RESPONSE TO CLIMATE CHANGE IN A TRANSNATIONAL CONTEXT: EUROPEAN CASE by Nazmiye Balta RESPONSE TO CLIMATE CHANGE IN A TRANSNATIONAL CONTEXT: EUROPEAN CASE Nazmiye Balta University of Illinois at Urbana-Champaign, Department of Urban and Regional Planning, 111 Temple Hall, 611 Lorado Drive, Champaign, IL, 61821 (email: balta@uiuc.edu) Abstract: As a response to the identification of significant role of human-induced activities in the climate change, major industrialized countries have agreed to reduce their greenhouse gas emissions on an average of 5.2% from 1990 levels by 2008-2012 with Kyoto Protocol in 1997. In this Protocol, the European Union as single identity has committed itself to reduce its emissions by 8% by the year 2012 on 1990 levels, and unanimously ratified Kyoto Protocol in May 2002. While the Burden Sharing Agreement sets emission reduction targets for each member state, the European Climate Change Programme (ECCP) that was launched in March 2000 outlines a list of priority actions for EU-wide common and coordinated policies and measures. This paper explores how climate change issue can be dealt in a transnational context, with a case study of the EU. It attempts to provide an outline of the European climate change policy, of the actors in play, its formulation and implementation processes, and a research agenda for a deeper understanding of these issues. The interviews made with the staff of the European Commission Directorate General of the Environment and of ministry of environments in selected member states in summer of 2002 highlight major experiences that could be gained from this European experience. Key words: climate policy, European Union. Paper prepared for presentation at the European Union Studies Association Eighth Biennial International Conference, Nashville, Tennessee, March 27-29, 2003 1. INTRODUCTION Human-induced carbon emissions have been accumulating in the atmosphere since 1850s, but only in the last decades its impacts and adaptation has gained public appearance. On June 4 1992, the United Nations Framework Convention on Climate Change was opened for signature at the so-called "Earth Summit". However, the first tangible measure in combating climate change came with Kyoto Protocol in 1997. As the first international treaty establishing emissions ceilings on six specified greenhouse gases for 38 developed countries, including the United States, European Union (EU), Central and Eastern European Countries, it set an average greenhouse gas emissions reduction target of 5.2% from 1990 levels by 2008-2012. There are only five years left for Kyoto first commitment period start, but still it is not in force1. Even though Kyoto exists as an international measure to reduce greenhouse gas (GHG) emissions and the impacts of greenhouse gases on climate change have been modeled extensively, there is a clear lack of research focus on exploring how to respond to climate change (Abler et al 2000). While developing countries remind historic responsibility of developed countries, and requests major emission reductions from them, developed countries are concerned about the growth potentials of developing world and their future emission shares. Even though everybody agrees that something should be done, how to distribute this burden is a major obstacle in taking tangible actions. As one of the participatory countries to Kyoto, the European Union (EU) signed Kyoto Protocol in April 1998 as single identity. Consequently, it has committed itself to reduce its emissions by 8% by the year 2012 on 1990 levels, and unanimously ratified Kyoto Protocol in May 2002. Different economic structure, reflected upon in varying levels of economic growth, differences in industrial structure, in energy consumption and production, together with social and environmental differences both could facilitate and hamper EU reaching Kyoto targets. That's why even though discussions at the EU level on greenhouse effect related problems, and their consequences started after June 1988, Toronto Conference (Bader 1998), formulation of a common climate policy and tangible policy actions took a decade. Reaping of the benefits from binding itself as a single identity is very much related to formulation, monitoring, implementation, and evaluation of all climate policies at the EU level. This research brings into life how a global, climate change in this case, issue can be dealt in a transnational context, with a case study of the EU. It deals with examination of political and economic issues from environmental perspective in a transnational context. These discussions imply how a treaty-based organization transformed into a transnational organization with its own legislative, executive and judicial institutions. During this transformation process, also the nature of the justification for EU-wide policies, including environmental policies, has changed. Environmental concerns at first were taken into account due to different standards across member states, which distort competition and complicate progress toward the common market (McCormick 1996). In addition to this economic concern, following the 1970s increased environmental awareness in political and scientific community accelerated a common environmental policy with two grounds: i) transnational environmental problems can not be solved by member states acting in isolation, and ii) enhancement of the quality of the European citizens (Wurzel 2002). But recently analysis of compliance cost seems to be gaining importance, as many European Commission policy initiatives take into account this factor as well. Studying the EU case is important as it represents a microcosm of all problems that can be encountered at the international level. All equity vs efficiency concerns that exist in the international arena come into existence in the EU as well. Also its evaluation can provide not only feedbacks to policy makers, but also contribute to debate in the scientific community. The paper attempts to provide an outline of the European climate change policy, of the actors in play, its formulation and implementation processes, and a research agenda for a deeper understanding of these issues2. In particular, the next section deals with distribution of burden from Kyoto Protocol. The third section discusses the formulation and contents of European Climate Change Program (ECCP). The fourth section analyzes the use of Kyoto flexible mechanisms, emissions trading, joint implementation and clean development mechanism. The last section is devoted to conclusion and provision of research agenda for further research. 2. DISTRIBUTION OF BURDEN In 1990, before the Second World Climate Conference, the Energy and Environment Council of Ministers met for the first time and agreed to stabilizing CO2 emissions in the EU as a whole by the year 2000 at 1990 levels. This 10-year target was found feasible by the Commission as already some states, namely Denmark, Germany, and the Netherlands, had adopted stricter regulations, while some didn't at all (Bader 1988). But how to allocate this EU-target to member states was a major issue. Serious attempts took off ground in 1991 with the Netherlands' presidency. Even though the Netherlands wanted to allocate this EU-target to member states, carbon/energy tax became a favorable instrument. It's thought that a EU-wide tax instrument would lead to fair burden sharing, as any target on CO2 emissions would have implications in many sectors of the economy. However, as a tax level was not agreed on at the EU level, this idea was abandoned by the Council in December 1994. Meanwhile, the United Nations Framework Convention on Climate Change, which calls for stabilizing GHG concentrations in the atmosphere at a level that would prevent dangerous human-induced interference with the climate system, was approved on behalf of the European Community by Council Decision 94/69/EC of 15 December 1993. Article 20 of the convention allows regional economic integration organizations to become a party to the convention and article 4.2.b allows countries to take joint or individual actions to reach their emission reduction targets (UN 1992). The first meeting of the supreme body of the Climate Convention, so called Conference of the Parties (COP), took place in Berlin in 1995. This COP1 meeting generated two implications for the EU climate policy: 1- adoption of Berlin mandate which calls industrialized countries to set quantified emission reduction targets for the post-2000, and 2- establishment of Ad Hoc Group on Berlin Mandate to facilitate negotiations between the countries. While the former urged for tangible emission reduction target, the latter, through the EU Ad Hoc Group on Climate, facilitated negotiations among the member states to reach a binding emission reduction target for the EU as a whole. The EU Ad Hoc group on Climate is composed of delegations from each Member State and addressed policies and measures and targets and timetables (Phylipsen et al 1998). However, some member states were reluctant to agree upon an EU target without distributing this target among the member states (Council Conclusions, December 1996). As negotiations were stuck at this point and the Kyoto Protocol was approaching, the Netherlands in preparation for its coming presidency for January-June 1997, commissioned a study from the Department of Science, Technology and Society, Utrecht University for a feasible burden sharing approach for the European Union. Different approaches were covered in the study, ranging from a flat rate reduction, a per-capita emissions approach, GDP-based approach, or combinations of these approaches, to an equal-abatement-cost based approach or cost-optimization approach. These approaches would produce different outcomes and have different pros and cons. While the first three approaches take into account equity, and are very transparent, they neither utilize different emission reduction potentials of the countries nor do respond to required policies and measures. However, the latter two not only do ignore the historic responsibilities and don't allow extra room for growth for cohesion countries, but also requires calculation of abatement costs, making the procedure more complicated (Bader 1998). At the end, the so-called 'triptych approach' (Phylipsen et al 1998) was taken as a basis for burden sharing negotiation as it accommodates national circumstances without being overly complicated (Greiner 2002). These national circumstances refer to differences in the current and expected future level of economic development, in economic structure, especially in distribution of energy-intensive industry, which has considerable affect on CO2 emissions, and in CO2 emission reduction potentials among the member states (Blok et al 1997). In order to take into account these factors, the triptych approach categorizes the economy into three sectors, hence its name, power producing sector, the internationally operating energy intensive industry, and the domestic sector. In setting up total national emission allowances, different criteria have been applied to each of these sectors. Blok et al (1997), contributors to this study, summarize all criteria and results of the computations in detail. While domestic sector comprises of households, services, light industry, agriculture and transportation, emission allowance for this sector is computed based on per capita approach. By assuming that by the year 2030, per capita domestic sector emissions should have converged across the EU and this level would be reached with a linear trend from 1990 levels, per capita allowance for 2010 is interpolated. Sectors like iron and steel, refineries, and basic chemical industry are considered as energy intensive. Two principles guided computation of emission allowances for this sector: i) taking existing industrial structure as given with an equal growth rate for all the countries and ii) same energy efficiency improvement rate across the member states. As differences in the electricity sector have significant implications on emissions of each member state, a custom approach is developed for this sector. Emission allowances for electricity sector is developed in light of the following principles: i) limiting growth of power consumption to 1% per year for rich countries, and to 1.9% for cohesion countries3 (Dessai and Michealowa 2001), ii) meeting EU directives and regulations for minimum requirements for renewable energies, and limitation of coal and oil use, iii) taking into account national preferences for nuclear energy, and iv) supplying rest of power using natural gas. So, for the last two sectors, lower rates were used for setting reduction targets of cohesion countries. By adding up sectoral allowances, both national and EU-wide emissions reduction targets were calculated, which amounts to 12.6% from 1990 levels to be achieved by 2010 (Blok et al., 1997, p.14). As we can see from Table 1 below, this target, which is presented in the second column of the table, is four times what member states have declared that can be achieved with existing policies and measures. However, when the Council of Environment Ministers convened to sign the agreement, the total EU reduction target turned out to be 10% (for a detailed discussion of negotiations between the member states on the allocation of EU reduction target, see Ringius 1999, Dessai and Michealowa 2001). But the EU Council has decided to aim for an extra 5% emission reduction target through common and coordinated policies to be achieved by 2010 from 1990 levels. After the Commission made sure of the feasibility of this target (EC 1997d), the EU proposed a 15% emission reduction for industrialized countries in Kyoto negotiations. When the Kyoto Protocol was signed with 8% emission reduction target, at a two-day meeting in June 1998, the member states renegotiated burden sharing, the outcome of which is the so-called Burden Sharing Agreement (BSA). Table 1 below presents evolution of emission reduction targets within the EU. [Table 1 here] The table presents a huge differentiation in emission reduction targets across the member states. While the very first column of the table has the highest differentiation, the difference gets closer under the triptych approach. Cooper (2001) provides an explanation of this wide range of commitments. As Germany's base year emissions were artificially high after reunification, they agreed to such a deep cut. Luxembourg steel production had been going down already. By accepting as deep cut rate as Germany's, Denmark wanted to show its green credentials. As France had high initial reliance on nuclear power, no cut was required from it. And as Sweden committed to phasing out its nuclear power, it was allowed a 4% increase over 1990 levels. The cohesion countries that had per capita GDP lower than 90% of the EU average; Ireland, Spain, Greece and Portugal were allotted increases over their 1990 emission levels. In evaluating this burden sharing agreement, one also should look at whether each member state has the same emissions shares in total EU emissions. That's why in the next part of the paper we will be doing some exploratory analysis of emissions' burden. 2.1. EXPLORATORY ANALYSIS OF EMISSION BURDEN There are six major greenhouse gases (GHGs) that affect climate: carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O), plus the three synthetic substitutes for ozone-depleting CFCs that are highly potent and long-lasting in the atmosphere, hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6). For each of these gases, global warming potentials are defined in CO2 equivalent units, with SF6 having the highest value of 23900. For the EU, 8% emission reduction target by 2010 from 1990 levels applies to emissions weighted by their (100 year) global warming potential4. Among greenhouse gases, CO2 is the most commonly produced in the world as it is a by-product of energy consumption mainly, holding for in the EU as well. In the EU average, 80% of all GHGs are CO2 emissions. While the share of CO2 in total GHG emissions is lowest in Ireland with an average of 60% from 1990 to 2000, it is highest in Luxembourg where 90% of emissions come from CO2. The graph below shows how the share of each GHG in total GHG emissions varies in the EU from 1990 to 2000. [Graph 1 here] In the EU total, each member state emits different amounts of GHGs. Almost 1/3 of total GHG emissions are generated in Germany. While in 1990 Germany emitted 29% of all EU GHG emissions, in 2000 this share dropped to 25%. The second highest emitter is the Great Britain whose share has dropped from 18% in 1990 to 16% in 2000 and it's followed by France, which emits 13% of all EU GHG emissions. Among the 4 cohesion countries whose emissions are allowed to increase in BSA, Spain has increased its share of 7% in 1990 to 10% in 2000. Greece, Ireland and Portugal have increased their share of emissions in total EU emissions in small amounts. However, the source of each GHG is different within the EU. While the 4 biggest emitters are the source of substantial amount of GHG emissions for all gases, Germany emits almost half of all EU SF6 emissions. The other interesting fact is that while Netherlands is not a big emitter in total GHG emissions, it is the source of HFCs and PFCs emissions for substantial amounts. While its share in total HFC emissions has decreased from 18% in 1990 to 8% in 2000, it's responsible for 20% of PFC emissions between 1990 and 2000. Graph 2 below represents these shares. [Graph 2 here] In the sectoral distribution of emissions, the European Environment Agency (EEA) divides the whole economy into 7 sectors: energy, industry, transport, households and services, agriculture, waste and other. Due to link between economic growth and energy consumption, emissions from the energy sector constitute 1/3 of all EU emissions, and it's followed by industry with a 20% share where both of them have a declining trend. The decline in the share of these sectors is compensated by increases in emissions from the transport sector, though. With a steady increasing trend, transport emissions reached from 17% in 1990 to 21% in 2000. Another observation is that agriculture and households and services sectors fluctuate around 10% and 16% respectively. These results are shown in graph 3 below. [Graph 3 here] Analysis of the shares of sectoral emissions at the member state level is also important as differentiated burden sharing was justified on the basis of differences in the level of economic development, and in economic structure. As we can see from Graph 4, for most of the countries the majority of GHGs are generated in the energy sector, except for Austria, France, Luxembourg, and Sweden. While in France, the major energy production comes from nuclear power generators; Luxembourg is a big energy importer. In 1998, Luxembourg imported more than 99% of its total energy5. The major source of emissions in Luxembourg is iron and steel industry, which went under restructuring after 1994. [Graph 4 here] When emissions from each sector are normalized by total population, a similar picture with more variation among the member states emerges. In Graph 5, a metric tonne of GHG emissions per capita is presented. [Graph 5 here] The sectoral contribution of each member state's emissions in total sectoral EU emissions is quite diverse. While Germany has the highest share of emissions in total EU emissions for each sector compared to other countries, its shares are highest in energy and households and services sectors. However, it was able to reduce its share of emissions in the other sectors of the economy from 45% in 1990 to 20% in 2002 within the EU. The other big emitters are Great Britain, France, Italy and Spain. France is source of highest emissions from agriculture. This is in line with the fact that it emits 20% of all N2O emissions in the EU. For a graphical representation of these figures, please see graph 6 below. [Graph 6 here] However, analyzing only changes in level of emissions does not give much information about the nature of these emissions. That's why; we will look at the changes in emissions per capita and per unit of GDP from 1990 to 2000. First we will look at total GHG emissions per capita. As can be seen in graph 7, the amount of emissions, in tonnes, per capita have been highest in Luxembourg. While it has increased from 28 ton per capita in 1990 to 32 in 1994, since then it has been decreasing with a value of 14 in 2000. Emissions per capita in Great Britain and Germany have been going down with a value always above the EU average. In another big emitter, France, though, emissions per capita have always been lower than the EU average and have been going down from 1990 to 2000. [Graph 7 here] Analysis of the amount of emissions, in kilotonnes, per 1990-million EUR GDP is important in highlighting differences in energy efficiency and economic growth levels across the member states. First observation from Graph 8, below, is that cohesion countries, Greece, Ireland and Portugal emit more tones of GHG emissions per million euro of GDP. While this rate was increasing in Greece (except a decrease in 1999), and Portugal, it has a downward slope for Ireland. While Luxembourg was following them, after restructuring of industry in 1994, its decreasing emissions and increasing GDP pushed down this rate substantially. While the big emitters of the EU are also lowering their emissions per million of GDP, this rate is higher than the EU average in the GB, lower in France and Italy. Even though Germany also started with above the EU average rate, it lowered its emissions per million euros of GDP to EU average level. [Graph 8 here] This exploratory analysis reveals that there are substantial differences among the member states in terms of their sources of emissions, and the nature of problems they pose on environment. However, with Burden Sharing Agreement all member states have taken a political decision on their responsibility towards the environment. So, now it's time to analyze to what extent these differences are incorporated in Burden Sharing Agreement. Does it really provide efficient and equitable terms of climate change policy across the Union? In the next chapter, I will be exploring this question. 2.2. EVALUATION OF BSA One of the important pillars of European climate change policy is BSA as it sets out tangible emission reduction targets, and implicitly allocates abatement costs among the member states. As it's presented in graph 9 below, even though the triptych approach showed a 12.6% CO2 emission reduction attainable at the EU level, pre-Kyoto agreement set a 15% emission reduction for the EU. As in Kyoto EU agreed on an 8% emission reduction target, which is almost half of this pre-Kyoto target, this needed to be redistributed among the member states. The graph below shows how the burden of each member state has changed as a result of a different EU emission reduction negotiation. An interesting observation from this graph is that countries that had adopted high national targets prior to BSA have agreed upon the highest emission reduction targets. Austria, Denmark, Germany and Luxembourg set high national target, even though their shares in total EU emissions were less than 2%, except Germany, which emits almost 1/4th of EU GHG emissions. The second highest emitter, which is responsible for 1/5th of EU emissions, the UK, however didn't set any national target for emission reduction. But eventually with the BSA, all the big emitters have agreed to reduce their emissions substantially. Austria, Denmark and Luxemburg are three member states that have decided to undergo substantial emission reductions even though they don't emit at high levels. This can be explained with Olson's principle that revelation of strong interests leads to exploitation, or as first-mover-disadvantage (Greiner 2002). [Graph 9 here] A quantitative analysis of BSA is carried out by Eyckmans et al (2002). In a general equilibrium model framework, they check if the BSA leads to both an efficient and fair distribution across the member states. They confirm the advantages of BSA over a uniform reduction mechanism in terms of cost efficiency. However, they find substantial differences in marginal costs across the member states. From equity perspective, while poorer states like Portugal and Spain should have been allowed to increase their emissions higher. Their results also indicate that Germany, the UK, France and Denmark should reduce their emissions more than they are allowed. In any event, the BSA binds the member states and the EU as a whole. Now, let's analyze where the EU stands now in reaching its 8% reduction from 1990 levels. 2.3. PROGRESS TOWARDS BSA TARGETS The latest emissions inventory produced by the EEA indicates that the EU cut down its emissions 4.0% from 1990 levels between 1990 and 1999 in their combined emissions of the six "greenhouse" gases covered by the Kyoto Protocol on climate change6. An 'information sheet' by the EEA, provides more details about these reductions (EEA, 2001). The following table gives details, for each Member State and the EU overall, of trends in emissions of all greenhouse gases, excluding emissions from and removals by land use change and forestry, up to 1999. [Table 2 here] As the table above indicates, 2% of reductions recorded between 1990 and 1999 were achieved in the year 1998-1999 alone. Even though Luxembourg has the highest cut as percentage in GHG emissions, it does not count much in the EU reduction target as it's emissions are relatively lower than the other industrialized countries in the Europe. The considerable emissions reductions were achieved in two industrialized countries, Germany and the UK. This is partly the result of lower coal consumption due to a shift towards increased use of gas in power generation in both countries and the closure of industrial plants, so-called Wall-fall profits in eastern Germany following German reunification7. It was also mentioned that for both countries policy measures accounted for more than 50% of greenhouse gas emission reductions in 1990-1999 periods. Even though the policy share is about 40% for energy-related CO2 emissions, the fuel-shift in energy production is certainly a choice, which is open to other nations8. However, the other Members were not on track and furthermore, it seemed difficult for Germany and the UK as well to reach their targets unless additional policies are implemented. Consequently, the EU Council of environment ministers has acknowledged the importance of taking further steps at Community level, and asked the Commission to put forward a list of priority actions for common and coordinated policies and measures (CCPMs) as early as possible in 2000 and to prepare appropriate policy proposals so that reaching Kyoto target is attainable. The response to this call came in March 2000 with two policy documents, one of which was about launching a European Climate Change Programme (ECCP). In reaching the Kyoto targets, the action at the EU level is strengthened through the ECCP, which will be topic of the next section. 3- EUROPEAN CLIMATE CHANGE POLICY 3.1. HISTORY The need to integrate environmental concerns into other EU policies has been acknowledged since the Single European Act9. The Treaty of Amsterdam defines the principle of sustainable development as one of the European Community's aims and makes a high degree of environmental protection one of its absolute priorities. European Council in Gothenburg, June 2001, stressed combating climate change as an important component of EU's sustainable development strategy. The European Council in Vienna (11 and 12 December 1998) and the Commission in the wake of its 1998 Communication on integrating the environment into European Union policies have stressed the horizontal, across-the-board approach to environmental policy again. All the Community institutions are mandated to take account of environmental considerations in all their other policies. As noted above, taking actions at the Community level has been an issue since setting up of an Kyoto target in 1997, as mentioned before. When the countries' emission reductions added up to 10% at that time, the Commission indicated that an additional 5% emission reduction can be attained by Community actions. When the EU Council of environment assigned the Commission to define appropriate steps to take as early as possible in 2000, the Commission responded with two policy documents: i) Communication from the Commission to the Council and the European Parliament on EU Policies and Measures to Reduce Greenhouse Gas Emissions: Towards a European Climate Change Programme (ECCP) and ii) Green Paper on Greenhouse Gas Emissions Trading within the European Union. On 8 March 2000, these two proposals were adopted by the Commission10. The ECCP is based on the May 1999 Communication "Preparing for implementation of the Kyoto Protocol" (ECCP 2001). In this communication, need for formulation and implementation of national and common and coordinated policies and measures is emphasized to demonstrate progress in emissions reductions by 2005 so that EU's credibility in international scene will stay intact (European Commission 1999). Proposals made by the Environment Council in June 1998 and October 1999 are continuation for this EU-wide approach (ECCP 2001). ECCP is a consultative process that involves climate relevant stakeholders, such as the Commission, national experts, industry and the NGO community, to help identify the most cost-effective measures to achieve 8% reduction from 1990 emissions levels for the EU (EC July 2001). ECCP has developed on two pillars: i) engagement of the full range of stakeholders in developing EU-wide climate policy, and ii) promotion of the issue of horizontal integration of environmental policy across the Directorates General of the European Commission. Creation of 'coherent, mutually compatible and reinforcing' policies is the main drive behind these steps. With ECCP six technical working groups (WGs) have been established under the coordination of ECCP Steering Committee, and these groups were on task intensively from June 2000 till May 2001. In March 2001, however, a seventh WG, Agriculture, was established11. The original six WGs cover Flexible Mechanisms, Energy Supply, Energy Consumption, Transport, Industry and Research. Each WG is tasked to identify and develop the most important elements in different sectors to enable the implementation of the Kyoto Protocol.12 While some WGs formed subgroups and had a coordinative role, some got together with relevant stakeholders without setting formal groups, and some established joint WGs with another WG. Table 3 below summarizes tasks and participants of each WG. [Table 3 here] As can be viewed from the table, the ECCP activity is carried out over a period of one year and these consultative meetings brought into light 40 measures to comply with the Kyoto Protocol. These measures have been defined taking into account their cost efficiency, emission reduction potential, time horizon and political acceptability. Among these, cost effectiveness criteria limit cost of reduction to € 20 per ton of CO2 equivalent (EC 2001). ECCP includes proposals for an EU emissions trading scheme which would be operational in 2005, legislation on the energy performance of buildings, on biofuels, on the promotion of Combined Heat and Power (CHP), on energy efficient public procurement, on renewable energy and on minimum efficiency standards for electrical equipment. Major components of ECCP can be summarized as follows: - Increasing the share of renewable energies - Energy efficiency in the electricity and gas supply industries - Improvement of energy efficiency standards for electrical equipment - Improvement of efficiency standards for industrial processes - Development of an EU-wide policy framework for emissions trading - Development of a framework of voluntary agreements between governments and industry - Transport pricing and economic instruments for aviation - Revision of transport policy (rail, road freight, modal-shift, maritime, aviation) These outlined measures are estimated to reduce GHG emissions by 664-765 MtCO2eq13. However, EEA finds out that 8% Kyoto emission reduction target translates into 336 MTCO2eq. So, if all the potential through ECCP were to be realized, the EU can reduce its emission reduction targets without using other Kyoto mechanisms. Of course, realization of this potential depends on how accurate the data is, timeframe to implement the measures and public acceptance. Timeframe had another implication in implementation of these measures at the EU level: in ECCP report, the measures are classified as i) 'at an advanced stage of preparation', ii) those 'in the pipeline' and (3) those for which 'more work is needed'. 3.2. COMPLIANCE COST Even though ECCP puts forward priority actions that can be taken in reducing Kyoto emissions, compliance cost is an important part in implementation of these policies. There are two issues in compliance costs: EU-wide compliance across sectors and compliance across sectors in the member states. Similar to burden sharing agreement, EU-wide compliance cost is different when Kyoto target of 8% reduction is uniformly distributed among the sectors from when emission reduction potential of each sector is utilized and differentiated sectoral targets are adopted. This horizontal approach estimates EU's total compliance cost be as low as €3.7 billion per annum, being 0.06% of the EU GDP in 2010 (Blok et al 2001). A rather uniform approach estimates this cost be five times higher, over €20 billion per annum during in 2008-2012 if each sector had to attain the same percentage emission reductions in each Member State. Table below presents sectoral reduction objectives computed by Blok et al (2001). [Table 4 here] 4. KYOTO FLEXIBLE INSTRUMENTS Kyoto protocol defines three mechanisms that countries can use in reducing their emissions: Emissions trading (ET), joint implementation (JI) and clean development mechanism (CDM). Another mechanism that was introduced by the US is 'carbon sinks'. Article 3.4 opens up the possibility for certain additional human-induced sink activities, in the form of agricultural soils, land-use change and forestry that have taken place since 1990 absorbing CO2, to be included in the emissions equation in the longer term. By this mechanism, the industrialized countries are allowed to offset their emissions against carbon 'sinks'. However, the implementation issues of how and which additional activities should be counted as sinks and deducted from the emission allowances are not still decided and consequently, we will focus on the role of the first three mechanisms in the European context. Following their definitions, we will move on to EU policies towards these issues. As an instrument promoting cooperation among the developed countries, JI enables industrialized countries and companies in them to receive Emission Reduction Units (ERUs) that count towards their emission targets by financing emission-saving projects in other developed countries. The ERUs will be deducted from the assigned amount of the country in which the project is located. CDM is a similar instrument, embracing the concept of JI for credit in developing countries. By conducting emission-saving projects such as the construction of high-tech, environmentally sound power plants in developing countries that promote sustainable development, the developed countries and companies in them will earn Certified Emission Reductions (CERs). CERs can be added to the project funding countries' assigned amounts of emissions14. Emissions trading is the mostly studied instrument among all these four mentioned. It enables the participatory countries to buy and sell emission credits among themselves. Buyers will be able to add such credits to their emission allowance, or 'assigned amount,' under the Protocol while sellers will have to deduct them from theirs. Even though it was developed in the United States to reduce sulfur dioxide that causes acid rain in 1990, as a market-based instrument the EU is also welcoming this instrument15. The Commission has published a green paper for establishment of a greenhouse gas emissions trading scheme within the EU starting from 2005. In this proposal, this market is proposed to comprise five sectors, which are responsible for 45% of EU total CO2 emissions. The EU policies and approaches on emissions trading and other instruments defined above will be discussed in the following section in detail. 4.1. EUROPEAN EMISSIONS TRADING SCHEME The European emissions trading scheme is introduced with the Commissions' adoption of 'GREEN PAPER on greenhouse gas emissions trading within the European Union COM(2000)87' on March 8, 2000. This document launched debates across the EU, in particular on i) sectoral coverage, ii) allocation mechanism in distribution of emission allowances, iii) integrating this with other policy instruments, and iv) compliance and enforcement mechanisms. The Commission invited interested parties to give their views on the proposal within 6 month, before September 15, 2000. Many organizations responded to this call, which are covered extensively on the EU website16. A year later after this deadline, in October 2001, the Commission came up with a proposal for 'establishing a scheme for greenhouse gas emission allowance trading' within the EU (CEC 2001a). Following presentation of Economic and Social Committee, and Committee of the regions' views on this scheme, in October 2002 the Parliament adopted this proposal by a majority of 381 votes in favor, 61 against and 38 abstentions as well. It is still in inter-service consultation. The proposal suggests the creation of GHG market be limited to CO2 emissions. The proposal has also sectoral limitation: it's targeted to include the sectors responsible 45% of total EU emissions: power, iron and steel, cement, paper and printing, and refining. Other core elements of this scheme are as follows: 1) The first phase of the scheme will run between 2005 and the end of 2007. The 2nd phase will coincide with Kyoto Protocol's commitment period of five-year. In each phase, member states will decide how many allowances to allocate. 2) In this first phase, trading market is limited to CO2 due to difficulties in monitoring of the other GHGs. However, the Commission may review the progress on the proposal by December 31 2004 or June 30 2006 and may decide to extend sectoral coverage, as well as including other GHGs. 3) During this preliminary stage, there are no legally binding targets limiting the emissions of GHGs across the member states. 4) Member states will prepare their national plans for allocation of the allowances. These plans should indicate total amount of allowances and how they will be allocated to operator of each installations. 5) In these national plans, member states should obey common criteria with respect to State aid, restrictions on market access, anti-competitive behavior or abuse of dominant position. The Commissions has the right to reject these plans in case common criteria is not taken into account. 6) Member states or their relevant authorities will grant a greenhouse gas permit and allowances17. While the permit is attached to a specific site, an allowance is transferable. In this initial phase, allowances shall be given free of charge. 7) Monitoring and enforcement of this scheme will be achieved through electronic registers. 8) If non-compliance occurs, the operators will be charged for penalty of either EUR 5018 or twice the average market price between 1 January and 31 March of that year for allowances valid for emissions during the preceding year, whichever is the higher, for each tonne of carbon dioxide equivalent. Even though the Commissions is in favor of use of this market based instrument, in the international negotiations, the EU insists on use of domestic policies and measures as the main means of action in complying with Kyoto Accords (CEC 2000, p.6). This implies setting of emissions trading limits between the participating agents. This view has gounds in environmental economics literature as well. It is discussed that these ceilings may induce technological innovation, as the agents will have a stimulus to reduce their emissions through domestic actions. If the marginal cost of reducing one more unit of greenhouse gas were less than market price of allowances, which may hold with technological innovation, then introduction of ceilings to emissions trading would lead to an efficient outcome where compliance cost is minimized. However, studies by different scholars indicate that this does not necessarily hold. Buonanno et al. (2000) find that both from efficiency and equity perspectives, introduction of ceilings have negative effects. From equity perspective, it is claimed that income transfers to developing countries through emissions trading increases their welfare and reduces income inequalities19. 4.2. JOINT IMPLEMENTATION AND CLEAN DEVELOPMENT MECHANISM Another member state is very ambitious in making use of these two mechanisms, namely the Netherlands. The Netherlands has an emissions reduction target of 6% from 1990 levels, which translates into 200 million tons of CO2 reductions. Currently their emissions grew 16%. In Dutch climate policy, negotiated agreements based on technology standards between the industry and the government is important instruments. Given the growth in the economy, it has been realized that around 17 millions of CO2 emissions reductions can be achieved with domestic actions by the year 200420. This has led the Dutch government to look for other measures to comply with Kyoto Protocol, and JI and CDM were the candidates where CO2 reductions from a project (carbon credits21) are bought by the government. The governmental agency responsible for JI and CDM implementations is Senter. This agency introduces this program22 on a website where interested parties and investors can collect comprehensive information about the procedure. In 1996, the Netherlands started a test program, Activities Implemented Jointly, to analyze the feasibility of JI and CDM transactions. When this program was ended, all these projects were transferred to Carboncredits.nl, the so-called emission reduction units purchasing programme. Purchases of these credits are managed with two sub-programmes: Emission Reduction Unit Procurement Tender (ERUPT) using the JI mechanism and Certified Emission Reduction Unit Procurement Tender (CERUPT) using the CDM mechanism. In the areas of renewable energy, energy efficiency, fuel switch, and waste management investors can generate substantial emissions reductions and procurements allow these reductions units to be sold to the Dutch government. Approximately, € 3-5 is paid per carbon credit and prices are realized by process of competitive bidding. Any project should have minimum 250,000 Claims on ERUs. Even though the Senter buys ERUs generated in the period 1 January 2008 until 31 December 2012, emission reductions achieved prior to 2008 can also be traded23. Within ERUPT the contract awarded company has the possibility to receive 50% of the total invoice amount before they actually deliver the claims on emission reductions. However, there is no possibility in CERUPT for advance payment. So far Senter held 3 ERUPT and 1 CERUPT tenders. The first 2 ERUPT tenders, which are done on January 31 2001 and March 2002, are expected to realize 13 million tons of CO2 equivalent24. The 3rd ERUPT tender closed on January 30, 2003 and submitted projects claim emission reductions of 40 million tones of CO2 equivalent (33 millions of which are claims on ERUs, and the rest are on AAUs). CERUPT tender ended with approval of 18 projects in developing countries, aiming to reduce CO2 emissions by over 16 megatons25. On average, 10 to 15% of the total cost of these projects is covered by the Dutch government in the form of purchases of carbon credits. The costs of contracted projects vary between € 300.000 to 500.000.00026. As the approval of the host country is one of the stages of the procedure, the government of the Netherlands has signed Memoranda of Understanding with Bulgaria, Croatia, Romania, Slovakia and Panama in order to facilitate transactions. A Senter official indicated that many other countries in the EU and in the world are also interested in their work, as they are the only country currently utilizing JI and CDM mechanisms. 5. CONCLUSION AND FURTHER RESEARCH An altruistic attitude towards the environment is important in taking actions against climate change. However, differences in levels of economic structure, varying degrees of economic growth across participant countries are the main obstacles in developing coherent policy approaches in a transnational context. The EU provides a good example of how these obstacles can be solved with use of economic analysis tools and basing some sort of scientific ground. The first success comes in Burden Sharing Agreement. Following a scientific study, the 15 member states agreed to bind their emissions at certain level which will lead to 8% EU emission reductions from 1990 levels by 2008-2012. Current discussions among the developed and developing countries on how to settle an equitable distribution can also be dealt in a similar way. EU's determination and formation of a coherent response to climate change can also be grounded on the following actions: 1) Importance of cooperation with industry organizations The Commission has initiated the discussion between the policy makers, the academia, the industrial organizations and representatives of the national governments by forming the WGs. However, their role was not limited in formulation of ECCP. At many stages the Commission kept the communication lines open with these organizations, and they also shared some responsibility in reduction of GHG emissions. One of these is agreement with car manufacturers to reduce the average CO2 emissions of new cars. The European Commission made agreements with European (ACEA), Japanese (JAMA) and Korean (KAMA) car manufacturers to lower the average fleet consumption of new cars to 140 g/km by 2008 and 2009. It is estimated that the ACEA agreement reduces annual CO2 emissions by about 80 Mt in 2008-2012. This amount of reduction translates into €99 2.3 billion higher compliance costs, if it was excluded (Blok et al. 2001). 2) Vertical and horizontal linkages in decision-making There are two bodies that have consultative role in the EU decision-making process: While the Economic and Social Committee (ESC), a non-political and advisory body, creates a platform for employers, workers, customers, etc. across the member states to have an opinion on EU policies, the Committee Of the Regions (COR) is made up of representatives of local and regional authorities, and is aimed to defend the common interests of EU citizens in the EU policy making process. Depending on the size of the country, each member state sends 6 to 24 representatives to each of these institutions27. While the ESC delivers the views of socio-occupational interest groups across the member states, providing a horizontal platform for the issues to be discussed, the COR serves as a vertical platform by carrying local and regional repercussions to an EU-wide setting. Policies have been Horizontal integration of EU-wide issues seems to have resonated for longer than vertical integration, though. While the ESC was set up by the Rome treaties, and its role in EU decision-making was extended with the following treaties28, the COR was created with the Maastricht Treaty in 199229. Both of these bodies may declare three different types of opinions: i) mandatory consultation where a decision can only be taken after the Council or the Commission consults the ESC or the COR, ii) voluntary consultation where the Commission, the Council or the European Parliament ask ESC'/COR' opinions, and iii) own-initiative opinions where the ESC/COR takes the initiative to declare its opinions on any subject it considers of interest. Each of these bodies must be referred to any policy regarding environment30. 3) Flexibility in decision-making and implementation For the implementation of policies and measures, the Commission prepares directives, and regulations. For them to be in force, they should be decided by the Council, and they are binding law to all members of the EU. While a regulation is in force directly, a directive needs to be implemented by member states, thus gives some freedom to do so (as long as the goal is achieved). (And the instrument council decision is also directly in force - but it is addressed to certain Member states- not necessarily to all of them.) As these regulations will be passed onto national governments directly, they will lead to horizontal integration in all the sectors among the member states. At policy preparation stage, the European Commission can issue green or white papers. While the former is a communication on a specific policy area and is addressed to interested parties who are participating in a process of consultation and debate, the latter is a proposal for Community action in a specific area. Usually, white paper would follow a green paper, which comes out of a consultative process, and it would contain an official set of proposals while the green one presents set of ideas for public discussion and debate31. Also, depending on the theme is debated; the Commission has the 'right of initiative' in determining the decision-making procedures. However, there are still some challenges to be analyzed further: 1) Integration of Kyoto flexible instruments with domestic actions. This is especially important for the countries that have undergone substantial emission reductions, such as Germany. 2) With regard to emissions trading, many industry associations are very controversial, especially German industry. A representative from EUROPIA32 claimed that more problems will come from the governments than firms as allocation of allowances is a sensitive issue. Another obstacle is acceptance of this market-based instrument morally33. 3) Enlargement of the EU towards Central and Eastern European Countries puts up a challenge for harmonization of environmental policies between these countries and the EU. 4) Monitoring, electronic registration of emissions and enforcement of policy proposals at the plant level, together with necessary administrative structure. REFERENCES: Abler, D., J. Shortle, A. Rose and G. Oladosu 2000 Characterizing regional economic impacts and responses to climate change, Global and Planetary Change, 25, pp:67-81. Bader, Pascal. 1998 "Targets and Strategies: The Role of Economic Assessments in European Climate Policy". Belfer Center for Science and International Affairs (BCSIA) Discussion Paper E-98-14. Cambridge, MA: Environment and Natural Resources Program, Kennedy School of Government, Harvard University, available at http://environment.harvard.edu/gea/pubs/e%2D98%2D14.html Bernd, G. 2002 Austrian Federal Environment Agency Ltd. Blok, K., D. Phylipsen and J. W. Bode 1997 The triptique approach. Burden differentiation of CO2 emission reduction among European Union member states, Department of Science, Technology and Society, Utrecht University, January 1997. Blok, K., D. de Jager and C. Hendriks, 2001 Economic Evaluation of Sectoral Emission Reduction Objectives for Climate Change, Summary Report for Policy Makers, Updated March 2001, available at http://europa.eu.int/comm/environment/enveco/climate_change/sectoral_objectives.htm Bohringer, C. 2002 Industry-level emission trading between power producers in the EU, Applied Economics, 34, pp: 523-33. BP 2002 British Petroleum, 'BP Statistical Review of World Energy June 2002', available online at http://www.bp.com Buonanno, P., C. Carraro, E. Castelnuovo, and M. Galeotti, 2000 Emission trading restrictions with endogenous technological change, Nota di Lavoro 43.2000, Fondazione Eni Enrico Mattei, Milan. CEC 2000 Commission of the European Communities, Green Paper on greenhouse gas emissions trading within the European Union, (presented by the Commission), Brussels, 8.3.2000, COM(2000) 87 final, available at http://europa.eu.int/eur-lex/en/com/gpr/2000/com2000_0087en01.pdf CEC 2001a Commission of the European Communities, Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC, Brussels, 23.10.2001, COM(2001) 581 final, 2001/0245 (COD). Collier, U. 1996 The European Union's climate change policy: limiting emissions or limiting powers? Journal of European Public Policy, 31 March 1996:122-38. Cooper, R. N. (2001) The Kyoto Protocol: A flawed concept, paper presented in the workshop on "Trade and the Environment in the Perspective of the EU Enlargement" by Fondazione Eni Enrico Mattei (FEEM), Milano (Italy) 17-18th May, 2001. Council Conclusions European Union Environment Council, Brussels, December 1996. Dessai, S. and A. Michealowa 2001 Burden sharing and cohesion countries in European climate policy: the Portuguese example, Climate policy, 1:327-341. Dinan, D. 1994, Ever closer union?, Lynne Rienner Publishers. EC July 2001 European Commission briefing paper, EU position for the Bonn conference on climate change 19-27 July 2001, 6 July 2001. EC 2001 Communication on the implementation of the first phase of the ECCP - COM (2001) 580 final, available at http://europa.eu.int/eur-lex/en/com/pdf/2001/com2001_0580en01.pdf ECCP (2001) European climate change programme, long report, June 2001, available at http://europa.eu.int/comm/environment/climat/eccp_report_0106.pdf European Commission 1999 "Preparing for Implementation of the Kyoto Protocol", Commission Communication to the Council and the Parliament, COM (99)230, 19 May 1999, available at http://europa.eu.int/comm/environment/docum/99230_en.pdf Greiner, S. (2002) 'Sharing the climate policy burden in the EU', paper presented at the 2nd World Congress of Environmental and Resource Economists, June 24-27 2002, Monterey, CA. Eyckmans, J., J. Cornillie and D. Van Regemorter (2002) 'Efficiency and Equity of the EU Burden Sharing Agreement', Energy, Transport and Environment Working Papers Series / Katholieke Universiteit Leuven, Centrum voor Economische Studiλn, Energy, Transport and Environment (RePEc:ete:etewps:ete0002), available at http://netec.mcc.ac.uk/WoPEc/data/Papers/eteetewpsete0002.html McCormick, J. 1996 The European Union: politics and policies, Westview Press, Colorado. Phylipsen, G. J. M., J. W. Bode and K. Blok 1998 A triptych sectoral approach to burden differentiation; GHG emissions in the European bubble, Energy policy, 26(12), pp.929-943. Ringius, L. 1999 Differentiation, leaders and fairness: Negotiating climate commitments in the European Community, International Negotiation, 4:133-166. Wurzel, R. K. W. 2002 Environmental policy-making in Britain, Germany and the European Union, Manchester University Press, Manchester. Wynne, B. 1993 Implementation of greenhouse gas reductions in the European Community: institutional and cultural factors, Global environmental change, 3(1):101-28. UN 1992 United Nations Framework Convention on Climate Change, United Nations, Geneva. Tables and Graphs Table1. Emission Reduction Targets within the EU CO2 emission estimates 1 submitted to the Irish EU Presidency (%)* CO2 reduction target as calculated under the Triptych Approach (%)** Pre-Kyoto burden sharing (March 1997) (%) (CO2, N2O, CH4)* Post-Kyoto burden sharing (June 1998) (%) (CO2, N2O, CH4, HFCs, PFCs, SF6) Austria (AT) -46 -4.8 -25 -13 Belgium (BE) 0 -15.1 -10 -7.5 Denmark (DK) -25 -14 -25 -21 Finland (FI) +8 -7.0 0 0 France (FR) +2 -12.3 0 0 Germany (DE) -18 -19.6 -25 -21 Greece (GR) +31 -1.8 +30 +25 Ireland (IE) -39 -4.9 +15 +13 Italy (IT) -5 -8.8 -7 -6.5 Luxemburg (LU) -37 -19.8 -30 -28 Netherlands (NL) -1 -8.9 -10 -6 Portugal (PT) +47 +15.5 +40 +27 Spain (ES) +26 +6.2 +17 +15 Sweden (SE) +5 +21.5 +5 +4 United Kingdom (GB) +3 -19.5 -10 -12.5 EU15 -3 -12.6 -15 -8 1 Emission scenarios with existing policies and measures and additional national as well as EU common and coordinated policies and measures not yet implemented Source: * Bader (1998, p.53). ** Blok et al (1997, p.14). Table2. Greenhouse gas emission trends and Kyoto Protocol targets Change 1998-1999 Change 1990-1999 1 Targets 2008-2012 under Kyoto Protocol and EU "burden sharing" EEA evaluation of progress in 19993 Austria 0.0 % + 2.6 % -13.0 % ( Belgium -3.4 % + 2.8 % - 7.5 % ( Denmark 2 -4.6 % + 4% (-4.6%) -21.0 % ( Finland -0.8 % - 1.1 % 0.0 % ( France -2.2 % - 0.2 % 0.0 % ( Germany -3.7 % -18.7 % -21.0 % ( Greece -0.7 % +16.9 % +25.0 % ( Ireland +2.5 % +22.1 % +13.0 % ( Italy +0.9 % + 4.4 % - 6.5 % ( Luxembourg +4.6 % -43.3 % -28.0 % ( Netherlands -2.9 % + 6.1 % - 6.0 % ( Portugal +2.9 % +22.4 % +27.0 % ( Spain +6.1 % +23.2 % +15.0 % ( Sweden -2.6 % + 1.5 % + 4.0 % ( United Kingdom -6.5 % -14.0 % -12.5 % ( EU Total -2,0% -4,0% -8,0% ( Source: http://reports.eea.eu.int/topic_report_2001_10/en/climate_change_info_sheet_topic_report_10.pdf 1) For the fluorinated gases some Member States have selected a base year other than 1990, as allowed for under the Protocol. 2) For Denmark, data that reflect adjustments for electricity trade (import and export) in 1990 are given in brackets. This methodology is used by Denmark to monitor progress towards its national target under the EU "burden sharing" agreement. For the EU emissions total the non-adjusted Danish data have been used. 3) The EEA's evaluation of progress to 1999 awards "smileys" if the trend from the base year to 1999 is in line with a linear target path in 1999. The following rating system is used: ( more than 2 index points below linear target path (positive contribution to EU trend) ( more than 2 index points above linear target path (negative contribution to EU trend) ( in a range of plus/minus 2 index points of linear target path (limited positive or negative contribution to EU trend) Table3. Composition of WGs and their tasks WG Sub group Themes34 Participants Work period Flexible mechanisms Emissions trading * Introduction of EU-wide ET scheme * Sectoral, and gas coverage * Co-existence with wider scheme * Fair competition and internal market 6 EC staff, 5 national experts 3 European industry 1 German, 1 UK industry * From July 2000-May 2001 * 10 meetings for a full day Joint Implementation/ Clean Development Mechanism Energy supply * Sectorial and plenary sessions * No specific sub-groups defined * But depending on theme discussed, different participants are asked to attend. * Efficiency in electricity and gas supply industry * Promotion of renewable energy, and their access to the grid (1) * Reduction of methane emissions in mining and extraction industries (2) * CO2 capture and disposal in underground reservoirs (2) * Use of combined heat and power generation (CHP) and further development of internal electricity and gas market (2) 17 EC staff 13 industrial associations 4 national experts 5 NGOs * June 2000- May 2001 * June 2000- May 2001 * June 2000- May 2001 * June 2000- May 2001 * 2000-May 2001 Energy consumption * Joint Sub Working Group (JSWG) on "Energy consumption in products and industrial processes (explained under Industry WG) * No specific sub-groups defined * Depending on theme discussed, approximately 15 experts selected from an agreed list are asked to attend (All energy end-use sectors, with special emphasis on energy consumption in buildings) * Improvement of building and lighting performance (1) * Building design and infra-structural planning (1) * Combined heat and power (1) * Public procurement initiatives (1) * Technology procurement initiatives (2) * Harmonization of energy schemes (2) * Labeling of individual appliances (1) * Energy efficiency requirements for household appliances and (1) * Industrial best practices in heavy industry (1) * Improved energy service to industry (2) Once a month meetings Total list: Commission: 13 from DG Env, Tren, Entr, Res National experts: 14 NGOs: 14 Industry: 13 * June 2000- May 2001 * Nov 2000- May 2001 * Dec 2000- May 2001 * Nov 2000- May 2001 * Dec 2000- May 2001 * Mar - May 2001 * June 2000- Jan 2001 * June 2000- May 2001 * Sep - Dec 2000 * -Dec 2000- May 2001 Transport * Joint expert group on transport and environment * Efficiency of transport modes Road freight Passenger cars Urban transport Air transport * Fuel taxation * Optimization of infrastructure EC staff: National experts: 3 Users: 2 NGOs: 3 Industry: 6 * June 2000- April 2001 * Adoption of interim report by Dec 2000 Industry * No specific sub-groups defined * But different 'sets of experts' depending on theme discussed * Energy efficiency * Development of policy framework for fluorinated gases * Interrelating ECCP with IPPC (Integrated Pollution Prevention and Control Directive) * Renewable raw materials * Industry agreements * Vehicle Technology and Fuel * Transport Infrastructure, Use and Charging * Freight Logistics and Intermodality * Awareness Raising and Behavioural Change * Data Validation EC staff: 7 National experts: 5 NGOs: 3 Industry: 8 * June 2000- May 2001 * Adoption of interim report by Oct 2000 * Joint Sub Working Group (JSWG) on "Energy consumption in products and industrial processes Aim: Assessment of the rational use of energy and the improvement of energy efficiency in various sectors. * In industrial processes (particular steel, cement, chemicals, paper and non-ferrous metals) * Efficiency requirements for gas, mechanical, electrical and electronic equipment * Improved energy service provision to industry and in particular to SMEs EC staff: 5 National experts: 4 NGOs: 3 Industry: 14 External experts: 4 * July 2000- Mar 2001 * Adoption of interim report by Oct 2000 Research * Aim: developing new methodologies and technologies for making mitigation more cost effective and socially acceptable. * Sub group in Dec 2000: Sinks * Collection and compilation of information from previous RTD programmes * Assess future RTD needs * Investigate and help in formulating policy options * Mobilization of European resources EC staff: 8 National experts: 4 Academia: 4 NGOs: 1 Industry: 2 * June 2000- June 2001 * Adoption of interim report by Feb 2000 Agriculture * Agricultural soils Reducing N2O emissions C sequestration potential EC staff: 11 Nat. experts: 8 NGOs: 2 Business: 4 * Dec 2000- Dec 2001** * Bio-energy for C substitution EC staff: 11 Nat. experts: 8 NGOs: 2 Business: 4 * Animal husbandry Enteric fermentation Manure management EC staff*: 9 (7) Nat. exp.*: 7 (8) NGOs*: 3 (2) * The first figures correspond to Enteric fermentation while the figures in parentheses are for Manure management. ** Source: European Climate Change programme (COM (2000)88) Working Group 7- Agriculture, available at http://www.europa.eu.int/comm/environment/climat/agriculture_report.pdf Source: This table is compiled based on information provided for each WG at http://www.europa.eu.int/comm/environment/climat/eccp.htm Table4. Sectoral reduction objectives of all greenhouse gas emissions in 2010 Millions of tonnes of CO2 equivalent (with marginal cost €20/tCO2 eq) Emissions in 1990 (1995 for fluorinated gases) (Mt CO2 eq) Baseline (or business-as- usual) emissions for 2010 (Mt CO2 eq) Cost-effective objective for 2010 (Mt CO2 eq) Change in emissions vs. 2010 baseline (Mt CO2 eq) % change Energy generation 1190 1206 1054 -152 -13% Transport * 753 984 946 -39 -4% Industry 894 759 665 -94 -12% Households 447 445 420 -25 -6% Agriculture 417 398 382 -16 -4% Services 176 200 170 -30 -15% Waste 166 137 119 -18 -13% Fossil fuel extraction and distribution 95 61 51 -10 -16% All sectors 4138 4190 3807 -383 -9% * In addition to the full implementation of the environment agreement to reduce vehicle emissions. Source: Blok et al (2001) Graph 1. The share of GHGs in total EU emission from 1990 to 2000 Source: Compiled based on data received from Bernd (2002) Graph 2. Distribution of GHG emissions by the member states in 1990, 1995, 2000 Source: Compiled based on data received from Bernd (2002) Graph 3. Distribution of EU GHG emissions by sectors, 1990-200035 Source: Compiled based on data received from Bernd (2002) Graph 4. Distribution of GHG emissions by sectors and member states, 1990 and 200036 Source: Compiled based on data received from Bernd (2002) Graph 5. Distribution of GHG emissions per capita by sectors and member states, 1990 and 200037 Source: Emissions data from Bernd (2002) and population data from Global Market Information Database (National statistical offices/Eurostat/UN/Euromonitor). Graph 6. Distribution of GHG emissions by sectors and the member states in 1990, 1995, 2000 Source: Compiled based on data received from Bernd (2002) Graph 7. GHG emissions per capita in member states, 1990-2000 Source: Emissions data from Bernd (2002) and population data from Global Market Information Database (National statistical offices/Eurostat/UN/Euromonitor). Graph 8. Kilotonnes of emissions per €90-million GDP Source: Emissions data from Bernd (2002) and GDP data from Cambridge Econometrics. Graph 9. Emission reduction negotiations and countries 1 For Kyoto to enter into force it has to be signed by at least 55 parties and simultaneously, these parties must cover 55% of emissions in 1990. Even though the first condition is met as total number of ratifications/accessions/acceptances reached up to 106, only 43.9% of total emissions are covered (source: http://unfccc.int/). 2 This paper is not focused merely on development of EU climate policy since its early beginnings. For a detailed discussion on this, see McCormick 1996, Dinan 1994, Collier 1996, Wynne 1993, among others. 3 Cohesion countries are Greece, Ireland, Portugal and Spain, which have per capita gross domestic product levels lower than 70% of the EU average. 4 http://www.europa.eu.int/comm/environment/enveco/climate_change/ecoeva_ex.pdf 5 Energy policies of IEA Countries, Luxembourg 2000 Review, International Energy Agency, OECD, available at http://www.iea.org/books/countries/2000/lux2000.pdf. 6 http://europa.eu.int/comm/environment/climat/gge_press.htm 7 http://www.eurunion.org/legislat/climatechange.htm 8 http://www.eurunion.org/legislat/climatechange.htm 9 http://europa.eu.int/scadplus/leg/en/lvb/l28075.htm 10 http://europa.eu.int/abc/doc/off/bull/en/200003/p104040.htm 11 http://www.europa.eu.int/comm/environment/climat/eccp_longreport_0106.pdf 12 http://www.europa.eu.int/comm/environment/climat/wg4_mandate.pdf 13 http://www.europa.eu.int/comm/environment/climat/eccp_longreport_0106.pdf, and MtCO2eq refers to metric tones of CO2 equivalent 14 A levy on certified projects is to be used to cover administrative expenses as well as to assist developing countries that are particularly vulnerable to the adverse effects of climate change in meeting the costs of adaptation. 15 Some member states within the EU also have created national emissions trading schemes. While the UK initiated a voluntary emissions trading scheme open to all sectors since April 2002, Denmark has set up an emissions trading market for power sector. 16 http://europa.eu.int/comm/environment/docum/0087_en.htm 17 An allowance gives a right to the holder to emit corresponding quantity of GHGs and is measured in metric tones of CO2 equivalent (CEC 2001a, p.3). 18 After the 1st phase, the minimum of penalty will be EUR 100. 19 Some other scholars applied same principle in the EU and analyzed changes in total welfare due to inter-sectoral vs intra-sectoral trading. For example, see Bohringer 2002, Blok et al. 2001 among others. 20 In an interview, Senter official has indicated this information. 21 Carbon credits are reductions of emissions of GHGs by a project / an investment, and One carbon credit is equal to 1 ton of CO2 equivalent. 22 http://www.senter.nl/asp/page.asp?id=i001003&alias=erupt 23 These Early Credits are called Assigned Amount Unit (AAUs), and can be traded with the permission of the host country under the Emissions Trading (ET) mechanism of the Kyoto protocol. 24 In an interview, Senter official has indicated this information. 25 http://www.senter.nl/asp/page.asp?id=i000001&alias=erupt 26 In an interview, Senter official has indicated this information. 27 For a list of each member states' representatives in ESC, see http://www.esc.eu.int/pages/en/org/w_esc.htm 28 http://www.esc.eu.int/pages/en/org/w_esc.htm 29 http://www.cor.eu.int/en/pres/pres_rol.html 30 While Maastricht treaty (1992) included environment as an area to where the ESC must be referred, the COR has given this role with the Amsterdam treaty (1997). For the coverage of referral areas, see http://www.esc.eu.int/pages/en/org/w_esc.htm for ESC and http://www.cor.eu.int/en/pres/pres_rol.html for the COR. 31 European Commission official documents description, http://europa.eu.int/comm/off/white/index_en.htm 32 European oil refining and marketing industry 33 A Commission representative indicated that in his conversations with the representatives of the Central and Eastern European Countries he had difficulties in explaining this instrument as they don't have a market. 34 Numbers in parentheses show priority of each theme. 35 At http://dataservice.eea.eu.int/dataservice/viewdata/viewtbl.asp?id=403&i=1&res=3, it's said that the sum of sub-categories does not always correspond to the category totals due to incomplete data delivered by Member States. However, for this analysis, totals are computed by summation of subcategories. 36 At http://dataservice.eea.eu.int/dataservice/viewdata/viewtbl.asp?id=403&i=1&res=3, it's said that the sum of sub-categories does not always correspond to the category totals due to incomplete data delivered by Member States. However, for this analysis, totals are computed by summation of subcategories. 37 At http://dataservice.eea.eu.int/dataservice/viewdata/viewtbl.asp?id=403&i=1&res=3, it's said that the sum of sub-categories does not always correspond to the category totals due to incomplete data delivered by Member States. However, for this analysis, totals are computed by summation of subcategories. 32