1. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Climate Mitigation: Integrating Approaches for Future International Co-operation Cédric Philibert Energy efficiency and environment division ECN side-event Bali, 7 December 2007

2. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE www.iea.org/Textbase/publications/free_new_Desc.asp?PUBS_ID=2000 www.iea.orgwww.iea.org, “by topic”, then “climate change”, “publications and papers” Richard Baron, with Julia Reinaud, Matt

3. INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE Content of the IEA paper Competitiveness and climate policy What could sectoral approaches consist of? Governance issues  Integration in UNFCCC Negotiating domestic policy Reliance on international flexibility (carbon trading)  Role of industry federations Legal status in any international accord? Risks of anti-competitive behaviour Industry case studies (cement, steel, aluminium)  International market dynamics and challenges  Industry’s efforts to date to curb GHG emissions More at the… IEA side-event, GH, Monday 11, 6 pm

4. Annex I Expert Group on the UNFCCC Drawing on three 2005 AIXG papers: Approaches for future international cooperation New commitment options: compatibility with emissions trading Integrating approaches for future international cooperation www.iea.org ; www.oecd.org

5. Annex I Expert Group New commitment options: compatibility with emissions tradidng Dynamic, non-binding and sectoral targets, and price caps, all compatible with emissions trading, with each other and with fixed binding targets  In any case governments must be liable in case of overselling Other options show mixed compatibility with emissions trading and/or with other target types Intensity targets only partially alleviate uncertainty from economic growth

6. Annex I Expert Group InternationalOther types Domestic Domestic to international Dynamic Yes Price cap Yes Non-binding Yes Sectoral Yes Action ??Yes? Allowances Endowments No YesNo Long term ?No??

7. Annex I Expert Group on the UNFCCC A key question for future negotiations Can we integrate technology approaches and cap and trade approaches into a future regime?

8. Annex I Expert Group on the UNFCCC Objectives Define integration Consider reasons for integration Investigate comparisons of approaches  e.g. a technology approach and a cap-and- trade approach  Comparing results / Comparing efforts  Domestic efforts / Efforts to help others

9. Annex I Expert Group on the UNFCCC What is ‘integration’? Broader concept than linking emissions trading systems based on emission caps May take place when agreements are negotiated  To help the process take preferences into account, expand efforts and participation …and/or when policies are undertaken  To enhance synergies between approaches, even if adopted independently Integration requires comparisons

10. Annex I Expert Group on the UNFCCC Reasons for integration Climate change as a public good Competitiveness Fairness Static cost-effectiveness Dynamic cost-effectiveness Technology transfer

11. Annex I Expert Group on the UNFCCC Comparing domestic approaches Comparing domestic efforts  Costs: complex metrics  Broad direct comparisons of efforts: NATO’s case, possible problems for climate policy Comparing domestic results  Uncertain outcomes of broad technology approaches  Timing issues in comparing emission paths  Standards easily comparable to output- based sectoral targets – they could be linked

12. Annex I Expert Group on the UNFCCC Approaches in helping others Comparing efforts  Expenses may be the metrics  Difficulties can be overcome, for being similar to those experienced in the CDM  Contributions to international financial institutions the most easily comparable  Finance flows from mechanisms: do they belong to ‘helping others’ ? Comparing results  Multiple interactions may make it insoluble

13. Annex I Expert Group on the UNFCCC Comparing e.g. a technology approach with a cap-and-trade approach difficult  Except for comparing narrowly defined efforts (e.g., standards), no reliable metric to determine whether countries are making similar commitments – an essential element of fairness Political decisions may still request this Comparing efforts to help others easier than comparing results in helping others Conclusions