Can border carbon taxes fit into the global trade regime? Bruegel Policy Brief 2013/06, 9 December 2013

One complement to domestic climate policies could be the regulation of carbon dioxide emissions arising during the production of imported products. Such ‘border carbon adjustments’ (BCAs) are said to have several benefits, but are also severely criticised. This Policy Brief highlights some weaknesses in the standard argumentation for BCAs. But there is an alternative argument for border carbon measures, based on the fact that countries expose each other to climate externalities. The reformulated argument is economically more convincing, and provides a more convincing justification for the extraterritorial feature of border carbon measures. However, there are also several important factors mitigating against the implementation of such measures, including the risk that these measures will be used for protectionism. One complement to domestic climate policies could be the regulation of carbon dioxide emissions arising during the production of imported products. Such ‘border carbon adjustments’ (BCAs) are said to have several benefits, but are also severely criticised. This Policy Brief highlights some weaknesses in the standard argumentation for BCAs. But there is an alternative argument for border carbon measures, based on the fact that countries expose each other to climate externalities. The reformulated argument is economically more convincing, and provides a more convincing justification for the extraterritorial feature of border carbon measures. However, there are also several important factors mitigating against the implementation of such measures, including the risk that these measures will be used for protectionism.

Navigating the road from Warsaw towards a climate agreement in 2015. CEPS Commentary, 5 December 2013

The latest round of climate negotiations that took place in Warsaw (Conference of Parties, COP19) finally resulted in a decision to agree on a timeframe for the new agreement due in COP21 in Paris in 2015, and on ways to enhance the levels of ambition in pre-2020 mitigation pledges. Specifically, Warsaw produced two milestones: i) Parties were asked to communicate “intended nationally-determined contributions” by March 2015 and ii) the Ad-hoc Working Group on the Durban Platform for Enhanced Action was requested to identify before COP20 in Lima, the information that Parties will provide when putting forward their contributions. This Commentary by Noriko Fujiwara explores what the Warsaw decision means in practice and offers some preliminary ideas about what is still needed.

The New EU Climate and Energy Package: Passing the test? CEPS Commentary, 6 January 2014

On 22 January 2014, the European Commission is expected to publish the proposals for the 2030 Framework for Climate and Energy Policies, which will be discussed and possibly – or maybe, partly – agreed during the 20-21 March 2014 European Council. This is the first comprehensive review of the 2007-09 Climate and Energy Package, which resulted in the so-called ‘20-20-20’ targets by 2020. The principal intention is to define the EU’s climate change and energy policy framework for the next decade and beyond to give investors an adequate amount of predictability if not certainty. This Commentary argues, however, that the ‘2030 Framework’ is not just about predictability; it is also about making the proper adjustments based on the lessons learned and also in response to new issues that have emerged in the interim. The authors ask what the main lessons are and how they should influence the 2030 Framework. Or put differently, what are the conditions that the “2030 Framework” will need to meet in order to offer a viable package for discussion?

Climate Conundrums at High Altitude. EU Diplomacy Paper 01/2014, January 2014

The European Union (EU) was the frontrunner for the establishment of the world’s first multinational emissions trading scheme (ETS). Committed to combating climate change, the EU sought to overcome the multilateral paralysis within the International Civil Aviation Organization (ICAO) to mitigate aviation emissions. Unsuccessful in pushing for a global market-based measure (MBM) within the organisation, the EU was ready for take-off to include the sector in the EU emissions trading system (EU ETS). The geographical scope, however, including all flights from and to Europe in their entire trajectory, caused frictions with the international community about sovereignty issues. Ultimately, Climate Commissioner Connie Hedegaard announced a ‘stop-the-clock’ for international flights, a temporary derogation until the 2013 ICAO Assembly in order to find a global agreement. The ’stop-the-clock’ initiative provides ample opportunity to analyse EU leadership in curbing aviation emissions based on an analytical framework specifying different types of leadership. Its shows the global challenge to the EU’s claim of structural leadership on various levels in and beyond ICAO. The paper aims to analyse to what extent the EU is a global leader in mitigating aviation emissions and to identify the kind of EU leadership according to a threefold analytical framework. In addition, it will factor in the 'stop-the-clock' initiative and to what extent it altered the perception of EU leadership in the field. The paper comes to the conclusion that EU leadership in mitigating aviation emissions is not stalling. On the contrary, the EU, by pursuing the extension of the EU ETS, has put aviation emissions on everybody’s radar – and thus showed idea-based leadership. Proving the scheme’s feasibility further underlined EU leadership, in the form of directional leadership. The 'stop-the-clock' decision, however, already indicated what was later on confirmed in the 38th ICAO Assembly: Unilateral structural leadership of the EU in the field of aviation emissions is not credible at the moment.

The Role of Market Mechanisms in a Post-2020 Climate Change Agreement. CEPS Special Report No. 87/May 2014

This special report is intended to serve as a background briefing document for the European Climate Platform seminar on Carbon Markets in the 2015 Agreement: Role and Architecture, but also raises issues of more enduring relevance in the wider debate about market mechanisms and the next climate change agreement. The paper looks at the relationship between the carbon market and a new climate change agreement, to be finalised in Paris in 2015. It tries to answer two key questions: does the carbon market have a role to play in a post-2020 agreement, and what is the role of a post-2020 agreement in the creation and operation of a carbon market? Introduction. The world has changed in many ways since 1997 when the Kyoto Protocol was adopted, along some critical axes, both from an economic and emissions points of view. Moreover, and this cannot be quantified, the appetite for global governance, especially for an agreement with such far-reaching implications as a climate change agreement, has diminished considerably. This paper looks at the relationship between the carbon market and a new climate change agreement, to be finalised in Paris in 2015. It tries to answer two key questions: does the carbon market have a role to play in a post-2020 agreement, and what is the role of a post-2020 agreement in the creation and operation of a carbon market?

Elements of Europe's energy union. Bruegel Policy Brief 2014/05, September 2014

THE ISSUE European Union energy policy is guided by three objectives: sustainability, security of supply and competitiveness. To meet its goals in these areas, the EU is updating its energy strategy with new targets for 2030. The starting point for this is the assessment of the previous EU climate and energy package, at the centre of which were the 20-20-20 targets for 2020. Although the EU is largely on track to meet these targets, EU energy policy is generally not perceived as a success. Recent events have undermined some of the assumptions on which the 2020 package was built, and the policies for achieving the 2020 targets – although at first sight effective – are far from efficient.

Climate Change: Balancing economic and environmental concerns. CEPS Commentary, 3 October 2014

In surveying the portfolio for climate change assigned to Commissioner-designate Arias Cañete, Andrei Marcu finds in this CEPS Commentary that the approach proposed in the European Commission’s January 2014 package offers a sound basis on which to proceed overall, but he specifies that it needs to be put in a context where the causes and symptoms are correctly identified. He singles out timing and governance as other important elements and discusses their practical implications.

The 2015 Climate Agreement: What’s in it for the EU. CEPS Commentary, 17 October 2014

The European Union, together with other countries, is making a second effort to reach a comprehensive global climate change agreement in Paris in 2015, after the unsuccessful attempt to do so in Copenhagen in 2009. In a Europe still preoccupied with recovery from the economic crisis, why should the EU be tempted to offer leadership in the field of climate change and what would such an agreement bring – in short, what’s in it for the EU? Although the world has changed since the earlier attempt to reach agreement, the EU needs to continue to be a leader in the climate talks, argues the author, both for the sake of the world and for our own EU interest. Others will come and share that leadership and shape it together. It is the only way that we, the EU, can be successful in Paris.

The 2030 framework on climate and energy - Getting Europe on the right track? EPC Commentary, 30 January 2014

Climate vs competitiveness? The European Commission published its proposal on the 2030 climate and energy framework on 22 January. Reflective of the current economic climate, it was accompanied by a report on energy prices and the Commission decided not to propose regulation on shale gas but to issue recommendations on environmental standards. The same day also saw the publication of a communication “For a European Industrial Renaissance”. Climate considerations no longer drive the agenda. The enthusiasm of 2007, when the “20/20/20” climate and energy targets were set for 2020, has diminished. The new reality has brought competitiveness to the top of the EU’s priority agenda.

Energy and climate - What is the new European Commission thinking? EPC Commentary, 30 September 2014

A visible change of priorities and re-structuring of portfolios in the new European Commission have raised questions about related policy implications especially for climate and energy policies. On the one hand, it is seen that the new structure with Vice Presidents as team leaders for groups of Commissioners could encourage much needed policy coordination between policy areas, such as climate and energy policies. At the same time there are questions over what this could mean for political priorities, to what extent the Vice Presidents will be able to guide policy-making and how responsibilities will be divided. No matter what the structure of the Commission, it is in the EU’s interest to ensure that its climate and energy policies form a framework for action that helps to reduce global emissions, fight climate change locally and globally, secure energy supplies, promote wider socio-economic interests and increase competitiveness – all at the same time.

The US-China Joint Announcement on Climate Change: Can the G2 make a difference? CEPS Commentary, 26 November 2014

This Commentary finds that the US-China joint declaration on climate change, issued following the Asia-Pacific Economic Cooperation (APEC) Summit in Beijing on November 12th, is undoubtedly an important announcement by the two global economic giants responsible for emitting over 30% of the world’s GHG emissions. As such, it needs to be seen as important and relevant – a very positive development towards a new global climate change agreement in Paris. It is a challenge to those that have announced their pledges and are seen as capable of doing more, as well as to those that have not yet announced their intentions. It shows the importance and success of the UN climate change conference in Warsaw last year, when the decision was made that all Parties should announce their commitments by the first quarter of 2015. It also represents a total breakdown of the Kyoto Protocol-style separation in climate change negotiations between countries into Annex 1 and non-Annex 1, with China signalling that it is taking on the leadership role that comes with being a great economic power. In broader terms, it shows that there is scope for cooperation between the two main economic actors, even in the face of competition in other spheres. It is also a challenge to the EU, which was a leader and needs to show that there is a benefit in maintaining its leadership. Finally, agreements are deemed historic only by history. This one is important, and a potential game-changer, on the face of it. But it needs to live up to its promise. There is sufficient uncertainty for us to withhold final judgement and see if its promise materialises through implementation. But, as sober a judgement as we must make on such important matters, this announcement certainly gives us great hope that it is possible to do what needs to be done, and we must wholeheartedly welcome and applaud it.

A European response to the resource and climate challenge. CHALLENGE EUROPE Issue 22 - Challenges and new beginnings: Priorities for the EU's new leadership, September 2014

The 20th Century was characterised by growth: the world population grew by four times and its economic output grew by 40 times. At the same time, the resource use and greenhouse gas emissions increased drastically. Only within the last two decades, the worldwide extraction of resources increased by over 50%. With the expectation that the demand of resources will triple by 2050 and the demand for food, feed and fibre is projected to increase by 70%, there is no doubt that we will exceed our planet's boundaries, the safe thresholds within which humanity can continue to develop and thrive for generations to come. Crossing these boundaries could generate abrubt or irreversible environmental changes. Respecting them reduces the risk that human society and ecosystems will face irreversible damages.

Renewal through international action? Options for EU foreign policy. CHALLENGE EUROPE Issue 22 - Challenges and new beginnings: Priorities for the EU’s new leadership. September 2014

The time has come for the EU to become more curious of the world around it, open and receptive to different ideas, and more articulate and thoughtful about its own. This is a somewhat anthropomorphic description of what would be needed to 'mature' into a global actor. The EU has promoted and managed globalisation while pretending that its political dimension would not require attention. This has led to it punching below its weight globally. Now it is abundantly clear that the systemic weaknesses of globalisation require international action and that the management of internal affairs cannot be divorced from the external context: decision time has come.