Yesterday I was at a roundtable on Europe and climate change, hosted by Jim Murphy, the UK’s minister for Europe, with his French counterpart, Jean-Pierre Jouyet, as the main speaker.
France is about to take over the EU presidency and will play a critical role on the road to Copenhagen. Two questions stand out:
- Can the EU show that it is making credible moves towards its unilateral commitment to a 20% emissions cut by 2020?
- How hard will the French push the idea that laggards on climate change should be punished through the global trade regime?
The first question is the most important. In Bali, the Europeans had some success in leading the negotiations from in front. I summed up their strategy as follows in my Bali wrap up:
(i) Take a unilateral commitment first. (ii) Next bring on board others prepared to move ahead of the pack. (iii) Only then bring the US – the problem player – into the thick of the action, and do so at a time [after the presidential elections] when the country will be desperate to re-engage with the wider world; (iv) And finally, persuade developed countries to do their bit, using a blend of three arguments. First, that rich countries have committed to action first. Second, that incentives are on the table, to help the switch from dirty to clean tech. And finally that not to act is unfair on countries that are poorer and more vulnerable (expect India to hear a lot from low-lying Bangladesh, for example).
But that strategy only works if Europe’s partners believe that the EU intends to keep the commitments it has freely made. At the moment, that is far from clear. The roundtable was opened by the FT’s George Parker, who argued that the UK missed half of its own green targets, public interest in the environment was on the wane, and that the EU was failing to align its budget to its green aspirations.
This was a point hammered home by Stephen Hale from Green Alliance. He suggested that we had passed through a ‘false euphoria’, when a global deal seemed easy to achieve. Now, we needed a more serious discussion about what needs to be done to deliver the deal. The world needs to be convinced by mid-2009 that Europe is serious about decarbonising its economy, and that is prepared to support low carbon growth and adaptation in developing countries.
As Hale put it in a recent editorial:
The European Commission made proposals to strengthen the EU Emissions Trading Scheme by establishing a central European cap for emissions; to require companies in the power sector to buy these allowances through an auction; to require almost all companies to do likewise by 2020; and to build 10 to 12 (as yet unfunded) capture and storage demonstration projects. These will be the subject of intense negotiation. If Gordon Brown wants to continue the leadership shown by his predecessor, he must use this week’s summit to show Britain’s commitment to a fast-track negotiation and an ambitious set of final agreements.
Nick Mabey from E3G took a similar line. A stable climate won’t cost that much, but will require profound and difficult reforms to deliver. These reforms will lead to winners and losers. Overall, knowledge-dependent economies will win, resource-dependent ones lose. But the winners can only claim their prize if they look for transformative change and attempt to answer a simple question: How we live in a zero carbon economy by 2050? Or at least an economy where all available emissions allowances are used up by defence, air travel and agriculture?
The biggest barrier to change is not finance, though that’s important, but institutions and business models, Mabey argued. Europeans should use their market to driver standards and ‘set themselves up to win’ in a low carbon world. That means aggressive efforts to position Europe for tomorrow’s economic challenges.
Sounding a bit like a green Margaret Thatcher, Mabey was scathing in his criticism of those industrial sectors that are demanding protection against the winds of change. Cement, steel, pulp and paper, and aluminium are skewing the debate, he suggested. Providing them with free carbon allowances would fossilise outmoded business models, stymie innovation, and weaken the price signals that are needed to drive change.
Some thoughts:
- This is a critical time for Europe. Its leadership on climate is already draining away and will evaporate completely if its rests on its laurels. Will France ride to the rescue? That’s wasn’t clear from Monsieur Jouyet’s speech. Nor have we yet had decisive leadership from the Brown administration. There’s hope for the Swedes though, who have the EU presidency next year (after the Czechs). Their ambassador to the UK, Stefan Carlsson was making encouraging noises at the roundtable. His country could play a decisive role in Copenhagen.
- Climate politics have complex and surprising dynamics and incentives. There’s a big positive sum prize, but inside nestle a number of zero sum games. In some ways, Europeans want to lead the world to a promised land where everyone benefits. But to do so by exploiting first mover advantage (as Mabey argues), while limiting the rewards on offer to free riders (France’s concern – Mr Jouyet made some a somewhat menacing references to the need to ‘educate’ American politicians – Republican and Democrat – on the new climate reality). Zero sum competition, in other words, could drive the world towards (compete for opportunities) or away from (squabble over fair shares) a deal.
- Take these arguments to their logical limit and you could end up with a fundamental political realignment. Imagine that two broad tendencies develop. On one side, pressure to let liberalisation rip on legacy industries, combined with radical reform in the role of government (what it taxes and how it spends), and a new focus on the vulnerable (the energy poor at home; those suffering the ravages of an unstable climate overseas). On the other, a new coalition of industry and labour acting to protect its interests in a high carbon system, and thus becoming a broadly conservative force. Dividing the two, a difference in the value they ascribe to the future over the present.
- Finally, there’s a real possibility that climate politics will become increasingly fantastical over time – characterised by bold aspirations, inconclusive negotiations, and non-existent delivery. Jim Murphy’s initiative in calling the round table is to be applauded, but in climate circles there’s a growing sense of foreboding at how much needs to be done in a very short period of time. At present, the European conversation is fragmented and we’re far from the shared awareness needed to deliver a global deal. We need a Stern-like initiative on climate politics if that is to change. And we need it quickly or Copenhagen is sure to disappoint…
