The Champ is back: Where will Europe’s newfound climate leadership take us in 2012?

We all remember Europe being sidelined in the final hours of the 2009 climate conference in Copenhagen. Most observers agreed this was caused by obstacles involving internal disagreements and leadership. The hangover of this humiliating diplomatic defeat of a former climate champion lingered for quite a while in every European policymaker’s mind. Those days seem over now. The clear mark the European Union (EU) left on the outcome in Durban at the 17th conference of the parties to the UNFCCC is one example of the newly found EU confidence. The “champ” may be back but confirmation is needed in 2012.

Let’s start our story in September of 2011. With only three months to go until the next round of climate negotiations in Durban, a cunning plan emerged from the European institutions. At the time, most of the major players in those negotiations were basically crunching through the implementation of the smaller agreements reached in Cancun the year before, while Europe had tabled its wish for a time-bound road map leading to binding climate commitments for all nations on this planet. It is a testament to the EU’s outreach and commitment on climate action that the road map agreement, albeit in a weakened form, is in essence, the result of COP17 in South Africa.

message to Jose-Manuel Barroso, president of the European Commission, to maintain leadership and commitment throughout the negotiations at COP17
A message to Jose-Manuel Barroso, president of the European Commission, to maintain leadership and commitment throughout the negotiations at COP17

Europe’s success in Durban does not stand alone or look to be a lucky shot. It fits well within a list of events and decisions that have come about in the last twelve months. First, there is Europe’s firm commitment to go forward with its expanded emissions trading system (ETS). As of the 1st of January, the ETS also covers emissions from the aviation sector, including flights to and from the EU. This expansion of the EU ETS, first proposed in 2007, was deemed politically necessary because the aviation sector will become a growing source of greenhouse gas emissions and because the international body (i.e. the International Civilian Aviation Organisation, ICAO) responsible for dealing with this problem has been unengaged for over a decade. The current outright vocal from American, Chinese and Indian airlines toward the EU ETS (in some cases backed by their respective governments) does not cause Europe to blink or cave. Immediately after COP17, EU policymakers received the firm legal backing of Europe’s highest court when it confirmed the legality of the system due to its consistency with international aviation legislation established by the ICAO.

Another example is the firmer response from the EU concerning accepting off-set credits from the Clean Development Mechanism (CDM). The European Commission responded quickly and with determination when confronted with evidence that CDM project developers generating credits from the destruction of fluorinated greenhouse gases and nitrous oxide have been gaming the CDM. As of this year, certain credits related to the destruction of these potent greenhouse gases will cease to be accepted for compliance in the EU ETS. Again, the EU was forced to intervene due to the lack of corrective action under the UNFCCC.

Finally, there is Europe’s clear stand toward unconventional and CO2-intensive oil extraction. Technical experts from the EU member states and the European Commission are implementing the Fuel Quality Directive that obliges fossil fuel producers to reduce the life cycle of CO2 emissions of their products. The specific rules for the calculation of the greenhouse gas emissions will, in accordance with scientific data, set a much higher value on oil products extracted from tar sand in countries such as Canada.

All four examples reveal that when the European Union wants to intervene in the international climate debate, it does so with determination, with consistency and (importantly) in one voice. In the end, real actions, responses and results follow. Now the question is, what is next for Europe? The EU is not short of challenges facing its domestic climate policy instruments. The financial and economic crisis is having dramatic impacts on the carbon price in the EU ETS. With a price hovering around 7 EUR/tonne (while a price of around 30 EUR/tonne was expected in 2020) the 2008 Climate and Energy package seems to come apart at its seams. Investors in- and outside the carbon market are now sitting on the fence or backing off completely. Worst case scenario is a lost decade on climate action caused by a sustained oversupply and low carbon prices in the EU ETS. There more direct solution to this debilitating situation is to intervene in the carbon market by cutting the supply of allowances significantly. There are indications that this is bound to happen in 2012, finally. At the end of 2011, the European Parliament’s environment committee said nothing less when it voted on a new directive on energy efficiency. A preliminary decision, which on its own caused the carbon price to jump by 20 percent. In addition, an essential element is the presidential transition in the EU Council from Poland to a very climate-friendly Denmark.

We also expect the EU to strengthen its international climate partnerships and cooperation following the outcome in Durban. A growing number of developing countries are starting with the development and implementation of National Appropriate Mitigation Actions (NAMAs). Europe’s longstanding expertise with domestic climate action and proactive role in climate financing form the ideal ingredients to support the countries taking up those NAMAs. In particular, the planned high-level cooperation with China on implementation of an emissions trading system can herald an era of structural Euro-Asian cooperation on climate action. It is also time for Europe to send a strong signal to major industrialised polluters that keep standing on the sideline of international climate action. Europe’s emission trading legislation provides for the option to implement so-called “carbon inclusion mechanisms,” which would put a de facto carbon price on any CO2-intensive product entering the European Union’s market. While some might see this as a measure to protect Europe’s energy-intensive industry, it is also the quickest way to partially expose the US manufacturing industry to a carbon price. The recent court case victory on the aviation ETS can only make the EU more stout.

All in all, 2012 will be the year for the EU to confirm its newfound climate confidence and leadership both through international climate action concerning the consistent and bold implementation of what was agreed in Durban, and domestic action through salvaging and strengthening its current climate and energy legislation. Stay tuned.