The French government is working towards implementation of a direct carbon tax by July 2010. France’s Constitutional Council struck down the first version of the carbon tax bill last 29 December. On 21 January 2010, the government proposed a number of amendments to the original legislation, which is aimed at encouraging French consumers to be more energy efficient and conscious of their energy decisions.

The first version of the bill was meant to take effect on 1 January; halting its inception has been greatly embarrassing to Prime Minister, Nicolas Sarkozy. The legislation was deemed unconstitutional due to a large number of sectoral exceptions. The new version of the bill will maintain the originally proposed 17 EUR per tonne of carbon dioxide with compensation for households. There has been a reduction in the number of exemptions. Though, certain “sensitive and energy-intensive sectors” will still receive special exemptions. Farming and fisheries will pay just one-quarter of the normal rate; road transport and shipping, will only pay 65 percent.

French Environment Minister, Jean-Louis Borloo, has begun a series of consultations with companies, trade unions, and environmental non-governmental organizations concerning the specifics of the legislation. “The goal is to develop a new draft, which will be sent to Parliament for approval by spring,” spokesman Luc Chatel told a press conference after the weekly cabinet meeting.

Under the new proposal, the tax level remains at 17 EUR per metric tonne of CO₂ at over 1,000 of the most polluting sites. The main innovation of the amended bill is the inclusion of previously excluded sectors, such as power stations, oil refineries, and cement works. These plants were exempted in the first version of the bill because they are scheduled to be subject to a European Union quota system to be implemented in 2013. EU regulation calls for emissions in those sectors to be reduced by 21% by 2020.

In late January, a poll released by ViaVoice showed 51 % of the French public thought the government should abandon the tax proposal. “The carbon tax should not be an umpteenth tax used for filling up the state coffers,” small business union CGPME said in a statement. The French government is addressing this concern. It continues to stress that for businesses of all sizes, combined with the reform of local business taxes, the carbon tax will merely serve to transfer taxation away from work and investment. Yet, the debate continues to focus on how to compensate low income households,; due to inefficiency, the tend to use relatively more fuel and many work at night before public transport is running.

“The best would be for it to be ready in 2010 but it’s true that all these details … are complicated,” Michel Rocard, a former Socialist prime minister, said in an appearance on Europe 1 radio. “I don’t know if we will be ready in 2010.”

Last July, Rocard headed a review report of the potential tax for the government. At that time, the burden of the tax was presented as being divided roughly equally between households and businesses. There is no clear indication of how this division will change under the most recent tax proposal.

After a first round of consultations, the French government has unveiled two options for introducing the tax system into industrial sectors already subject to the European emissions quota system.

The first option would levy the carbon tax on all industries, but the introduction would be at reduced rates for companies most exposed to international competition, as well as for those that are the largest consumers of energy. A series of quantitative criteria (yet to be fully unveiled) will be used in order determine the particular rate of tax.

Additionally, under this plan, companies would be entitled to receive a tax credit on investments aimed to reduce both energy consumption and emissions and to prevent industrial risks.

The second option for the tax would construct a bonus-penalty system. All industrial installations would be subject to the tax of of 17 EUR per tonne of carbon dioxide emitted. Under this second plan, each business would receive a lump sum tax credit, dependant upon its efforts made to reduce emissions.

“This is the beginning of a wider process of reflection and consultation,” Economy Minister Christine Lagarde said after the report was presented.

While most politicians agree emissions must be cut to fight global warming, a key part of the debate is on how to compensate poorer households, workers in certain sectors and those who need to drive because they work at night or live in rural areas.

France aims for an 80% reduction in CO₂ emissions by 2050.

France would be the largest economy to apply a direct carbon tax, mirroring existent measures in Denmark, Sweden, and Finland.

Author: Nyla Sarwar

"Big Heads" seek financing for climate change (Image by: Oxfam)

An ambitious and positive draft text presented at the UN climate summit has failed to impress developing countries, who argue that more finance is needed to support their low carbon development and adaptation in some of the most vulnerable nations.

The so-called “long-term action plan text” believed to be much more positive that the “Danish text” leaked earlier in the week, sets GHG reduction targets for developed countries of around 25-45% by 2020 against a 1990 baseline. These targets are expected to be extremely ambitious, and will require the sequestration of already emitted atmospheric carbon, potentially limiting worldwide temperature increases to 1.5C - 2C. The text is now up for negotiation, and demands much stronger commitments from the developed counties, compared to figures already laid out on the table.

UK PM Gordon Brown has been actively engaged in the negotiations to encourage the EU to confirm its more ambitious commitment to reduce GHG emissions by 30% by 2020 against a 1990 baseline. It is expected that this will require the UK to contribute 40% emissions reductions by 2020, instead of the 34% share previously committed.

Gordon Brown has also been pivotal in negotiations among EU leaders to provide immediate finance for developing countries to adapt to climate change. Announcing that the EU would commit 7.2bn euros (£6.5bn, $10bn) for adaptation in developing countries over the next three years, Swedish Prime Minister Fredrik Reinfeldt reaffirmed Europe’s commitment to moving the Copenhagen negotiations closer to a global deal.

The UK’s promise, at £500m ($800m; 553m euros) a year, was the highest. Reports from Brussels suggest the German contribution will be 480m euros per year from 2010 to 2012. Earlier, Mr Brown and France’s President Nicolas Sarkozy told a joint news conference their two nations would contribute at least £1.5bn (1.7bn euros; $2.4bn) spread over the three years.

The money pledged is for a “fast start” fund to help the world’s poorest nations tackle rising sea levels, deforestation, water shortages and other consequences of climate change between 2010 and 2012, and reduce their own emissions.

The promised EU contribution will make up a sizeable portion of a proposed global figure of $10bn (7bn euros) annually.

Financial discussions in Brussels saw EU leaders during the International Monetary Fund (IMF) to consider a global tax on financial transactions to reduce the risks of a further financial crisis and raise funding for tackling climate change.

“The European Council encourages the IMF to consider the full range of options including insurance fees, resolution funds, contingent capital arrangements and a global financial transaction levy in its review,” the summit’s final statement said.

Whilst the text confirms the consensus between nations that halting forest protection is crucial, the details of measures to reduce deforestation are still al long way off. Developing countries are still demanding more funding from developed countries, and the details of a long term and fundamental financial package still remains hugely uncertain. The new text also requires developing countries to cut their carbon emissions by 15-30% by 2020 compared to BAU, and developing countries retired from the plenary requesting further time to digest the potential consequences of such commitments.

Additionally, reports suggest that the EU and US have finally agreed to a twin track deal which ensures that the Kyoto protocol - the only legally binding treaty that forces rich countries to cut emissions - continues at least until a new legal treaty is signed.

“This is very, very complicated. It’s tough because the world is trying to peak emissions. There is a long way to go. We are anxious and conscious of the scale of the challenge that remains,” said the UK climate and energy secretary, Ed Miliband.

The text will be negotiated in more detail next week, with details of a finance package and forest protection measures expected to dominate discussions. Developing countries will be calling for tougher commitments, and as Nasa scientist Jim Hansen recently commented - the climate agenda is not amenable to half measures. “It would be like saying, I’ll agree to cut 40% of slavery.”

Bang it on the table, Gordon!

The Guardian has it that the EU is once again stalling on adaptation finance being additional to aid (see previous Climatico posts on this issue here and here). Someone has forwarded them “confidential papers” where key lines of negotiating text have been removed. Apparently it says, “Cannot accept reference to ‘additional to’, and ’separate from’ ODA [official development assistance] targets.”

This has of course brought howls of complaint from the development NGOs, who argue, rightly in my opinion, that adaptation finance is a justice issue. Climate change was mostly caused by rich countries, the argument goes, and so any costs that poor countries incur in adapting to it should be financed by rich countries. Meles Zenawi (Ethiopia’s PM) puts it best, saying,

“[Climate change] has created a more hostile environment for development. No amount of money will undo the damage done. But adequate investment in mitigating the damage could partly resolve the problem. … Developed countries are thus morally obliged to pay partial compensation to poor and vulnerable countries and regions to cover part of the cost of the investments needed to adapt to climate change.”

Aid has completely different objectives (as well as different political economy questions around it), and should be protected from mission creep. Developing countries have consistently argued that a fair deal on finance is necessary for them to accept anything on the table at Copenhagen. If they are to get no additional funds, they might walk, and rightly so.

International Development is one of the few areas in which Gordon Brown still claims moral authority. He has banged his “big clunking fist” on the table before, to prevent rich country backsliding on development assistance - let’s hope he does it again. What he proposed last year is the least worst option - it acknowleges that adaptation and development do cross over to an extent, and therefore promises that 90% of adaptation finance from the UK will be additional to ODA. Along with the £10bn global fund he annoucned on Friday, this provides a useful framework for the EU.

 EU leaders failed to agree on a financing proposal for developing countries after their two-day summit this week, leaving the EU’s negotiating position on the issue open-ended.

A Kenyan riverbed: developing countries are expected to bear the brunt of climate change because of their geography and their lack of capacity to adapt to change (Image: Matt & Kim Rudge @Flickr)

In a set of conclusions that were long on rhetorical concern about accelerating climate change but short on any new commitments for the EU, the European Council effectively endorsed the views set forth in the Commission communication on funding that I discussed a few weeks ago. This means that the 27 Member states have agreed a common view of the amount of funding required for adaptation and mitigation in developing countries – €100bn annually by 2020 – but not over how much of this should come from the EU and its members.

One of the reported reasons for the failure to reach an agreement is reported to be, as usual, down to differences between the richer and poorer members of the EU. A coalition of East European countries allegedly resisted specific commitments due to concern over their ability to afford the proposals. But the BBC also reported differences over negotiating strategy as a cause for the ambiguity of the Council’s position. Germany, it is suggested, believed that providing an explicit figure would provide less of an incentive for other developed countries to make similar commitments.

How much the EU is really willing to pay for climate change mitigation and adaptation in developing countries, then, remains to be seen. But the failure of EU leaders to establish a common position underlines the political difficulty associated with large transfers of wealth to countries whose citizens don’t vote in European elections.

Mont-Saint-Michel, on the Normandy coast of France, is the sight of new conflict.  The most recent battle is not in a medieval setting, but a modern struggle against two good, but opposed environmental causes.  On one side are those who want to reduce carbon emissions by installing windmills.  On the other side stand ecologists who suggest that windmills churning above the tidal flats of Mont-Saint-Michel would distract from the natural beauty of the medieval monument and potentially destroy the landscape in the future.

France is on an ambitious route to expand its use of windmills in renewable energy.  Currently there are 2500 windmills producing 4500 megawatts per year; the goal is to have 8500 windmills producing 25000 megawatts by 2020.  Windmills are becoming increasingly sought after by EU goals to limit greenhouse gases.  Last week, the EU recommended that it invest $ 70 million in clean energy over the coming decade, tripling windmill construction to produce 20 % of Europe’s electricity.

Those against the windmills near Mont-Saint-Michel have nothing against the quest for clean energy but rather argue that windmills above the ridgeline are not the way to achieve this goal.  Allies have formed across France, and an ambitious campaign to prove the windmills would desecrate the vista has begun.

The mayor of Mont-Saint-Michel, Eric Vannier, has stayed out of the debate for the most part, but 600 locals have pooled finances to hire lawyers to sue local government.  They expect a court ruling in Spring 2010.  If the group wins the lawsuit, “they’ll have to put everything back beyond 30 km (~18.5 miles),” said Corinne Gressier, who runs the group “Windmills: Turbulences.”  But she also realizes, “if we lose, it’s over.”

French law bans windmills closer than 1500 feet from historical monuments.  The current court case in will be on trial in Nantes.  It concerns plans to build 300 foot high windmills on farmland in Argouges, on a plateau a bit more than 10 miles southeast of Mont-Saint-Michel.  The monument attracts about 3 million visitors each year to admire the rock-top monastery.  Andre Antolini, president of renewable Energies Syndicate, told reporters last month that, “at the proposed distance, tourists to the monument would only see tiny blades peeking over the horizon.”

But for protesters like Gressier and the national alliance of environmental groups, the three windmills at Argouges would just be the tip of the iceberg if building is permitted.  There are current plans for an additional 80 towers in farming communities across the entire ridgeline above Mont-Saint-Michel.

The complicating issue is that farmers and village counters tend to embrace proposals to install windmills in their fields because of the payments they receive.  They get stipends for use of the land and villages are provided tax revenue on income from electricity, which is sold to the national grid.  “It’s a flourishing business,” said Jean-Louis Butre, president of the Durable Environmental Federation, based in Paris.

At present France gets about 80 percent of its energy from nuclear reactors and an additional 12 percent from hydraulic generators.  That leaves a balance of 8 percent that must be filled by oil, coal, natural gas, solar, or wind.  Butre explains that if government decided to fill that gap with windmills, it would have so many that they would be part of the scenery in more than a third of the country.

In fact last year, Butre challenged president Sarkozy’s strong push for wind energy in the book “Fraud: why windmills are a danger for France.”  The former President Velery Giscard d’Estaing, a supporter for nuclear power, wrote the preface to the book.  He denounced windmills as an “unacceptable use of public funds, a deceptive public discourse, and often questionable business.”

Now the delegation from Argouges, with support from groups around France, waits to see if they will win the court battle and put atop to the windmill construction near Mont-Saint-Michel.  It remains to be seen how this part of Mont-Saint-Michel’s represents 13 centuries of history will play out.

This month, the European Commission published development roadmaps for seven key low carbon technologies. Thy relate to wind, solar, bioenergy, CCS, nuclear technologies, as well as smart grids and energy efficiency, for the period 2010 and 2020. 

There is a long-standing policy debate over how best to spur innovation in low-carbon technologies. One option is to let markets ‘pull’ technology development along. According to this reasoning, if governments ensure there is a credible price for CO₂ and other greenhouse gases, then companies will start to develop new technologies with lower emissions in response to this market signal. The other possibility is for governments to use a policy ‘push’ and pay directly for early-stage R&D into new and promising technologies.

The roadmaps follow the publication of a EU Strategic Energy Technology Plan in 2007. It outlined a vision where the EU enjoyed global leadership in a range of low-carbon technologies. Each roadmap has been developed by the Commission in consultation with the relevant industries, and attempts to describe, step by step, how each technology should develop over the next decade in order to fulfil the vision of the SET Plan. Development in each of the technology areas is backed by an European Industrial Initiative, which is a public-private partnership working in each of the low-carbon technology areas.

In practice, governments usually opt for a combination of the two. The SET Plan was the EU’s policy push for low technologies, accompanying the market pull of the carbon and renewable energy targets included in the Climate and Energy Package it unveiled in the same year.

While the Climate and Energy Package and its 20/20/20 targets have successfully made it into EU law, the SET Plan has arguably been somewhat neglected by comparison. The Commission’s new communication implicitly acknowledges this by speaking of the need for the SET Plan now to be ‘taken forward to implementation’.

But implementation costs money and, critically, the Commission’s new roadmaps don’t come with any new funding plans attached. The Commission calls on Member States to dig deeper into their own pockets to fund energy R&D – a recommendation that is unlikely to receive a warm welcome from treasuries across Europe as they seek to recover their battered public finances – and proposes to use the European Investment Bank’s lending power to fund research in promising areas.

The communication also refers to the role of other countries in developing low-carbon technologies. As with other areas of international climate negotiations, there are large inequalities in the distribution of low-carbon innovation. While the EU can justifiably point to its global climate leadership committing early to substantial emission reductions (at least, compared to other developed countries), the US is leading the pack in terms of its expenditure on developing low-carbon technologies, from biofuels to smart grids. A number of international negotiations are in progress to improve coordination between developed countries and sure that they all pull their weight when it comes to energy R&D; another set of negotiations again are discussing how developing countries can access these new technologies.

As reported by EurActiv, it is not only global cooperation that lies behind the SET Plan: there is something of a technology race occurring between different developed countries, with potentially large future gains available to countries who lead the development of new low-carbon technologies. The IEA this week released its technology road map for CCS that envisages an investment of US$6 trillion by 2050. Companies who are successful in developing CCS technologies now will be able to profit from this economic activity in future. Similar arguments apply to other low-carbon technologies like renewable generation and low-emissions vehicles.

There is no question that low-carbon technologies will be vital during the twnty-first century: without them mitigating climate change will be intolerably expensive. How many of those technologies will be European in origin depends in no small part on whether the Commission succeeds in finding R&D funding at a scale that matches its R&D vision.

The Committee on Climate Change released its latest report today highlighting the devastating impact the economic recession has had on carbon trading schemes and investment for low carbon technologies. The report emphasises the vast investment needed in efficiency through green housing, power and transport in Britain, to service the goal of meeting the commitments in the Climate Change Act.

The Committee has called for ‘dramatic improvements’ in efficiencies across the economy, suggesting that more ‘forceful’ policies may be required to increase annual cuts in emissions by four-fold.

The Committee also recommends

- The introduction of 1.7m electric cars, with 3.9m drivers trained in fuel-efficient techniques, by 2020

- Building 8,000 new wind turbines, alongside four new coal power stations fitted with carbon capture technology and three new nuclear power plants, to slash emissions from the power sector by 50% by 2020.

The Government’s largest proposed clean coal plant to be fitted with CCS was shelved by E.ON last week, also reportedly as a result of the recession. However, the announced delay in the Kingsnorth project, which had become the focus of protests against climate change, heavily targeted by climate camp activists and the media; leaves politicians wondering how they might fill the expected energy supply gap in 2016.

The recession has also had a significant impact on the world’s emissions trading schemes - expected to be pivotal in driving market signals for low carbon investment. The drop in energy consumption, which led to the shelving of the Kingsnorth project in the UK, has also led to a drop in emissions in Europe, resulting in a surplus of carbon credits in the EU ETS. It is feared that this might result in a carbon price of just €20 a tonne in 2020, rather than the €50 a tonne used for its previous analysis.

The Committee has suggested that options to strengthen the carbon price, including the government underwriting a minimum price or intervening in the electricity market, should be “seriously considered”. On Friday, a report from Ofgem suggesting domestic energy bills could rise 14-60% by 2020 was seen by energy industry experts as an acceptance that the market-driven system has failed and the government needs to be more interventionist.

So the recession has played its role in dampening the prospects of the low carbon investment opportunities, and strong leadership will be essential to deliver the ‘radical’ and ‘dramatic’ improvements that the Committee has demanded. With Ed Milliband’s small budget, and uncertainties over changes in government next year, the UK needs to dig deep to create green opportunities that rescue the nation from the dire straits, courtesy of the economic recession.

A Calm North Sea

According to UK’s  Department of Energy and Climate Change (DECC) the North Sea has potential to store over 100 years worth of UK power station CO2 emissions.

In the build up to the Carbon Sequestration Leadership Forum (CSLF) in London on 13^th October, DECC has launched a UK wide consultation to explore the idea to develop and manage the potential carbon storage sites under the North Sea, to harness the huge potential for storing CO2.

According to the Energy and Climate Change Secretary, Ed Milliband says:-

“There’s enough potential under the North Sea to store more than 100 years worth of CO2 emissions from the UK’s power fleet.  We are also working closely with Norway and other North Sea Basin countries to ensure the North Sea fulfils its potential in the deployment of CCS in Europe. We want to get the UK regulatory framework in place so we can harness that potential and make the North Sea part of the CCS revolution.”  (Source: DECC)

The future talks of The Carbon Sequestration Leadership Forum (CSLF), which is made up from a private and public member (including Ministers from 23 countries) will build on the foundations of the G8’s ambition to launch twenty CCS demonstration projects globally by 2010; and prospects of a global agreement on CCS prior to the UN Climate Change conference in Copenhagen this December. (Source: DECC)

 “Without CCS there is no solution to climate change.   As well as getting things in place in the UK and Europe we need that consensus at the global talks in Copenhagen.   The meeting in London will be a pivotal part of moving the discussion on CCS forwards.”  (Quote: Ed Milliband).

Subject to the outcome of this consultation, DECC aim to make and lay regulations in the first quarter of 2010 in order to bring the regime into force in April 2010. (Source: DECC)

This CCS target will form part of the UK’s Low Carbon Transition Plan which was first introduced in 2008, it sets out how the UK will meet the 34 percent cut in emissions on 1990 levels by 2020.  The plans set out to reach the following target by 2020:

• More than 1.2 million people will be in green jobs
• 7 million homes will have benefited from whole house makeovers, and more than 1.5 million households will be supported to produce their own clean energy.
• Around 40 percent of electricity will be from low-carbon sources, from renewables, nuclear and clean coal.
• UK will be importing half the amount of gas that we otherwise would.
• The average new car will emit 40 percent less carbon than now. 

In times of financial and economic instability, the government has committed a very large sum of £405 million towards developing low carbon technologies to meet the Transition Plan targets. This commitment to CCS is prevalent in the recent announcement to support a multimillion-pound research facility in Yorkshire, The Centre for Low Carbon Futures.  This is an innovative £50m research centre that combines the expertise and research power of the Yorkshire universities, with funding from Yorkshire Forward.  The centre aims to build a competitive, sustainable and carbon-efficient regional economy, while providing climate change solutions of national and international significance in collaboration with local business.

So far, the Centre has already identified its first four pilot research projects, which include:

• The regional economics of climate change
• Low carbon supply chains
• Biorenewables
• Carbon Capture Technology

In September 2009, the UK government has also injected £20m into early stage works for developing advances in wave, tidal, fuel cells, solar and energy efficiency technologies.   Announced in September, the ‘clean energy technologies fund’ will be like the ‘Dragons Den’ Venture Capitalists TV series, aiming to attract private sector finance in coming forward to fund new innovative clean technology projects.

 Simon Walker, Chief Executive of the British Venture Capital Association, said:

“Low carbon energy technologies backed by venture capitalists will play an important role in creating a sustainable energy future for the UK. In 2009 we have seen a dramatic fall in the amount invested into clean energy companies in the UK. We welcome any initiative which boosts the supply of capital into this crucial sector.”

Penny Shepherd MBE, Chief Executive of UK Sustainable Investment and Finance said:

“Government support now is vital to develop the UK low carbon technology businesses that we need for lasting prosperity. This commitment shows that the Government is serious about promoting a low carbon economy and sustainable investment in the UK.”

With the financial commitment from government and the new opportunities exposed by the CCS storage capacity in the North Sea emerging, the academic support is absolutely paramount into driving UK’s commitment to achieving further gains in meeting not only the UKs carbon reduction targets, but also to share these technologies with the rest of the world at the UN Summit in Copenhagen to contribute to the global efforts needed.

The International Air Transport Association (IATA) has challenged governments worldwide to take four key steps to support the global aviation sector’s commitment to tackle climate change. Speaking in Hong Kong yesterday, Giovanni Bisignani, IATA’s Director General and CEO, stressed the need to:

1. 1. Adopt challenging industry targets to stabilise and eventually reduce aviation’s carbon emissions;
2. 2. Manage aviation’s carbon emissions through ICAO under a new ‘Kyoto II’ framework by treating aviation as a global industrial sector;
3. 3. Invest in efficient infrastructure, particularly air traffic management; and
4. 4. Establish fiscal and legal frameworks to promote the rapid development of biofuels for aviation.

Whilst the aviation sector represents a significant source of employment and growth, it also has an increasing contribution to global climate change.

The sector accounts for around 2% of global emissions - around 677mtCO₂ in 2008, expected to grow to 3% by 2050 (IPCC, 2007; ATAG, 2009). Whilst increasing efficiencies have reduced emissions, these have been outstripped by emissions increases due to industry growth; and the industry now consumes around 150m litres of ‘Jet A1′ fuel per year. The aviation sector has few alternative fuel options; and electric drives frequently cited as an alternative road transport option, are not likely to present a viable solution for aviation.

The industry argues that a global sectoral approach is essential to reduce aviation emissions; ensuring that airlines pay for their climate cost just once at a global level, rather than several times over within national targets; or through varying policies across numerous jurisdictions. For example, the EU Emissions Trading Scheme (ETS) passed legislation for the inclusion of aviation sector emissions in January 2009, requiring all flights from European airports to consider their carbon liabilities. This is expected to drive emissions reductions on a level playing field, promoting efficiencies and the development and commercialisation of emerging sustainable aviation fuels.

“Aviation is unique among industries. When it comes to environment, no other global industry is as united, ambitious or determined. Our track record clearly shows that aviation is unique in its ability to drive major global changes. For example, IATA rolled-out e-ticketing to every corner of the planet in just 48 months,” said Bisignani.

IATA’s four-pillar strategy to address climate change with modern technology, effective operations, efficient infrastructure and positive economic measures is another example. “Implementing the four-pillar strategy, IATA has already saved over 68 million tonnes of CO₂. This year we expect aviation’s carbon emissions to fall by 7% - some 5% from the recession and 2% as a direct result of our work,” said Bisignani.

Government commitment will be critical for the aviation sector to reduce its emissions, and IATA calls for strong leadership at the Copenhagen summit to reject uncoordinated and opportunistic taxation which ‘does nothing for the environment’ and focus instead on positive emissions reduction activity - such as the air traffic management projects (US NextGen for example).

An industry-wide commitment, formalised in a working paper to be presented to the International Civil Aviation Authority (ICAO) today, will pledge the following targets:

• - Improving fuel efficiency 1.5% on average per year through 2020
• - Stabalising emissions with carbon-neutral growth from 2020
• - Reducing emissions 50% by 2050, compared to 2005.

In order to support this effort, governments must also play a significant role in facilitating and accelerating commercialisation of emerging sustainable feedstocks for large-scale bio-jet fuel production. Along with technological improvements in aircraft, sustainably produced biojet fuels are considered the most viable long-term alternative fuel for the aviation sector, delivering long-term GHG reduction and fuel security (ATAG, 2009). The industry is aiming for carbon neutral growth, with some airlines aiming to operate their fleet on 25% biofuels by 2025 (ATAG, 2009). Studies by Boeing (2009) suggest that microalgae-based biojet fuels provide better fuel specifications than current, traditional Jet A1 fuel, including a better heat combustion, which increases the aircraft’s fuel burn (allows the aircraft to fly for longer on less fuel), potentially by around 1%. This presents a significant financial driver for wider uptake of microalgae-based biojet fuels. Other feedstocks also being explored for biojet fuel production include camelina, jatropha and pongamia piñata, to name a few.

Bio-derived oils from the feedstock are converted into a ‘drop-in’ biojet fuel, via a patented hydrogenation procedure, which produces ‘bio-derived synthetic paraffinic kerosene’ (Bio-SPK) (Taylor, 2009; Boeing, 2009). Test flights have been undertaken using bio-SPK, most notably by Virgin Atlantic, Air New Zealand, Continental Airlines and Japan Airlines using blends of jatropha, camelina and algae (2% blends of algae were used in the latter two) (ATAG, 2009, Boeing, 2009).

Microalgae biofuels have the potential to play a significant role in the long-term sustainability of the aviation sector. However, the major challenges for microalgae-based biojet fuel production are expected to be production at a scale appropriate for aviation consumption, whilst increasing productivities and decreasing cost per hectare (ATAG, 2009). Whilst commercialisation challenges exist, microalgae as a feedstock is considered as ‘the future’ sustainable aviation transport fuel.

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.