Stern vision 'needs new targets'
November 8, 2006
The Stern Review's recommendations on curbing climate change need a fresh set of global emissions targets, according to a leading environmental economist.
Professor Michael Grubb said carbon trading would only be effective globally if a new deal were in place.
New emissions targets are being discussed at the UN climate summit in Nairobi, but agreement is unlikely.
Professor Grubb also warned that the European market for carbon risked being undermined by a number of countries.
He described as "laughable" some of the national emission quotas being proposed for the second phase of the European Emissions Trading Scheme (ETS).
The European Commission is due to make a statement on Thursday which could include its response to these quotas.
No deal
In his vast review of climate change economics released last week, Sir Nicholas Stern concluded that a global market for carbon should be a key component of attempts to curb rising emissions of carbon dioxide and other greenhouse gases.
Countries, companies or even individuals producing high levels of CO2 would buy credits from counterparts with low emissions.
The ETS is currently the biggest carbon market in the world, and was set up to help EU nations meet emission reduction targets set by the Kyoto Protocol.
Power companies and heavy industry have been given emission limits for the period 2005-2007, and allocations for phase 2, covering 2008-2012, are being processed now. Current Kyoto Protocol targets expire in 2012.
Michael Grubb, an economics professor at Imperial College London, chief economist of the Carbon Trust and a major contributor to international reports on climate economics, said that building a significant carbon market beyond Europe was unlikely to happen without new targets for reducing emissions.
"You could envisage the EU scheme going on beyond the Kyoto targets, but it would be much weaker," he told the BBC News website at a briefing in London.
"In the longer term, spreading [carbon trading] further afield will depend on having further emissions targets spread beyond the countries which already have them."
But he was not optimistic of seeing such a deal materialise at the UN climate summit in Nairobi, a view which is shared privately by British officials attending the talks, and publicly by EU Environment Commissioner Stavros Dimas, who said recently it was too early to expect breakthroughs on this process.
The US and Australia will not countenance a further round of targets, having opted out of their Kyoto Protocol commitments; without the US, no developing countries are likely to accept targets either.
Heat rising
Looming large on Mr Dimas' horizon is a rift over emissions allocations for phase 2 of the ETS.
EU member states have submitted proposals, known as National Allocation Plans (NAPs), which would allow their industries collectively to emit far more carbon dioxide than they do now.
"Much to my regret... the first 17 NAPs notified to us propose an emissions cap that is about 15% above the actual emissions in those member states [in 2005]," he said recently.
On Thursday Mr Dimas may reveal what he intends to do about this situation. The politicking is not just between the European Commission and member states; countries such as Spain and Italy, which are proposing big cuts in their own emissions, are reportedly angry with others which want increases in allocations.
Much of their ire is directed at Poland, which proposes to allow its industry to produce 17% more CO2 each year than in 2005.
"We have collections of allocations which will simply not support meaningful action to reduce emissions in Europe," observed Professor Grubb.
Weaknesses in the European position over these allocations could become a focus for criticism at the Nairobi meeting, he told reporters.
Developing nations are looking for Europe to take a lead on future emissions cuts, he said; and absurdly high national allocations could have implications for the world's poorest countries, causing the price of carbon to fall and reducing investments in clean energy, reforestation and adaptation.
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