Future climate change policy discussed in Prague

Scientific evidence that climate change is caused by human activity has boosted ongoing efforts to address the problem. Now the focus is primarily on what will happen after 2012 when the validity of the Kyoto Protocol, an international treaty designed to limit global greenhouse gas emissions, expires. Last week representatives of the EU, the World Bank and the new EU member states met in Prague to discuss the challenges ahead.

The two-day workshop in Prague covered a broad range of issues - the future of emissions trading, EU climate policy and means of drawing countries such as the United States, China and India into the global effort to prevent climate change. Arthur Runge Metzger from the European Commission says that a global effort is absolutely crucial and the way to secure it is to show that environmental protection and economic prosperity can go hand in hand.

"The EU alone cannot save the world. That is very clear. But what the EU can do is set an example because there are a lot of fears around -particularly from developing countries- based on the assumption that you can either grow economically or you can fight climate change - as if these two things are exclusive of each other. And that is absolutely not true. We in the EU can show that we can grow economically, that our people can become more wealthy and at the same time we can reduce greenhouse gas emissions. And that is what we have to tell the rest of the world."

The World Bank is actively helping to channel investment funds into clean technologies and generally making it worthwhile for countries to embrace an environment-friendly policy. Grzegorz Peszko is a World Bank representative:

"We are helping developing countries and transition economies to implement tough policies in a very cost-effective way. We are developing projects and programmes that demonstrate that climate mitigation, energy efficiency can have win-win effects, can be good for the environment and good for the economy. We are facilitating global carbon markets, ensuring that countries which undertake emission reductions at home can find others in the developed countries, in the rich countries are willing to pay for these emission reductions. So we are reducing the risks for different market players therefore making emission reductions globally less burdensome and cheaper."

Photo: European Commission

One of the main topics discussed was the future of emissions trading. The EC recently slashed the proposed carbon quotas of many EU members. The Czech Republic and Poland were particularly put out by the news, arguing that they had fast-growing economies to support. Gregorz Peszko counters that the carbon trading scheme cannot be expected to work if the commission over-allocates units.

"The scheme was successful in demonstrating the market mechanism but it also demonstrated that if you over-allocate, if you allocate too many allowances the unit price goes down because the supply is bigger than demand and we all know that in such a case the price goes down to zero. And that is what happened - the prices in the first faze of the European trading scheme were close to zero and that gives a clear signal that this must not be allowed to happen again in the future if we want the market to function efficiently for all participants. I think what history shows is that individual sectors do not realize that if they are too greedy and if they ask for too many allowances everyone else will ask for more as well and if everybody does that there will be too many allowances on the market and their price will be zero. So at the end of the day it is bad for everyone."

Photo: European Commission

In recent years the Czech Republic has done a lot to improve the environment. So where does the country stand today in the global effort to avert climate change? Bedrich Moldan is a former environment minister.

Bedrich Moldan

"Because the process of transition from communism to democracy came just after 1990 we automatically achieved rather large emissions reductions of greenhouse gasses, especially CO2, due to the restructuring of the industry. Therefore fulfilling our commitments was not such a difficult task. On the other hand the energy- intensity of the Czech Republic and other post-communist states is now much higher - two, three times higher than the EU 15 average and therefore we have a duty to reduce overall energy consumption. So on the one hand we are in "good shape" regarding the Kyoto commitments on the other we are still consuming too much energy, especially fossil energy. For us it is now extremely important to have a clear idea of climate policy after the Kyoto protocol expires in 2012. There will be some new commitments, nobody knows what kind of commitments at this point, people are talking about different schemes like emission trading and emission taxes and other possibilities. What is absolutely clear is that whatever arrangement is reached the Czech Republic will be more strongly involved than in the past and secondly that this new "scheme" will be part of a more global arrangement because everybody understands that without the big players in North America and Asia the new scheme cannot be established."

So how effective has the Kyoto protocol been and what will happen when it expires in 2012? Artur Runge Metzger again:

"The Kyoto protocol with its commitments until the year 2012 is of course insignificant compared to the challenge ahead of us. But it provides very important architecture on how to resolve the problem. It provides flexibility and looks for the least-costly solution. So in that respect the Kyoto protocol is very important. The next international framework which we are going to see in a few years time will certainly take the good elements of the Kyoto protocol and try to improve on those that require improvement. So the outcome of the next round will look different from the Kyoto protocol itself. There will be new elements added - there are things that were left aside in the Kyoto protocol - for instance tropical deforestation, aviation emissions and also shipping emissions were not tackled under the Kyoto protocol. These things need to be addressed so the future framework will definitely look different from what we have right now. But the Kyoto protocol is the first step in the right direction."