1. Priorities on the climate change agenda during the Belgian EU Presidency Etienne Hannon – FOD VVVL / SPF SSCAE 22/06/2010

2. Overview 2 important issues on the EU-climate change agenda during the BE presidency: 1.The Road to Cancún : global negotiations on a post-2012 climate regime under the UNFCCC 2.Follow-up ‘Analysis of options to move beyond 20% greenhouse gas emission reductions and assessing the risk of carbon leakage’

3. 1. The Road to Cancún  Main Challenges for the EU on the way to Cancun: Rebuild trust and recover “institutional normality” avoid antagonism between two negotiating tracks (KP, LCA) combine a science based top down approach with a bottom up approach to engage developing countries address the substantial gaps in the present proposals (cf. current developed countries pledges account only for reduction in order of -13 to -17% by 2020 compared to 1990, compared to the -25 to -40% required by science) issues of hot air and LULUCF accounting rules need to be resolved (cf. can potentially undermine reduction targets) integrate the elements of the Copenhagen Accord in decision texts, and make them operational: – MRV – Finance: which sources, how to institutionalize the Copenhagen Green Climate Fund – Strengthening market mechanisms – Mechanisms and frameworks on adaptation, REDD+, technology

4. 1. The Road to Cancún  EU approach on the way to Cancun: reinforce EU leadership by stressing the EU commitment for both: – Immediate action: confirmation on its share of fast start financing (2,4 billion Euro for next 3 yrs) and reporting at COP.16 – An ambitious end result (a comprehensive global legally binding agreement in line with the 2°C target) show that the EU is engaging seriously in the work of both AWGs and supporting the need for continuity of the Kyoto track Show openess to: – stepwise approach – the form of a legally binding agreement Initiatives on REDD + Increased importance for outreach activities, bridge building role of the European Union and need for strategic alliances Clarify the expectations for a balanced and realistic outcome in Cancun, as a major step for a legally binding agreement in 2011

5. 1. The Road to Cancún  Important steps Bonn session June 2010 : – AWG-LCA : constructive atmosfere and good discussion, but strong reactions of some developing countries on the new text proposed by the chair – AWG-KP : increasing willingness to discuss ‘loopholes’ under the AWg-KP : surplus AAUs, LULULCF accounting rules Bonn session August 2010: – AWG-LCA : new text accepted as a basis for negotiations? – AWG-KP : workshops and discussions on loopholes Initiatives on REDD+ (Oslo-Paris), adaptation (Spain, US, Costa Rica) and mitigation/MRV (Germany, South Africa) Input by other fora into the UNFCCC-process : G8? (25-26 June 2010), G20? (26- 27 June 2010)? and MEF (30 June 2010), Clean Energy Forum (19-20 July 2010) Further informal consultations by Mexico, i.a. on legal form Second additional negotiation session (beginning October, Beijing) COP 16/CMP 6 (29 November – 10 December, Cancún)

6. 2. Analysis of options to move beyond 20% Context Climate/Energy package (20/20/20) – 20% GHG reduction in 2020 wrt 1990 – ETS review; Effort sharing decision; RES directive Conditional move to 30% GHG reduction (within an ambitious and comprehensive global agreement ) Purpose of the communication To analyse costs, benefits and options for moving to 30% taking into account recent developments (such as economic crisis) Not to decide to move now to 30% ; be ready to act whenever the conditions are met Requirement Env. Council March 2010 to update the analysis Requirement C/E package to assess competitive situation of energy-intensive sectors (carbon leakage) after Copenhagen

7. 2. Analysis of options to move beyond 20%  Reassessment of the -20% target New factors: – policies – economic crisis (effects on business, public finances) – oil prices Consequences on: – expected carbon price: ETS: 16.5 € in 2020, instead of 32 € – GHG emissions: baseline 2020: -14% (wrt 1990) – costs: ‘Direct’ costs of package in 2020: 48 bn€ instead of 70 bn€ – auctioning revenues: halved

8. 2. Analysis of options to move beyond 20%  Update of the -30% target Costs : – Direct costs: 81 bn€ in 2020 – Macro costs: positive or negative impact on GDP depending on policy options Benefits : competitiveness “green sectors”, air pollution, employment, energy security,… Options: – Split between ETS and non-ETS sectors – Policies : Cohesion funds (linked with surplus AAUs); technological options (eg. Product standards, smart grids); carbon taxes; multiplier CDM credits;…  Assess competitive situation (carbon leakage) Copenhagen Accord + lower carbon prices (under 20% reduction)  lower risks than in 2008 estimations (but measures remain justified at present) Move to 30%: current measures + option of including imports into the ETS Difficulty to make definitive assessment (cf. negotiations still going on)

9. 2. Analysis of options to move beyond 20% Council Environment 11/06/2010 Exchange of views – Good basis for further discussions – Some MS: in favor of unilateral stepping-up to 30% (eg. DE, FR, NL, DK, IE, PT) – Some MS: recall the conditionality (eg. HU, AT, IT, LV) Council conclusions – “AGREES to revert to these issues as soon as possible and in any case no later than at its October 2010 session, and WELCOMES the intention by the Commission to conduct more detailed analysis on the policy options and costs and benefits, including at Member State level, as appropriate” Linkages with international negotiations long term strategy (incl. EU roadmap 2050 and LEDSs)

10. More information on these issues: CCPIE stakeholdersmeeting ‘post-2012’ ‘Développements récents dans la politique climatique européenne et multilatérale ’ 30 June 2010, 8:45 – 13:00 Eurostation – Salle Storck Registration: bart.landuyt@health.fgov.be