EU puts €100bn-a-year price on tackling climate change

Leaders agree cost will amount to €100bn a year by 2020, but fail to agree on short-term aid for developing world
Ian Traynor in Brussels
guardian.co.uk, Friday 30 October 2009 17.38 GMT
European leaders agreed for the first time today that the price tag for tackling global warming would amount to €100bn (£89bn) a year by 2020, up to half of which would need to come from taxpayers' money in the developed world.
But mired in wrangling over how to split the European share of the bill among 27 countries and how much Europe collectively should spend, they failed to agree on urgent short-term funding for combating climate change in the developing world.
Five weeks ahead of the Copenhagen conference on a new international treaty on global warming, an EU summit spent two days immersed in number-crunching rows over the costs and who should bear them.
Difficult decisions were shelved because of an east-west dispute pitting the poorer member states against the wealthy western countries, and because leading EU states such as Germany, France and Italy were reluctant to make specific commitments on funding for the developing world before hammering out an agreement with the US, Japan and other rich states.
"Europe is leading the way, making these bold proposals," said Gordon Brown. "The major decision to come out of this is we're leading the way on the climate change negotiations."
The agreements fell well short of what had been sought by the Swedish presidency of the EU, the Danish government hosting the Copenhagen conference, the UK and the European commission.
In the short-term, the leaders agreed that up to €7bn a year was needed from January for three years for "fast-track" funding in the developing world. The EU said only that it would seek to persuade others to share that bill and that Europe would pay its "fair share".
Some of the east Europeans, led by Poland, which balked at being asked to pay up, are refusing to contribute and Fredrik Reinfeldt, the Swedish prime minister, admitted that European contributions to the fund would be "voluntary", meaning they may not be made at all.
Angela Merkel, the German chancellor, was said to have fought strongly to avoid firm funding pledges. She goes to Washington next week, as do other EU leaders, for what could be crucial negotiations with the Obama administration on how to come up with a global fund for the poor countries. The issue of financing climate change measures in the developing world is a possible deal-breaker at Copenhagen.
The Germans were highly critical of the east European reluctance to share the bill, arguing that it was difficult to ask some of the world's emerging economies to contribute when Europe's poorer countries were saying no.
"EU leaders speak loud and clear on the global challenges of climate change, but remain tongue-tied when it comes to meeting their own responsibilities," said Rebecca Harms, leader of the Greens in the European parliament. "EU governments have now acknowledged the need for an annual €100bn towards climate mitigation and adaptation in developing countries, but have once again failed to put a clear figure on the EU's contribution."
While the Swedes, Danes and others argued that Europe had to take the lead on climate change and send a strong signal for Copenhagen, the Germans are more skeptical, noting that there are limits to leadership and calling for the other rich countries to step up to the plate.
It is not yet clear on what basis the contributions will be made. The west Europeans want to combine the "polluter pays" principle with ability to pay, meaning that a donor country's GDP and level of greenhouse gas emissions will determine how much it puts in.
Of the €100bn euros ballpark figure, the Europeans said €22bn-€50bn should be public sector money in annual transfers to the developing world by 2020.
Although the Europeans refused to specify the European share, Merkel said it should be around one-third; the same amount should be supplied by the US, and Germany would foot around 20% of the European bill.
The 22-50 cost range is wide and vague enough for lots of wiggle room. Britain says €50bn is "unaffordable" and €22bn is not enough. It sought a narrower range of €30bn-€40bn.
Rather than detailing specific European pledges, the leaders agreed only to contribute a "fair share" to the global fund and stressed that the offer was "conditional" on agreement with the other main donors.