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SPEECH/10/468

Connie Hedegaard

European Commissioner for Climate Action

Europe's view on International Climate Policy

As pronounced

Climate lecture at Harvard Kennedy School, US

Cambridge, 20 September 2010

Professor Stavins, Professor Hogan,

Ladies and gentlemen,

It is a great honour to be given the chance to address faculty members and students at this world-class seat of learning. Thank you for the invitation to speak here today.

As European Commissioner for Climate Action, I would like to take the next half hour or so to set out the European Union's view of international climate policy. I look dforward to aconstruvtive dialogue. I am also here to learn.

I know this is an issue that is closely followed here at Harvard, and in particular by the Belfer Center. The research and analysis you produce is a valuable contribution to the international debate on climate change policy and the search for a global deal. I can assure you it is read with great attention in the European Commission.

The past few months have brought tragic and shocking reminders of the massive human, economic and environmental costs the world faces from climate change. These reminders have included deadly floods in central Europe, floods and mudslides in Mexico and China, the record-breaking heatwave in Russia and then the catastrophic monsoon flooding in Pakistan.

Some political leaders and media commentators have pinned the blame for some of these events at least partly on climate change. Some climatologists have stuck their necks out and done likewise. Other experts maintain that it is still very difficult to attribute a particular event to climate change.

I am not a climatologist. But what is clear to me is that these disasters fit pretty much exactly with the scientific community's projections of what climate change will look like in the respective regions. More frequent and more severe extreme weather events are an essential element of these projections. But hoew many more warnings do we need before we start acting and living up to our responsibility.

As a conservative I prefer to act on facts. If the science is right, we do the right thing. If climate change is not as serious as they say, we have still done a good thing by bringing down emissions and being more ressource efficient.

What we saw this summer serves as a stark reminder that every country needs to anticipate and adapt to the impacts of climate change – and of the huge challenges we all face in doing so. The Kennedy School's discussion paper Responding to threats of climate change mega-catastrophes is an important contribution to thinking and awareness-raising on the issue of disaster preparedness.

So, these recent events ought to be the wake-up call to the international community that strong and effective action to limit global warming is needed – and urgently.

This call must be heeded and translated into real progress towards a global climate deal in the coming weeks and months.

One might well wonder whether it is a coincidence that these extreme weather events have occurred in a year that seems to be on track to set a new global temperature record – and which follows a decade that was itself the warmest since records began.

According to the National Oceanic and Atmospheric Administration here in the United States, the global average temperature over the first six months of this year was the highest in the 130 years of record-keeping.

And this is despite the cold winter we had in the northern hemisphere, which did so much to increase public scepticism about global warming in Europe and, I believe, here too.

The Earth is on average already around 0.8° Celsius - that is 1.4°C Fahrenheit - warmer than in pre-industrial times. The Intergovernmental Panel on Climate Change, the IPCC, has projected that continuing with business as usual will most likely lead to further warming of between 1.8 and 4 degrees Celsius on average this century.

In the worst case scenario the global temperature could increase by up to 6.4° Celsius, or 11.5° Fahrenheit. Since these figures are all averages, the temperature rise will be even higher in some regions.

The IPCC has had its share of adverse publicity over the past few months, but the main findings of its report from 2007 are unchallenged. The bottom line, borne out by the recent InterAcademy Council review led by Harold Shapiro, is this: the IPCC made some minor errors but overall it has done a very difficult and important job well.

A temperature increase even at the lower end of the range projected by the IPCC could cause irreversible and potentially catastrophic changes in the global environment. The lives and livelihoods of millions of people around the world would be put at risk.

This is one of the reasons why the international community decided at the end of 2007 to set 2009 in Copenhagen as the deadline for a global climate agreement under United Nations auspices.

The real threat of dangerous climate change is undoubtedly also one of the reasons why the UN Secretary-General has set up the High-Level Panel on Global Sustainability which met for the first time yesterday in New York. I am greatly honoured to be a member of the panel, which has been asked to come up with suggestions on how to have sustainable groth in a low carbon future.

It should be obvious that a global threat to which all countries contribute to a greater or lesser degree can be addressed most effectively through a globally agreed framework.

Reaching a global agreement requires strong political leadership and courage to resist vested interests that want to preserve the high-carbon status quo.

Shifting from our present model to a low-carbon future is a vast challenge - but it is also a huge opportunity to reinvigorate our economies and accelerate our exit from the crisis. Innovation in low-carbon technologies such as energy efficiency, renewable energy and carbon capture and storage promises to generate new sources of economic growth and jobs and to strengthen our economies' energy security.

Clean technologies tend to be more labour intensive than dirty ones. If you'll permit me to quote some West Coast research for a moment, Professor Dan Kammen at Berkeley has found that every dollar invested in renewable sources of energy generates 3-5 times more jobs than a dollar invested in fossil fuel energy sources.

And it is a market that is growing rapidly. A recent analysis by the HSBC banking group forecasts that the global market for low-carbon energy and energy efficiency technologies will at least double over the next 10 years - and is more likely to triple, to 2.2 trillion dollars.

Who is going to get the biggest slice of this pie? A global competition is already well under way. And it is clear that China's huge ambitions make it a formidable competitor for both Europe and the US.

China is undertaking the biggest green stimulus programme of all, worth some 230 billion US dollars. Together with Taiwan, it already produces most of the world's photovoltaic panels. Three Chinese wind turbine manufacturers now appear in the global top 10, and soon expect two-three in top 5 and last year China installed more wind power capacity than any other country. It is pouring money into developing electric cars.

The European Union intends to stay at the forefront of the low-carbon revolution and we know this will require continuous efforts to drive innovation.

We intend to do so through proactive climate and energy policies.

We have committed unilaterally to cut our emissions to 20% below their 1990 level by 2020, and we have passed legislation to achieve this.

In addition, we are offering to increase our emissions reduction to 30% over the same timescale if other major economies commit to take on their fair share of a global effort. This reflects the IPCC's analysis that collective emissions from developed countries need to be cut to between 25 and 40% below 1990 levels by 2020 if we are to keep the 2°C ceiling within reach. But it will take an effort from all major emitters. Not just the EU and a few others.

Europe wants a global deal that is ambitious, comprehensive in terms of scope and international participation, and legally binding. That is what the climate needs.

There were widespread hopes and expectations that the Copenhagen conference last December would give us a global deal. In the end the political will was lacking.

The Copenhagen Accord that resulted nevertheless represents progress.

Firstly, industrialised and developing countries alike accepted for the first time that they share responsibility for keeping global warming below 2° Celsius – 3.6° Fahrenheit - in order to avert the worst impacts of climate change.

Almost 140 countries, responsible for more than 80% of global emissions, have associated themselves with the Copenhagen Accord, and over 75 have notified targets or actions to limit or reduce their emissions. In the run up to Copenhagen, most of the major emitters set national targets for CO2 emissions. This was a major and promising achievement.

As the Belfer Center and others have pointed out, even the high-end pledges fall well short of what is needed to stay below 2° Celsius. But they are a start. They will need to be ratcheted up over time.

Secondly, the industrialised world has put a considerable amount of money on the table to help developing countries combat climate change: nearly 30 billion dollars in finance over the next three years – what we call 'fast start' finance - and in Cpenhagen, it was agreed that 100 billion USD a year by 2020 must be found. This will of course have to be a mix of public and private funds.

Developing countries rightly see prompt and full delivery of the fast-start commitment as a key test of the rich world's trustworthiness. I'm glad to say the EU is well on track to deliver on its pledge of 2.4 billion euros for this year.

Thirdly, in several areas, and notably on the issue of transparency, the Copenhagen Accord provides important political guidance for the continuing negotiations on a global agreement.

Copenhagen also put climate change at the top of the political agenda – even in a time of economic crisis.

It created unprecedented momentum for action in the months beforehand. The final days of the conference brought together some 120 heads of state or government, whose presence sent a powerful message that world leaders recognise the serious and urgent threat from climate change.

I want to take this opportunity to pay tribute to President Obama's very important contribution. His dynamism and personal commitment were key factors in the conclusion of the Accord.

The Copenhagen Accord provides a basis for moving forward. The international community must now build on it. And we cannot afford more backtracking. We still have a long way to go to reach the strong, comprehensive and legally binding global agreement that we need.

In order to manage expectations and get useful progress, I have already in March 2010 suggested a step wise approach. The next big step needs to be taken at the Cancún conference in November and December.

In fact the European Union would be ready to reach a legally binding deal in Cancún, but it is evident that a number of other key players are not.

Many of the problems we had in Copenhagen are still with us. In particular, there is still no climate legislation here in the US. Additionally, a number of major emerging economies remain reluctant to bring their domestic actions on climate change into an international framework.

But until action is taken in the US, others have an excuse – valid or not – for not coming along. Legislation is an important signal of political commitment. Many countries are asking themselves why they should take action as long as the biggest emitter in the developed world is unwilling to live up to its global responsibilities.

The China fear is often mentioned in the debate. But we must be careful not to miss opportunities because of fear. If we fear our competitors, we should improve our competitiveness. Carbon leakage is not a one way street. No action is not a way to address economic and political challenges. You can also loose jobs by doing little and by being hesitant. Status quo is not what the world or the US needs right now.

The pro-active stance of the Obama administration and the House approval of the Waxman-Markey bill last year are of course very welcome. But in Europe we had surely hoped that Waxman-Markey, or something like it, with a federal cap and trade system at its heart, had been followed up in the Senate.

As a Conservative from Europe I've always thought we could count on the US when the world faced big challenges.

This country played a key role in the first world war and a decisive one in the second. Its military strength kept the peace throughout the Cold War. The US stand firm in the fight against terrorism. These achievements make it all the harder to understand why the US cannot mobilise the political will to face up to a challenge that threatens to cause untold human suffering and undermine the very basis of global prosperity.

It is not for lack of information. America leads the world in so many fields of research related to climate change, such as atmospheric science and satellite monitoring.

Nor can it be because climate change is not primarily a military issue. After all, the Pentagon has identified it as one of the greatest risks to homeland security.

Is it perhaps because, as President George Bush senior famously said, "the American way of life is not negotiable" ? Well, if all of us continue with business as usual, then our lifestyles would indeed be threatened.

But the American way of life is more than the high-carbon lifestyle associated with SUVs and giant steaks. For me it is about a free society that allows people to make the best use of their abilities - a vibrant, open economy that gives entrepreneurs the freedom to innovate and create new products and jobs.

And that makes this country particularly well placed to reap the benefits of the low-carbon revolution. A Favourable policy framework would help stimulate the entrepreneurship, this country is so famous for. I ask myself why the most efficient cars are not produced in the US. Why does Asia have to take all the technology awards?

And I constantly ask myself, why the addiction to oil remains. To me, energy security is an extremely solid argument for rigorously pursuing a low carbon track. Why borrow money from the Chinese to buy oil from the Middle East? It does not make much sense.

For now it looks like the legislative stalemate in the Senate is starting to hurt investment in the US economy.

Earlier this month Ernst and Young reported that China had overtaken the US to top its index of the most attractive countries for investment in renewable energy projects.

And the manager of a major international asset fund was recently quoted as criticising the US for being "asleep at the wheel" on climate change, job growth and the industrial revolution taking place in the energy industry.

His conclusion? His bank will invest the considerable funds it manages in other places – principally in China and Western Europe.

What this shows is that too little policy action can be as damaging to investment and employment as an over-ambitious climate policy that runs the risk of driving production and jobs abroad.

In Copenhagen President Obama pledged that the US will reduce its greenhouse gas emissions by 17% of 2005 levels by 2020, the target set in the Waxman-Markey bill. It is encouraging that the administration is sticking by this goal despite the absence of Senate legislation.

We look forward to seeing progress. Inevitably, we all have to contribute by lowering our emissions. I wish we could turn it into an innovation race, we all participated in to win. We will look carefully at the US action in the coming years, both legislative as well as innovative actions, and to the impact they have on emissions. There is only one way forward. Get emissions down.

And one final remark on this. The US has an enormous responsibility as to whether we in the 21st century – the century of globalisation and interdependence – will create international reponses to international challenges. Whether we get common rules that we all follow or if every country continues on their own. We must not be late in tackling common challenges when the time factor is key. We all have to contribute to the international cooperation.

In the meantime, everyone needs to have realistic expectations for Cancún. It will certainly not be the end of the road.

The Cancún outcome we want to see is a balanced package of decisions that both captures the progress achieved so far and lays a solid basis for completing a global deal as soon as possible.

'Balanced' means that it must cover both tracks of the negotiations and that all Parties see at least some of their priorities addressed.

For us it is key that the Cancún outcome anchors into the UN process the peogress and pledges put forward so far under the Copenhagen Accord and provides a framework for strengthening these through international cooperation. The same goes for the long-term finance commitment made in Copenhagen.

Cancún must also solve a number of major "architectural" issues.

A priority that the EU certainly shares with the US is to get tangible progress towards a stronger system of measurement, reporting and verification. This is needed to track each country's progress towards delivering on its emission pledges, as well as industrialised countries' progress towards meeting their financing commitments.

The greater transparency this would bring is crucial for building trust between North and South. This issue of MRV, as it is known in the jargon, was a particular bone of contention between the US and China in the negotiation of the Copenhagen Accord. The final text of the Accord provides useful guidance, but this needs to be further elaborated. A process should be launched in Cancún to develop guidelines next year.

We need transparency. Chimna must realise that greater transparency is part of their new stronger role in this world.

A balanced package of decisions should also address a range of other issues. These include the broader financial architecture of the future global climate regime; agreement on a phased approach to reducing emissions from tropical deforestation; an international framework to facilitate adaptation; agreement to set up new carbon market mechanisms; and targets for reducing emissions from international aviation and maritime transport.

To support the Cancún package and make early progress on the ground, we also envisage that some of these decisions would be underpinned by the early launch of specific projects in developing countries to be financed by fast-start funding.

One positive development for the international process has been the setting up over the past few months of informal partnerships on deforestation, MRV and adaptation. These can help to promote progress in the negotiations on these issues. I very much welcome the US leadership of the adaptation partnership together with Spain and Costa Rica.

On a less upbeat note, the EU is very concerned at the growing imbalance between the progress in the two tracks of the international negotiations. This is a very negative development for the process of getting to a global deal, and a major threat to the success of the Cancún conference.

While there has been progress under the Kyoto Protocol track, there is a virtual standstill in the parallel negotiations on long-term cooperative action which cover all Parties including the US and developing nations.

The bottom line for us is that all countries have to contribute their fair share to a global agreement. This is what the principle of common but differentiated responsibilities means.

It would not be fair if the lion's share of the effort were to fall on developed countries that are Parties to Kyoto. Nor would this be anywhere near effective since they account for only about 30% of global emissions.

The fact is that the United States and the major emerging economies have got to play their full part too if the world is to have a chance of preventing dangerous climate change. By 2020 China is likely to emit 30% of global CO2. There is no solution without China.

And unless and until they do so, the EU cannot sign up to a second commitment period under Kyoto. I want to be very clear about that.

All this is not to say that Cancún cannot still deliver the solid and balanced package of decisions we need. But with only six days of negotiations left before Cancún starts at the end of November, time is getting very short.

The last preparatory session, in Tianjin in China early next month, needs above all to achieve consensus on what the Cancún outcome should be - and then make rapid progress towards preparing the individual decisions that will make up the package.

I hope we can start making progress in this direction at the Major Economies Forum meeting in New York that I will be going to after this, as well as at the informal meeting of foreign ministers in the margins of the UN General Assembly on Saturday (25 September).

Ladies and gentlemen,

Allow me to take this opportunity to update you on the climate action we are taking in Europe.

First of all, we are well on course to meet or even comfortably overachieve the collective 8% reduction target that our 15 older Member States have committed to under the Kyoto Protocol. Actually, the latest estimates put us at 17% below 1990 emission levels last year while the economy grew 40% over the same period.

The recession has made a substantial contribution to reducing emissions of course, but the target was already well within reach before that. This is thanks not least to the literally dozens of policies and measures we have put in place under the European Climate Change Programme over the past 10 years.

These include restrictions on fluorinated industrial gases, energy performance standards for buildings and CO2 emission limits for new cars. My prot flio is to try and mainstream climate concerns into all relevant policy areas like energy, transport, agriculture etc.

But much the most important of these initiatives is the EU Emissions Trading System, which has put a price on carbon that applies to some 40% of our emissions today.

For the medium term, we have set ourselves ambitious climate and energy targets for 2020 and adopted a major package of legislation to implement them.

As I've mentioned, this will cut our emissions to 20% below their 1990 level. By 2020 we will also be getting at least 20% of our energy from renewable sources. And through a major programme to improve Europe's energy efficiency we aim to reduce our energy use by 20% of projected levels over the same period.

We are doing this because we believe the fight against climate change needs developed countries to lead by example.

But I make no secret that we have done it also to get a head start on the road towards the low-carbon economy. We want the increased growth, extra jobs and greater energy security that the development of low-carbon technologies and infrastructure promises.

We estimate that the massive expansion of renewable energy that our 20% renewables target demands will put some €130 billion worth of extra investment into this sector and create some 700,000 new jobs by 2020. The package will strengthen our energy security by reducing our vulnerability to external energy shocks.

Looking ahead to 2050, the EU is committed to reducing our emissions much further - to between 80 and 95% below 1990 levels - as part of the industrialised world's contribution to at least halving global emissions by mid-century. Our target is very similar to the Waxman-Markey bill's goal of an 83% cut in US emissions over the same timeframe.

Early next year the Commission will be proposing a detailed roadmap of how to reach our 2050 objective, including an interim target for 2030.

Our Emissions Trading System, the EU ETS, is central to Europe's climate strategy. It is our key instrument for achieving deep emission cuts at least cost.

As part of the climate and energy legislation the system is undergoing a major overhaul that will make it stronger and more effective from the start of our third trading period in 2013. The reformed ETS will deliver about two- thirds of the emission cuts needed to reach our 2020 target.

With the ETS we have borrowed an American invention and run with it. There is no doubt in our mind that the starting point for a cost-efficient climate policy has to be putting a price on carbon.

And we continue to hope that in this country, cap and trade will progress from the current regional initiatives to a federal system.

When that time comes, we want to work together. Provided there are no problems of compatibility, we would want to link the EU ETS with the US system to create a transatlantic carbon market.

Our vision is to build a much larger and stronger international market than exists today, first by linking up the cap and trade systems of developed countries and then by bringing in the major emerging economies in the medium term. That is the way to get the global proce signal we need. To get a global price on carbon.

We see the creation of new sectoral carbon market mechanisms for the major emerging economies as an important stepping stone towards their eventual introduction of broad cap and trade systems. That is why we want a decision to establish these mechanisms taken as part of the Cancun package.

I am very encouraged that China is now beginning to show movement towards carbon trading and by the lively debate about this that is under way there.

Europe is as determined to engage China in global action as the US is, and we see the carbon market as perhaps the most promising way to do so.

We are leveraging our position as the biggest market for carbon credits to create pressure for change. In particular, and in the absence so far of international action to improve the environmental integrity of the Clean Development Mechanism, we are preparing restrictions on the use of credits from industrial gas projects such as those that destroy HFC-23.

Before I finish, let me point out that besides reforming the ETS we are also expanding it - above all by bringing the civil aviation sector into the system at the start of 2012.

International aviation is not covered by the Kyoto Protocol and is not currently subject to any emission reduction targets, except Europe's unilateral commitment to cut our overall emissions by 20% by 2020.

This has to change.

Emissions from aviation are growing faster than from any other sector, and all forecasts indicate they will continue to do so under business as usual conditions. By 2020 – even with significant efficiency improvements of 2% a year - international aviation emissions are projected to be around 75% above their 2005 levels, and by 2050 a staggering 300-600% higher.

With forecasts like these it would be completely irresponsible to do nothing. Firm action is needed if we are to have a chance of keeping global warming below 2°C.

But so far no action is being taken at international level. So we have taken the initiative ourselves to bring flights to and from the European Union into the EU ETS.

We believe cap and trade is the most economically efficient way of addressing this issue. And we believe we are legally entitled to do so under the terms of the Chicago Convention that regulates international civil aviation.

Our legislation means that flights responsible for around 35% of global aviation emissions will be subject to an emissions cap from 2012.

It is a good start, but what we really want to see is global action.

So we are proposing that the international climate negotiations should set a global target of reducing emissions from international aviation to 10% below 2005 levels by 2020. We also propose that ICAO, the International Civil Aviation Organization, be tasked with establishing measures to achieve this target over the next year. We want to see these decisions taken in Cancun.

In fact ICAO has an opportunity to take the initiative itself when it holds its assembly of member countries at the end of this month. Regrettably, all the signs are that they will be unable to reach a meaningful agreement.

Ladies and gentlemen,

The urgent need for a global climate agreement is clear for all to see. The Cancún conference can and must take us a good step forward. But I fear that the prospects of reaching our destination will remain slim as long as the US delays passing climate legislation.

Europe is not alone in hoping that this great country will live up to its responsibilities sooner rather than later. In the global race for green growth and jobs, I believe this is also squarely in America's own economic interest.

For one day last December, the United States, Europe and countries around the world worked intensively together to produce the Copenhagen Accord.

Now the international community needs not only to build on the content of that document but also to recreate the spirit of global cooperation in which it was created.

In facing up to a challenge that threatens to redraw the face of this planet, much more unites us than divides us.

Thank you.


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