The UK’s Department for Energy & Climate Change (DECC) this week announced a £20m injection of government-backed venture capital support, for the deployment of recent advances in innovative, low carbon technologies.

Whilst private funds for early stage commercialisation and technology development have fallen significantly as a result of the economic downturn, this investment demonstrates the rising priority and commitment of the UK government to the climate change agenda. The funds will level the playing field for new and emerging technologies, to support capacity building, develop skills and demonstrate capabilities of renewable energy sources to meet the insatiable needs of the global economy.

This announcement complements initiatives announced in the UK’s Low Carbon Transition Plan in July 2009, aimed at reducing the UK’s emissions by 34% by 2020 (18% of 2008 levels); and ultimately 80% by 2050, as set out in the Climate Change Act 2008. At the heart of the Act and the Low Carbon Transition Plan lies the carbon budgets, which have been assigned to all Government departments responsible for regulating different sections of the UK economy; with a requirement to produce a plan to demonstrate how they intend to stay within the assigned budget. If the Government fails to ensure that the UK can live within its carbon budgets, it will have to purchase carbon credits from international emissions trading schemes.

The UK has committed to procure 40% of energy needs from low carbon sources by 2020; an extension to the legally binding commitment in the EU Renewables Directive, which obligates the UK to generate 15% of total energy (electricity, heat and transport) from renewable sources by 2020.

The Low Carbon Transition Plan introduces a range of efficiency measures, including the ‘pay as you save’ insulation scheme, as well as a Clean Energy Cash-back Scheme, which aims to incentivise the generation of green power by individuals and organizations by providing a fair structure to sell green energy back to the National Grid. Ed Milliband, has talked about the inspiring communities by encouraging the UK’s top 15-20 cities, towns and villages to compete at the forefront of green innovation, to initiate the UK’s green revolution. Whilst climate change is a driving force, significant policy drivers include resource and national security, as the race to limit dependencies on finite resources begins.

The UK is keen to cement its position as a leader in the run up to the 15^th Conference of Parties (CoP-15) in Copenhagen in December, and Ed Milliband has called for the same decisive approach to climate change as the G20 demonstrated earlier this year on the global economic downturn (McLachlan, 2009).

Discussions held at the UN’s climate change summit last week, and the Pittsburgh G20 summit; provide a broad practical framework of what may constitute a succinct ‘Copenhagen treaty’, but Jeffery Sachs argues that the climate change issue may be too complex to solve in a ‘Kyoto II’ type agreement in December. Instead climate negotiations should aim for an interim agreement on general principles, financing and technology transfer, with practical programmes and steps, which can be introduced and further developed for immediate action. Sachs (2009) adds

“There is still time for a three-part package: a political framework, a financing package, and a series of practical steps announced by all major regions to tilt the trajectory on emissions.”

The political framework would outline the fundamental agreement – that all countries have “common but differentiated responsibilities”, and that drastic quantifiable emissions cuts are required to stay under a 2C rise. A financial package from the most developed nations should support the least developed countries to invest in clean technologies, and adapt to the disastrous impacts, especially since the majority of poor populations reside in tropical regions vulnerable to the major effects of climate change.

In addition to all the negotiations, Sachs adds that governments should announce a meaningful set of immediate practical programmes to reduce emissions on a large scale. The initiatives introduced by the UK Government in its Low Carbon Transition Plan do just that, but the bigger challenge remains to encourage the fundamental participation of the US, Europe, China, and India to do the same.

Climatico’s entire European Union team (me) has been away on holiday recently, and on my return I find that I’ve missed an eventful couple of weeks. The credibility of both the EU’s domestic climate policy and its international commitments has been dealt a couple of blows, one by a Commission publication on climate financing for developing countries and another by a European court ruling.

EU flag (Source: openDemocracy: Flickr)

Developing country financing first. As Ian Ross wrote in a – dare I say it – grumpy post in March 2009 there are longstanding disagreements within the EU over how much money it should give developing countries to help them mitigate and adapt to climate change. Back then, the EU’s environment ministers were beginning the process of trying to reach agreement over the funding they would commit to adaptation.

Now the Commission has set out its view of how developing country financing could work under an international agreement, and provided an indication of what it sees as an appropriate scale for the EU’s contribution. In its communication, the Commission adhered to its long-standing view of the amount of money that needs to be spent in developing countries by 2020 – €100bn every year. But its proposal for how much of this should come from EU funds disappointed NGOs including Oxfam, WWF, and Greenpeace. The amounts it proposed fall short of their expectations and – more revealingly – are short of the figures seen in a draft of the same document leaked the previous week.

Financing for developing countries is one of the four key areas identified by Yvo de Boer recently as crucial to a successful climate agreement. The Commission’s publication may help to provide a framework for negotiations over this topic. But its lack of ambition underlines the difficulty of resourcing climate mitigation and adaptation abroad at a time of severe public finance constraints – even for countries that are willing to commit substantial resources to reducing emissions at home.

Meanwhile, the EU’s flagship policy for reducing European GHG emissions found itself at the wrong end of a critical judgment from the European Court of First Instance last week. The court sided with Poland and Estonia in a dispute over the Commission’s role in evaluating their National Allocation Plans (NAPs) for carbon emissions for the period 2008-2012.

The background to the case is that the Commission rejected the NAPs originally proposed by these two countries for this period, and revised them downwards. The Commission’s power to review NAPs exists so that countries aren’t too generous in their allocations – this should avoid a price crash of the sort seen during the experimental first phase of the EU ETS. The Court’s judgment found that the Commission’s grounds for rejecting the NAPs weren’t legally valid and has annulled the Commission’s decision.

Although the prospect of a possible loosening of the cap sounds alarming, there are a few reasons to think that this won’t crash the carbon price. One is that the Commission will appeal the decision, dragging out the legal process and delaying any reversal until 2010 or even beyond. Even if the appeal is unsuccessful, Member States won’t have free rein to determine their own NAPs – they will still be subject to the Commission’s scrutiny. And the fact that certificates can be banked and used in the third Phase of the EU ETS, which runs from 2012 to 2020, should allow some of the excess certificates (if there are any) to be absorbed in those later years. But this is an unwelcome distraction all the same, especially at a time when weak demand for energy has already depressed the value of carbon allowances.

 From a party not known for a forward stance against Climate Change legislation and with many members downright sceptical, perhaps we should be positive when Senator Lindsey Graham (R-SC) visited Saskatchewan last week and declared himself a believer, that Climate Change was a “reality”. The interview, worth reading in full, brings to light some of the thinking of Republicans on Climate Change and the North American energy market.

Senator’s Graham’s views are particularly important for several reasons. Firstly the Climate change bill that passed through the US house and is awaiting its senate hearing is possibly the single most important turning point in getting a global deal on Climate Change. As Graham himself noted, the bill narrowly passed in the house meaning that it dropped Democrats, given the house is often seen as more partisan, the implication is that the bill would need to be watered down to make a passage through the Senate. While this may be true to some extent, Graham is being slightly disingenuous, the House bill passed with enough votes – some Democrats were able to vote against it for their constituency, safe in the knowledge it would pass (i.e. if it had been closer they would probably have also voted for it).

Senator Graham’s views were likewise interesting in terms of the shape of Climate legislation in North America, which can probably be read as a reasonable gauge of Republican thinking on energy policy if not Climate Change policy.

“Carbon sequestration is the key to anything you want to do when you talk about getting away from fossil fuels or controlling CO2 emissions”

Not that this will surprise many, but CCS ( Carbon Capture and Storage) is in the near future at least a political reality– whether its viable or not. For both Canada and the US, CCS is the magic wand which can placate their powerful fossil fuel lobbies – especially Coal in the US and the oil-sands in Canada. Both Obama and Harper have alluded to its necessary use – and with many Democrats hailing from coal states such as West Virginia and Virginia, it will be next to impossible for Climate Change legislation to be passed without it. Similarly in Canada, the powerful geopolitical role envisaged from Alberta’s oil sands including in any North American Cap and Trade, ensures that both countries will create opt outs or subsidies to nurture their particular fossil fuel industries.

On Oil Sands Senator Graham words will disappoint environmentalists:

“the United States should accept it, because every drop of oil that we can receive from our friends in Canada is one less we have to buy from people who don’t like us.”

“I think the future’s on your side when it comes to your U.S. neighbours accepting your products.”

Almost without a doubt, there is a necessary trade-off to be made in environmental issues. Senator Lindsey Graham (R-SC) may be a “believer” in Climate Change, but his language was firmly rooted in pragmatic security and economic issues- cheap and safe energy – if Congress does swing back towards Republicans, future Climate Change debates will be shaped by this kind of language. This isn’t necessarily negative, in order to make Climate Change a permanent legislative priority it needs to be bundled into other issues, to appeal to wide base. In this case, the issue is energy security, while for many this was meant to be about fuel economy standards, reduction in oil for power stations and growth of new green energy industries – yet in the interim this will mean oil sands from Alberta. The battle for environmentalists will be to try to lobby for the clean- up of the Alberta sands and the US coal.

Administrator Lisa Jackson signing the final rule (photo: EPA)

Starting on January 1^st 2010, any US fossil fuel and industrial GHG suppliers, motor vehicle and engine manufacturers and other facilities that emit 25,000 metric tons or more of CO2 equivalent per year, will be required to report their emissions data to the Environmental Protection Agency. According to the EPA this will cover approximately 85 percent of the United States’ GHG emissions and apply to roughly 10,000 facilities.

These new rules lay the groundwork for regulating emissions, providing the basis of a monitoring system that should be in place by the time – if such a time arrives – that greenhouse gas emissions are to be regulated.

As Administrator Lisa Jackson, who signed the rules on Sep 22, stated – “The American public, and industry itself, will finally gain critically important knowledge and with this information we can determine how best to reduce those emissions.”

 While opposed by many business, claiming that the reporting requirement is a first step toward burdensome and needless government regulation, others have welcomed this move.

Even the United States Chamber of Commerce seems to be on board with the new rules – “We have always supported transparency and do not oppose the reporting requirement,” said Bill Kovacs, senior vice president for environment, technology and regulatory affairs.

This is somewhat surprising as the Chamber of Commerce stance has so far been very much in opposition to any action, legislative or otherwise, on climate change. Throughout the past months the Chamber has sided themselves with climate change deniers by repeatedly attacking the EPA’s use of climate science, and it was the same Bill Kovacs who said in August that the EPA doesn’t “have the science to support the endangerment finding,” when the Chamber recently demanded a “Scopes Monkey Trial” for climate change science. A call they have later retracted after receiving too much heat.

The Chamber’s continual opposition to climate legislation has recently resulted in several utilities – including the major Californian utility Pacific Gas and Electric – withdrawing their membership (mirroring similar desertions in other industry groups). Others, such as Nike and Johnson & Johnson, have also expressed their dissatisfaction over the Chamber’s approach, saying it does not represent the full spectrum of members’ views. I wonder if the support, or at least non-opposition, to the EPA’s new reporting rules is an attempt to soften the Chamber of Commerce’s position before more companies quite it.

Just in time for the UN summit in New York next week, Senate Majority Leader Harry Reid warned earlier this week that due to the Senate’s busy schedule it might not act on a comprehensive climate change bill until 2010. Health care and regulatory reform are also high on the Senate’s agenda, and according to Reid’s statement, the climate change bill might have to wait until the other two are dealt with.

This follows Senators Boxer and Kerry’s announcement at the beginning of the month, that rather than early September, they are now aiming to unveil their version of the bill at the end of the month. A target that was repeated this week by Sen. Kerry saying that “We are aiming for this month.”

Reid’s statement naturally caused quite a stir, though it was later somewhat retracted by Reid’s spokesman, who commented that “no decisions have been made” on floor timing for a comprehensive climate and energy bill. And two days after his original comment, Reid insisted that he hopes to move a climate bill “as quickly as we can”

In response though, the EU ambassador to the US expressed his concern by the delay which will push the decision about a US climate policy until after the UNFCCC meeting in Copenhagen, noting that “if this were to happen it would open the United States to the charge that it does not take its international commitments seriously, and that these commitments will always take second place to domestic politics“

This feeling is echoed by the concerns expressed by environmental organisations such as Environmental Defense Fund, whose international counsel Annie Petsonk pointed out that “The appearance to the international community would be that the U.S. Congress is just adrift,” and others who worry that this lack of domestic progress in the US will give other countries an excuse not to act as well.

Obama’s administration also acknowledges the importance of US legislation to international progress as was evident when Todd Stern, the State Department’s special climate change envoy, testified in front of the House Select Committee for Energy Independence and Global Warming saying that “Nothing the United States can do is more important for the international negotiation process than passing robust, comprehensive clean energy legislation as soon as possible” and stressing that “President Obama and the Secretary of State, along with our entire Administration are committed to action on this issue“

Progress Nonetheless

Even though the legislative process is delayed, the US is still making progress in its attempt to curb GHG emissions, as evident by two developments in the past week.

On Monday Interior Secretary Ken Salazar signed an order setting up a Climate Change Response Council and eight regional response centres to study and respond to the expected impacts of climate change on wildlife and historic places. The order also includes a commitment to produce a plan to reduce the Interior Department’s own greenhouse gas emissions, including setting a firm target. The Interior Department, which manages 20 percent of the land in the United States, will also explore methods to sequester carbon by storing it underground and by absorbing it through forests and rangelands.

The following day the EPA ,along with the Department of Trasport, moved ahead with car emissions regulations – unveiling the proposed rules based on the outline presented by the president in May.

These two developments give somewhat more weight to Todd Stern’s warning to countries such as China and India, that if there is no cooperation on international action to reduce emissions, Congress is more likely to put in place protectionist measures, as at least the US can show some domestic progress.

These actions though, while beneficial in mitigation of CO2 emissions, are not as reassuring to other countries of the US willingness to tackle climate change as actual legislation. The US failure to ratify Kyoto is still very much on everybody’s mind and Obama will have to work hard to convince other countries, especially major players like the EU and China, that any agreement signed in Copenhagen – if one is at all signed – stands a good chance of later passing Congress. This might motivate him to be involved more closely with the legislation than he has been so far (more like he has been with health care reform), which in the end might result in a better bill. If that happens, Reid’s statement would have been for the better.

Bordeaux vineyards -- might they be found in Scotland in future years?

Leading figures in the French wine producing communities are urging the French government to push for a strong agreement at the United National climate summit in Copenhagen this December.  Their motivation is that failure to reduce greenhouse gas emissions is estimated to devastate their sector in the coming years.

“As flagships of our common cultural heritage, elegant and refined, French wines are today in danger,” 50 leading names from the world of French wine and food wrote in an open letter in the 12 August in the French newspaper “Le Monde.”  The letter went on to describe that “marked by higher alcohol levels, over-sunned aromatic ranges and denser textures, our wines could lose their unique soul.”  Among the signatories to the letter were: Marc Veyrat, a chef with three Michelin stars and Franck Thomas, who was voted the best sommelier in the world. “We will have new wine-producing regions in zones where one doesn’t normally cultivate vineyards like in Brittany and Normandy,” said Jean-Pierre Chaban, a climatologist at France’s National Institute for Scientific Research. “It will spread to Great Britain. One can imagine vineyards in southern Sweden and Scotland.”

And well…According to the Department for the Environment, Food and Rural Affairs, there are now 416 vineyards in England and there are 2,732 acres of vines under cultivation – an increase of 45 per cent in the past four years.

The “World Conference on Climate Change and Wine” took place in Barcelona during February 2008.  During the conference over 350 wine producers from 36 countries learned that wine production indeed emits large quantities of CO2 gases.  Tony Sharley, a company scientist for Banrock Station Wine in Australia (and lauded for their sustainable techniques), taught the group that “the reforestation of areas close to the vineyards” may also help reduce the carbon footprint.

But many producers are skeptical of how much good reforestation can really do.  “The consequences of global warming are already being felt. Harvest season already comes ten days earlier than before in almost all wine regions,” warned French expert Bernard Seguin.

Fine French wines are produced in small territories and taste depends strongly on factors such as mineral content of the soil. For example, a Burgundy produced in California will not taste nor smell like a Burgundy from Burgundy.  Many of the vines in production are old and will not produce satisfactory wine when they are young.  Thus, replanting the same varieties further north will not produce the same superior product. 

While admitting that some French regions, such as Bordeaux, Alsace and Moselle, were “were making wines near their climactic limit,” wine-maker Jacques Lurton added there was “still room for maneuver.”

Indeed, he predicted a change in style of wine over the next 20 years, with perhaps a Bordeaux Cabernet Sauvignon becoming closer to those wines currently being made in the Napa Valley, California. 

Yes, as the French winemakers and chefs warned in the open letter, “our [French] wines could lose their souls” if action is not taken to halt climate change.

Though much of the letter (original available here) addressed to French President, Nicolas Sarkozy, read poetically, there is a very real call to action. The signatories want the government to push for a global deal to cut industrialized countries’ greenhouse gas emissions by 40 per cent by 2020 and set up “solid aid mechanisms” for developing countries.

Though this issue has been brought to the forefront in the recent month due to a publication by Greenpeace, the concern and the statistics to back it up are not entirely new. 

Swedish Prime Minister Fredrik Reinfeldt (Photo: Pawel Flato)

Two key members of the Swedish government – the Prime Minister and the Environment Minister – appeared last week to adopt contrasting tones when commenting on the EU’s expectations of other parties at the forthcoming climate negotiations in Copenhagen.

Sweden currently holds the EU’s rotating Presidency, and over the last few months it has been outlining the bloc’s position on the Copenhagen negotiations that will take place later this year. Much of what the Swedish ministers said has followed the broad outlines of the European Commission’s January communication on a global deal – significant absolute cuts for developed countries, reductions compared to business-as-usual for developing countries, and reform of the CDM.

As recently as last week the Swedish Environment Minister, Andreas Carlgren, repeated similar opinions in a press conference. He described the proposed climate legislation currently being debated in the US as promising, but not ambitious enough. He also called on large emerging economies to be prepared to reduce their emissions by as much as 30% below business-as-usual projections.

Meanwhile, Swedish Prime Minister Fredrik Reinfeldt was reported to have indicated that a less exacting set of commitments could be sufficient for an international agreement. The Prime Minister echoed Minister Carlgren’s view that the positions expressed by both the US and major developing countries were not satisfactory. However, he also went on to suggest that Europe needed to be ‘open to other types of solutions’ besides binding targets, including special terms for China and theUS.

Without seeing the full interview with Prime Minister Reinfeldt it is difficult to know exactly how different the substance of his comments was from the Environment Minister’s. But the difference in tone underlines the nature of the EU’s role in this year’s negotiations.

During the build-up to last year’s Poznań conference all eyes were on the EU as it tried to finalise its politically ambitious Climate and Energy Package. By committing itself back then to a 20% cut in emissions by 2020, it has deliberately played its hand early. Its role (at least in public) is now effectively limited to maintaining political pressure on other countries to follow suit, and trying to retain its reputation as a global leader on climate change.

This may go some way to explain the Swedish Ministers’ good cop / bad cop stances last week: the EU is on one hand eager to articulate an ambitious vision for a global deal, while also pragmatically laying the ground for a compromise position if (or, rather, when) China and the US fail to offer what the EU has previously said it wants of them.

Europe will not have the leading role in this year’s drama at Copenhagen – China and the US will be centre stage instead. But there is no doubt that the EU’s Swedish Presidency will want to ensure that it continues to be seen and heard all the way to the final act.