Remarkably, the world is responding to the climate problem.  Considering that we find it difficult to deal with today’s global problems (poverty, war) it is rather striking that we are managing to come to some agreement about managing the risk that we be facing a serious problem sometime in the future.  On the other hand, the potential threat is rather catastrophic indeed, especially if global warming gets out of hand.  Best we do something.  Given our economic dependency on fossil fuels, however, this will not be easy.

 

The International Energy Agency (IEA) evaluated two climate policy scenarios where the world manages to stabilise GHG concentrations at 550 and 450 parts per million (ppm) of CO2 equivalent respectively.  At present the concentrations are at approximately 430 ppm, rising at an average of 2 ppm per year.  The 550 policy scenario assumes an increase in global temperatures of about 3°C, the 450 scenario an increase of 2°C.  Both scenarios imply a plateauing of emissions by 2020, followed by substantial reductions.  Obviously, in the 450 scenario the reductions will need to be very steep indeed.  It requires that OECD countries reduce their emissions by 40% in 2030 compared with 2006 levels (and that other major non-OECD economies limit their emissions growth to 20%).  The IEA makes clear that these policy scenarios will be decidedly challenging to achieve if not unrealistically so.  In the 450 scenario, for example, the 2030 emissions for the world as a whole would need to be lower than the projected emissions for non-OECD countries alone in the reference ‘business as usual’ scenario. Thus, the OECD countries alone cannot achieve this target alone, even if they cease their emissions entirely.   This scenario will require unprecedented political consensus and commitment.  Furthermore, the investment required to transform the global energy system will be enormous.  By 2030, 40% of total electricity generation will need to come from renewable sources (wind, solar, biomass, hydro).  Existing power plants will need to be upgraded and on the demand side households and companies will need to spend on more efficient cars, buildings and appliances.  The IEA estimates that the 450 policy scenario will cost trillions of dollars, equalling on average 0.55% of annual world GDP.  Although in return, there will be savings in fuel costs—and possibly a reduced risk that Bruges and Antwerp are submerged.  

 

Greenpeace and the European Renewable Energy Council (EREC) have taken the scenario planning exercise a step further. (1) Projecting forward to 2050, they argue that if we want to minimize the risk that temperatures will increase beyond 2° C then we will need a 50% reduction in global emissions by 2050, implying an 80% reduction for the OECD economies.   Some individuals at Greenpeace argue that even these projections are obsolete and that we need to strive for an 80% reduction in global emissions by 2050, translating in null emissions for the OECD.  

So much for the scenarios, what about policy, what are the actual commitments in place today? From our Belgian perspective we are impacted by climate policy from three levels, the international level (Kyoto and post-Kyoto), the EU level, and the national level. The Kyoto Protocol is a first international attempt to stabilise emissions.  The industrialised countries, including Belgium, that are signatories to the Kyoto Protocol have agreed to cut their combined emissions to 5% below 1990 levels over the period 2008-2012. Each country has its own targets to be able to achieve that.   Thus, the EU committed to reduce emissions by 8%; Belgium by 7.5%.  While Kyoto signatories must meet their targets primarily through national measures, the protocol does offer additional means of meeting their targets by of three market-based mechanisms: emissions trading, the Clean Development Mechanism (CDM) and Joint Implementation (JI).  In December this year (2009) a new post-Kyoto international framework will need to be agreed on at the United Nations Climate Change Conference in Copenhagen.   Expectations are high—at Copenhagen the world will need to get serious about its commitment.  Kyoto is an achievement because it showed that international agreements on climate are possible and it put in place the basics of a ‘cap and trade’ mechanism.   However, its impact is negligible.  The emissions reductions targets are far too weak in light of the scenarios posited by the International Energy Agency and the IPCC.   

In preparation for the Copenhagen conference, numerous international meetings have been held to get the process of negotiation underway.  On the whole, these offer little indication that Copenhagen will be a success (although much has changed in the world since then).  A G8 summit in 2007 did release a declaration that the G8 would ‘aim to at least halve CO2 emissions by 2050’ but other meetings such as the most recent in Poznan delivered little in the way of concrete commitment.  

 

Perhaps the most positive development looking ahead to Copenhagen is the European Union’s new energy policy, the so-called 20/20/20 plan, agreed upon in December 2008, and designed to slot into a possible post-Kyoto framework.  Having already committed to the Kyoto target of an 8% reduction in emissions by 2012, with the new energy policy the EU commits unilaterally to a reduction of 20% in GHG emissions by 2020 (compared to 1990 levels) with the option to increase the target reduction to 30% if an international agreement is achieved at Copenhagen (committing all developed nations to a 30% cut).  The longer-term objective is to cut emissions by 50% by 2050.  It also sets a target to reduce energy consumption by 20% through increased energy efficiency, and to cover 20% of European energy needs from renewable sources.  Overall, the policy departs from the objective that global temperature changes must be limited to no more than 2°C above pre-industrial levels (below the temperature change believed to cause catastrophic climate effects) and that GHG concentrations therefore need to be stabilised at 445-490 ppm.   Hence, the more ambitious 30-20-20 version of the EU’s energy policy is in line with the International Agency’s 450 scenario, requiring OECD countries to reduce their emissions by 40% by 2030. It falls short, however, of the Greenpeace/EREC scenario that seeks an OECD reduction of 80% by 2050.

 

The EU's main policy instrument is the emission trading scheme (ETS).  The scheme applies to all the EU countries and currently covers 10,500 installations in the energy and industrial sectors (responsible for 40% of the EU’s total greenhouse GHG emissions).  In Belgium the key sectors covered by the ETS are the electricity producers, the chemical industry, the steel industry and the cement industry.   The original idea for ETS was that each year in the period 2012-2020 the member states auction off their allotted emission rights.  Since the total emissions for industry need to decline by 21% by 2020, the allotted emissions rights will decline gradually each year.  While the energy-intensive industries managed to negotiate a benchmarking regime where their emissions rights are allotted free instead of auctioned (on condition that they meet certain energy efficiency benchmarks), the absolute target of a 21% reduction in emissions remains in place.  The electricity production companies will, however, have to pay for their emissions rights from 2013 onwards.  

 

The economic sectors that fall outside the ETS scheme such as transport, housing, agriculture and waste will need to commit to a 10% reduction in emissions 2005 levels by 2020. Here the principle of ‘burden sharing’ is applied, whereby each member state will contribute to this effort according to its relative wealth.  Belgium will need to reduce its non-ETS emissions by 15%.  The regional governments of Flanders, Wallonia and Brussels will need to prepare action plans outlining how they intend to achieve these targets.  Possible components of these plans will be stricter insulation norms for buildings and a km-tax of some sort on motorised transport.  If these targets are not achieved, the regions can use the Kyoto mechanisms to pay for emission reduction projects in developing countries.

 

The 20% target of renewable energy is similarly ‘shared’ out between member states, with Belgium allocated a 13% target (coming from about 2.5% today).  The Flemish government and the Belgian employers’ associations (FEB, VOKA) initially reacted with dismay, finding this a particularly steep target that takes little account of the country’s potential for renewable energy.  Quoting research conducted for the EU Commission (2) they argued that Belgium has the potential to cover only 9.3% of its energy needs from wind, solar and biomass energy, meaning the rest will need to be imported from abroad.  This perspective is countered by the renewable energy industry (EDORA) who argue that the country has the technical-economic potential to cover about 14% of its energy needs with renewable.