That you very much, Mr. Chair.
Thank you to the committee for inviting the European Commission to present our experience with climate change policy.
I am very pleased to be here to speak to you today. As I was saying to the chair, it is really wonderful to have beautiful winter weather and lots of sunshine. It is a pleasure to be here in Ottawa. Thank you very much.
I will continue in English.
I want to start with the basis of the EU's climate policy. The EU's climate policy is driven by scientific evidence on man-made climate change. Its objective for some time has been to limit the average increase of global temperature to a maximum of two degrees Celsius--that's 3.6 degrees Fahrenheit--above pre-industrial levels. Within this threshold we'll still see some serious climate change impacts, but we'll have a reasonable chance of avoiding catastrophic consequences.
This requires swift and ambitious action to put the world on a path to avoiding dangerous climate change. From our perspective, staying within two degrees Celsius means that global greenhouse gas emissions need to peak around 2020 and then be reduced significantly to around 50% of 1990 levels by 2050. Developed countries like our own must take the lead and reduce emissions by 60% to 80% by 2050. This is where we start from, and the first step is meeting our Kyoto commitments.
The EU is on track to meet its commitment to reducing greenhouse gas emissions by 8% compared to 1990 levels by 2008 to 2012. The target is split among EU-15, the old member states, and there are targets for most of the new member states, except for two that don't have targets. We're on track to do this with policies already in place, policies that are now being discussed and being put in place, and with the use of the Kyoto flexible mechanisms of CDM and JI.
Over the past decade, the EU and its member states have put in place a comprehensive array of reduction measures, including: energy efficiency, renewable energy, taxes, and vehicle emission and fuel standards. Probably the most important is the mandatory cap and trade system, the EU emitters trading system, or EU ETS, which provides industry with the necessary political policy certainty, a continuous financial incentive, and the flexibility to take action and innovate in the most effective ways.
The EU ETS covers around 10,000 installations responsible for 40% of the EU's greenhouse gas emissions. We've just completed three years of a learning-by-doing phase, and the EU ETS is functioning well. We're now in the second trading period, which is the trading period that coincides with the Kyoto commitment period, and this is the real crunch time. This period will bring about reductions in emissions relative to 2005 verified emissions of 6.8% over the period 2008-2012, with allowances currently trading, and have been for some time, at more than $30 Canadian per tonne of CO2.
The EU is also very keen to support the development of the global carbon market, which we see as essential for shifting finance and investment into clear solutions. Member states and the companies in the EU ETS can use credits from international emission reduction projects, such as under the clean development mechanism, to meet part of their reduction objectives.
For us, that is important, both for cost effectiveness to support clean development projects and to engage developing countries in climate action. To give you an idea of the scale, EU member states, at a national level, have set aside €2.9 billion, which is about $4.2 billion Canadian at current exchange rates, for more than 500 million tonnes of CO2-equivalent reductions over the Kyoto commitment period.
In addition, the private sectors of those companies covered by the EU ETS can also purchase carbon credits from CDM or JI projects, up to 1,400 million tonnes, or 1.4 gigatonnes, up to 2012 as part of their compliance under the EU ETS. They can also buy credits in addition to that, but that's for the EU ETS compliance element.
Obviously, Kyoto is just a first small step. We need to make much greater global emission reductions as part of a comprehensive global agreement post-2012. With this in mind, the EU heads of state and government adopted a package in 2007 under which they called for developed countries together as a group to reduce their greenhouse gas emissions by 30% below 1990 levels by 2020 as part of a comprehensive international agreement.
This makes economic sense, and I think it's important to note. Our own analysis shows that investing in a low-carbon economy would reduce global GDP growth by just 0.19% per year up to 2030. That is just a fraction of the expected projected GDP annual growth rate, which is 2.8%. It is 0.19% related to 2.8%, and this is without taking into account the associated health benefits, greater energy efficiency and security, and reduced damage from avoided climate change.
The EU believes that developed countries must take the lead, and we are serious about leading by example. To show our determination to tackle climate change and our conviction that it's fully compatible with economic growth, the EU has taken a firm, independent commitment to achieve at least a 20% reduction in greenhouse gas emissions by 2020 in the absence of an international agreement.
Last month the European Commission published its detailed proposals on how the EU will meet its greenhouse gas emissions targets for 2020 with the measures needed to reduce emissions by at least 20% of 1990 levels by 2020, regardless of what other countries do--