Following El’s blog a few minutes ago, I wanted to give some details and thoughts that are coming in from those around the EU delegation here in Poznan.

Despite predicted NGO criticisms of not going far enough, this package was not easy to achieve, as evidenced by concessions that have been made to industrial communities as well as the central European states that joined the Union in 2004 and 2007.  These concessions relax the proposed changes to the European Emissions Trading Scheme (ETS) that had been proposed, including:

  • Electricity companies can continue to pass the costs from the permits system through to their customers.  Yet, they will continue to receive these permits for free, and so will be passing on false costs to consumers, generating large profits for the companies
  • Industry operating in Central and Eastern Europe will not now have to buy emissions permits from 2013.  Instead they will only have to buy 30%, rising to 100% by 2020.
    Source: chinadialogue @ flickr

    Source: chinadialogue @ flickr

There is also some speculation that heavy industry in Western Europe will also have some exemptions.

While these concessions are indeed a step down from the original plan, passing what is still an ambitious package during the financial crisis is indicative of the EU–and French Presidency’s–determination to deal with climate change and, in doing so, lead on it.

In comparison to the deal being negotiated in Poznan, the EU certainly does have some characteristics in its favour in terms of its leadership.  Policy in the EU, for example, is not only legally binding but also well enforced by the ECJ and Commission; violation of environmental targets has incurred severe fines as well as legal challenges in the past.  In contrast, a major flaw in the UNFCCC process has been its lack of enforcement, leading to accusations of hollow targets.

The EU package is also significant in a wider, global sense.  As I reported yesterday the UN climate change negotiations are a good example of game theory in practice, where a number of parties are required to make early moves in order to incentivise the move for other parties.  This EU package goes some way to addressing the need for this early move in the context of the COP-14 to COP-15 process.  Firm, enforcable targets gives other parties a good assurance that the EU is now committed to this emissions pathway, and so potentially makes the move to global mitigation of climate change more attractive by making the optimal equilibrium of reduced climate change a possibility.

We shall wait to see here in Poznan whether the EU deal has such an impact, although it is widely expected now that tonight’s (said with extreme caution) statement will focus on mechanisms not targets.

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