It’s the regulations, stupid! Only policies, not targets, will deliver on climate change

Stephen Tindale is a former chair of the Greenpeace European Unit and the co-founder of Climate Answers.

Historic #ParisAgreement success for @EUClimateAction - and now "Let's get to work"

Those working on European issues are not always great at communication. Twitter’s limit of 140 characters does not play to their strengths; 140 pages is more their style. 

But this tweet from Climate-KIC, the Commission-funded initiative to promote EU’s climate innovation, accurately sums up what happened in Paris on Saturday. The fact that an agreement was reached is excellent. The agreement, signed up to by rich, poor and middle income countries alike, was indeed historic. But the agreement is only a set of political promises, and politicians have been known not to keep their promises. Attention must now shift to implementation: to policies and to money.

The Paris Agreement very clearly a triumph for the French government. To lay on a major international summit just weeks after the horrific terrorist attacks in Paris was a great demonstration of resilience. French foreign minister Laurent Fabius was an effective chair: to persuade 196 national delegations to agree on anything required all of the fabled French diplomatic skills.

The EU can rightly claim a share of the triumph. In my previous article for Wake Up Europe I wrote that the EU would not play a major role in Paris. I was wrong about this. Climate Action Commissioner Miguel Arias Canete played a determined and constructive role, forming an alliance with more than 100 developed and developing countries, the high ambition coalition, to press for a deal. So the EU was a significant actor in Paris: a substantial foreign policy success. The European project is badly in need of some success stories right now, so the Commission should blow its own trumpet.

Now the focus will shift to implementation of the promises, and the EU has an opportunity to take a leading role again. Supranational action is clearly needed to tackle pollution: even the most narrow-minded little Englander usually accepts that the Channel is not an effective defence against air pollution. European institutions have a track-record of implementing effective policies to control acid rain and to deliver cleaner air (though it is not yet clean enough).

However, if it is to take a lead on the delivery of the Paris agreement, the EU will need to overhaul its climate and energy policies. Canete recognises the need to move on from pledges and targets to policies: “Now it is about implementation. We need to have the policies. The EU has policies, and everyone needs to have policies”.  

Yes, the EU has policies. The problem is that they are very weak policies. The cap-and-trade Emissions Trading System (ETS) was intended to control the overall amount of pollution, which is has delivered, but also to deliver a carbon price high enough to channel investment into low-carbon energy sources. The price would need to be about €60 per tonne of carbon dioxide. The current price is around €6. The EU set itself a target to have 12 large-scale carbon capture and storage (CCS) projects in operation by 2015. There are none. The Industrial Emissions Directive requires the use of Best Available Technology to limit emissions of toxic air pollutants such as sulphur dioxide and nitrogen dioxide, but does not regulate greenhouse gas emissions.

Most academics argue that a market mechanism such as the ETS or a carbon tax is better than regulation. That may be true academically. Politically it is false. Jacques Delors proposed a carbon/energy tax, but was defeated by the UK in the Council of Ministers on subsidiarity grounds: taxes are for member-states, and any EU tax can only be agreed by unanimity. In 2008 the UK (Labour) government sent a letter to the Commission arguing that the proposals to amend the ETS turned it into a tax. Commission lawyers overcame this challenge, so the ETS was amended. This has prevented the price collapsing to zero, but a price of €6 is just a green fig leaf, hiding the lack of real climate action. In the last Commission, DG Climate Action, in charge of the ETS, argued against the attempts of DG Energy to propose stronger energy efficiency regulations, on the grounds that greater energy efficiency would mean less demand for ETS permits so lower the price even more. In the Juncker Commission DGs Energy and Climate Action do at least report to an Energy and Climate Commissioner, Canete. So more progress should be possible.

To avoid another failure on subsidiarity grounds, Canete should focus on regulation rather than market mechanisms. A proposal to turn the ETS into an effective policy tool, for example by setting a price floor under which permits would not be auctioned, would be opposed by some coal-dependent central and eastern European countries (notably Poland), and also by the UK. British Europhobes would condemn it as creeping federalisation of taxation policy – even though the UK itself operates such a price floor. (Logic and consistency are not always prominent features of the UK European debate.)

Instead, Canete should propose to amend the Industrial Emissions Directive so that it regulates greenhouse gas emissions as well as toxic air pollutants. The Emissions Performance Standard (EPS) is an established and effective policy instrument. Canada has one at federal level, and regulation has been used by provincial governments, notably Ontario, to phase out coal. In the US, the Obama administration spent its first term trying unsuccessfully to get a cap-and-trade Bill through Congress, so in its second term is implementing a regulatory EPS instead, using the 1970 Clean Air Act so that Congress cannot block it. The UK has an EPS too.

Canada, the US, and the UK are possibly not the best role models in the EU right now. British Prime Minister David Cameron’s renegotiations have further reduced the popularity of ‘the anglo-saxon model’.  But Canete has the advantage of not being a Brit. He has past links to the oil and gas industry, so is not keen on coal; another plus. Having contributed significantly to the success of the Paris climate conference, the EU’s Energy and Climate Action commissioner now has the opportunity to emerge as a genuine climate champion.


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