Economic Analysis of EUwide Emissions Trading of CO2

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The EC Climate Policy and Public Health
ConsiderationsDr. Nicola Notaro, Policy
CoordinatorEuropean Commission, DG Environment C1
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International Climate Change Policy

• The UNFCCC
• national programmes and reports,
• industrialised countries to stabilise GHGs
  emissions at 1990 levels by 2000,
• non binding goal

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International Climate Change Policy

• The Kyoto Protocol
• overall aggregate target 5,2 by 2008-2012,
  binding targets for industrialised countries,
• EU 15 bubble at 8 and the other MS

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Post 2012 -EU Building Blocks

• . A shared vision 2C, 50 global emissions
  reductions by 2050 compared to 1990 20 by 2020
  or 30 if not alone
• . Developed countries to commit to further
  significant cuts
• . Developing countries to enhance their
  contributions
• . Strenghtening the global carbon market
• . Adaptation
• . Technologies
• . Deforestation
• . Emissions from maritime and aviation
  international transport
• . Mobilising finance and investments for climate
  change

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Bali Action Plan

• Start of negotiations on a global and
  comprehensive agreement for post 2012
• two track approach with two separate Ad-hoc
  Working Groups to end by 2009
• A shared vision?
• Explicit only in Kyoto track (Annex I Parties
  indicative collective emission reduction range of
  25 40 by 2020 )
• Convention track does not explicitly identify a
  level of ambition (resistance of US, Japan and
  Russia)

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Bali is a breakthrough
first time,

• that US engage in negotiations and subscribes to
  a decision with an explicit reference to emission
  reduction commitments
• that explicit reference is made to the need for
  developing countries to take action

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The mandate I

• Reference to shared vision
• Mitigation
• Further commitments or actions by developed
  countries
• Mitigation actions/contributions by developing
  countries
• Action to address deforestation and forest
  degradation in developing countries,

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The mandate II

• Adaptation
• Actions at national and international level,
• Risk reduction, risk management strategies
• Economic diversification
• Technology
• Deployment, diffusion and transfer, RD
  cooperation, transfer of environmentally sound
  technologies to developing countries
• Finance
• Adequate and predictable financing for developing
  countries,
• Positive incentives for mitigation and
  adaptation,
• Funding for adaptation in vulnerable countries
  and
• Capacity building and mobilisation of public and
  private finance.

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What is next? (I)

• Bali is just the start!
• Intensification of the negotiating process in the
  next 2 years with stock taking in Poznan first
• 4 meetings/negotiating sessions per year, at
  least
• Bangkok, April 2008 (agreement on a work
  programme)
• Bonn, June 2008 (first discussion on substance,
  focus on adaptation, technologies and finance)
• Accra, August 2008, focus on forest and sectoral
  approaches

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What is next? (II)

• Use of outside processes to support the
  negotiations G8, MEM...
• Intensification of contacts/dialogue with key
  third country partners.
• COP 14 and COP/MOP4, Poznan December 2008
• COP 15 and COP/MOP 5, Copenhagen, December 2009

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²
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Climate and Energy package objectives

• 20 GHG reduction compared to 1990
• Independent commitment
• 30 GHG reduction compared to 1990
• In context of international agreement
• 20 renewables share of final energy consumption
• 10 biofuels in transport, with
• production being sustainable
• second generation biofuels commercially available

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Where do we stand today?

• In 2005
• -6.5 GHG emissions compared to 1990
• including outbound aviation
• 8.5 renewable energy
• mainly through large scale hydro and conventional
  biomass
• Targets are ambitious
• -14 GHG compared to 2005
• 11.5 renewable energy share

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The Climate and Energy package

• Overall Communication
• Revision of EU Emissions Trading System (the ETS)
• Effort sharing in non ETS sectors
• Directive on promotion of renewable energy,
  report on renewable energy support schemes
• Directive on carbon capture and storage, and
  Communication on demonstration plants
• Revised environmental state aid guidelines
• Accompanying integrated impact assessment

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Approach

• Cost-effectiveness Fair distribution
• Solution
• Fairness differentiate efforts according to
  GDP/capita
• national targets in sectors outside EU ETS
• national renewables targets (partially half)
• redistribution of auctioning rights (partially
  10)
• Cost-effectiveness introduce flexibility and use
  market based-instruments (EU ETS, access to
  JI/CDM, etc.)

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Health effects of climate change Source
COM(2007) 2 final, impact assessment for
Commission Communication on Limiting Global
Climate Change to 2 degrees Celsius

• Increases in summer heat related mortality
  (deaths) and morbidity (illness)
• (lower) Decreases in winter cold related
  mortality and morbidity
• Changes in the disease burden e.g. from vector-,
  water- or food-borne disease
• Increases in the risk of accidents from extreme
  weather events (storms and floods).
• Impact on mortality, morbidity, disability,
  health systems, and health economics of extreme
  events (storms and floods)

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Co-benefits air pollution and climate change

• The inter-linkages between climate change
  policies and air pollution were studied in the
  preparation of the European Commission's Thematic
  Strategy on Air Pollution.
• Reducing CO2 emissions generates substantial
  reductions for other air pollutants, e.g.
  nitrogen oxides (NOx), particulate matter (PM)
  and sulphur dioxide (SO2).
• Co-benefits of climate change policies are
  estimated to be substantial Reducing CO2
  emissions by 10 compared to baseline emissions
  in 2020 reduces impacts on human health, implying
  benefits of between 8.5bn and 27.8 bn.
• Reducing CO2 emissions by 22 compared to
  baseline emissions in 2020 reduces impacts on
  human health, with benefits between 27.8bn and
  48.1bn

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Reducing costs air pollution and climate change

• For the EU in 2020, reducing CO2 emissions by 10
  percent as compared to baseline emissions would
  cost about 12bn per year. However, the overall
  costs would decrease with about 2.5bn by 2020
  due to the reduction in abatement costs for
  traditional air pollutants.
• Similar or larger co-benefits are anticipated in
  developing countries, where urban areas
  experience particularly high local air pollution
  levels. Nine out of the 10 large cities worst
  affected by PM10 pollution are located in Asia,
  the other one is in Africa (World Bank, 2006).
• Studies on Shanghai and Beijing show that energy
  efficiency is one of the most cost-effective
  policies in reducing CO2 emissions. The local
  benefits of these measures outweigh local costs.
  By 2030 the monetized health benefits are
  projected to be 7 to 8 times larger than the cost
  of implementing these policies.

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More info on

• http//ec.europa.eu/environment/climat/home_en.htm
  
• Thank you !