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Brussels, 10 January 2007
What are the main points of the Communication?
The Communication is the key climate change-related element of the Commission's integrated energy and climate change strategy. It sets out proposals for action by the EU and the rest of the international community with the aim of preventing climate change from reaching dangerous levels. This means limiting global warming to no more than 2°C above the temperature in pre-industrial times.
The key points of the Communication are:
What are the climate change Communication and the energy package trying to achieve?
The dual aims are to ensure global average temperatures do not rise more than 2°C above pre-industrial levels and to build a more energy-competitive, cleaner, low-carbon European economy.
The EU cannot win the battle against climate change on its own but it can show leadership by setting a convincing example. The integrated energy and climate policy package does this. It confirms to the EU's partners around the globe that action to reduce emissions will continue seamlessly after 2012 and that it is economically and technologically feasible. The Communication’s recommendations will give fresh impetus for concrete progress in the international negotiations on further action to combat climate change after 2012, when the Kyoto Protocol targets expire. An autonomous EU emissions reduction target will be a major contribution towards convincing the rest of the international community that the EU intends to shoulder its responsibilities, and thus towards encouraging them to do likewise.
The Communication and the energy package demonstrate that tackling climate change and energy policies go hand in hand. Integrating these policies is essential for reducing the EU's greenhouse gas emissions and makes the European economy more competitive. By building a low-carbon economy Europe will reduce its dependence on energy imports and continue to lead in low-carbon technologies such as renewable energy sources, energy efficiency and insulation, thereby stimulating EU growth and employment.
Why is it essential to limit global warming to 2°C?
The 1995 Second Assessment Report from the Intergovernmental Panel on Climate Change (IPCC), which brings together over 1,000 leading climate scientists, put forward evidence that the risk of severe climate change impacts would increase markedly beyond a temperature rise of 2°C above pre-industrial levels. Consequently the Council of Ministers set 2°C as the EU's target ceiling. Scientific studies since then, including the IPCC's Third Assessment Report in 2001, have further underpinned the arguments for keeping within this limit. Significant impacts on ecosystems and water resources are likely even with a temperature increase of 1-2°C above pre-industrial levels. But once global warming exceeds 2°C, climate impacts on food production, water supply and ecosystems are projected to increase significantly and irreversible catastrophic events may occur.
The Council has noted that to respect the 2°C limit, atmospheric concentrations of greenhouse gases - currently around 425 ppmv CO2 eq and rising by 2-3 ppmv CO2 eq per year - would have to remain well below 550 ppmv CO2 eq. Stabilising concentrations at around 450 ppmv CO2 eq in the long term would give a 50/50 chance of staying within the 2°C ceiling. This is the long-term concentration that has guided the Commission in its most recent economic analysis. Concentrations are however likely to overshoot 450 ppmv CO2 eq. in the short term before deeper emissions reductions bring them back down to this level subsequently.
Climate change is already having pronounced environmental, economic and social impacts. The economic costs are projected to be heavy and will increase the more we allow the temperature to rise. Economic studies, including the recent Stern review for the UK government, show that the benefits of early and decisive action to reduce global greenhouse gas emissions far outweigh their economic costs.
A current example of the economic and social impacts of climate change is the lack of snow suffered by European ski resorts after an abnormally warm autumn and early winter. The deadly summer 2003 heat wave in Europe is also typical of what experts consider is likely to occur increasingly frequently as a result of climate change. During that episode more than 20,000 people in the EU died prematurely from a combination of heat stress and increased air pollution from ozone (another greenhouse gas) and particulates. Southern Europe suffered large-scale forest fires. European farmers lost over €10 billion in income due to crop damage and other effects.
There has also been an increase in weather-related natural catastrophes, such as floods and windstorms. A survey of the years 1950 to 2003 conducted by the world's largest re-insurer, Munich Re, shows that between 1994 and 2003 there were almost three times more weather-related natural catastrophes than in the 1960s. Even disregarding the tsunami in South Asia, 2004 was the costliest year for natural catastrophes so far in insurance history, with insured losses of over €30 billion worldwide.
The Stern review of the economics of climate change has estimated that without further action to reduce emissions, the overall costs and risks of damage due to climate change will reduce global GDP by at least 5% a year, and in the long term by possibly as much as 20% or more. In contrast, the cost of reducing emissions to avoid the worst impacts of climate change can be limited to around 1% of global GDP per year through use of the most cost-efficient instruments, including emissions trading.
It is projected that climate change will have severe impacts on certain ecosystems, with some species and habitats disappearing. Global food production is likely to decline, infectious diseases such as malaria and dengue fever, may spread, and water scarcity and quality will become problems for many regions. Over the last 30 years the extent of Arctic sea ice has decreased by around 7% and the ice has thinned by about 40%. By 2100, sea levels are expected to rise by 9-88 cm if global greenhouse gas emissions are not reduced. This would drown some low-lying islands (e.g. the Maldives) and many coastal regions (e.g. the Bangladesh delta), and cause widespread salt water intrusion. Weather impacts are likely to include higher maximum temperatures, more heat waves, increased summer dryness with the risk of drought and fires, or, in other regions, increases in precipitation, storms and floods.
Such impacts might trigger so-called secondary effects, such as regional conflicts, poverty, famine and migration. Although Europe may be less vulnerable to these than some other regions, it would inevitably be affected.
Why is stronger action to combat climate change needed?
Global warming is happening: the average global temperature is already 0.6°C above the pre-industrial level and is now increasing by around 0.2°C per decade. This means the window of opportunity for staying within the 2°C temperature ceiling is closing fast.
The Kyoto Protocol is an essential first step towards reducing the greenhouse gas emissions that are mainly responsible for this warming trend, but it was never expected to solve the problem on its own. The Protocol commits only industrialised countries to reduce their emissions, and by an average of only 5.2% below 1990 levels by 2012. This reduction is nothing like enough to keep within the 2°C temperature limit. A new international agreement is needed on deeper, global emissions reductions for the period after the Kyoto targets expire in 2012.
Why is the Commission proposing that developed countries cut emissions 30% by 2020?
Scientific evidence shows that for there to be a 50/50 chance of respecting the 2°C temperature ceiling, worldwide emissions will need to peak before 2025 and fall by up to 50% of 1990 levels by 2050. This stabilisation of global emissions within less than two decades will require decisive action. This is why the Commission believes that, as part of a new global agreement, the essential next step must be for developed countries to reduce their emissions by an average of 30% below 1990 levels by 2020, and for emissions from developing countries to peak and then start falling from 2020-2025.
Only by taking the lead in making ambitious emissions cuts will developed countries succeed in convincing developing countries to contribute to the global effort. All major developed country emitters should substantially reduce their emissions. An ambitious target will also strengthen the global carbon market, whose continuation is essential to limit the costs of cutting emissions. Domestic trading schemes with levels of ambition comparable to that of the EU Emissions Trading Scheme should be linked to maximise cost-efficiency.
The post-2012 framework will have to contain effective, binding rules for monitoring and enforcing countries' commitments to ensure they are met.
Why is the Commission also proposing that the EU reduce its emissions unilaterally?
An autonomous EU commitment to achieving an ambitious emissions reduction target would demonstrate leadership by example to the rest of the world and send a clear signal to participants in the carbon market. Industry needs this clear signal about the longer term direction of climate change policy so that they can plan the necessary low carbon investments that have payback periods beyond 2012.
There is still large potential for reducing the EU's greenhouse gas emissions. The concrete measures contained in the energy package, combined with ambitious targets under the EU emissions trading scheme, make the attainment of a 20% emissions reduction entirely realistic. The Commission's priority, however, is for developed countries to reduce emissions by 30% below 1990 levels by 2020, and therefore the EU should adopt this target as part of a satisfactory global emissions reduction agreement.
Why should developing countries contribute to the global effort?
The United Nations Framework Convention on Climate Change (UNFCCC) is based on the principle that countries have common but differentiated responsibilities to combat climate change. As developed countries have been responsible for a large part of the greenhouse gas emissions in the atmosphere to date, it has been agreed by most that they should take the first step towards limiting or reducing their emissions under the Kyoto Protocol.
However, developing country emissions are growing rapidly and will account for 50% of global emissions by 2020. This means that action by developed countries alone will not suffice. Consequently the Commission is proposing that developing countries – with the exception of the least developed countries - should slow the rate of growth of their emissions as soon as possible and then start reducing emissions in absolute terms from 2020 onwards. A major effort will also be needed to halt emissions resulting from deforestation.
These actions are perfectly feasible without undermining economic growth and poverty reduction policies. The impact assessment undertaken by the Commission estimates that the overall GDP of developing countries in 2020 should be a tiny fraction (1 %) lower if they applied climate polies than if they did not. In reality, the difference is even smaller and probably even negative as the benefits of avoided damage from climate change are not taken into account. Over the same period, GDP is projected to double in China and India and increase by around 50 % in Brazil.
In fact, many developing countries (for example China and India) have already made significant steps towards decoupling energy intensity and emissions from economic growth, and Brazil has produce biofuels on a large scale since the early 80’s.
Because of their low level of greenhouse gas emissions, least developed countries should not have to take action to reduce them.
What policy options are available to developing countries?
Involving developing countries in the global effort to reduce emissions does not mean that all countries would have to take on Kyoto-style reduction targets. The Communication explores various options for increased participation by developing countries. Countries that reach a level of development similar to that of developed countries should take on reduction commitments in accordance with its per capita emissions, its potential to reduce emissions and its technical and financial capacity to implement further emissions limitation and reduction measures.
Many policy options are available to developing countries where the benefits can outweigh the costs, for example by increasing energy efficiency, promoting renewable energy, improving local air quality or capturing methane from sources such as landfills as a cheap source of energy. Such policies can be strengthened by sharing good practice in policy design and planning and technology co-operation. The EU will continue and increase its cooperation efforts in this respect.
How else could developing countries be helped to reduce their emissions?
What other elements should a global agreement address?
In the Commission's view, a future international agreement needs also to address the following issues:
How much will all this cost?
The Commission's impact assessment shows that taking action to limit climate change is fully compatible with sustaining global growth. Investment in a low-carbon economy will require around 0.5 % of total global GDP over the period 2013–2030. This would reduce global GDP growth by just 0.19 % per year up to 2030, a fraction of the expected annual GDP growth rate of 2.8%, and this is without associated health benefits, greater energy security and reduced damage from avoided climate change being taken into account. This is a small insurance premium to pay for significantly reducing the risk of irreversible damage, particularly when compared with Stern's estimate that uncontrolled climate change will cost 5-20% of GDP in the longer term.
What are the other benefits of limiting climate change?
The Commission’s recent Action Plan for Energy Efficiency demonstrates that there is a solid economic case for policies that increase overall resource use efficiency, even before the accompanying emissions reductions are taken into account.
The Commission's impact assessment shows that EU action to tackle climate change would significantly increase the EU's energy security. Oil and gas imports would each decrease by around 20 % by 2030 compared with the 'business as usual' case.
Action on climate change also reduces air pollution because they share many of the same sources. For example, reducing CO2 emissions in the EU by 10 % by 2020 would generate enormous health benefits estimated at €8-27 billion. Such policies will therefore make it easier to attain the objectives of the EU’s strategy on air pollution.
Similar benefits exist in other countries. By 2030, the US, China and India are projected to import at least 70 % of their oil. Geopolitical tensions could rise as resources become scarcer. At the same time, air pollution is increasing, in particular in developing countries. Reducing greenhouse gas emissions in other countries will improve their energy security and air quality.
What are the prospects for reaching a global agreement?
The Commission believes the basis for reaching an agreement exists and is getting stronger. In the US and Australia, which have not ratified the Kyoto Protocol, there is a growing awareness of the dangers of climate change, and this is leading to regional initiatives to curb emissions. Business, more than some governments, is taking a long-term view and is becoming a driving force in the fight against climate change, asking for a coherent, stable and efficient policy framework to guide investment decisions. Most technologies to reduce emissions either exist or are at an advanced stage of preparation. What is needed now is support from major emitters for a long-term agreement to ensure their deployment and further development.
Where can I find further information?
 1939th Council meeting, Luxembourg, 25 June 1996
 Environment Council, 10 March 2005. Ppmv CO2 eq stands for carbon dioxide equivalent in parts per million by volume.
 The CDM generates credits for investments in emissions reduction projects in developing countries, which can be used by developed countries to meet their targets, generating considerable flows of capital and technology.