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SPEECH/05/712












Stavros Dimas

Member of the European Commission, Responsible for Environment




EU Climate Change Policy






















Conference of National Parliaments of the EU and the European Parliament - London - House of Commons
London, 21 November 2005

Let me first of all thank the Committee of Environment, Food and Rural Affairs of the House of Commons and the Committee on European Union of the House of Lords for inviting me here today and giving me the opportunity to set out briefly the European Commission’s view on evolving European Climate Change Policy and future international climate change co-operation. This is particularly relevant in view of the annual climate conference starting in Montreal at the beginning of next week which, we hope, will sound the start of formal discussions on the future climate change regime, post-2012.

Over the last 100 years, the global average temperature has increased by approximately 0.7° Celsius. Over the next 100 years, estimates for global average temperature increases range between 1.4° and 5.8° Celsius. To put these figures into perspective, the average temperature was only about 5° Celsius lower during the last ice age.

This year, we have witnessed a string of natural catastrophes in Europe as well as in other continents. This includes a severe drought in the Iberian peninsula, summer floods in central Europe, and the devastation wrought by Hurricane Katrina in the south of the US, to name but a few.

While it is not possible to link individual extreme weather events directly to climate change, more droughts, more floods, and more severe tropical storms and hurricanes are consistent with scientific warnings about the changing climate.

These climate events bring substantial costs: since 1980, 64% of catastrophic events have been attributable to weather and climate extremes. Economic losses that are a direct result of such events have increased by around 5 billion US dollars during the 1980s and by over 11 billion US dollars during the 1990s.

Climate change is not a fatality that we have to endure. In the same way that climate change is caused by human activity, mankind can stop climate change having disastrous effects by taking the right decisions. We also know that taking action is affordable. A recent assessment by the European Commission estimated that cutting EU emissions annually by about 1.5% would reduce the EU’s economic output by the year 2025 by only some 0.5% compared to business as usual.

However, the longer the international community delays taking meaningful action to tackle climate change, the more severe will be the consequences and, hence, the higher the costs. In short, the cheapest way to move forward is to take gradual action at global level now.

This is why the European Union feels the international community has no option but to tackle the problem. The scientific debate evidence that climate change is happening is overwhelming – it is now time for global co-operation and determined action by all to fight climate change, building on the existing United Nations Framework Convention.

EU climate change policies

The EU has taken the lead internationally on climate change. We have matched our words with concrete actions in order to limit emissions of greenhouse gases.

In 2000, the EU launched the European Climate Change Programme. Under this umbrella, stakeholders, including industry, actively participated in the search for smart and innovative measures to reduce greenhouse gas emissions. These covered actions related to energy supply, energy efficiency, transport and fluorinated gases. At the time, many of these measures were seen as very ambitious – but, 5 years later, it is clear that the EU has delivered. Nearly all of the announced measures are now in place and are starting to produce results.

The most recent official figures, for 2003, show that greenhouse gas emissions in the EU 25 are down by 5.5% from their level in 1990. With current measures taken to reduce emissions, the EU-15 is estimated to achieve an overall reduction of 4.1% below the base year by 2008-2012, and the EU-25 an overall reduction of 7%. This is a good result – but it is not enough. More work is necessary if we are to reach our Kyoto target.

Moreover, all projections indicate that, by 2020, deeper emissions cuts are necessary in developed countries if atmospheric concentrations of greenhouse gases are to be stabilised in the 21st century at a level which prevents dangerous and irreversible climate change. The European Council has suggested exploring with our international partners reduction pathways in the order of 15-30% by 2020.

For these reasons, the Commission launched a second phase of the European Climate Change Programme on 24th October. The aim is to prepare new measures that will deliver deeper cuts in emissions. This new stage of European Climate Change Policy will review the progress made by Member States in reaching their emission target and study how existing policies have been implemented at national level. The Commission will focus on new sectors and technologies where it believes that innovative and cost-efficient measures to cut greenhouse gases are possible. This will include the transport sector, in particular aviation and cars, as well as new approaches such as carbon capture and storage. If appropriate, the Commission will not hesitate to put forward new legislative initiatives in these areas.

The EU Emissions Trading Scheme

The cornerstone of the first European Climate Change Programme is the EU Emissions Trading Scheme. Emission trading represents a departure from more traditional environmental regulation: after governments have set the environmental goal, they must stand back and let business decide through market signals where emissions will be reduced and how.

The EU emissions trading scheme began on 1 January of this year. It covers almost half of the EU's CO2 emissions, emitted by some 11,500 energy-intensive installations. It has broken new ground as the first international emissions trading system and the greatest ever in terms of economic coverage.

With the Emissions Trading Scheme, the EU has created a new currency based on tonnes of CO2 and a new market, in emission allowances. It is still early days, but the financial potential of the market in the future could be significant: the estimated 230 million allowances traded so far in 2005 have a financial value of over 4 billion Euros.

The Commission is convinced that market mechanisms must be at the core of a successful long-term response to climate change. In implementing the emission trading scheme, the EU has created the nucleus from which an international carbon market can grow over time.

The Commission is currently undertaking a review of the scheme, in order to assess where streamlining and improvements to the system can occur.

Post-2012

Let me now turn to the international dimension. From the beginning of next week, delegates from 189 countries will be assembling in Montreal for two weeks of discussions on the future international climate change regime. In these discussions, the EU must continue to exert leadership, building on the entry into force of the Kyoto Protocol but also on recent scientific evidence, particularly in the Arctic, that the impacts of climate change might be felt far more rapidly than previously expected.

The EU will adopt an open and constructive approach to the post-2012 debate. In Montreal, we wish to start a process that leads to formal negotiations on future international co-operation on climate change, but we are not jumping to any pre-conceived ideas on how this co-operation should look. There are, however, a series of principles which the EU will push for in Montreal that I would like to outline briefly:

Firstly, the future international climate co-operation must be based on broad participation in the global reduction effort - by all major emitters, including the US and rapidly developing countries. Our projections show that, in the absence of an international climate policy, absolute emissions from the developing world will continue to increase, while emissions from industrialised countries are likely to remain stable. Only through broad participation can we effectively tackle climate change and minimise costs.

However, we do not think that developing countries, even those with booming economies, should or indeed could take on the same commitments as the industrialised countries. Their per-capita emissions are still a fraction of ours. But we could design a system with different types of participation, under which developing countries would take on commitments that were in line with their level of economic development.

Secondly, continuing with this first theme, the future regime must include all greenhouse gases and all sectors, including aviation, maritime transport and forestry. Deforestation is an important source of global emissions that we cannot continue to overlook.

Regarding aviation, I am pleased to tell you that, on 27 September, the Commission took the decision to work towards the future inclusion of aviation in the EU emission trading scheme. Although aviation’s share of overall greenhouse gas emissions is still modest at around 3%, its rapid growth is undermining progress made in other sectors. If that growth continues its current trend, by 2012 emissions from international flights will have increased by 150% from their 1990 level. The EU is now ready to address this problem but it remains vital that the international community continues to progress on this area so that emissions from international aviation across the world are counteracted.

Thirdly, the development of new technologies will be indispensable to master the shift to a low-carbon society. Spending at international level on research and development in the field of energy has been decreasing ever since the early 1980s. This needs to be reversed. Bilateral and multilateral agreements such as the Asia-Pacific partnership and the EU partnerships with China and India will help to reverse the trend.

However, and this is my fourth point, it is crucial that there are incentives to ensure that new technologies which are already readily available are actually taken up in practice.

There is a big difference between a government-funded demonstration project and a commercially viable mass-marketed product. The cheapest way to do this is to implement market mechanisms such as emissions trading that pull new technologies onto the market by allowing companies to profit from exploiting these new products.

Lastly, we have to start developing policies to adapt to the inevitable impacts of climate change. This requires identifying vulnerabilities and measures to increase resilience across the whole range of regional decision-making, such as flood protection measures, land use methods and building codes.

Upcoming negotiations and conclusion

At Montreal, it is far too much to expect full agreement to be reached on all the core elements of a future climate change regime. Montreal will not produce the final solution to climate change – but it might be a crucial stepping stone towards reaching a global consensus. This is why we have to explore what common ground countries share.

I am very happy that many Members of the European Parliament as well as many elected Members of national parliaments will join us in Montreal and look forward to working with you closely during the conference.

Winning the battle against climate change concerns us all. That is why we need to work together and also why I welcome this opportunity for a frank and open exchange of views with you all today.


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