THE KYOTO PROTOCOL AND THE WTO: INSTITUTIONAL EVOLUTION AND ADAPTATION. CEPS Policy Brief No. 28/December

Overview. Questions about the interface between the multilateral climate regime embodied in the Kyoto Protocol and the multilateral trade regime embodied in the World Trade Organisation (WTO) have become especially timely since the fall of 2001. At that time, ministerial-level meetings in Marrakech and Doha agreed to advance the agendas, respectively, for the implementation of the Kyoto Protocol and for negotiations on further agreements at the WTO. There have been concerns that each of these multilateral arrangements could constrain the effectiveness of the other, and these concerns will become more salient with the entry into force of the Kyoto Protocol. There are questions about whether and how the rights and obligations of the members of the WTO and the parties to the Protocol may conflict. Of particular concern is whether provisions in the Protocol, as well as government policies and business activities undertaken in keeping with those provisions, may conflict with the WTO non-discrimination principles of national treatment and most-favoured nation treatment. The WTO agreements that are potentially relevant to climate change issues include many of the individual Uruguay Round agreements and subsequent agreements as well. The principal elements of the Kyoto Protocol that are particularly relevant are its provisions concerning emissions trading, the Clean Development Mechanism, Joint Implementation, enforcement, and parties’ policies and measures. In combination, therefore, there are numerous potential points of intersection between the elements of the Kyoto Protocol and the WTO agreements. Previous studies have clarified many issues, as they have focused on particular aspects of the regimes’ relationships. Yet, some analyses suggest that the two regimes are largely compatible and even mutually reinforcing, while others suggest that there are significant conflicts between them. Those and other studies are referenced in the ‘suggestions for further reading’ section at the end of the paper.1 The present paper seeks to expand on those studies by providing additional breadth and depth to understanding of the issues. The analysis gives special attention to key issues on the agenda – i.e. issues that are particularly problematic because of the likelihood of occurrence of specific conflicts and the significance of their economic and/or political consequences. The paper adopts a modified ‘triage’ approach, which classifies points of intersection as (a) highly problematic and clearly in need of further attention, (b) perhaps problematic but less urgent, and (c) apparently not problematic, at least at this point in time. The principal conclusions are that: · The missions and objectives of the two regimes are largely compatible, and their operations are potentially mutually reinforcing in several respects. · Some provisions of the multilateral agreements that may superficially seem at odds are not likely to become particularly problematic in practice. · ‘Domestic policies and measures’ that governments may undertake in the context of the Protocol could pose difficult issues in the context of WTO dispute cases. · Recent WTO agreements and dispute cases acknowledge the legitimacy of the ‘precautionary principle’ and are thus consistent with the environmental protection objectives of the Protocol. · The relative newness of the climate regime creates opportunities for institutional adaptation, as compared with the constraints of tradition in the trade-investment regime. · The prospect of largely independent evolutionary paths for the two regimes poses a series of issues about future international regime design and management, which may require new institutional arrangements. In sum, the present paper thus finds that although there are some areas of interaction that are problematic, the two regimes may nevertheless co-exist in relative harmony in other respects –more like ‘neighbours’ than either ‘friends’ or ‘foes’, as Krist (2001) has suggested.

EU 2020 Renewable Energy Goals Insufficient. IES Policy Brief Issue 2012/01/January 2012

Summary. It is clear that any action to combat climate change must involve extensive efforts in reducing the greenhouse gas (GHG) emissions from the energy sector. In the EU, nearly 80% of total GHG emissions come from the energy sector (European Commission, 2011, p. 21). Any credible action within the EU on combating climate change therefore requires deep shifts in the way we produce and use our energy. This paper highlights that renewable energy policies to 2020 are insufficient to meet the EU’s long-term climate policy objectives of reducing GHG emissions by between 80 and 95% by 2050, and thereby aiming to avoid an increase in global temperatures of more than 2°C. Such an ambition would likely require a very high share of renewable energy (in the range of 80 to 100%) in the overall energy mix of the EU, given current uncertainties about the feasibility of potential technological developments (e.g. carbon capture and storage technology).

EU Performance in the International Climate Negotiations in 2013: Scope for Improvement. IES Policy Brief Issue 2014/01/January 2014

Summary. The European Union (EU) has long been an important player and even a leader in the international cooperation on climate change. In 2013, preparations for a new global climate agreement in 2015 moved centre stage in the international negotiations. This policy brief assesses the EU’s performance in 2013 culminating in the Warsaw conference in November 2013. We find that the EU was actively engaged in the negotiations and pursued partially ambitious/progressive policy objectives, which it was partly successful in realising. The policy brief argues that international EU leadership for a 2015 agreement requires (1) building an international leadership alliance including the EU and other progressive countries and (2) serious homework by the EU to advance domestic climate mitigation efforts both by 2020 and 2030, and to enhance its position on climate finance.

EU climate and energy policy: hope for more and better climate policy integration? IES Policy Brief Issue 2014/02/January 2014

Summary. With discussions on-going in the EU on the climate and energy policy framework to 2030, it is timely to assess the reality of climate policy integration into EU energy policy. Such an analysis can lead to lessons for the legislative process for the 2030 package, and even for policies in other sectors and beyond 2030. Climate change is a complex, crosscutting, long-term and global problem. Policymakers acknowledge that integrating climate policy objectives into the elaboration and agreement of measures in other sectors represents one method for striving towards coherent policies that respond adequately to the climate change problem. This policy brief presents the results and policy recommendations from the project “climate policy integration into EU energy policy”.

European Energy and Industrial Policy Realigned: Risk or Opportunity for EU Eco-Innovation Strategy? IES Policy Brief Issue 2014/03/February 2014

Summary. Europe’s eco-innovation strategy fuses industrial, energy and environmental policy together in a concept for sustainable economic growth in the 21st century. The latest debate about high energy prices and their impact on energy-intensive industry shows, however, that the emphasis among the three policies has shifted over the years. Some adjustments are therefore necessary in order to reduce evolving inconsistencies. This Policy Brief describes the different dimensions of the EU’s industrial policy, and assesses the options available to policy-makers to increase the competitiveness of energy-intensive sectors without compromising the eco-innovation and sustainability agenda. If several key principles of the European sustainability agenda remain unchanged, strategic development is possible.

Paris Climate Agreement 2015 – EU needs to ensure ‘signal’ and ‘direction’. IES Policy Brief Issue 2014/08/October 2014

Summary. Parties to the UN Framework Convention on Climate Change are expected to agree on a new international climate agreement applicable to all countries from 2020 at the Paris climate summit in December 2015. This Policy Brief investigates the possible role of the European Union (EU) towards the 2015 Paris climate agreement. It argues for renewed efforts by the EU at coalition building with progressive developing countries, leadership by example and a more prominent, complementary role of individual EU member states. It also argues for a Paris agreement that provides a strong “signal” and “direction”, and discusses what this may entail.

Testing limited environmental liability against human rights requirements. IES WORKING PAPER 3/2009

Questions regarding oil spills remain high on the political agenda. Legal scholars, legislators as well as the international, European and national Courts struggle to determine key issues, such as who is to be held liable for oil spills, under which conditions and for which damage. The international regime on oil spills was meant to establish an “equilibrium” between the needs of the victims (being compensated for their harm) and the needs of the economic actors (being able to continue their activities). There is, however, a constantly increasing array of legal scholars’ work that criticizes the regime. Indeed, the victims of a recent oil spill, the Erika, have tried to escape the international regime on oil spills and to rely instead on the provisions of national criminal law or EC waste legislation. In parallel, the EC legislator has questioned the sufficiency of the international regime, as it has started preparing legislative acts of its own. One can in fact wonder whether challenging the international liability regime with the European Convention on Human Rights could prove to be a way forward, both for the EC regulators as well as the victims of oil spills. This paper claims that the right to property, as enshrined in Article P1-1 of the Human Rights Convention, could be used to challenge the limited environmental liability provisions of the international frameworks.

The CAP post-2013: more equitable, green and market-oriented? Based on the seminar held by Egmont on the 25th of November. European Policy Brief No. 5, December 2011

Following a seminar on the CAP post- 2013 held by Egmont - with the cooperation of the Polish Presidency - on the 25th of November 2011, Egmont commissioned the present policy brief. Three major policy issues were addressed at this occasion, namely; how to make the CAP more equitable, green and market-oriented? The trade-off between these policy issues will require policy choices that are worthy of analysis.

Re-designing the European Climate and Energy policies post-2020. European Policy Brief No. 29, March 2014

Ensuring the sustainability, security and cost-competitiveness of energy supplies for the EU citizens are the main objectives of the EU climate and energy policy, which remains high on the EU agenda. The next European legislature will have the difficult task to reconcile these different objectives into a comprehensive 2030 framework for climate and energy policies. Taking into account the changing energy dynamics, this paper analyses thus the state of play of these objectives today in order to better understand how the 2030 framework for climate and energy policies should be designed.

The Emission Trading Scheme reform: will the Commission's proposal save the system? EPC Policy Brief, 29 May 2015

The European Union’s Emission Trading Scheme (ETS), proposed by the Commission in 2001, entered into force in 2005. It was the flagship instrument of an ambitious policy aiming to reduce the emission of greenhouse gasses in the EU by making emission allowances a freely tradable ‘financial commodity’. However, in recent years, the cracks in the system have begun to show as the price of these CO2 emission allowances has dropped. In this Policy Brief, Jørgen Knud Henningsen argues that the envisaged ETS reform may not be enough to address the system’s shortcomings, and that there should be a more open discussion about its potential if it is to contribute to the EU’s goal of a largely de-carbonised economy by 2050.

Making low-carbon technology support smarter. Bruegel Policy Brief 2015/02, 18 August 2015

This Policy Brief describes the interaction between three approaches that are effective in driving innovation in low-carbon technologies. Based on that, the author provides four recommendations for making low-carbon technology support smarter. THE ISSUE Combating climate change on the global level will be much easier when abundant low-carbon technologies that are competitive in their cost and capabilities are available. But private companies underinvest in low-carbon innovation because they cannot capture the climate benefits. There are three policies to address this issue: pricing carbon, supporting deployment of as-yet uncompetitive technologies and supporting research and development.

European climate finance: securing the best return. Bruegel Policy Brief ISSUE 2015/03, 11 September 2015

Combating climate change is perhaps the most formidable public policy challenge of our times. Unmitigated climate change will be irreversible. It will place significant costs on future generations, and expose them to unexplored risks. To mitigate climate change, global coordination is indispensable. European Union citizens consider climate change a central problem. The EU and its member states have therefore put in place signficant and costly climate mitigation policies.

Towards a sustainable European economy. EPC Policy Brief, 13 October 2015

Europe is faced with interlinked economic, ecological and climate crises. As identified in the European Environment Agency's The European Environment – state and outlook 2015 report1 , Europe is increasingly affected by global trends that come with positive and negative impacts. Some of these it contributes to, some it can try to manage, while others are beyond its control. Regardless, only by anticipating these trends and making a sustainable economy the overriding policy objective, can it aim to maximise the related opportunities and minimise the threats.

REACHING FOR BLUE GOLD - How the EU can rise to the water challenge while reaping the rewards. EPC Issue Paper No. 80, November 2015

Foreword. Climate change is bad news for water resources – and thus for human development, societies, economies, the environment, and local and global security. The increasing frequency and severity of extreme weather events such as droughts and floods serves as a reminder of the effects climate change can have on the quantity and quality of global water reserves, and thus on various other aspects of life. Even though the effects differ from region to region, this is a global challenge with far-reaching consequences to which Europe is not immune. As the world leaders gather in Paris in December 2015 to discuss a new international climate deal, it is worth to remind politicians, businesses and citizens of the water challenge and its wider implications, which already affect us today – and which will only get worse with climate change. However, water-related risks resulting from climate change are not a fatality and damage control doesn’t have to be the only mantra. Placing the water challenge at the centre of political and security dialogues, development strategies and climate mitigation and adaptation measures, and implementing smarter water management, could also bring great economic, environmental and social benefits, in and outside the European Union. It would also contribute to global security. Water matters – now more than ever. This is also what this publication demonstrates. Building on the European Policy Centre’s, two-year “Blue Gold” project, this publication shows the rationale for action, how the EU could use its existing internal and external policy instruments to tackle the water challenge with its various dimensions and the benefits of action.

Can a global climate risk pool help the most vulnerable countries? Bruegel Policy Brief 2015/04 December 2015

Extreme climate events related to global warming will happen somewhat randomly and could have a huge cost for the most vulnerable countries. A global climate risk pool, with contributions from all countries, could help these vulnerable countries to recover from such events and might thus smooth the way towards a broader climate deal.