Options for future climate policy

Meeting of Stakeholders for Climate Change

Istanbul, 27th April 2006

Gemma Reece, Niklas Höhne

Ecofys
Options for future climate policy
Options for future climate policy

Econcern (2)
Options for future climate policy

Agenda

•International Climate Change Regime

–UNFCCC
–Kyoto Protocol
–Kyoto Mechanisms
–European Emissions Trading Scheme
•Position of Turkey
•UNFCCC Process
•Options for post-2012
Options for future climate policy

Climate Change Convention

Objective:
“Stabilization of greenhouse gas concentrations in the
atmosphere at a level that would prevent dangerous
anthropogenic interference with the climate system.”

Important principle
“The Parties should protect the climate system on the
basis of equity and in accordance with their common
but differentiated responsibilities and respective
capabilities. Accordingly, the developed country Parties
should take the lead in combating climate change and
the adverse effects thereof.”
Options for future climate policy

Kyoto Protocol
Entered into force 16 February 2005
Developed countries = Annex I countries
• Decrease average emissions 2008-2012 compared to
1990
All developed countries: -5%
USA: -7%
EU: -8%
Japan: -6%
Russian Federation: 0%
• Includes gases: CO2, CH4, N2O, HFCs, PFCs, SF6
• Sinks of CO2 may count under special conditions
Options for future climate policy

Kyoto Mechanisms
• International emissions trading between Annex I countries

• Joint Implementation of projects between Annex I countries

– Annex I investor country provides finance
– Annex I host country transfers (part of) emission reductions
over to investor country to use against its commitment

• Clean development mechanism

- Annex I investor country provides finance
- Non-Annex I country hosts the project
- Annex I country can use reductions to meet its commitment
Options for future climate policy

EU emissions trading system

• Implementing part of Kyoto obligation in Europe

• Officially started January 1st 2005
• Setting a price to CO2 emissions in a carbon-
constrained European market
• Participation of energy & industry at installation level
–Operators need emission permit (non-tradable)
–Operators with permit receive allowances (tradable)
Options for future climate policy

Future of EU ETS

•Phase I runs 2005-2007 and covers:

–50% EU greenhouse gas emissions
–Over 12,000 industry and energy sector installations
•Phase II runs 2008 to 2012, coincides with first
Kyoto commitment period
•Phase II expanding to include additional sectors
(and gases?)
Options for future climate policy

Position of Turkey
Options for future climate policy

Position of Turkey

•Ratified UNFCCC
•In Annex I but has no emission reduction
target
•Deleted from Annex II (2001)
•Not (yet) ratified Kyoto Protocol
•Not (yet) in European Union
•Low greenhouse gas emissions per capita but high
growth rates, compared to other Annex I countries
Options for future climate policy

UNFCCC process

Open ended ad-Hoc working group (AWG) for

new reduction targets for Annex I countries

Review of the Kyoto Protocol

Future system
2005 2006 2007

Dialogue on future steps for cooperative

action under the Convention

Other efforts like the G8, Asia Pacific Partnership

and other effort
Options for future climate policy

Two alternative views

EU et al.:
Continuing Kyoto with additional stages in
between Annex I and Non-Annex I

USA et al.:
Emphasis on technology development and
reductions in the future
Options for future climate policy

Approaches
Contraction and
Based on Convergence Brazilian Proposal
one/two on hist. resp.
Common but diff.
principles
convergence

Intensity targets

Sectoral
Triptych approaches
Sophisticated
approaches
Multistage South North
dialogue
Options for future climate policy

Options in a multistage setting

• Annex I: Alternatives to absolute emission reduction targets
– Dynamic targets and “price caps”
– Sectoral targets / sectoral emission standards
– Agreements on technology development

Most of the alternatives are unlikely to be sufficient to reach the

2°C limit

• Non-Annex I: incentives for participation

– Sectoral targets
– “No lose” targets
– “Sector crediting mechanisms”
– Extended CDM
– “Sustainable development policies and measures”

See also: Höhne and Lahme 2005: “Types of future commitments under the UNFCCC and
the Kyoto Protocol post 2012”, Briefing paper for WWF
Options for future climate policy

Possible multi-stage agreement

Group Criterion Ambition level of Types of Differen-
(cut-offs are indicative) commitments targets tiation of
targets

A > 9 tCO2-eq/cap 15 to 30% Absolute Sectoral

2/3 of Annex I average average reduction emission approach
Annex I + from 1990 ceilings

B 5 - 9 t/cap Per capita Flexible Individual

between 1/3 and 2/3 of stabilization emission approach
Annex I average (eg. CO2/GDP) targets

C < 5 t/cap Emission None, but N.A.

< 4000 $/cap limitation efforts assistance to
reduce

Source: K. Blok, N. Höhne, A. Torvanger, R. Janzic, 2005: “Towards a Post-2012 Climate Change Regime”,
http://europa.eu.int/comm/environment/climat/pdf/id_bps098.PDF
Options for future climate policy

Asia-Pacific Partnership on
Development and Climate
Initiative by Australia, China, India, Japan, South Korea, USA

• Agree to cooperate on technologies including energy

efficiency, clean coal, carbon capture and storage,
methane capture and use, civilian nuclear power,
advanced transportation, agriculture and forestry,
hydropower, wind, solar, …

• Meeting was scheduled for November 2005 but postponed

to April 2006

• G8 asked Worldbank to develop investment framework for

clean energy and development, creation of new financing
instruments
Options for future climate policy

Post-2012 activity conclusions

• Increasing momentum, more activities than ever

• Strong focus on alternatives to absolute binding emission

targets of the Kyoto Protocol
– Dynamic targets, price caps,…
– Sectoral targets / sectoral standards
– Technology agreements

• Incentives for developing country participation: “No lose”

targets, sector crediting mechanisms, revisiting CDM,
sustainable development policies

• But time is short to still keep 2°C goal within reach. Delay
of 5-10 years has significant impact on later required
reductions
Options for future climate policy

Contacts Ecofys

Ecofys Turkey.
Mr. Haluk Sayar
E-mail: haluks@alternatifenerji.com

Ecofys UK
Ms. Gemma Reece
E-mail: G.Reece@ecofys.co.uk

www.ecofys.com
Options for future climate policy

Backup slides
Options for future climate policy

CO2 emissions growth per capita

(Source: Climate Analysis Indicators Tool (CAIT), http://cait.wri.org/)

Options for future climate policy

Delay of emission reductions

14
Reference: Based on 450 ppmv CO2
SRES A1B scenario 12

Global CO2 emissions (GtC)

Delayed 2020: Kyoto 10
countries extend their
8
targets to 2020, no Maximum annual
action by others 6 Reference
reduction rate
-2.2%
Delayed 2020
Delayed 2015: Kyoto 4 - 3.6%
Delayed 2015
countries extend their >- 10%
targets to 2015, no 2 Multistage > -10%
action by others 0
1990 2000 2010 2020 2030 2040 2050
Multistage: All
countries reach Kyoto
until 2010, followed by Delay of 5 to 10 years after 2010 has significant
ambitious agreement
for 2020 for all implications on subsequently necessary emission
countries reductions to meet the same goal
Source: K. Blok, N. Höhne, A. Torvanger, R. Janzic, 2005: “Towards a Post-2012 Climate Change Regime”,
http://europa.eu.int/comm/environment/climat/pdf/id_bps098.PDF
Options for future climate policy

Linking temperature increase to

global emissions
15
Reference 120%
14
13 100% Approximate
12 temperature levels at
80%
11 equilibrium (e.g. 2200):
60%
10
550ppm 550ppm CO2:

Change to 1990
9 40%
4°C (2.5-5.5)
8 20%
GtC

7 450ppm 0% 450ppm CO2:

6
3°C (1.5-4.5)
5 -20%
4
400ppm -40% 400ppm CO2:
3
-60% 2°C (1-3)
2
-80%
1 (Source: IPCC TAR 2001
0 -100% and others)
1990 2000 2010 2020 2030 2040 2050

(Source: Ecofys, adapted from post SRES stabilization paths Morita et al. 2001, CO2 only)
Options for future climate policy

EU ETS prices and trade

European Union
Allowance
prices have
reached €30
per tonne CO2
(April 2006)

Source: Point Carbon

Options for future climate policy

Contraction and Convergence

• Contraction: Agreement on a global emission pathway
(e.g. towards 450ppmv)
• Convergence: Per capita emission converge until, e.g., 2050

30
Annex I
Em issions per capita (tCO2eq./person)

25 Global total
Non-Annex I

20

15

10

5
For 450 ppmv CO2:
0
• Convergence level 2-3 tCO2eq.
1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 (Global average today ~6)

Origin of the approach: Global Commons Institute www.gci.org.uk/briefings/ICE.pdf

Options for future climate policy

Intensity targets
• Improvement of Emissions/GDP
• Decision on participation needed

For 450 ppmv CO2:

• Annex I assumed to reduce 20% below 1990 in 2020
• Intensity targets for Non-Annex I countries, if their per-
capita emissions above 3 to 5 tCO2eq./cap in 2020
• Emissions/GDP improvement 1 to 2 percentage points per
year better than under reference scenario
Options for future climate policy

Sectoral approaches
• Emission targets are defined for all individual sectors as
function of their respective output (e.g. t of steel, kWh
produced, etc.). Emission trading possible

For 450 ppmv CO2:

• Annex I assumed to reduce 20% below 1990 in 2020
• Major Non-Annex I countries
– Electricity: reduction in CO2/kWh by 3% per year; energy
efficiency improvements reduce growth in production by 0.5%
per year
– Iron & steel: convergence in tCO2/t steel by 2025 to 0.80
(year 2000 average = 1.53)
– Cement: convergence in tCO2/t cement by 2020 to 0.60 (year
2000 average = 0.77)
Options for future climate policy

Triptych
Industry Adjusted BAU production growth
with efficiency improvement

Electricity Adjusted BAU production growth

with limit on sources

emission target
Domestic Converging per-capita emissions

National
Fossil fuel Decline to low level
production

Agricultural Percentage reduction below BAU

Waste Converging per-capita emissions

Land use Decline to zero

change and
forestry

For 450 ppmv CO2:

• Convergence to efficiency 50% better than BAT in industry in 2050
• 60% emission free electricity in 2050.
• Domestic: convergence to 0.7tCO2eq/cap
Options for future climate policy

Multistage
• Increasing participation:
Absolute reductions

e.g. lowing of emission

growth
e.g. sustainable development
policies and measures
No commitments

• Countries “graduate” into the next steps based on

thresholds (emissions/cap, GDP/cap, human development
index)
See also EU (EGFA), scientific community (RIVM, Wuppertal
Institut), NGOs (CAN proposal)
Options for future climate policy

Worldbank investment framework for

clean energy & development
•Developed out of the G8 process
•Energy sector policy reform is urgently needed
•Low-cost, high impact approaches should be
addressed first
•International Financial Institutions can be an
important source of finance, policy, and technical
advice
•Creation of new financing instruments:
–Clean Energy Financing Vehicle
–Power Rehabilitation Financing Facility
–Project Development Fund
–Venture Capital Funds for Technology Adoption
Options for future climate policy

Future international action on climate

change network
Information
- Activities
- Institutions
- Ideas
Discussion forum

www.fiacc.net

Supported by
- German Federal
Environmental Agency
- EU Commission
DG Environment
Options for future climate policy

Selection for further reading

DG Environment Climate Change Unit

www.europa.eu.int/comm/environment/climat/home_en.htm
International Emissions Trading Association: www.ieta.org
Kyoto-experts network: www.kyoto-experts.com
UNFCCC Climate Convention: www.unfccc.int
Climate Action Network: www.climnet.org
European Climate Forum: www.european-climate-forum.net
Emissions Marketing Association: www.emissions.org