APPENDIX 16
Memorandum submitted by WWF
EXECUTIVE SUMMARY
WWF welcomes the opportunity to contribute to
the Environment Audit Committee's inquiry into climate change.
This opportunity is timely for WWF since we are shortly to launch
our first global climate change campaign—Powerswitch!
—designed to address climate change in over 20 countries
across the world.
As part of this campaign in the UK, WWF will
be intensifying its efforts in challenging the UK government,
power sector and industry to deliver on domestic targets and take
the urgent deep cuts in greenhouse emissions required to avoid
dangerous climate change. The UK Government must deliver a robust
domestic strategy for tackling climate change if it is to demonstrate
credible international leadership on climate change next year.
We have chosen to orientate our submission explicitly
around the issues of an international emissions trading scheme
and UK leadership on climate change in G8 and EU. Our recommendations
can be summarised as thus:
1. INTERNATIONAL
EMISSIONS TRADING
SCHEME AND
POST-2012
WWF considers that:
— An international "cap-and-trade"
scheme is feasible and, in fact, already exists under the Kyoto
Protocol Trading scheme up to 2012;
— While the Kyoto scheme may be deficient
in various ways, it's architecture can be improved without the
need to design a new scheme and the alternatives look less promising
in terms of their potential effectiveness;
— Kyoto's entry into force and implementation
is an important first step in building the multi-lateral cooperation
that addressing this serious global problem demands, and leaves
the door wide open for new negotiations with the greater global
community for the period beyond 2012. This must include re-engaging
the U.S. and developing countries;
— Any "post-2012" framework
for successfully delivering the significant climate change reductions
necessary should build on Kyoto and incorporate a global equitable
"cap-and-trade" system to include:
— A multilateral agreement based on
absolute mandatory caps for Annex 1 countries.
— Appropriate enforcement and compliance.
— A strong governance structure.
— "Decarbonisation" strategies
for developing countries ie decoupling economic development and
greenhouse gas emissions.
2. UK LEADERSHIP
IN 2005: G8 AND EU
WWF strongly advocates that the UK government
use its leadership position first and foremost to achieve global
political consensus for the need to stabilise the climate and
to kick-start international negotiations on the climate regime
post-2012. As part of this, it is important that the UK:
— Promotes and seeks agreement from
parties to a "2C ceiling" (staying below an average
of 2 degrees C above pre-industrial levels) for avoiding dangerous
climate change;
— Initiates discussions on the adoption
of an international multi-lateral framework for climate change
action post-2012, which builds on the Kyoto process, and ensures
that G8 countries adopt mandatory absolute caps for the post-2012
time period;
— Engages with the larger emitters
among the developing countries as part of the G8 process to assist
them in decarbonising their development and limiting their emissions,
and build new coalitions of Heads of State on deep emissions'
reductions targets (eg in the form of a "G-12");
— Ensures that the EU conducts a thorough
review of its progress towards meeting its Kyoto targets and delivers
deep cuts in the second commitment period (ie post-2012);
— Ensures effective implementation
and enforcement of the EU Emissions Trading Scheme (ETS), and
strong National Allocation Plans (NAPs) for the second phase;
— Calls for the EU to take on deep
cuts in the second commitment period (ie post-2012);
— Calls for greater international investment
in the development of carbon neutral technologies, including in
developing countries, through ensuring that international sustainable
energy initiatives (eg JREC and REEEP) result in measurable commitments;
— Engages with the most vulnerable
developing countries to articulate the scale and urgency of climate
change; and
— Leads the debate for redirecting
agricultural subsidies and introducing stronger incentives to
support biomass production.
INTRODUCTION
Climate change is the most serious environmental
threat facing the world today. Climate change has far-reaching
implications for the environment, poverty eradication, development,
population migration, international relations and security worldwide.
As such, the UK and other countries must treat climate change
as a foreign and domestic political priority. Global warming is
already having a huge impact and countries' decisions in the next
5-10 years will be crucial in avoiding long-term irreversible
damage.
To avoid the worst impacts of climate change,
WWF strongly advocates the need to ensure that, as agreed by the
UK government at the European Council conclusions of May 2003,
global mean temperature must be limited to a 2C increase
above pre-industrial levels, and that warming is reduced rapidly
from that peak. The science clearly shows that to exceed this
threshold would have tragic implications for people, ecosystems
and species—jeopardising food security, with up to hundreds
of millions more people at risk of hunger and poverty; significantly
damaging or disrupting arctic ecosystems, boreal forests and mountain
ecosystems, and threatening millions of species with extinction[30].
To limit warming to a 2C peak, industrialized
countries must reduce their emissions by at least 60-80% over
the next few decades[31];
Russia's recent ratification of the Kyoto Protocol is a welcome
development in this regard. However, of greater longer term importance
is the wider global debate on post-2012 negotiations—a key
issue that the UK must address through its international leadership
in 2005. The key objectives must be to ensure binding deep-cut
targets for developed countries, and to engage larger developing
countries in curbing rising emissions via low-carbon pathways.
The most vulnerable developing countries, from Africa to Central
America, largely mountainous or island states, must also play
a role in the climate negotiations, particularly in terms of adaptation
to impacts which are, in some countries, already occurring.
WWF is a leading international conservation
organisation, working for the protection of the natural environment
and quality of human life for over 40 years. WWF has a strong
presence in other European and G8 countries, as well as many developing
countries, and has long been actively involved in international
climate change negotiations, including UNFCC discussions surrounding
Kyoto and emissions trading. WWF has been working on the policy
front in the UK, EU and internationally via its network to ensure
commitment for keeping below this 2C ceiling, and that effective
measures are implemented to achieve the deep cuts in emissions
required. In this way, WWF considers emissions trading schemes
as the most cost-effective means to deliver these outcomes. Therefore
WWF is supportive of the overall objective of this inquiry in
assessing the feasibility of such schemes as a framework for negotiating
a post-2012 agreement.
Building on our policy efforts, WWF will be
launching its first ever global climate change campaign—Powerswitch!—later
this year, to elevate the profile of climate change in the public
arena and challenge governments and industry to make a swift and
major shift away from fossil fuels consumption. Globally and in
the UK, Powerswitch aims to engage all stakeholders—energy
utilities (ie power companies), financial institutions, the Government
and consumers—to make the switch from fossil fuel to clean
power, by using more renewable technologies and supporting greater
energy conservation.
Through this campaign, WWF is specifically challenging
the biggest global carbon dioxide (CO2) emitter—the power
sector in developed countries—to become CO2-free by 2050.
As part of this campaign in the UK, WWF is calling upon the UK
government to deliver on its targets and take serious action on
the power sector and industry to cut emissions.
We have chosen to orientate our submission according
to the questions directly posed by the Committee.
1. Is an International Emissions Trading
Scheme Feasible?
1.1 WWF considers that an international
emissions trading scheme is feasible. Such a scheme already exists
under the Kyoto Protocol's trading regime. It enables developed
countries to buy and sell emission credits and co-operate in projects
under a system of "joint implementation" where one developed
country can finance emission reductions in another. The original
Kyoto Protocol agreement does not prescribe any specific emission
reduction targets to developing countries, based on the principle
that the burden of responsibility for increased greenhouse gas
emissions lies with the industrialised countries—an appropriate
arrangement, in the view of WWF. Developing countries, at this
stage, are involved through the "clean development mechanism",
developed through the Protocol, whereby industrialised nations
can fund emission-reduction projects in developing countries and
claim credit against their own reduction targets. The Kyoto Protocol
Fund set up in 2001 also assists developing countries in sustainable
development projects as well as guarding against the threat of
climate change.
1.2 Kyoto is not without its flaws. However,
its principles, rules of compliance and ways-of-working prove
the best basic architecture from which to build any longer term
framework for action on climate change. This includes setting
absolute caps for industrialised countries supported by binding
compliance and international emissions trading to ensure cost-effectiveness.
A global emissions trading scheme that is implemented effectively
with strong caps and rules should be at the core of any future
climate change regime beyond the Kyoto period of compliance. It
is the most cost-effective mechanism developed countries can use
to deliver on their reductions targets. Giving an economic value
to CO2 will trigger the switch to cleaner forms of energy because
the dirtier ones just become more expensive. This will play itself
out in the beginnings of an international carbon market, where
cleaner companies should have a clear leg-up, driving the energy
sector to less carbon intensity in the future. Governments are
free to choose how they may comply and may enforce policies which
encourage efficiency, reform the energy and transportation sector,
promote renewable forms of energy, phase out inappropriate fiscal
measures and market imperfections etc. This system also sends
strong signals to enable parties to move early, as they will reap
the rewards of positive action taken in reducing their emissions.
1.3 There are several features that an ideal
emissions trading regime should possess if it is to be environmentally
effective, some of which are described briefly below. These include:
1.3.1 Strong absolute mandatory caps for
developed countries (as defined as "Annex 1" by the
UNFCC) that reflects the magnitude of the longer term objective.
These caps should be set centrally and independently from its
participants to minimise dilution (for example, by the UNFCC).
We have already witnessed the inherent problems of inconsistent
rule application, lack of harmonisation and the dilution resulting
from the setting of weak NAPs by individual countries in the European
ETS. Ad-hoc subsidiarity has resulted in a "race-to-the-bottom",
where the real environmental benefits have been largely compromised
by the politics and industry lobbies in different countries. The
UK has presented a classically appalling example with its decision
on 27 October to provide an extra 19.8 million allowances to industry
over the 3-year period due to the upwards revision of national
emissions projections. This decision was damaging for both business
and the environment: if the government's climate change goals
are to be achieved, these extra emissions will now have to be
reduced through other measures such as taxation and regulation,
with higher costs for industry than the economically-efficient
emissions trading approach. The practicalities of determining
caps and an international regulating body or bodies need serious
consideration and further exploration. Building on the Climate
Change Convention and Kyoto Protocol cap setting processes is
likely to be the best place to start.
1.3.2 Strong compliance and enforcement
is essential in providing certainty of environmental effectiveness
for the scheme and verifiable delivery on commitments. This is
a challenging task for all international regimes, particularly
given the technical and reporting difficulties involved in assessing
compliance. However, the Kyoto Protocol has a relatively sound
reporting and review process, and could be the model for future
compliance systems. Enforcement is also extremely difficult in
any international agreement: since they are contracts between
states, into which states enter voluntarily and from which they
can withdraw, there is no way of enforcing them other than through
the imposition of fines or by extreme measures, such as invasion
or trade sanctions[32].
To date, most "enforcement" in international agreements
has consisted of shaming recalcitrant states. There has been some
exploration of enforcement systems under Kyoto. These and all
other viable options demand full analysis for any future international
emissions trading scheme.
1.3.3 Widening participation will strengthen
the robustness of the scheme and delivery of long-term objectives
for climate change. This should include the larger new and rapidly
industrialising countries that are prepared to do so, such as
China, India and Brazil. A post-2012 framework requires discussions
to start on what such countries will accept in terms of binding
carbon reductions or carbon intensity (linked to GDP) targets,
and what is needed to support decarbonisation of their economies.
The UK must lead on engaging these emerging economies in discussions
on the most suitable options. This process must, however, recognise
that any meaningful political engagement on this level with these
nations will only happen once the UK and other industrialised
countries first demonstrate that they are actually delivering
on their commitments (eg in meeting Kyoto targets, in the first
instance).
How and when other developing countries (except
the most vulnerable countries) participate in terms of binding
commitments will largely depend on a number of factors including
their capacity to mitigate (eg per capita GDP), potential to mitigate
(eg a measure of carbon intensity), total emissions, and historical
responsibility for emissions. A multi-staged approach based on
these principles has been suggested under the CAN framework, discussed
briefly in 3.2 below.
2. Are there alternatives to an international
emissions trading scheme?
2.1 There may be alternative strategies,
however it is WWF's view that they are unlikely to be as effective.
Emissions trading offers the most flexible cost-effective mechanism
by which countries and their businesses can deliver reductions.
This must be done at a global level to ensure that inconsistent
"cap-and-trade" systems do not emerge in different countries,
and to avoid the potential adverse competitiveness impacts that
could arise if measures are not internationally coordinated. Unilateral
"cap-and-trade" systems or bilateral schemes will in
no way deliver the scale of emissions reductions required to combat
climate change seriously.
2.2 In the absence of progress in the formal
negotiations to date on a long-term climate change regime, the
UK and other concerned governments have focused on sustainable
energy initiatives involving "coalitions of the willing".
Certainly, there must also be development of credible institutional
arrangements to facilitate and support developing countries' efforts,
such as the channelling of investment in low-carbon technologies,
particularly to assist larger developing countries to follow low-carbon
pathways in their economic development. These are further discussed
in Section 3 below in relation to initiatives for the UK to take
up in its presidencies of G8 and EU. The deployment of renewable
technologies, however, is in itself insufficient to deliver the
necessary emissions reductions.
3. What approach to climate change should
the UK Government adopt during its presidency of the G8 and EU
in 2005?
The UK Government has an unprecedented opportunity
in 2005 to steer political discussions and negotiations on climate
change internationally, particularly as Chair of the G8 and President
of the European Council. The Prime Minister's commitment to use
the UK's position to advance international action on climate change
is vitally important. It is an opportunity that, if missed, will
undermine UK credibility in this area. The Kyoto Treaty is now
likely to become international law in early 2005, and must be
implemented. The UK must now start discussions for a wider agreement
beyond the Kyoto commitment period following 2012 that re-engages
the US and developing countries. In so doing, WWF urges the UK
government to prioritise the following objectives in its strategy:
3.1 Commitment to staying below 2 degrees
threshold: The UK government promotes and seeks agreement
from parties to the "2C ceiling" for avoiding dangerous
climate change. Countries must commit to keeping below a maximum
global mean temperature increase of 2oC above pre-industrialised
levels (ie not from present day), consistent with the current
science and accepted thinking on thresholds and impacts.
3.2 Post 2012 framework: The UK should
initiate discussions on the adoption of an international framework
for climate change action post-2012, which builds on the Kyoto
process. At the very least, the UK should be pushing for a future
climate change action regime that is based on:
(a) reduction targets that will avoid a level
of global warming increases exceeding 2 above pre-industrialised
levels, and
(b) recognition that industrialised country
targets need to be more aggressive than developing country targets
from the outset.
For the G8 specifically, the UK should promote
agreement for a multi-lateral "cap-and-trade" system
for emissions globally, based on mandatory absolute caps from
Annex 1 countries. Bilateral schemes will not deliver the emissions
reductions required to stay within a 2C regime. The sound
low-carbon technology investment initiatives currently promoted
by the UK government are unlikely to realise full business and
economic potential without a strong international framework to
incentivise uptake of such technologies. The two are interdependent.
In terms of the EU Council specifically, the
UK should promote adoption by the EU of the Climate Action Network
framework proposal, or similar, as an effective long-term regime
for climate change action[33].
WWF supports this equitable "multi-track approach" which
includes three elements:
(a) continuation of the Kyoto process in
ensuring deep cuts from industrialised countries;
(b) decoupling of economic growth and emissions
in developing countries (ie decarbonisation); and
(c) an increase in resources for adaptation
in vulnerable countries.
3.3 Engage Large Emitters: Through
the G8 process the UK must engage with the larger emitters among
the developing countries and build new coalitions of Heads of
State on deep emissions' reductions targets. These countries include
China, India, South Africa and Brazil. Their involvement will
be crucial to achieving meaningful global emissions reductions
in any future climate change policy and market regimes. Discussions
must focus on decarbonisation strategies as a way forward ie decoupling
economic growth from carbon emissions.
3.4 US Approach: The UK government
should hold a firm position on its objectives for advancing climate
change action internationally next year. The UK government will
need to act more assertively in driving forward the agenda towards
setting mandatory caps globally, and building coalitions with
the aforementioned developing countries. The UK must ensure that
re-entry of the US into the international climate change regime
is based on strong US commitments to tough emissions reductions
domestically.
3.5 EU Targets: A key task for the
UK's Presidency of the EU should be to review its progress towards
meeting its emission reduction targets (ie "demonstrable
progress"). The review should identify areas where more effort
is needed and initiate a process for ensuring that existing EU
policies and measures are fully implemented in member states,
strengthening those measures and developing new ones.
Effective implementation and enforcement of
the EU ETS and the delivery of strong NAPs for the second phase
(2008-12) is essential. The UK is in the best position to lead
on this issue, since it implemented the first domestic trading
scheme and has the experience and expertise to share on delivery
of such systems. The UK must work with the EU towards tightening
the rules governing the scheme to enable it to set far more challenging
targets in the second phase of trading, and seek clarification
and harmonisation of rules for consistent application across Member
States.
The UK should drive discussions on increasing
harmonisation of the system in terms of review processes for plans
and verification procedures, in addition to the introduction of
auctioning of allowances and the future inclusion of non-traded
sectors (most notably transport and aviation) in the ETS for the
second and subsequent phases. WWF believes the ability for participants
to source allowances from outside the EU severely undermines the
integrity of the system and recommends that this be disallowed
from Phase 2 onwards.
However, the European countries' commitments
much stretch beyond the ETS. The UK must also call for the EU
to take on deep cuts in the second commitment period (ie post
Kyoto) and adopt an emissions' reductions target by 2020, consistent
with the long-term 60-80% cuts necessary to remain within the
2C limit to global warming.
3.6 Sustainable Energy Initiatives: The
UK must lead in developing a robust and coherent strategy to reorient
global investment away from fossil fuel intensive and inefficient
energy infrastructure and into low-carbon or carbon-neutral technologies,
particularly in middle income countries. Sustainable energy initiatives—notably
JREC[34]
and REEEP[35],
but also any initiatives aimed at implementing recommendations
arising from Renewables 2004, the Extractive Industries Review
and the G8 Renewables Task Force—must result in measurable
commitments, be better integrated and far better resourced if
they are to form the basis of a coherent and comprehensive plan
to support decarbonisation in developing countries.
As part of this process, the UK should seek
financial commitments via the Extractive Industries Review, countries'
Export Credit Agencies, and International Funding Institutions
for supporting investment in renewable energy development and
energy efficiency initiatives in developing countries. The UK
can also take a lead in influencing the spending decisions in
EU budget discussions next year to favour such strategies.
The UK should promote a meaningful follow-up
process to the Renewables 2004 conference to ensure that technology
transfer and development approaches are better coordinated, and
that voluntary commitments made at the Bonn conference are implemented.
At present, the credibility of these programs in delivering meaningful
outcomes is questionable.
3.7 Engage the Most Vulnerable Countries:
Any international agenda must act to reduce the vulnerability
of developing countries and poorer communities where climate change
impacts are already occurring or will occur soon. The UK government
could play a lead role in initiating engagement with these most
vulnerable developing countries—drawing attention to specific
climate change impacts and developing a longer-term global action
framework. This development outreach could fit well as part of
the climate change science conference proposed for February next
year. The UK can uniquely bring to this forum the expertise on
the "2C science" and related impacts from highly
reputable research institutes such as the Hadley Centre, and can
articulate the scale and urgency of climate change, disseminate
research on thresholds and impacts, and seriously start addressing
adaptation needs.
3.8 Agricultural Subsidies and Incentives
for Biomass: The UK is in a good position to lead the debate
for redirecting agricultural subsidies and introducing stronger
incentives to support biomass production. Such initiatives could
provide an important contribution to reducing international and
EU dependence on fossil fuels for energy and transport, as well
as reducing commodity dumping on developing countries and facilitating
greater market access and economic prosperity for African and
other developing farming communities.
This initiative provides natural synergies between
the UK government's Africa and climate change agendas for the
G8, and is an issue the UK could work on under both G8 and EU
presidencies. It could help deliver on both OECD biomass commitments
and policy imperatives to assist developing countries as well
as enable the UK to align multiple constituencies including the
environment and development lobbies and farmers. Even in the US,
environmentalists, agricultural states' representatives and farmers'
lobbies have identified support for bioenergy as a potential "win-win"
for climate and rural development.
This will coincide with the planned EU Biomass
Action Plan and EU Biofuels Directive, and builds on progress
already made by the UK in linking agriculture, trade and the environment
in the EU. In particular, there is considerable scope under the
current EU Common Agricultural Policy (CAP) reform to press for
more support for a stable, environmentally sustainable biomass
supply.
4. WHAT
CONTRIBUTIONS CAN
INDIVIDUAL UK GOVERNMENT
DEPARTMENTS MAKE?
4.1 All UK government departments must play
a role in co-ordinating efforts in delivering a strong coherent
UK package for international climate change strategy. The Department
for Food and Rural Affairs (Defra) must be given the power and
lead on such initiatives—given its expertise in science
and policy areas—with key expert input from the other departments,
especially where participation on environmental affairs has been
lacking previously, as has been the case for Department for Transport
(DfT).
4.2 In particular, DfT have a key role to
play on the transport agenda and aspirations to include aviation
within future EU Emissions Trading regimes. The Treasury must,
at the very least, start participating on an international level
with regards to supporting and facilitating the necessary economic
instruments for bolstering sustainable energy technology initiatives,
and adaptation efforts in developing countries. The Department
for Trade and Industry (DTI) has industry expertise to feed into
the UK agenda, but would do well to appropriately reflect the
views of all business players, including the smaller and more
environmentally progressive, and promote the benefits of competitiveness
to UK and EU industry of strong national and international climate
change policies.
5 November 2004
30 See www.metoffice.com/research/hadleycentre/obsdata/globaltemperature.html;
www.ipcc.ch/pub/SYRspm.pdf. Back
31
Decision by the UNFCCC in Bonn in 2001 (decision 5/CP.6). Back
32
Agreements that regulate trade can, and do, initiate or approve
of sanctions. Back
33
A Viable Global Framework for Preventing Dangerous Climate Change-CAN
Discussion Paper, COP9 (Dec 2003)-http://www.climatenetwork.org/docs/CAN-DP-Framework.pdf. Back
34
Johannesburg Renewable Energy Coalition. Back
35
The Renewable Energy and Energy Efficiency Partnership. Back
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