EU calls on America to create transatlantic carbon trading scheme

Brussels capitalises on optimism about Obama's green agenda with proposal to expand carbon trading system

• Ian Traynor, Brussels
• guardian.co.uk, Wednesday 28 January 2009 15.54 GMT
• http://www.guardian.co.uk/environment/2009/jan/28/carbon-trading-us-europe

The Obama administration should join Europe in an ambitious new transatlantic pact to combat climate change, Brussels proposed today.

Seeking to seize on the excitement generated by the election of the new US president and hoping to co-opt Barack Obama's green agenda for a powerful alliance to tackle global warming, the European commission called on the Americans to establish a joint carbon trading scheme with Europe modelled on the system operating in the EU since 2005.

Unveiling the commission's pitch for the crucial round of global climate talks later this year in Copenhagen, Stavros Dimas, the environment commissioner, added that if the new US administration joins the system for auctioning polluting rights, it should then be extended to other industrialised countries and later to the big developing countries, transforming it into a global carbon market by 2020.

Dimas described this year's Copenhagen meetings, aimed at clinching a new global climate change deal to succeed the Kyoto protocol, as "a last chance" to get global warming under control before it passes the point of no return.

He appealed to President Obama to join the EU in the fight to save the planet. "It appears Obama prefers cap and trade," said Dimas, describing the new US leader's initial statements on global warming as "tremendously encouraging."

Senior officials from Brussels set off for Washington today to try to get the measure of the new administration on climate change policy after Dimas wrote to Obama on Tuesday to try to enlist the Americans in his campaign.

"Many of the new ideas that will move us away from our carbon addiction will come from America," Dimas told Obama. "America has the diplomatic and financial resources that, when added to the efforts of the EU, can help bring the rest of the world on board."

Dimas clearly hopes that such a joint EU-US strategy could bear fruit in Copenhagen in December in persuading the likes of China, Brazil, India, Russia, and Japan to forge a common front across the developed and developing world.

Today's policy paper from the commission was the opening salvo in what will inevitably be tough negotiations in Copenhagen.

The policy outline, which is to be debated at a summit of European government leaders in March and may still be changed, calls on developing countries to limit the growth in their greenhouse gases by up to 30% by 2020, compared with business as usual, as revealed by the Guardian in December. In return, it commits the EU to a 30% cut compared to 1990 levels by the same deadline, if agreement is reached with the other big international polluters.

The EU is already pledged to a 20% reduction in greenhouse gases by 2020 even without a Copenhagen accord.

The EU package is aimed at keeping the rise in the Earth's temperature to a minimum of 2C, and Dimas believes that global carbon emissions need to be halved by 2050. To achieve this Europe would need to reduce greenhouse gas emissions by up to 95% by that date.

The cost of success in meeting the targets, said the commission, will be €175bn a year by 2020, with around half of that money being spent in the developing world. Spending on research in green technologies would need to be quadrupled by 2020.

The commission reckoned that the industrialised world will need to pour in subsidies worth up to €54bna year into the developing countries.

But arguments are looming about who will foot the bill and about equitable burden-sharing.

NGOs such as Oxfam criticised the commission proposals as doing too little to alleviate poverty in the developing world, arguing that the poor countries faced the most "devastating impact" from global warming generated in the rich countries.

But Greenpeace welcomed the commission's paper as a good start while complaining that precise figures on how many billions would need to be transferred to the developing world had been dropped from earlier drafts.

"The commission has come up with a decent blueprint, but has shown it is unable to put its euros where its mouth is and support credible amounts of aid to prevent a global climate catastrophe," said Joris den Blanken, Greenpeace EU climate and energy policy director.

Dimas admitted that the issue of funding the impact of climate change in the poor countries would be a crucial topic at Copenhagen and mentioned a figure of £30bn in possible annual transfers from the rich to the poor. "Without a credible financial package there will be no deal in Copenhagen. No money, no deal," he said.

Senior commission officials also signalled that they would use the Copenhagen negotiations to push to reform and perhaps even scrap the so-called Clean Development Mechanism, an instrument under Kyoto that allows wealthy countries to offset their emissions reductions obligations through investment in green projects in the developing world.

The officials admitted that the system is being abused by both rich and poor countries, and noted that some of the beneficiary countries were wealthier than some of the countries doing the subsidising.

"There is some cheating," said a commission official. "And some of the developing countries are much richer than some [EU] member states."