Some Perspectives on Climate Change Policy architectures and international trade

1
Some Perspectives on Climate Change Policy
architectures and international trade

• Dr Nick Campbell
• Chairman of the UNICE Climate Change Working
  Group
• Chairman of the ICC Task Force on Climate Change

2
Outline

• The EU Emissions Trading Scheme
• Some initial impacts of the EU ETS
• The post-2012 Architecture
• The European Union
• Timeline
• The International Scene
• ICC Recommendations
• The Longer term regime
• Some concluding thoughts

3
The EU Emissions Trading Scheme

• Cap and Trade
• CO2 only
• Two periods, 2005-7 and 2008-12
• Primarily power generation and energy intensive
  industries, e.g. refining
• Each installation requires a permit to emit CO2
  and is granted an allocation
• Annual monitoring, reporting and verification
• Penalties

4
Initial Impacts of EU ETS

• Successes
• Price of Carbon
• Monitoring, Reporting and Verification
• Problems
• Implementation
• Interpretation of definitions
• Electricity prices
• Slow development of JI/CDM

5
The post-2012 Architecture (1)

• The European Union
• Commission Communication Winning the Battle
  Against Global Climate Change, February 2005
• EU Spring Council 22-23 March 2005.

6
The post-2012 Architecture (2)

• Timeline
• UNFCCC Seminar, Bonn, May 16-17th, 2005 Not
  the start of negotiations
• COP-11, COPMoP-1, Montreal, November 2005 a
  mandate for negotiating the post-2012 Kyoto
  Protocol commitment period?
• COP-13, November 2007 a decision on the
  post-2012 commitment period?

7
The International Scene

• The European Union
• Involve all Parties differentiated approach
  deep cuts (60-80) required by 2050-60.
• USA
• Commitment to technology approach and research
  and development wait and analyse impacts of
  current national policies and measures.
• Canada/Japan
• Struggling to meet current Kyoto commitment
  against further absolute reduction commitments
  other policies and measures needed.
• Developing Countries
• Concentrate on adaptation and development
  against discussion of developing country targets.

8
ICC Recommendations
In light of the inherent difficulties in current
international policy approaches -- based on a
progression of binding emission targets-- to
deliver a sustainable long-term framework, the
International Chamber of Commerce (ICC) urges
UNFCCC Parties to pursue a fresh approach with
the following objectives

• Promote global participation
• Address climate risks in the context of
  developing country priorities development,
  poverty eradication, access to energy
• Encourage more rapid use of existing efficient
  technologies (in both developed and developing
  countries)
• Stimulate research and development to create
  innovative, affordable, low GHG technologies
  sooner

Continue...
9
ICC Recommendations
Continued

• Eliminate or reduce regulatory barriers that
  limit development, utilization and diffusion
  innovative technologies
• Encourage voluntary actions by industry to
  reduce, avoid or sequester greenhouse emissions
• Provide market incentives for efficient energy
  use, eliminate subsidies that encourage
  uneconomic consumption
• Continue scientific research to assess risks,
  inform policy response
• Encourage adaptation
• Focus on approaches that limit long-term climate
  risks

10
The Longer Term Regime

• The post-2012 Climate Change regime is likely to
  look very different from Kyoto
• Differentiation by countries/regions
• Differentiation by sectors
• More focus on energy production, supply, and
  efficiency
• Adaptation and Development
• Differentiation by targets e.g. absolute,
  intensity, GDP, per capita
• Technology and Research Development

11
Concluding Thoughts

• Diplomacy
• Climate change is not just an environmental issue
  but encompasses energy supply, national
  development and adaptation
• The negotiation is about the three pillars of
  sustainability environment, social and economic
• This is a political negotiation that will
  determine the economic future of all businesses
  worldwide wherever you are situated in the world
• Business has a vital role to play

12
Thank you for your attention