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Issues related to climate policies 24 November 2011 Conseil Central de l’Economie / Centrale Raad voor het Bedrijfsleven

Peter Wittoeck / Vincent van Steenberghe FPS Health, Food Chain Safety and Environment Climate Change Section

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Outcome of COP.16/CMP.6:

The Cancún Agreements

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Cancún Agreements - highlights  UNFCCC process back on track, after CPH “failure”  Copenhagen “Accord” effectively enshrined in UN agreement  Mitigation targets:  2 C objective  Review 2013-2015, based on IPCC AR5  Anchoring of post CPH “pledges” into formal UN documents (developed and developing!)  …  Financial targets:  FSF 30 G$ (2010-2012)  100 G$ (2020)

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Cancún Agreements – highlights (ctd.)  “new principles”     

paradigm shift towards building a low-carbon society just transition of the workforce, decent work and quality jobs equitable access to sustainable development in all climate change-related actions fully respect human rights gender equality, effective participation women & indigenous peoples

 establishment of processes for way forward:       

Scope and modalities of the Review Clarification of ‘pledges’ Guidelines and modalities for MRV, ICA, IAR Work programme on Loss & Damage REDD+ finance Consider market and non-market based mechanisms …

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Cancún Agreements – highlights (ctd.)  Creation of new tools and institutions:      

Green Climate Fund Standing Committee for CC Finance NAMA registry Technology Mechanism (TEC & CTC/N) REDD+ Mechanism Adaptation Framework & Adaptation Committee

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From Cancún to Durban

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Durban: key challenges 1) Operationalising Cancún 2) Addressing ‘remnants’ from Cancún: international

transport, carbon market mechanisms, LULUCF, AAU surplus, HFCs, …

3) Address main ‘political’ gaps in the regime: a) Mitigation gap b) Legal form gap c) Finance gap

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Cancún 2008

2009

2010

GAPs

Durban 2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Finance gap FSF 30 G$

Path for scaling up climate finance?

100 G$/yr

Legal gap Kyoto Protocol CP 1

Kyoto Protocol CP 2 ?

Comprehensive LBF?

Negotiate LBF ?

Mitigation gap 2C

Review

“pledges”

Process to ramp up ambition?

Review ?

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Cancún 2008

2009

2010

Durban 2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Finance gap FSF 30 G$

Path for scaling up climate finance?

100 G$/yr

Mitigation gap

Legal gap Kyoto Protocol CP 1

Kyoto Protocol CP 2 ?

Comprehensive LBF?

Negotiate LBF ?

Mitigation gap 2C

Review

“pledges”

Process to ramp up ambition?

Review ?

SPF SANTE PUBLIQUE, SECURITE DE LA CHAINE ALIMENTAIRE ET ENVIRONNEMENT Cancún: “reducing global greenhouse gas emissions so as to hold the increase in global average temperature below 2 C above pre-industrial levels and that Parties should take urgent action to meet this long-term goal, consistent with science and on the basis of equity”

Now : 48 Gt

BAU : 56 Gt Low pledges: 53 Gt High pledges: 49 Gt 2 C : 44 Gt

Gap = 5-9 Gt 2 C trajectory

Cancún: “work towards identifying a time frame for global peaking of greenhouse gas emissions […], and to consider it at COP17”

Cancún: “work towards identifying a global goal for substantially reducing global emissions by 2050, and to consider it at COP17”

Source : UNEP gap report

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UNEP gap report

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www.climateactiontracker.org

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Cancún: “Agrees that developing country Parties will take nationally appropriate mitigation actions in the context of sustainable development, supported and enabled by technology, financing and capacity-building, aimed at achieving a deviation in emissions relative to business as usual emissions in 2020;” www.climateactiontracker.org

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Cancún: Urges developed country Parties to increase the ambition of their economy-wide emission reduction targets, with a view to reducing their aggregate anthropogenic emissions of carbon dioxide and other greenhouse gases not controlled by the Montreal Protocol to a level consistent with that recommended by the Fourth Assessment Report of the Intergovernmental Panel on Climate Change; www.climateactiontracker.org

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-20 %

-30 %

www.climateactiontracker.org

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Low Carbon Roadmap Cancún:

• […] a low-carbon development strategy is indispensable to sustainable development. • addressing climate change requires a paradigm shift towards building a low-carbon society that offers substantial opportunities and ensures continued high growth and sustainable development, […] , while ensuring a just transition of the workforce that creates decent work and quality jobs; • Decides that developed countries should develop low-carbon development strategies or plans • Encourages developing countries to develop low-carbon development strategies or plans in the context of sustainable development

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Belgian position on EU LCE Roadmap

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In general The Roadmap is « very much welcome » •

Requirement to elaborate low emission developement strategies (LEDs)

•

Urgent need to provide certainty to private sector and to public decision makers at all levels

•

Need to reach long-term targets in cost-effective way (trajectory) by avoiding lock-in effects

•

Important input for further development and strenghtening of EU climate policies

•

Need to be open to EU domestic emission reductions above 80% in 2050 (scientific findings, e.g. from IPCC)

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On specific policies Energy efficiency is key •

Many advantages: energy security, competitiveness, jobs, health, protection against volatile energy prices, …

•

Large investments are required but costs are to a large extent compensated by lower energy expenses and co-benefits

•

Welcomes EC finding that 20% EE leads to 25% GHG reductions in 2020

The price-signal needs to be restored •

EU ETS must play its role in driving low carbon investments  needs to be ‘recalibrated’  link with EE goal and policies

•

Need to envisage implementation of new targets in non-ETS sectors (with costeffectiveness between ETS and non-ETS sectors)

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On the integration of policies Policy initiatives • Energy and climate policies • Directive on taxation of energy products • Next Multi-annual Financial Framework • New product standards Other long term strategies • White paper on transport • Energy roadmap

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On the « short » term (2020) (1/2) 100%

80%

100% Power Sector

80%

25% domestic reductions in 2020

60%

Current policy

Residential & Tertiary

60% Cost-effective trajectory

Industry 40%

40% Transport

20%

20% Non CO2 Agriculture

Non CO2 Other Sectors 0% 1990 2000 2010

2020

2030

2040

0% 2050

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On the « short » term (2020) (2/2) Issue related to « beyond 20% » or « step-up to 30% » GHG emission reductions since possible modalities to step-up to 30% are • 30% domestic reductions • 25% domestic reductions + 5% offsets Currently, no common BE position on this issue Federal level: resolution of the parliament (kamer/chambre) in March 2011 • In favor of unconditional EU step-up to 30% • Attention to be paid to employment and competitiveness

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Analyses: impacts and policies (1/4) Macroeconomic impacts in 2020 (FPB analyses)

Average annual loss of 0.05%

Average annual loss of 0.02%

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Analyses: impacts and policies (2/4) • Energy bill

• Public revenues from autionning of quotas

Baisse des importation énergétiques belges en 2020 (mio d'euros) Source: BFP (2011)

Recettes annuelles belges des enchères ETS (moy. sur 2013-20, en mio d'euros) Source: OKO Institute (2010)

2500 2100 2000 1500

1700 1200

20%

600 30% avec flexibilité

1000 30% interne

500

500

400

20%

400 300 200 100

0

662,5

700

0

30% avec flexibilité

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Analyses: impacts and policies (3/4) • Employment opportunities

• Health

Impact net sur l'emploi belge en 2020 d'un renforcement de l'objectif européen avec fiscalité carbone et recyclage en baisses de cotisations sociales (en unités)

Bénéfices sur la santé en Belgique en 2020 d'un renforcement de l'objectif européen (mio d'euros) Source: HEAL et al. (2010)

Source: BFP (2011)

700

30000 25530

621,5

600 500

20000

400

10000

7120

297,5

30% avec flexibilité

300

30% interne

200

30% interne

100 0

30% avec flexibilité

0

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Analyses: impacts and policies (4/4) Carbon leakage risks? Before crisis • 20% scenario: C price ~ 30 € (2020) • Leakage addressed through free allocation After crisis • 20% scenario: C price ~ 16 € (2020) • 30% scenario: C price ~ 30 € (2020)

How to step-up? • •

Cost-efficient distribution of efforts at EU level: +14% in ETS sectors and +6% in non-ETS sectors ETS: at EU level (cap) / non-ETS: new targets at national level

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Further steps needed On the short/medium terms: • Further analyses on step-up to 30% (at MS and sectoral levels) • Start analyses on 2030 horizon and beyond (also DK PDCY priority) On the long term: • Need to elaborate a BE LCE roadmap 2050 • Encouraged by Council of the EU • Focus on « transition » aspects • Involve all stakeholders and civil society • Such initiatives do exist abroad (eg: UK, DK, SE, SI, …) and even within Belgium (eg: Limburg, Leuven)

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