Published: Monday 26 January 2009

The EU will present proposals on Wednesday (28 January) for an international agreement to replace the Kyoto Protocol on climate change. The bloc is calling for a increase in global investment to 175 billion euro per year by 2020, more than half of which must be spent in developing countries.

Background:
Next December in Copenhagen, the global community must decide upon a new international climate agreement to replace the Kyoto Protocol, which expires in 2012.

The United Nations Framework Convention on Climate Change (UNFCCC) conference, which took place in Poznań from 1-12 December 2008, represented the halfway point in global talks.

Despite a modest outcome, the conference nevertheless put in place the building blocks for strenuous negotiations to take place in 2009. The work programme approved in Poznań calls for proposals to be tabled in February and a negotiating document to be put forward by June. Heads of state and government could also debate the issue in September, when they meet for the UN General Assembly.

In a communication to be published next Wednesday (28 January), the European Commission will outline the bloc's position on a post-Kyoto global climate deal ahead of UN climate talks to take place in Copenhagen in December.

The draft document, obtained by EurActiv, urges rich nations to step up public funding to help developing countries cut their greenhouse gases and prepare for the negative impact of climate change.

"All developed countries will need to contribute to mobilising financial resources for adaptation and mitigation in developing countries via public funding and the use of carbon-crediting mechanisms," reads the draft paper.

Sources close to the file, however, cautioned that the paper is likely to be heavily revised before final approval on Wednesday.

The draft proposes two options to increase public funding, based on the 'polluter pays' principle. The first would require developed nations to pay a set price for every tonne of carbon dioxide emitted – starting with €1 per tonne and rising later to €3 – to reach a total of €28 billion in 2020. The other option, less predictable because it is linked to market fluctuations, would set aside a percentage of emissions traded for the fund.

Binding emissions targets for all OECD member countries

The EU executive will also urge developed countries to increase emission reduction commitments, opting for a binding agreement which would include all OECD member countries and all present and future EU member states.

But a "significant contribution from developing countries is also required," the paper states. "This needs to be enabled through significantly enhanced cooperation to provide necessary capacity, technology and finance," it adds.

According to the Commission, all developing countries except for the poorest ones should commit to adopting low-carbon development strategies by the end of 2011. These should cover all key emitting industries, especially the power and transport sectors. Such "robust low carbon strategies should be a pre-requisite for access to international support on mitigation actions," reads the draft.

Independent body to facilitate multilateral mechanisms

To ensure action is matched by financial and technical backup, the Commission is proposing a new 'Facilitative Mechanism for Mitigation Support,' which would provide a platform for bilateral and multilateral support schemes.

Aware of possible abuses of the system, the EU executive is proposing to create an independent body to ensure that the plan's ambitions are sufficient for achieving developing countries' overall emission reduction objectives.

Along the same lines, the EU executive is also backing a proposal from South Korea and South Africa to establish an international registry to record the mitigation actions of developing countries. "The registry should list the actions and show their mitigation benefits," the paper notes, saying it will be up to the UN climate change conference to assess their efforts. In light of the assessment, developing countries could be requested to step up their efforts with additional help from developed nations.

The Commission also suggests establishing another technical panel under the UNFCC to support adaptation efforts for both developed and developing countries.

Towards a global carbon market

As an increasing number of nations set up carbon trading schemes across the world, the Copenhagen agreement should also step up efforts to link these schemes together and create a global carbon market, reads the draft. An OECD-wide carbon market linking comparable cap-and-trade systems could be set up as a first step, it says.

Key to the success of such an initiative is a potential US cap-and-trade system, which is expected to be launched by the end of 2009, according to Barbara Boxer, chair of the US Senate's environment committee.

To facilitate the implementation of a strong system, the Commission draft proposes to put in place an EU-US working group. The EU executive is also proposing to reform the Clean Development Mechanism (CDM), which allows rich countries to finance projects in developing countries and claim credits under the EU emissions trading scheme (EU ETS; see EurActiv LinksDossier).

According to the draft, CDM credits should only reward actions that go beyond "low-cost or win-win options". Credits would be phased out for "advanced developing countries and highly competitive economic sectors" and replaced by separate cap-and-trade schemes.