Experience and key issues of climate change and low carbon economic policy in Europe
Dr. Dr. Josef Baum
http://www.josefbaum.at
University of Vienna - Department of East Asian Studies – Chinese Studies
Altes AKH, Spitalgasse 2-4, Hof 2,
1090 Wien, Austria
T: +43 1-4277-43852 , M: +43 664 1142298
josef.baum@univie.ac.at
1.Introduction
Rigid with fear, in Europe we are currently looking at financial debts and discuss possibilities and probabilities of paying back financial debts. Even the head of the European Central Bank, Claude Trichet, – usually very cautiously and calming – mentioned that the financial situation facing a financial meltdown and standstill of economy (similar to the situation after the bankruptcy of Lehman Brothers) would be the most critical since World War II or even since World War I. Probably this is true but should also be some help for harsh measures, by which many people will suffer.
But what about ecological debts, what about over exploiting of resources and implications to climate change, and so erosion of conditions of existence of future generations?
In comparison with the current financial crisis this climate crisis will be many times stronger. E. g. the financial crisis, which hits Greece and maybe other southern European states, is marginal in comparison with the impacts of climate change predicted for Greece, southern Italy and southern Spain (droughts, water scarcity, desertification…).
The climate issue will develop to a deep and long climate crisis (probably not in the next years but within some decades) – EXCEPT we immediately and globally start with a dedicated low carbon policy.
2. But now about Europe: Firstly climate change and low carbon policy in Europe is differing heavily between many: There are some countries such as Italy, in which this strand of policy is almost ignored, but there are also smaller regions which go ahead, e. g. some Austrian districts have achieved energetic “autarky” on the basis of renewable energy. And there is the level of policy of the European Union. So the picture is very different.
I will only highlight some selected issues:
3. By and large the performance of the EU and the EU member states in climate change and low carbon policy is not impressive.
Some self-picture of climate pioneer generally is not based on reality: despite the fact that there has been some progress, Europe is still using fossil energy generally on a very high level per capita.
4. Basically the vast majority of efforts is based on voluntary or not binding measures. But the experience is that proceeding in this mode there is some good performance in some regions, but not generally and not in relation to global necessities.
But unfortunately we face "deadlines" for the solution to the climate issue, which has becoming an existential question of humanity. To achieve the 2 degree Celsius target in climate change policy – accepted by the Copenhagen accord - we have only a relatively short window of opportunity for acting. If we look at circular economy regulation we can see that voluntary targets significantly perform worse than strict regulation.
Therefore we need more binding regulation.
5. The most prominent binding mechanisms, the processes submitted to the International Law of the Kyoto treaty are important, but firstly their dimension is not sufficient. The hope in the Copenhagen conference to bring a necessary strong commitment was in vain. But the last word about the execution of Kyoto obligation has not been said. For example Austria – despite some very successful regions - will not comply with the obliged reductions of emission of CO2, but there are more or less tricky efforts to avoid fines.
So the execution of the Kyoto process should be strict.
6. Within the Kyoto treaty obligations the EU had and have a summary target. This summary target was shared to national targets by a deliberate process of negotiations considering the status of development and capabilities. So the EU-countries have different targets. The important principle of “common, but different responsibility” (familiar since the Rio conference 1992) was implemented somehow. This “burden sharing” then was reframed as “effort sharing” for future targets. Many countries try to influence the implementation of a scheme of burden sharing, which is useful for their interests so to be able to minimize efforts. The creation of a fair and accepted scheme of burden sharing considering resources, historical activities, already undertaken efforts, status of development and capabilities is important.
It can be summarized that “burden sharing” or “effort sharing” is in the first steps and will become more and more important when targets will be ambitious and the execution of these targets will be more strict. “Burden sharing” or “effort sharing” will gain increasing importance on all scales: regional, national, continental and especially global.
7. Related to the question of evaluation is the problem of huge subsidizing fossil energy. The global subsidies for fossil energy are many times bigger than the funds for research and development of renewable energy (See world bank).
Even if we believe in Adam Smith`s “Invisible Hand” or “efficient markets” (Fama) in the energy sector all laws should try to shift subsidies from
fossil energy to renewable energy.
8. CO2 trade is implemented in Europe for big companies and financial institutions. But because of bad specification this until now has not been a story of success. There have been given to much certificates without payment to some sectors of the economy so that the intended implications of steering accumulation to the industries where most useful has not been achieved; and worse many companies used the bad regulation for a “free lunch” and extraordinary profits. The price of traded CO2 -certificates is volatile
Evaluation. So CO2-trade is becoming in new field of speculation rather than a tool for more efficiency. And there is much doubt if CO2 trade basically is helpful. Remember Stern famous sentence: “Climate change is the biggest market failure in history”. I f this is right, why should the cause of troubles be the solution? Anyway the experience of Europe is that CO2 should be strongly regulated. Why should financial markets with so much domination and asymmetric power relation find the correct price for CO2 ? To achieve strict targets of low carbon the price of certificates should be determined within narrow intervals.
9. Austria will not achieve the (moderate) Kyoto goals; but many other European countries consumed some “windfall profits” generating by the special calculation in relation to 1990 within the Kyoto architecture. Germany achieved the Kyoto goals because of the de-industrialisation of Eastern Germany. France used – risky - nuclear energy for a good performance. Great Britain was favoured by increasing gas (which is - relatively – better for CO2-emission than former coal and oil. Most of Eastern European countries profit could take advantage of some de-industrialisation in the 90ies in respect to the CO2 emission. So on the country level no European country until now managed a structural turn to a low carbon policy.
10. But there are also examples of good practise in low carbon policy: Denmark achieved a considerable share in wind energy. Germany went ahead with the law of promotion of renewable energy (by subsidizing energy prices for producers of renewable) energy, which triggered innovation especially in the sectors of photovoltaic and wind energy. This law was copied then by dozens of other countries. In Austria – as mentioned - some rural regions achieved self-sufficiency or still energy export status on the basis of renewable energy. Norway was somehow successful in feeding funds by revenues coming from fossil energy and so financing sustainable activities. In Sweden (and Austria) very efficient technologies for biomass from wood have been developed. Switzerland has been investing in public transport since many years; together with taxing trucks there is some shift to train transport (that is ecologically more advantageous).
In a summary the Scandinavian countries have a good all over performance.
11. Although the performance of Europe is not impressive in relation to capabilities and necessities, compared with the USA, European countries perform still better. In many fields of low carbon policy the USA are years and decades behind European Countries, and they cannot catch up in the next future, because all the built-in infrastructure (houses, settlement structures, implicating mobility patterns…) cannot be renewed in some years but only in decades.
12. The future of low carbon policy is the simultaneous solution for the emission (output) side on the one hand and for the input (resource) side on the other hand. This is true circular economy (circular in relation to flow of matter) on the basis of renewable energy. For this we need a tremendous increase in resource productivity, significantly bigger than economic growth - unprecedented in human history
13. Because of the great divergence on earth effective low carbon policy will be only possible on principles of justice, fairness and equity considering historical responsibility - on the global level but also on the national level). Otherwise every time many will say: Why me, the others shall start (although we know that beginners can yield an innovation rent, and we know gains of “first mover”).
So comprehensive low carbon policy is not easy because it has to solve the environmental problem and the distributional problem simultaneously within a historical short time.
But there seems to be no alternative. And this necessary socio-ecological transition will bring a healthier life, more quality of life, and by redistribution and participation more potential of innovation.
Let me finish with some more comments on a special theme:
14. The necessity of rapid distribution of knowledge and global technology transfer
The issue of global technology transfer is one of the most controversial. Unfortunately an juridical implementation is currently not on the agenda. So basics have to be reasoned:
For climate change mitigation policy and adaptation to climate change many technologies of energy efficiency and renewable energy are to be implemented globally. Since the Rio conference 1992 technology transfer has been one of the most central issues. But no advances have been made until now; on the contrary: Several multinational companies, along with the US Chamber of Commerce set up a special alliance against easier access on climate technologies. Current negotiations are blockaded most in this field.
The IPCC stated that climate change mitigation “depends on reducing barriers to the diffusion and transfer of technology”. Even well-known Nicholas Stern proposed “obligations … imposed on developed-world technology providers that new technology be made available to the developing world on a marginal cost basis, or for some reduced license fee”.
The need for transfer of environmentally sound technology to developing countries is evident. But only 3 percent of world patents are owned by inventors in the developing countries, the most important patents belong to big companies, which want to generate maximal commercial return on investment. – On the other hand the achievement of patents has been founded on long-term capital accumulation again based on decades of greenhouse gas emissions causing climate change. This historical ecological debt can be paid back by disseminating environmentally sound technology.
So any global accord must ensure developing countries to have rapid and easy access to the proprietary mitigation technologies. Basically scientific and technical information should be part of the commons and access to it should be free. But because of urgency there should be immediate first steps in this direction as soon as possible and so first exceptions could be made in intellectualproperty regimes on environmentally sound technologies.
Another rapid step could be to allow free access to environmentally beneficial technologies within a shorter period by a significant reduction of patent blocking from the present minimum of 20 years e. g. to 5 years.
The global technology transfer should be arranged by United Nations agencies.
A negative example in another global ecological important issue has been the current regime of intellectual property causing impacts of slow pace of innovation in developing countries in replacing ozone-depleting substances.
A comparable positive example is the successful struggle of people resulting in the solution for exceptions for patents in the pharmaceutical industry to fight against the comprehensive threatening of people’s health in many developing countries (e.g. in the case of HIV).
A feasible solution could be the transfer of relevant patents from owners of environmentally sound technologies and products to some public funds. They would get some compensating for this, but at moderate level. This would be also fair because research and development and so innovations mostly has been supported by public funds. Such an exclusion is not incompatible with TRIPS and may have to be incorporated through a suitable amendment.
Some will say that these proposals are not realistic, but we face a situation unprecedented in human history requiring fundamental changes.
