During a meeting of the European Union Council last month, Environmental Ministers from European Union (EU) companies met to establish the EU’s position on a post-Kyoto international climate change policy and reviewed the status of the EU’s own package of climate change legislative proposals.  While the climate policy issues were largely prospective in nature, the meeting indicated that European Ministers do not appear to be letting the current financial turbulence undermine their support for a robust post-2012 climate agreement.

Preparing for Post-Kyoto Treaty Negotiations

The next round of negotiations under the United Nations Convention on Climate Change (UNCCC) is scheduled for December 20, 2008 in Poznan, Poland.  During the EU Council meeting discussions related to that meeting, the parties reiterated the importance of achieving worldwide consensus by the end of 2009, to ensure a replacement regime for the Kyoto Protocol by the end of 2012.  Among the EU Council’s key conclusions and statements on upcoming negotiations, the Council:

• Reaffirmed its commitment to the Bali Roadmap, with a goal of completing the successor agreement to the Kyoto Protocol at the scheduled talks in December 2009 in Copenhagen, Denmark.
• Stated that any post-2012 agreement would need to limit global average temperature increase to not more than 2°C above preindustrial levels” - a limit that would require 50 percent reductions in global emissions from 1990 levels by 2050, with emission levels peaking and starting to decline by 2020.
• Called on developed countries to propose economy-wide, medium-term emission reduction targets at a “comparable level of effort” to the commitments made by the EU.
• Noted that “the least developed countries should not be subject to obligatory emission constraints” but encouraged them to link sectors, where appropriate, to the international carbon markets.
• Stressed the importance of reducing emissions from deforestation and forest degradation.
• Discussed the importance of energy efficiency and the transfer of clean technology.
• Recognized the threat to competitiveness posed by carbon leakage, and the need to achieve a level playing field between industrialized and developing countries.

Consensus on other issues has proven more elusive.  For example, member states have yet to agree on the percentage of emissions allowances that should be auctioned versus given away, as well as which emissions baseline should be used for measuring reductions (for example, use 2005 or an average of 2005-2007). 

Status of Pending EU Legislation Going Into NegotiationsThe Council also discussed and reviewed the progress of three pending climate-energy legislative initiatives under development in the EU Parliament, including:

• a directive amending the EU’s Emission Trading System (”ETS”) to improve and extend the system of trading quotas for greenhouse gas emission beyond 2012;
• a directive on reducing emissions of greenhouse gases from sources not covered by the emissions trading system by 2020; and
• a directive establishing a regulatory framework for the capture and geological storage of carbon dioxide.

The Council members appeared to endorse accelerated negotiations on the three legislative packages, with a goal of reaching agreement within the Parliament on the legislation in time to conduct successful first readings by the end of the current parliamentary session. Among the issues still to be clarified is the percentage of emissions allowances to be allocated by auction in the energy sector, and whether specific situations might justify short-term derogations from a 100-percent auction approach (e.g. cases of insufficient integration of the energy sector at the European level.).

On balance, the meeting suggested that the EU will continue to be an aggressive advocate for both domestic and international action on climate change regulation, regardless of what economic dislocations may be affecting individual nations.

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