Rhein on Energy and Climate

At the last meeting of the UNFCCC in Doha in December 2012 the contracting parties have pledged to finalise negotiations on an international climate compact before the end of 2015 that should enter into force by 2020.

This pledge will only become reality if the international community is prepared to adopt a radically new approach to the negotiation process and the substance of the compact.

This is the lesson from 20 years of frustrating and mostly unproductive negotiations at global level.

Negotiations should focus on C02 emissions, presently the major green house gas and its three major sources:

  • Emissions from major emitter countries.To ensure a breakthrough of negotiations before the end of 2014 only a small number of countries accounting for more than three quarters of global C02 emissions must participate. Once these have come to terms, some 20, mostly small countries with per capita emissions of more than five tons annually, must also be invited to join, for reasons of equity.
  • Emissions from deforestation, especially of tropical forests, amounting to at least six per cent of C02 emissions.
  • Emissions from international air and maritime transport, which presently account for three per cent of C02 emissions, but are rising fast.

Following this approach the international community would conclude four separate texts tackling essentially all C02 emissions. This would substantially ease negotiations. Only after these texts have been adopted should the international community address financing climate mitigation and climate adaptation, two other burning subjects for many, especially developing countries.

China, USA, EU, India, Russia, Japan, Canada, Australia, South Korea, Saudi Arabia, South Africa, Brazil, Mexico, Iran, Indonesia, Turkey and Ukraine must join the 2015 agreement because of their their global climate relevance.

Each of them accounts for more than one per cent of global emissions (0.3 million tons of C02 per year); jointly they are responsible for more than three quarters of global emissions.

Per capita CO2 emissions should be the common yardstick by which to measure the actions to be undertaken by the contracting parties.

By 2040 latest, no country must emit more than five tons of CO2, the 2010 global average. In the absence of legal enforcement, this goal can only be a political one.

In climate terms, this is the minimum of what is necessary. But politically, a target of emissions of five tons per capita will be the limit of what major countries with high per capita emissions (USA, Canada) are likely to agree to.

Each country would have to decide for itself the actions to be taken in view of reducing emissions. Whatever their precise nature, they will have to imply raising the cost of fuel fossils and/or reducing that of renewable energies.

Abolishing all subsidies and raising taxes fuel fossils gas should be the foremost action.

Many countries, among them very poor ones, spend up to 4 per cent of GDP on subsidising fossil fuels, the benefits of which mainly accrue to middle income citizens. Abolishing these subsidies should be a priority for the international community.

Countries granting such subsidies should not qualify for loans/grants from

IFC` s, unless they introduce the necessary adjustments. By 2025 latest, essentially all subsidies on fossil fuels should have disappeared.

This can only be a first small step on the necessary path towards higher fossil fuel prices.

Introducing or raising excise taxes on fossil fuels should be an even more crucial priority for all countries. To have have an impact on consumption they must be substantial and progressive over time, say 30 per cent of sales prices to start with.

To encourage the consumption of gas at the expense of coal and oil, which emit substantially more C02, tax rates should vary according to the C02 content.

This should apply in particular to China and, to a lesser degree, USA.

Countries with reliable statistics and administrative controls might introduce CO2 cap-and-trade systems, following the EU example. Focusing on big emitters these are relatively easy to introduce and manage, and they are effective in ensuring a reduction of emissions according to the “cap” chosen, say 2 per cent annually.

Subsidies for wind, hydro and solar electricity or/and renewable quotas for utilities are an indispensable component of any energy policy intent on reducing C02 emissions. They should therefore be essential components of any national energy/climate policy.

So are actions aiming at raising energy efficiency. They should target automobiles and buildings, the two biggest sectors of C02 emissions in almost all countries :

  • Average new cars should not emit more than 75 g C02 by 2025-30.
  • Each country must introduce strict rules for insulating buildings in line with domestic climate conditions and international standards.

These two fields should be subject informal arrangements among major countries.

To ensure proper compliance, parties will have to accept annual audits of their policies. This will be easier said than done, considering the aversion to transparency in several major countries. But there is not much point negotiating an international climate agreement without ensuring its effectiveness.

Allowing action against “carbon leakage” from non-participating countries will help promote compliance and overcome opposition from energy-intensive sectors in contracting parties.

Negotiations will only have a chance of succeeding if USA, China and EU, the three biggest emitters, jointly take the lead. They must agree on the broad outlines of the 2015 agreement well before the end of 2014. This will be the main stumbling block and require urgent intervention at the highest political level.

The EU should focus its diplomatic skills on this difficult challenge.

Separately to the negotiations among the main emitter countries, the international community must finally agree on curbing emissions from maritime shipping and international air traffic, which keep rising rapidly with the growth of international trade.

Higher prices for kerosene and bunker oil have been the driving force for keeping a lid on C02 emissions, through impressive increases of fuel efficiency and lowering speeds.

The future answers will have to be even higher fuel efficiency, slower speed and “green fuels”.

The “easiest” answer for the future would be “mandatory surcharges” on passengers and freight according to the emissions they cause. These are easy to calculate and to apply.

ICAO and IMO would only have to negotiate the technical modalities, each organisation for its sector.

They would have to overcome three major hurdles:

  • at what price to fix to the C02 price per ton of emissions;
  • how to take into account the specific situation of very isolated countries like Chile, New Zealand and Australia;
  • how to insure compliance by air and shipping companies.

Forests will have to be covered by a separately negotiated agreement among the major forest countries.

Deforestation is one of the biggest threats to life and climate on the planet.It is responsible for as much as10 per cent of fuel fossil-induced CO2 emissions.

The target should be crystal-clear: Humanity must stop net deforestation, especially of tropical rain forests, which are of irreplaceable value for the diversity of species.

But many forest countries, especially in tropical regions with demographic pressure are unwilling or unable to preserve their forest areas. Governments find it hard to prevent illegal logging, whether for timber exports or for transformation into pastures/agricultural areas.

The international community will therefore have to compensate forest countries for the preservation of their tropical forests. The $200 billion “international climate fund” to be established by 2020 for financing climate-relevant programmes should become the principal source of financing.

In return, national governments will have to guarantee protection against illegal logging and exports. This will not be easy to put in place. Forest countries may want to get more funding than the international community will be willing to pay.

But there is a minimum of bilateral experience on which to base an effective international agreement.

The main tropical forest countries should be asked to supply their ideas. On these bases a special working group should elaborate a draft text by the end of 2014.

In order to get anywhere in 2015 the EU must urgently engage in bilateral ministerial meetings with China and USA to explore their readiness to accept a more pragmatic, but ambitious approach. The three parties need a minimum of consensus in order to enter the negotiation process with a minimum prospect of success.

Eberhard Rhein, Brussels

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