised are: reform of the often-criticised Clean Development Mechanism; a phase out of rich nation's offsetting of emissions; inclusion of the aviation and shipping industries in any future deal.
The emissions targets it sets out are nothing new — a 30% cut by 2020 for rich countries compared with 1990 levels, 15-30% off "business as usual" trajectories for rapidly developing countries, with the long-term aim of delivering a global reduction of 50% by mid-century. But detail has been added about how these targets should be shared by countries and what mechanisms will need to be in place to deliver them. The recommendation that global emissions need to peak and decline before 2020 is an important additional element — one which might be helped by the current recession but which nevertheless requires significant action in the short term to prevent emissions rising again in tandem with economic recovery.
A key new idea is that global financing for the necessary mitigation and adaptation measures could be raised according to the "polluter pays principle", ie countries' contributions are pegged to their emissions levels. It is further suggested that this could take the form of an auction of permits rather than handing them out for free as is currently the case under Kyoto.
This is a sensible suggestion though not without its complexities, and could, over time, evolve to solve the eternal conundrum of how to allocate fairly who can emit what: let the market decide. Of course this could mean that under a global cap only China will be able to afford to raise the cash necessary to grow emissions and the US would be forced to cut down on its excessive energy consumption — an interesting turn around that is much more reflective of current economic circumstances than the current imbalanced system under Kyoto of partial caps and free handouts.
Another significant element of the proposals is the acknowledgment that the Clean Development Mechanism is in need of major reform. This is the instrument under Kyoto that allows wealthy countries to offset their emissions reductions obligations through investment in green projects in the developing world.
The suggestion is that the complicated and often abused system should be largely replaced by the extension of the carbon market in the form of cap and trade and/or sectoral crediting. One of the motivations behind this idea is to correct the distortion that currently occurs where global steel companies can raise cash for carbon reductions in one half of the world, via the CDM, but face carbon penalties in the other, from cap and trade schemes, distorting competition in what is increasingly a homogenous industry.
Perhaps the most interesting proposal, however, is that rich countries should no longer be able to simply pay for emissions reductions, and that over time "offsetting" should be phased out all together.
This is a welcome admission that at the moment, both the international Kyoto market and the EU ETS are doing little to stimulate investment in clean technology in the developed world and that more needs to be done at home to demonstrate a commitment to taking action and to commercialise technologies and solutions.
The recommendation that aviation and shipping be included in the future deal is also welcome and is a clear shot across the bows of the international organisations charged with reaching agreement for climate mitigation measures in these sectors: the International Maritime Organization and International Civil Aviation Organization, both of whom have made lamentably slow progress. Hopefully this will provide the stimulus that is needed to reach a global agreement in these sectors that will internalise the cost of their emissions.
Although the EU is in no real position to lecture the world about how to build successful global carbon markets, especially given the current low prices in the EU ETS, the document is a step in the right direction and it will be interesting to see how countries react to it once there has been sufficient time to assess the detailed implications.
As the home of the industrial revolution and therefore the largest contributors of global emissions, the EU must show leadership — and it will almost certainly need to give more ground to persuade others to share their vision — even the proposed 30% target is too low. But it has at least put together a defensible position and issued it early enough for discussion to take place. Let's hope the plan works.
Bryony Worthington is the founder of sandbag.org.uk