While Europe sets the pace on climate change commitments, confirming a target for emissions reduction by 2020 and challenging the world to do the same, it may be the rest of the world is now deciding to run a different race.
Brussels is committed to binding 2020 targets not just for Europe, but the rest of the developed world, offering to lift its proposed target from 20 to 30 per cent if other major emitters follow suit. A sniff of the wind in North America and the Asia-Pacific, however, detects a growing unease over the wisdom of hard mid-term targets on the way to any ultimate 2050 goal for cutting greenhouse gas emissions.
The science is telling us that to avoid dangerous climate change we have to stabilise greenhouse gas emissions and reduce them in the order of 50-80 per cent by the middle of the century. Because of this imperative, and perhaps because 2050 is far enough into the future for today’s politicians not to have to face up to the ultimate responsibility, there is a broad agreement emerging worldwide.
If any progress has been made of late – Bali, the G8 summit and the US’s major economies meeting – there is at least agreement for deep cuts by mid-century. But while the final destination is crystallising, there remains little agreement on the many ways to get there. Ways which have large bearing on cost and industry’s ability to adjust and remain competitive.
A quite different approach to targets suggested by the Japanese prime minister last week, the thrust of targets policy among the remaining US presidential candidates and early signs from Kyoto converts Australia suggest that the European and traditional Kyoto approach to targets may be ditched on the road to a new post-2012 international climate agreement – due to be finalised in Copenhagen in 2009. The rejection of the 25-40 per cent interim target commitment in Bali by these non-European industrialised regions may be just the precursor of this.
The Confederation of British Industry may be an early torchbearer within Europe on a new world path. Its stance on the European Commission’s 2020 targets for renewable energy and emissions reduction, which it branded unrealistic, and its call for the market to be allowed to decide the best path for cutting emissions, will find support outside Europe. CBI director-general Richard Lambert said neither Britain’s goal to cut emissions by 26-32 per cent by 2020 nor the EC’s proposed target for a 20 per cent cut would be achieved. He may or may not be right, but if Europe can’t make 20 per cent, you can be sure no-one else will get there.
The more important question is should we be setting such aims in the first place. The CBI argues the cheapest most efficient way to get to a 60 per cent reduction by 2050 is to enhance the EU ETS and allow it to set the most realistic carbon price along the way, dictating the level emissions reductions at each stage.
The best efforts so far to quantify the cost of the emissions reduction challenge, by Stern and others, finds that the sooner we start cutting emissions the cheaper the overall bill will be in the long term. The danger is that this is being read by policymakers to mean that there needs to be a something like a linear reduction in emissions over the next 40 years.
In reality, the first ten years of that period, for most of the industrialised world at least, is going to be spent slowing then halting emissions growth. The second decade hopefully sees emissions fall with the pace accelerating over the third and fourth decades when the full fruits of clean technology only now being envisaged can be brought to bear. So a major issue, particularly for politicians, is that we need to move forward on new technology now – research, develop, demonstrate and begin deployment – yet understand that one can’t expect significant movement towards the 2050 emissions reductions goal for some time.
Jon Stanford, an economist with Deloitte Insight Economics, has addressed this point in the Australian Financial Review arguing that it may well be cheaper for industrialised countries to focus on meeting a 2050 goal for a 60 per cent emissions cut than it would to strive for 25-40 per cent cuts by 2020. Stanford argues that not many of the technology solutions will be available by 2020 and it won’t be feasible to replace many long-life old-technology assets like coal fired power stations until well after that time.
Another economist commissioned to inform Australia’s new Labor government of the best approach to meeting a 2050 goal of securing a 60 per cent cut in emissions has indicated a lack of support for any firm 2020 interim target. Professor Ross Garnaut is not due to report to the government until later this year but has already gone on record as favouring a system where the private sector decides how much to reduce, and when, in order to get to 2050. The legislative framework should lay down no more than a loose guide for milestones along the way, Garnaut says.
Japan says, meanwhile, it’s dedicated to showing leadership to the rest of the world on climate change and is committed to binding targets, but Prime Minister Yasuo Fukuda is baulking at making a firm 2020 reduction commitment. He now prefers a different approach. It’s a reverse approach, a “bottom up” method where no overall national 2020 target is imposed. Instead, targets for each sector of the economy, appropriate to its circumstances, are laid down. The sum of the sectoral targets becomes the national contribution to emission reductions. If such a system was the basis for a post-Kyoto agreement one imagines it leading to wildly varying emissions reduction performances among major emitting countries, but the looser arrangement might be more likely win the inclusion of the US, China and India.
There is no great emphasis on interim targets coming out of North America either.
Both Canadian and emerging US policies embrace interim targets but not ones that amount to a significant emission reduction effort by 2020. This despite commitment to deep cuts by mid-century. Canada sets down a weak 2020 target that would still see emissions well above 1990 levels by then. In the US, we’ll have to wait the outcome of this year’s presidential election but it appears targets and emissions trading are likely to be embraced whoever wins among the leading candidates.
Leading Democrat candidates Clinton and Obama favour setting a modest 2020 goal of only returning to 1990 levels but then jump to bold targets for 80 per cent reductions by 2050. If Republican frontrunner John McCain stays true to the Senate climate bill he co-sponsored with Joe Lieberman (certainly not assured), he too would deliver a modest 2020 goal and then a 65 per cent reduction by 2050.
So business is pushing for the flexibility to achieve most efficient abatement path and politicians are finding it hard to commit to binding emission cuts in little over a decade. The alarm bells are ringing among environmental groups and scientists. They say this risks the hard work being put off, making the emissions reduction challenge that much harder in the long run. A lead author on the IPCC’s Working Group 2, Jeff Price of California State University, says a lack of interim targets threatens an overshoot in temperature resulting from a delayed stabilisation and reduction path. He is doing the numbers on what the extent of the blow-out might be without 2020 targets.
In the meantime, policy movement sees Europe’s call for the world to step up to ambitious mid-term cuts to greenhouse gas emissions is looking isolated. By the time the end of 2009 rolls and the deadline for a new global agreement, the shape of international climate policy to cover the next two decades may be looking very different.
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