Rhein on Energy and Climate

The US Congress is about to take its first ever serious action against climate change. We should applaud this fundamental policy reversal, but not hesitate to tell the USA that the action so far envisaged is far from making an impact on global green house emissions.

US legislation aims at reducing green house gases by 17 percent until 2020 (over 2005, which is the equivalent of 15 percent over 1990).That falls short of what the scientific community calls for and constitutes the kiss of death for the EU 30 percent reduction target (over 1990!) that the EU has envisaged in case of comparable efforts by other major emitters.

In order to reach these modest climate targets

· The fuel efficiency standards for automobiles will be toughened. After 2016 new cars must not emit more than 140g C02 per km, a 30 percent reduction compared to present levels.

· Utilities, refineries, steel, metallurgical, paper industries etc will have to cut back their C02 emissions by 17, in 2020, 42 percent in 2030 and 80 percent in 2050. The USA legislation will be the first to provide a truly long-term prospect for all users of energy. This constitutes an advantage over the EU regulation.

· Each electricity provider will have to generate a rising share of electricity from renewable sources, rising from 6 percent in 2012 to 20 percent in 2020. On this point the US bill is also superior to the EU equivalent.

There is, however, no certainty for the USA to adopt and fully implement this inadequate package of measures. The 948 page (!) “Clean Energy and Security Bill” has only passed the first hurdle, the committee on energy and commerce. Under optimistic assumptions, the House of Representatives might adopt the bill before its recess at the end July.

It is highly unlikely that the Senate with a weaker Democratic majority and vehement resistance from coal and oil states will agree to the text approved by the House. The final outcome from Congress is therefore most likely to be a strongly weakened piece of legislation. President Obama needs the “Clean Energy and Climate Act” to be in place before the Copenhagen Climate Conference. Without such legislation, the USA will not be able to take even weak commitments for the reduction of their green house gases.

The fuel efficiency standards for automobiles, which the President has announced May 19 as a historic event, are a far cry from what Europe is heading for at the horizon of 2020, i.e. 95 g C02 emissions per km.

The USA continues refusing to raise gasoline taxation. US gasoline taxes are only 20 percent of gasoline prices, compared to 60 percent in the EU. US gasoline prices are far too low an incentive for riding less or switching to public transport. It is pity that President Obama has not listened to the recent appeal by the Chairman of Ford Company for a dramatic rise of gasoline taxes as the most effective incentive for the industry to become more fuel efficient.

Considering the recent decline of oil prices, the opportunity for raising gasoline taxation has never been more propitious. The objection that such a step would be incompatible with the depressed economic situation is not valid. The government could offset a higher gasoline tax by lowering the income tax for less well-off groups of US society.

The US proposals do not augur well for the outcome of the decisive climate negotiations in Copenhagen in December. China, India etc. will be even less willing to take any commitments than they have been so far. China has just told the EU that it expects developed countries to reduce their C02 emissions by no less than 40 percent before 2020, a tactical request because impossible to implement in such a short time.

The world risks repeating the traumatic Kyoto experience in 1997 and lose another decade before waking up to the challenge.

There are two ways of avoiding such an outcome.

First, the USA and other developed countries improve their offer for 2020. That is possible if the US uses his executive prerogatives under he Clean Air Act and impose what is necessary for the USA to behave much more climate-friendly. Such a package should have a few simple components:

· An average automobile emission target of 120 g /km by 2020;

· A ban on the sale of incandescent lamps by 2015;

· Much stricter fuel efficiency standards for new buildings;

· A multi-billion national investment programme for improving the thermal insulation of the existing stock of buildings, in particular office buildings.

Second, the EU and other main emitters extend the time frame for their climate action programmes beyond 2020 and fix ambitious mandatory targets for green house gas reductions of at least 40 percent over 1990 by 2030. But a simple fixing of targets at a 20 year horizon will not be enough. It needs to be reflected in appropriate national legislation. Concretely, this implies that USA (the EU etc) will have to extend the precise time-table for the reduction of green house gases and the share of renewable electricity to be generated by each provider until 2030. (The US draft bill freezes it 20 at percent in 2020).

The extension of binding commitments to 2030 would facilitate the inclusion of emerging countries into the global climate policy. It should suit every country, including China, which can impossibly argue being still a developing country in 20 years from today.

From a climate perspective humanity should, of course, focus on front loading rather than delaying concrete climate action. But in 2009 it does not seem to be prepared for such a course of action

The ball game has just begun. The next round will take place early June in Bonn, when the UN will present a first draft for the future climate agreement.

Hopefully, negotiators will finally start talking substance.

Brussels, 25th May 2009 Eberhard Rhein

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