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José Manuel Durão Barroso

President of the European Commission

The EU: ending the doubts on energy and climate change

IFRI energy programme
Brussels, 24 May 2007

Ladies and gentlemen,

I would like to thank IFRI for giving me the opportunity to set out what Europe is aiming to achieve on energy and the environment in the coming months. Let me also congratulate IFRI on all its work, not least on these crucial topics.

The European Union has put the inter-linked challenges of energy and climate change at the very top of its agenda, and this is not about to change. Energy was the driving force behind European integration at the very outset. We have come full circle and it is now back at the heart of European policy.

What we have to ask ourselves, as Europeans, is where these issues are in the global agenda. Are they at the top? If not, how do we get them there?

We know that global energy demand is increasing, and will continue to do so – by around 60% by 2030, according to the International Energy Agency, if we do not act.

Second, Europe's hydrocarbon reserves are dwindling. Today we import around 50% of our energy. By 2030 that will be nearer 70%, if we continue with current policies.

Third, our climate is changing. According to the Intergovernmental Panel on Climate Change, the global temperature rose by 0.7°C in the 20th century. Recent IPCC estimates tell us that, without action on climate change, temperatures could rise by as much as 4.7°C by the end of this century. The latest reports also show that certain regions of Europe are likely to be seriously affected by temperature increases.

Science is rarely certain. But the evidence is now overwhelming. Climate change is here, it is man made, and its effects are becoming increasingly evident. We also know that climate policy is closely linked to energy policy, as energy emissions represent three quarters of greenhouse gas emissions.

The EU has set down a path for the new energy and climate change agenda.

Back in 2005 the European Commission took the initiative by raising the issue of energy in its contribution to the meeting of Heads of State and Government at Hampton Court in October that year. It was on the basis of this contribution that the EU leaders agreed on the need for a European energy policy.

Then, in March 2006, EU leaders approved the European Commission's outline of what that policy should be, set out in its Green Paper.

Finally, in March this year, EU leaders agreed to over twenty measures proposed by the European Commission. I would like to highlight a few of our objectives.

First, a 20% increase in energy efficiency by 2020 by means of a number of concrete measures.

Second, tripling renewable energy use to 20% by 2020.

Third, investing heavily in low carbon technology.

Fourth, agreement to develop the single energy market. This is essential not just for competitiveness, but also for sustainability and security. Let us be perfectly clear: Europe must have a common internal position if it is to speak with one voice externally. And the single market is essential if Europe wants genuine solidarity in energy matters. Our energy security lies in integration, not isolation.

Fifth, strengthening the EU’s carbon market, which already covers 50% of our energy emissions and represents a market value of over 20 billion euros.

I also believe that the Member States cannot avoid the question of nuclear power. There has to be a full and frank debate about the issue. Obviously, the European Commission leaves the choice of energy mix to the Member States and respects the different options they choose. But it is ready and willing to help them launch a proper debate, if that is what they want.

At the heart of the measures agreed in March

is an ambitious, but achievable, target: to reduce EU greenhouse emissions by at least 20% by 2020 compared with 1990 levels, a target that we are keen to increase to 30% in the event of a global agreement on comparable emission reductions for developed countries and a greater contribution by advanced developing countries to the collective effort.

It is essential that we separate economic growth from greenhouse gas growth. I know this is possible because Europe has done it already. Since 1990 the EU economy has grown by more than a third, but our emissions have fallen.

So far, so good. But the truth is that the EU cannot achieve its energy and climate objectives alone, for three reasons.

First, our import dependency. The European Union is already the largest importer and second largest consumer of energy in the world. Our imports are going to increase. And the biggest oil and gas reserves in the world are held by Russia, Iran and countries of the Middle East.

Second, in the new areas of energy development, such as renewables and clean hydrocarbons, Europe is not, and should not consider itself, an energy island.

The third and final reason why the EU cannot achieve its energy and climate change goals alone is an obvious one. People talk of global warming, not European warming, for a reason: it is a global problem which requires a global response.

Europe's emissions are 14% of worldwide greenhouse gas emissions and should decrease to 10% or less by 2030. Before 2020 developing countries will outstrip the industrialised world in terms of greenhouse gas emissions. So how can Europe help to solve this global problem?

In defining the way forward, the EU should be guided by three key objectives.

First of all, a global and comprehensive post-2012 agreement to reduce global greenhouse gas emissions must be concluded. An agreement which harnesses the collective efforts of the international community to achieve the shared goal of mitigating the damage which climate change will bring. And one which will help us to meet the technological and financial challenges posed by climate change.

Second, the EU must take the lead, by demonstrating that we can reduce our greenhouse gas emissions whilst strengthening our economic growth and by significantly stepping up cooperation with our partners around the world in developing and deploying new low-carbon technologies.

Third, we need diversity in our energy policy; diversity of type of energy, of its geographical source, of its transit routes.

We will not achieve these objectives overnight. They will take years, not months.

But there are a number of opportunities for laying the foundations for achieving these objectives that we can take this year.

Ladies and gentlemen,

We have just had summit meetings with the US and Russia. And others will be held shortly with Japan and Canada. The EU must make the most of these major international encounters to promote its energy and climate strategy.

We need to have good energy relations with our main suppliers – Russia, Norway and Algeria in the case of gas. Energy dependence is not of itself a risk. It is the behaviour of the suppliers which might be. Put simply, we need their gas and oil, they need our market. This interdependence is mutually beneficial, so long as the energy relationship is that of a market, not a geopolitical chessboard. If I have a concern, it is not that Europe is buying gas abroad - it is whether our main suppliers are able to meet our needs. If there have been problems with the operation of the gas market, it has not been because of Europe.

The EU must continue to develop its relations with its near neighbours. We have, for instance, signed memorandums of understanding on energy with Ukraine, Azerbaijan and Kazakhstan. We will continue the task of building the energy corridor to link the EU, the Caspian Sea and the Black Sea.

We are currently stepping up our efforts to strengthen energy relations in the Euro Mediterranean region, in particular by enhanced cooperation with Algeria, Egypt, the Mashreq countries and the Middle East, including Qatar, which has large gas resources. We will be endeavouring to provide a legal framework for energy in the European neighbourhood policy, where the Mediterranean dimension will be extremely important.

We will tell our partners in India that we stand ready to support them in reducing their emissions in an economically viable way. Our cooperation under the EU-India Initiative on Clean Development and Climate Change is an excellent basis for this.

The recent report of the Intergovernmental Panel on Climate Change shows that the impact of climate change would be greater for China than for Northern Europe. So I welcome the action which China is taking to ensure the long-term sustainability of its remarkable economic growth.

Unless there is closer EU/China cooperation, the EU's global climate change and energy strategy is doomed to failure. We must use this year's Summit to accelerate that cooperation and specifically to set up an EU-China clean energy centre in Beijing.

Let us not forget Africa in all this. The European Commission has proposed an EU-Africa Energy Partnership, which I hope will be formally adopted at the EU-Africa Summit in Lisbon in December.

Attention should focus on strengthening the EU Africa dialogue on access to energy and energy security; increasing investment in energy infrastructure, including promotion of energy efficiency and renewable energy; placing capacity building in the areas of energy and climate change high on our agenda of development aid; encouraging the flow of oil and gas revenues into development; promoting greater transparency and investment-friendly frameworks; and mainstreaming climate change into development cooperation. Let us be frank – those who will be hardest hit by climate change will be those who can least afford it.

We are also at work in the context of the UN. It is vital that we engage our partners in the fight against climate change at the highest political levels around the world. That is why I was encouraged, when I met UN Secretary-General Ban Ki-moon last month, by his determination to do just that with his plans for a major UN conference on climate change. He has my full support in his own efforts to tackle this thorny issue.

A key milestone for progress this year is the UN Climate Conference in Bali this December. The EU has already launched the worldwide debate on climate change; if we continue to lay the groundwork at other events this year, then I hope Bali will be the moment to launch negotiations on a global and comprehensive, post-2012 agreement.

There is no time to waste. If we want to avoid a vacuum at the end of the existing framework, after 2012, then we must reach international agreement on further action soon, preferably by 2009. This means coming to a common understanding on where we want to go.

And last, but certainly not least, the G8. The summit at Heiligendamm is an important stepping stone on the way to a global response to climate change. The EU will be looking for others to join us in our determination to take concrete and urgent action. We have put our cards on the table; with our invitation to the other industrialised countries to jointly cut our emissions by 30% by 2020. This target is crucial if we are to ensure that global temperatures do not exceed pre-industrial levels by more than 2°C.

Our objectives are clear; cut greenhouse gas emissions and stabilise temperatures. When will we achieve them? I do not know, but what matters is that the G8 takes steps towards them. What I do know is that we must act now or pay more later.

It will not be easy. But a signal could be the key that unlocks further progress later in the year. We are keen to get our G8 partners to sign up to the level of ambition of our actions and, ideally, to commit themselves to the key steps for fulfilling this. I welcome the determination of the German Chancellor, Ms Merkel, to push for such a strong and clear signal, and her initiative to involve China, India, Brazil, South Africa and Mexico in the process. It is vital that after Heiligendamm these countries should maintain their commitment on these issues. This G8 should not be a one-off event, but part of a process.

On energy, I want the G8 Summit Declaration to endorse the EU’s proposal for an international agreement on energy efficiency; to include the introduction of energy efficiency labels for new cars; and to support national and international efforts in the field of carbon capture and storage, notably with a view to ensuring security of storage and the provision of the necessary legal framework.

Ladies and gentlemen,

In conclusion, let me repeat: climate change and energy security are closely linked. Action on one very often benefits the other. Lower and cleaner energy use reduces both damaging greenhouse gas emissions, and our growing external dependence on gas and oil.

On the other hand, there is no inevitable link between limiting greenhouse gas emissions and limiting growth. Europe has proved that.

I am not saying action to fight climate change is free. It has costs. What I am saying is that the cost of action, of taking out a collective insurance policy, is small compared to the risks we face. But at the risk of repeating myself, what I will say is that the longer we wait the higher the price we will have to pay.

Climate change requires a collective response, a 'grand bargain'. This bargain could notably contain several key elements: the use of market mechanisms, with connections between different markets; technology, including its transfer; public investment; research and development; trade policy and others.

The G8 meeting in Heiligendamm, along with the other international events I mentioned today, represent important milestones on the way to that grand bargain. We will get there – I have no doubts about that - because the facts on the ground and our publics will force the issue if we do not move ourselves.

But we must not fall into the trap of sitting and waiting for this grand bargain to happen by itself, and doing nothing in the meantime. We will get there by incremental steps, not a one-off transformation. And we have no time to waste.

We have taken some steps forward; we need to keep moving, and quicken the pace. Each country should contribute according to its means, but towards a shared outcome, with a determination to get there together.

That is the only way we can hope to cap, and then reverse, the damage caused by global warming.

And there should be no doubts about that.

Thank you.

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