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The Bonn Climate Conference 2017: Progress on the implementation of the Paris Agreement and higher ambition?

 

 

 

Kati Kulovesi

Professor of International Law & Co-Director of the Centre for Climate, Energy and Environmental Law

THE LATEST round of United Nations climate negotiations concluded on 18 November 2017 in Bonn, Germany. What is the state of international climate policy after the meeting and what lies ahead for 2018 and beyond?

THE NEGOTIATIONS in Bonn were intended to have a mainly technical focus. Major outcomes were neither expected nor achieved. Still, the negotiating agenda was packed with issues ranging from agriculture and gender to indigenous peoples and loss and damage caused by climate change. Also high on the agenda were the main building blocks of the UN climate regime, namely mitigation, adaptation, finance, technology and capacity building.

Photo by IISD/Earth Negotiations Bulletin (http://enb.iisd.org/climate/cop23/enb/images/17nov/3K1A6733.jpg)

 

ONE OF the main issues in Bonn related to the development of detailed rules for implementing the 2015 Paris Agreement. The deadline for concluding these important negotiations is in December 2018. While progress was achieved on some issues, long-standing controversies also surfaced and largely stalled negotiations on the crucial issue of mitigation.

THE PARIS Agreement’s key achievements include that its basic mitigation regime applies to all Parties; the Agreement does not refer to the outdated categories of developed and developing countries in the 1992 UN Framework Convention on Climate Change and gives more consideration to countries’ national circumstances.  However, during negotiations on guidance on Nationally Determined Contributions (NDCs), China, India and their allies in the Like-minded Developing Countries group called for returning to a bifurcated system where different rules apply to developed and developing countries respectively. For many, such a system would constitute a major step backwards and the proposal met strong opposition especially from developed countries. Ultimately, countries forwarded 180 pages of text on mitigation to the next negotiating session in May. The text leaves all the highly divergent options on the table, including by reproducing word-by-word submissions from several countries and coalitions.

HOPEFULLY THE question of bifurcation will not distract the negotiators too much next year. For the question that urgently should take the centre stage in 2018 and beyond is that of ambition. The UN Environment’s 2017 Emissions Gap report indicates that the gap between the emission reductions needed to meet the Paris Agreement’s objectives, including the 2°C 1.5°C targets, and the existing NDCs is “alarmingly high” and “more ambitious NDCs will be necessary by 2020.”

THE PARIS Agreement relies on global stocktakes at five-year intervals from 2023 onwards to increase collective ambition. A similar exercise, a facilitative dialogue, was agreed in Paris for 2018. Now known as the Talanoa Dialogue -inspired by traditions of COP 23 President Fiji – this exercise will be an important opportunity to test the Paris Agreement’s largely procedural approach to mitigation.

THE TALANOA Dialogue will be informed by the Intergovernmental Panel on Climate Change’s Special Report on the 1.5°C target, scheduled for October 2018. Given that countries should submit new or updated NDCs in 2020, the hope is that the IPCC report along with the Talanoa Dialogue will lead to a stronger response to climate science and to more ambitious NDCs.

DIVIDED INTO preparatory and political phases, the Talanoa Dialogue will take place from January to December 2018. It will focus on three main questions: where are we; where do we want to go; and how do we get there. Positive elements in the Dialogue’s design include its comprehensive and participatory nature. Parties, stakeholders and expert institutions are invited to provide analytical and policy-relevant input. They are also invited to organize local, national, regional and global events in support of the Dialogue.

A PROBLEMATIC feature of the Talanoa Dialogue’s design is that there is no clear path forward from the Dialogue towards more ambitious NDCs. The Dialogue’s outputs will include summaries and reports of the discussions. The outcome is also “expected to capture the political momentum, and help Parties to inform the preparation of nationally determined contributions.” However, there seems to be nothing in the design to ensure that ambition will indeed be increased following the Dialogue.

Photo by IISD/Earth Negotiations Bulletin. (http://enb.iisd.org/climate/cop23/enb/images/9nov/3K1A2815.jpg)

HOW, THEN, to start building the momentum for more ambitious climate action?  An obvious challenge for the political climate is that President Trump has announced intentions to withdraw from the Paris Agreement in 2020 and the US federal government is no longer providing global climate leadership like it did during the negotiations for the Paris Agreement, especially through bilateral cooperation with China.

SEVERAL PROCEDURAL steps have already been identified both within inside and outside the UN climate negotiations for the next couple of years. These include:

WHILE IMPORTANT, these steps are not by themselves enough to guarantee that ambition will be increased in 2020. Stakeholders within EU countries and elsewhere should therefore take advantage of the participatory nature of the Talanoa Dialogue and build pressure on politicians to take stronger action both nationally and internationally. An encouraging example of going beyond the official government position is the ‘alternative’ US represented through individual states, cities and other stakeholders. The ‘alternative’ US was highly visible in Bonn and plans to remain active in global climate policy despite the backward position on climate change by the Trump Administration.

THE PARIS Agreement’s legal structure is interesting and innovative in that it includes opportunities to bring various actors at various levels of global governance closer together, including when preparing NDCs and evaluating collective progress through global stocktakes. The Talanoa Dialogue will provide the first important opportunity to test this design and hopefully show that it can actually work in increasing collective mitigation ambition.

A Nudge Towards Low-Emission Mobility – A Glance at the AFI Directive’s Approach to End Oil Dependence in the European Transport Sector

 

 

 

Sara Kymenvaara, Researcher, Climate Change Law, LL.M.

A FAMOUS metaphor on climate change politics refers to people’s unrelenting driving of SUVs, disconnected from the threat of climate change they are contributing to. Although a lot has changed on the political arena with the entry into force of the Paris Agreement on 4 November 2016, the transport sector’s current state of play, in certain aspects, still corresponds to the metaphor’s dystopian features. The sector plays, however, an important role in achieving the Paris Agreement’s climate change mitigation objectives.

IN THE EU, transport is set to contribute to the overall emission reduction target of 30% by 2030 from 2005-levels. The Commission has also set out a specific goal for the transport sector to reduce greenhouse gas emissions by 60% from 1990-levels by the year 2050.

HOW TO achieve these ambitious objectives?  Transport remains the only sector in EU where GHG emissions have risen since 1990. Emission reductions achieved by new motor vehicles’ improved energy efficiency as a result of the EU Regulations on passenger cars and vans are forecast to be offset by increased mobility demand. In fact, it seems that the 60% emission reduction target for the transport sector will require a “systemic change” in the transport system and sector as a whole.

ONE OF the key measures to achieve the necessary systemic change is to end the transport sector’s heavy reliance on fossil fuels and start using cleaner vehicles and fuels. To this end, a key EU-level policy instrument is Directive 2014/94/EU on the deployment of alternative fuels infrastructure (the “AFI Directive”), a main legislative measure to implement the Commission’s alternative fuels strategy.

ALTERNATIVE FUELS include, for example, electricity, hydrogen, natural gas and sustainable biofuels, and the AFI Directive’s main objective is to promote the construction of the infrastructure needed for the vehicles running on these fuels. However, installing infrastructure for vehicles using alternative fuels should correspond to the amount and types of vehicles in use. Such vehicles are not currently sold in amounts large enough to develop sufficiently competitive prices. Thus, the combination of high prices and lack of infrastructure discourages consumers from buying them.

THEAFI Directive aims to end this vicious circle by obliging EU Member States to promote the development of their national markets for alternative fuels and set objectives and targets for the related infrastructure. The AFI Directive contains, however, no binding targets for infrastructure and the Member States’ objectives can be revised at a later stage. Thus, the AFI Directive ‘nudges’ rather than obliges Member States to develop markets and infrastructure for low-emission fuels and vehicles.

CONCERNING ELECTRIC mobility, for example, the EU Member States must ensure that an “appropriate” number of public charging points are installed for electric vehicles in densely populated areas by 2020. The “appropriate number” is determined largely by the Member States themselves in relation to their national estimates of, and objectives for, the number of electric vehicles to be registered by 2020.

ACHIEVING THE ambitious emission reduction goals in the transport sector also requires that policy incentives that counteract these objectives are identified and abolished. For long, the tax benefit to diesel fuels in many EU Member States has created such an incentive, let alone the failure to consider diesel’s external costs of air pollution on human health. Over half of all newly registered passenger cars in the EU run on diesel while alternative fuel vehicles currently only account for 4.9% of all passenger cars in use.

THE FIGURES indicate that EU currently is far from achieving the objective of a Low-emission Mobility. Interestingly, however, certain estimates, mainly concerning Norway, predict that electric vehicles are set to conquer the markets extensively in the near future. However, Norway seems to be an exception to the otherwise increasing share of diesel vehicles in the rest of Europe; Norway’s share of electric vehicles in new car sales currently is currently almost 30%, while the same figure is 1.5% for Western Europe. In addition, hardly no other European country has a state budget robust enough to afford the fiscal incentives for electric vehicles that have stimulated their surge in Norway.

AGAINST THIS backdrop, the national objectives and policy measures of the EU Member States to implement the AFI Directive will be essential for cutting oil dependence in the transport sector. If these national policy frameworks are sufficiently ambitious, the AFI Directive’s adaptive strategy may indeed solve the deadlock concerning lack of infrastructure and alternative fuel vehicles’ market penetration – and thus contribute to the decarbonisation of the transport sector within the timeframes set out by the EU’s climate policy objectives.

Volatile relations: EU-Russia energy regulation

 

 

 

Moritz Wüstenberg, Junior Researcher, European Law

THE WORLD Trade Organization (WTO) is often seen as a curiosity generally associated with globalization. The WTO as we know it today has developed in its 70 year’s history from a provisionally applied interim agreement (the General Agreement on Tariffs and Trade or “GATT”) to become an independent organization, with nearly universal participation.

FOLLOWING ACCESSION to the WTO in 2012, Russia has been eager to take its energy related grievances with the EU to be adjudicated at the WTO. Whilst transit has become a lesser problem in recent years, partly due to the direct connection from Russia to Germany via the Nord Stream 1 pipeline (Nord Stream 2 is on its way, see previous blog by K. Talus), the internal market liberalization of the EU has had effects on the European investments of Russia´s export monopoly Gazprom.

THE CASE directly related to energy regulation brought by Russia to the Dispute Settlement Body (case DS476, Certain Measures Relating to the Energy Sector) of the WTO alleges, inter alia, that Russian goods and services are treated less favourably than third countries and less favourably than other EU goods and services (in violation of the Most Favoured Nation obligation and National Treatment obligation of the EU, respectively). The alleged violations are mainly related to limitations in access to infrastructure, including pipelines that connect Nordstream 1 to the wider European gas network, owned by Gazprom.

TWO OTHER cases brought by Russia against the EU (cases DS474 and DS494) are also related to energy, albeit indirectly. In anti-dumping determinations against energy intensive goods (in this case, steel from Russia), EU rules make it possible to replace the actual energy costs producers pay in Russia by a cost that is adjusted to reflect “market” prices. In effect this means that the anti-dumping margin paid on steel imports to the EU become higher.

THE REGULATION of energy trade between the EU and Russia is vital for the EU to secure its energy supply and at the same time crucial for Russia, as some 50% of the federal budget is raised from the extraction and sale of energy goods. The disputes brought by Russia touch upon matters of trade that are sensitive due to their strategic nature, but are not regulated effectively by the rules of the WTO which were negotiated for more traditional areas of trade.

THE ENERGY Charter Treaty, which Russia abandoned in 2009, has detailed rules for energy trade and would be more effective in regulating this area of trade. Russia withdrew from provisional application of the Energy Charter Treaty following the gas crisis of 2006 and 2009. The gas crisis were caused by transit disputes and resulted in many eastern and central European countries being undersupplied during the winter. Central stated reasons for the final withdrawal from the ECT were related to failures in the regulation of transit. Whether Russia will join the ECT seems uncertain, even though efforts to develop the regulation of transit continue at the Energy Charter.

THE SHORTCOMINGS of the regulatory framework of the WTO for energy trade have been discussed at the WTO as well as in academia. It is generally understood that there are a number of areas, export prohibitions through cartels (e.g. OPEC) and transit rules being prominent examples, which the rules of the WTO do not address effectively. Numerous suggestions for amendment or addition of rules have been made, but the debate remains open.

A NEIGHBOURHOOD trading relationship, such as the one between the EU and Russia, can be regulated by a number of WTO rule compliant means. One option would be the conclusion of a Preferential Trade Agreement (PTA) to regulate energy trade between the EU and Russia. This would be a fairly straightforward option which, as long as it complied with WTO requirements (mainly the obligation not to raise tariffs or other barriers to trade in relation to other WTO members), could be negotiated bilaterally and would effectively remain outside the multilateral framework of the WTO.

PLURILATERAL AGREEMENTS (PA´s), binding to those members that accede to them, have previously been adopted within the framework of the WTO (Annex 4 agreements). The main difference in relation to PTA´s is that PA´s function within the framework of the WTO. There are a number of advantages to regulating through a PA as opposed to a PTA, one being direct access to the dispute settlement system of the WTO. The main difficulty in adopting a PA on energy would be the need to achieve consensus among the WTO membership to add such an agreement to Annex 4. In effect this means that consensus has to be obtained also from members who do not intend to join a PA and consequently do not have rights or obligations arising from it.

RE-REGULATING ENERGY trade between the EU and Russia may become necessary rather sooner or later. Even if a transition to renewable energies is on its way, natural gas will remain an important transition fuel until 2040 and later, even under the most ambitious climate targets. Russia has the world´s largest natural gas reserves and is connected by pipeline to the EU. Maintaining a well-regulated commercial relationship would therefore not only ensure energy security, but would also be advantageous to achieve climate policy targets.

 

Full articles on the above issues have been published recently as:

Moritz Wüstenberg, ´An Overview of the Dichotomy between EU Energy Market Liberalisation and the Multilateral Trading System: Case Review of WTO Case DS476 – Certain Measures Relating to the Energy Sector, International Trade Law & Regulation 22 (1) 2016

Moritz Wüstenberg, ´Reformation or Standstill? Re-Regulating Energy Trade between the EU and Russia, International Energy Law Review 34 (7) 2016