The EU and Climate Change
There is now a broad consensus among scientists that man-made "greenhouse" gas emissions are having a marked effect on the earth's climate. Globally, the ten hottest years on record have all occurred since the beginning of the 1990s. Current climate models predict that global temperatures could warm from between 1.4° to 5.8° C over the next 100 years, depending on the amounts of greenhouse gases emitted and the sensitivity of the climate system.
| Climate Change Index |
| The Stern Report |
| The impact |
| The need for EU action |
| Kyoto Agreement |
| EU climate change programme |
| Emissions Trading Scheme |
| Next steps |
| Key points |
Rising sea levels are already a problem for some countries but the situation is likely to deteriorate further, potentially causing significant land loss in areas like Bangladesh and Florida and even wipe out whole countries where they consist of low-lying islands such as the Maldives. Large areas of cultivated land are continuing to turn into desert. Food and water shortages are a growing in parts of the developing world. The social, environmental and economic costs associated with this level of climate change are likely to be catastrophic.
All this available evidence suggests that the world needs vigorous action in order to combat climate change. In arguing for measures to prevent or reduce the impact of climate change, we are stronger as an EU block than we are as individual nations.
The science of climate change is now widely accepted. It is an issue of critical importance and urgent action is required both at home and internationally to tackle it. As Gordon Brown highlighted at the United Nations, climate change is an economic as well as an environmental issue.
The review published in November 2006 by Sir Nick Stern, Head of the Government Economic Service and a former Chief Economist for the World Bank, illustrates the fact that climate change will seriously affect the global economy, human life and the environment, and that whilst no country will be spared the impacts, developing countries in the third world will be hardest hit. 
The Review notes that the current level of greenhouse gases in the atmosphere is equivalent to around 430 parts per million (PPM) compared with around 280 ppm before the industrial revolution. Moreover, it explains that, even if the annual flow of emissions does not increase beyond today's rate, the level of greenhouse gases in the atmosphere will rise to around 550 ppm by 2050. At that level a global average temperature rise of at least two degrees celcius is 80-99 per cent probable.
Stern estimates that failure to take action to tackle climate change will lead to a reduction of over five per cent of global GDP each year. In contrast, the costs of reducing greenhouse gas emissions to avoid the worst impacts of climate change can be limited to around one per cent of GDP per year.
The physical impacts of climate change are multi-fold. They include:
- Melting glaciers which will initially increase flood risk and then, when they go, significantly reduce water supplies, eventually threatening one-sixth of the world's population.
- Declining crop yields, potentially leaving hundred of millions without the ability to produce or purchase sufficient food.
- An increase in worldwide deaths from malnutrition and heat stress.
- Eco-systems will be vulnerable to climate change, with 15-40 per cent of species potentially facing extinction in the event of a two degree temperature rise.
Warming may induce sudden shifts in regional weather patterns such as monsoon rains in South Asia or the El Nino phenomenon - changes which would have severe consequences for water availability and flooding in tropical regions and threaten the livelihood of millions of people.
Developing countries will suffer the most, despite the fact that their contribution to global carbon emissions is minimal, given that they are heavily dependent on agriculture, the most climate sensitive of all economic sectors. Climate change is likely to further reduce already low income levels and increase illness and death rates in the poorest nations.
Adaption to climate change will cost developing countries tens of billions of pounds, and put further pressure on already scarce public services. In the light of this, it is crucial that climate change be fully integrated into development policy, and that rich countries follow the lead of the UK and other EU nations in honouring their pledges to increase support through overseas development aid, in particular, to deal with the impact of climate change and research into crops that will be more resilient to drought and flood.
But it is not just developing countries that will suffer. Rising sea levels will cause huge costs of flood defences to avoid the flooding of, for instance, London and large parts of Yorkshire. Tropical diseases will threaten people in temperate climates. Desertification in Africa will increase migratory pressures on Europe .
As the Environment Secretary David Miliband recently asserted - 'you cannot be an environmentalist without being an internationalist'.
It is clear that the only feasible solutions to a problem of such magnitude are through multilateral action and international cooperation. Domestic action alone will not tackle the problem.
The EU actively led the way to the first, albeit insufficient, step: the Kyoto Protocol - in the face of resistance or reluctance from the USA , Russia and many others. Without European countries negotiating as a single powerful block, there would have been no Kyoto Protocol.
The onus is on the EU to take the lead in going further on climate change. Firstly, we are the world's biggest single market and have a budget - of more than €120 billion per year - which gives us the ability to drive key areas, such as, research and development, advanced technologies, renewable energy and energy efficiency, that will define the global response to climate change.
Although the initial costs of tackling climate change will be onerous, it will create significant business opportunities in terms of new markets for low carbon goods and services. There are no obvious barriers to prevent such markets from becoming significant economic sectors and employment providers.
In Germany , for example, the renewable energy sector has already generated an estimated 170,000 jobs and €16 billion in turnover. In the UK , oil giant BP recently published a study illustrating that responding to climate change offers a £30 billion business opportunity to British companies over the next decade.
By taking a pro-active stance on an issue which is important to the public, and by delivering the jobs and growth which are at the heart of the European agenda, the EU can demonstrate its added value to citizens.
Secondly, action on climate change will protect our energy security, reducing our reliance on imported hydrocarbons and addressing fuel poverty. It also offers the opportunity to forge more constructive alliances with other major economies such as encouraging China to take a deeper interest in cutting its emissions.
It is because of this that we need to set a common carbon price by making the recently established the EU emissions trading scheme (ETS) the basis for a global carbon market.
To aid the success of the ETS it is important that the overall EU limit on emissions should be set at a level that ensures scarcity in the market for emissions allowances. Clear and frequent information on emission levels during the trading period would improve transparency and equilibrium in the market, reducing the risks of unexpected price collapses or, indeed, sudden temporary surges.
The Stern Review also emphasises the need for multilateral action to avoid deforestation. The UK Government recently announced that it would explore methods to mobilise global resources for sustainable forestry. The EU will work with the governments of Brazil , Papua New Guinea , Costa Rica and the Coalition of Rainforest Nations.
Climate change must also be tackled by developing low-carbon technologies and tackling barriers to behavioural change. Although products such as low-carbon emitting fuels and vehicles are often available to consumers, they are far more expensive than the fossil-fuel alternatives.
This is also an issue that Gordon Brown has taken the lead on - in March 2006 he announced the creation of an Energy Technologies Institute to co-ordinate £1billion of research and development funding over the next decade. The Government has also established initiatives with Norway and China to develop carbon capture and clean coal technology, which will enable locally sourced coal to be a part of the UK energy mix.
While failure to tackle climate change will leave Europe and the world facing a bleak future, if we have the political will and support new and developing technologies, the reality of climate change offers many opportunities.
Global Action on Climate Change: Kyoto agreement
The EU was instrumental in securing the negotiation of the Kyoto Treaty, and later in persuading Russia to ratify it. However, it has not been ratified by the US , though some individual US states and cities have subsequently agreed to take equivalent action, not least California .
UN countries agreed at Kyoto in 1997 to halt the increase in greenhouse gas emissions and to make a start on reducing them, aiming to start with a 5.2% reduction by 2012 from the baseline of 1990; the treaty came into force in February 2005. Countries party to the Kyoto agreement, including European Union Member States, have agreed to meet their commitments jointly. This arrangement allows the EU's target to be redistributed between Member States to reflect their national circumstances, requirements for economic growth, and the scope for further reductions. In June 1998 environment ministers agreed how the target should be shared out. The UK agreed to reduce its emissions by 12.5%, making this its legally binding target under the Kyoto agreement. Targets for CO2 reductions by other Member States range from -21% for Germany and Denmark , to -6% for the Netherlands. In the case of less prosperous countries in the third world, provision has been made for them to increase their emissions to take account of essential economic growth.
The UN Climate Change Conference in Montreal in 2005 agreed to start looking at commitments beyond 2012. This is the beginning of a process that could see a successor agreement to the Kyoto agreement. In parallel, at the Gleneagles G8 Summit under British chairmanship a dialogue on post-2012 arrangements was begun, including China, Brazil, India and the United States .
The EU Climate Change Programme
The EU began to tackle the threat of climate change in 1991, but after the signing of the Kyoto agreement it realised that much more dramatic measures would be needed if EU Member States were to meet their Kyoto obligations to reduce carbon emissions. The EU Climate Change Programme was launched in June 2000 in order to identify all the necessary elements of an EU strategy to implement the Kyoto agreement.
Member States did not agree to the very large reductions in emissions originally proposed by the Commission but the final agreement in June 2001 was based on making bigger cuts than had been agreed for the EU countries at Kyoto .
The key result of the first Climate Change Programme was the EU's Emissions Trading Scheme.
The EU established a market in CO2 emissions on 1 January 2005. The purpose of this scheme is to reduce carbon dioxide emissions from each Member States' industry and power generation plants by setting caps on the amount of emissions allowed. About 12,000 large industrial plants in the EU are covered by the scheme. Businesses are able to trade their carbon dioxide allowances across an EU-wide market. Enterprises thus have a financial inducement to reduce their emissions because they will face an increased cost if they exceed their historic levels and have to buy extra permits, whereas they can benefit financially from any reduction in their emissions.
Each Member State government produced a national allocation plan, giving the total carbon dioxide emissions permitted for that country and the allowances for industry and power generation. The UK Government submitted its proposed allocations in April 2004 but later revised this figure upwards by 20,000 tonnes because of fears that the original proposal was too restrictive and would undermine the competitiveness of UK industry.
The early years of emissions trading were always likely to prove difficult because this is the first time such a scheme has been adopted. The evidence from the first year of the scheme is that too many permits to trade in emissions were issued in some countries; this depressed the market price of permits making it cheaper for companies to pay for higher emissions.
The second European Climate Change Programme began in October 2005. Issues in this round include whether aviation emissions should be included in the emissions trading scheme in the future (a Commission proposal to this effect was published in September 2005 and is supported by the UK ). The question of geological capture - storing CO2 under the sea or underground - is also being examined.
The Commission has now begun enforcement procedures against several Member States who have failed to implement various climate change policies already agreed. Countries that have been sent enforcement notices in respect of various measures include Germany , Poland , Italy and Luxembourg .
- The EU has gone beyond the reductions in emissions demanded of its Member States in the Kyoto agreement;
- It has established the world's first large-scale emissions trading scheme; although it is in its infancy and has some flaws, this scheme is pioneering the use of market mechanisms to reduce the scale of climate change;
- The EU remains a world leader in developing the response to climate change - an area where national frontiers have little significance.