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The EU's climate-change gambit

The EU has proposed that rich countries put money towards a fund that will give developing countries €50bn a year by 2020 to help fight climate change. But is it enough?

HAS THE EU rescued the UN climate-change summit in Copenhagen from disaster? In late October, the leaders of the bloc's 27 member states offered a proposal under which rich countries will put money towards a fund that will give developing countries €50bn ($74bn) a year by 2020 to help fight climate change.

The EU claimed the plan, which followed a two-day summit, would help meet a price tag of €100bn a year to fight climate change. The remainder would come from the private sector (see p4).

The German leader, Angela Merkel, suggested the proposal showed that Europe remained the world's leader in fighting climate change, claiming "no-one else among the industrialised nations" has made a similar concrete offer to assist the developing world. Gordon Brown, the UK prime minister, agreed, saying Europe was "leading the way" on negotiations ahead of the December meeting in Copenhagen.

Someone needs to lead the way, because the US – which has been unable to pass its own climate legislation in time for Copenhagen – seems reluctant to take up that role, despite President Obama's previous promises. Last month, his officials made clear that the White House is not counting on any kind of agreement in Copenhagen.

Yet that won't stop Europe from trying to pull a rabbit from the hat, as last month's proposal suggests. A concession of some kind by rich countries is necessary because of the way negotiations are expected to unfold in the Danish capital. Pitted on one side will be wealthy Western countries, especially western European ones, demanding mandatory across-the-board cuts in carbon emissions.

On the other side, developing nations, led by China and India, say their per capita emissions remain a fraction of those in Western countries (see Figure 1, p4). With good reason, they also point out that the West had two centuries to advance their economies on the back of carbon; so, stunting growth by limiting carbon use in developing nations would be unfair. They will be reluctant to agree swingeing emissions cuts if it involves a threat to economic growth.

One solution is for all countries to agree cuts in greenhouse-gas emissions (GHGs); but for those that put most of the gasses in the air in the first place – the developed countries – to pay for most of the clean-up, and for new technologies and other costly measures to counter climate change.

So the EU leaders' opening gambit is promising. Swedish prime minister Fredrik Reinfeldt said it gave the bloc a "very strong negotiating position". In theory, at least, it should assure other countries that the EU is willing to put its money where its mouth is.

And the proposal to fund developing countries is not aimed only at securing the signatures of China, India and others on an agreement in Copenhagen to halve global GHG emissions by 2050 – the minimum target set by the UN. It should also put pressure on some other rich countries. The EU says it will wait to see how much cash the US, Australia and other developed nations are willing to put towards the same cause before it specifies how much it will spend.

That is a climate tactic the European Commission pioneered in 2007, when it launched its 20-20-20 programme (to reduce GHG emissions, increase the share of renewables in the energy mix and cut energy waste, all by 20% and all by 2020). The Commission says the target of cutting emissions by 20% will be raised if other countries also step up with specific goals.

However, the latest variation on this strategy was not well received by environmentalists and others pressing for strong action in Copenhagen. The biggest criticism is that the EU failed to give specifics on how much money its member states would commit, although there were some hints. The Commission had originally demanded that members collectively pledge €15bn a year to the fund, although this number was not mentioned after the meeting.

Instead, the bloc said it would offer "fast-start" finance of €5bn-7bn. Merkel said the EU ought to pay about a third of any global fund (and the same as the US) and says Germany will pay for 20% of the EU's contribution. The UK said anything over €50bn from the EU would be unaffordable; but a low figure of €22bn, as recommended by some countries, would be insufficient.

Otherwise, leaders congratulated themselves on having kept things vague, believing this would give them stronger cards to play in Copenhagen. Europe could not afford to be "naïve" ahead of the meeting in Denmark, said Jose Manuel Barroso, president of the Commission. "Our offer is not a blank cheque," he said, adding that Europe was "ready to act, if our partners deliver".

Members divided

Yet in suggesting that the EU is being canny, Barroso and others who echoed him are putting a gloss on the proposals, because the ambiguity says as much about the bloc's failings as it does about its negotiating strategy. Europe itself is divided about how to tackle climate change. Its own less-well-off members, led by Poland, are reluctant to transfer money to developing nations. (Some of the proposed recipients of aid, such as Brazil, are wealthier than Europe's poorest members.)

Indeed, while climate change dominates the public discourse in western Europe, east European governments – and publics – remain more concerned about energy security, not least how they can ensure more reliable supplies of oil and gas.

With such divisions within the EU itself, its position at the Copenhagen summit might be less solid than the Commission believes. Green groups were also critical of the proposals, saying they would rely too heavily on the private sector and carbon markets and were, in any event, pointless if specific spending commitments were not included.

That is a harsh judgement. Climate change is a global problem, so unilateral action is pointless. Europe can go only so far on its own. And unlike the leaders of countries such as China, Europe's politicians must explain and justify their actions to voters.

And there is one crucial specific that has emerged from the recent summit. The EU has acknowledged that rich Western countries must pay for the bulk of the fight against climate change, and that it will cost €100bn a year by 2020. If Merkel has her way, the US and EU will foot two-thirds of that bill. That is a breakthrough and there is a small possibility that the gambit might work in Copenhagen.


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