Good afternoon...or good morning in Ottawa.
My name is Jos Delbeke. My colleague is Mrs. Dranseikaite, from the International Department of the European Commission dealing with environmental issues.
It's a great pleasure to address your committee today.
I can assure you that within the EU we are having a very lively debate on climate change. We had unusually high temperatures during the winter. We also had very convincing new scientific evidence--the IPCC report was mentioned, and we had the economics review by Sir Nicholas Stern from the U.K. I would even go as far as to say that not a single day is passing without newspapers and media making reference to climate change and the issues in front of us.
Within that context, Mr. Chair, allow me to make three basic points: the first is the global political context of decision-making in the EU on climate change; then, to perhaps go into more specific issues on the European's emissions trading scheme; and then some specific comments related to the economics of what we are doing--air pollution, local air pollutants and things like that.
First, on the global political context, I think the European Union is preparing its act to address not only the commitments under the Kyoto Protocol but also how to prepare for the longer term. In terms of the climate change science, 2012 is around the corner and we have to put it into a perspective of at least 2020. That's so we can reassure our economic decision-makers in private companies and give consistent and coherent signals to our consumers in terms of using the technologies and equipment we need in the future.
Cost-effectiveness is a very important element of our discussion. In fact, on January 10 the commission made some important decisions to put on the table of our heads of state meeting on March 8 and 9--in a couple of weeks from now. These heads of state and government are expected to pronounce themselves on long-term climate change objectives for the EU. They are addressing a coherent package of measures in the fields of energy and climate. It deals basically with three sorts of issues, which are an important overlap in what we are discussing here. These are issues related to the improvement of energy efficiency generally--buildings, cars, appliances, etc. We think we are not doing too bad in the world today, but there is a lot more we can do. We have the technologies available for that.
The second issue is how to put much more effort into the development of renewable energy sources. It's not only about solar and wind, in which we are doing relatively well so far, but also to develop biofuels and the new technologies in this respect.
A third element that we are developing is on carbon capture and storage. We think this new technology is about the future of using fossil fuels in a sustainable manner and the future use of coal. This is a very important message when it comes to other parts of the world, not only in Europe, but in China, for example, or South Africa or Australia, where plenty of fossil fuels and coal resources are available.
In that context, the European Union will discuss two kinds of targets. In view of 2020, there is a target for the developed countries as a group. We think we should put a target on the table for the developed countries of a reduction of 30% by 2020 on 1990 levels.
At the same time, our heads of state are going to discuss how within the EU, irrespective of the international negotiations on this 30% target, we should now adopt a target of a reduction of 20% of our greenhouse gas emissions by 2020, measured on 1990.
To put that into perspective, today under the Kyoto Protocol, the EU is reducing its emissions by 8% by 2012. We would take a unilateral commitment to go further from the minus 8% in 2012 to minus 20% in 2020, primarily through the use of new energy technology.
It is our firm commitment to develop and to take leadership in the development of technologies, the energy technologies of the future that the world is going to need.
Only a few days ago the European Commission also put forward, at the table of the council, quite an ambitious proposal to radically reduce the fuel consumption of cars from the more or less 160 grams per kilometre that we have today down to 130 grams in 2012, which means a significant improvement.
Our car manufacturers are looking into that. On average, we think we have all the technologies at hand, but putting it into reality is of course going to be a major industrial challenge that we are happy to take on.
Similarly, when it comes to fuels, we have on the table the commitment to gradually decarbonize the fuel content of our transport fuels, with 1% on average between 2010 and 2020. The cars in the fuel proposal would bring us a reduction of 500 million tonnes of carbon dioxide by 2020, which is the equivalent of the member states, Spain and Sweden, today.
As an introductory comment, the European Commission and other heads of state are going to discuss these issues in a couple of weeks. They are very much determined to continue our commitment on climate change within a long-term perspective, and that means beyond Kyoto.
My second point is on the emissions trading scheme the EU has developed. In fact, our scheme has been up and running since January 1, 2005. As we see it, it is the pre-period, 2005-2008, the period before the Kyoto Protocol starts. We know our system is up and running, but at the same time, we have a number of points to address.
In fact, Europe lacked the database, if not to say the very demanding database, that was needed to launch the system. The pre-period of 2005-2008 has now given us all the tools to be ready by January 1, 2008, when the Kyoto period starts, to have all the elements of the infrastructure in place.
Our scheme today is covering all major industrial installations of the industry in the power sector, some 11,000 installations, covering roughly half of the emissions of the EU, and that means the 27 member states we are forming today. In 2006 the market volume of real changes of emission allowances was in the order of magnitude of $22.5 billion Canadian.
The system is up and running. As I said, we have some teething problems to address, and we are addressing them. As part of the review, we are also studying how to extend the system in two ways.
On more sectors, we have international aviation on the table. A proposal is being discussed these very days in your beautiful country, in Montreal, in the context of ICAO.
We also have a lot of proposals and ideas on the table on how to internationalize the European trading scheme, and we in fact have two vehicles to do that. We have the Kyoto Protocol that is creating the so-called project-based instruments, the clean development mechanism and the joint implementation mechanism.
Today our European member states have committed more than $4 billion Canadian for the period up to 2012. When I observe what our public authorities in the member states are planning, I think this figure is going to increase.
Before I move on to the other possibility of linking, we think that investing in projects related to clean technology, such as in the context of the clean development mechanism, is a very good case of technology transfer. It is a very effective way of cooperating with developing countries, and on top of that, it is a very cost-effective way of reducing the compliance costs that our companies are incurring. There is quite a bit of support, because after all, greenhouse gas emissions do not know any borders. If we can, with the same euros spent, reduce emissions more in other parts of the world compared to what we do in Europe, we think that is a good economic case to be made, and we collectively think we should go for it.
Of course, a very important question for public opinion here is that any moneys spent on the clean development mechanism and on joint implementation should be spent in a very solid way, not in a way where we just would transfer moneys, finance, but in a way whereby it is money spent in tangible emission reductions, in tangible investments wherever in the world, but in tangible emission reduction projects. That's a very important element. What we are discussing here in the context of the CDM NGI is not what some are calling hot air coming from the ample availability of emission allowances in the transition economies, which have a quite significant downturn in economic terms.
Where we are putting a lot of effort in is to see whether, in a medium-term perspective, we could link up our own cap-and-trade scheme with trade schemes elsewhere in the world. We were more than happy to be present in a working group, as was mentioned by John Drexhage, in Canada, and we are more than eager to follow up that discussion if there is an interest in Canada to do so.
We are in close cooperation with our colleagues from the California Air Resources Board. We are increasing our contacts wherever in the world on this issue, and this possible way of linking trading schemes around the world is becoming an issue of very high attention here. Let me underline that it would be our pleasure to cooperate with Canada further and in a more operational way in this respect.
Just to finalize, I have a couple of comments I would like to say on issues that were just raised. We think indeed in dealing with local air pollutants there are a lot of co-benefits to be reached also in terms of climate change. In fact, there is some ability to go either for tackling local air pollutants and have a side benefit in terms of greenhouse gas emissions, or just go the other way around. I think we are looking at both sides, but in particular also at the co-benefits when we regulate cars and fuels in the European Union, as I indicated. But there is a strong economic case to be made for acting in transport. If we are clever, we can have co-benefits in terms of traditional local air pollutants and climate change.
We did a lot of economic studies. In fact, related to the climate paper that the commission was adopting we have a full-fledged economic analysis attached to it that is available on our website. We think there is a good economic case to be made about climate change and the policies related to that, if only we go for the development and deployment of the new energy transport and industrial technologies in our economic system.
As my last comment, Mr. Chair, we have had in the European Union now almost a decade and a half to two decades of reflection on what needs to be done on climate change. The Europeans made a deliberate choice not to go for carbon taxes. We had a discussion on carbon taxes. We have a standing tradition on energy taxation, but we were making a deliberate choice for emissions trading, emissions trading primarily among actors within the EU but also with an openness to link up with those mechanisms created under the Kyoto system and with those, wherever in the world, who would develop similar trading systems.
So there is a strong determination for the Europeans to continue with emissions trading. The emissions trading we currently have is not limited to the Kyoto Protocol, so it's not going to stop in 2012. But in operational terms, with the targets that are now on the table, we are extending the timeframe up to 2020. We are open to any discussions, with whoever in the world, to follow that up in more operational terms.
Thank you, Mr. Chairman.