European
concern is growing about the prospects of securing a new international climate
treaty, as support appears to be waning in the
US
for domestic climate legislation
that would include a cap-and-trade system.
US President Barack Obama's drive
for ambitious energy and climate policies started well last year with the
passage of the cap-and-trade bill in the House of Representatives.
But it then slowed down as the
healthcare debate took centre stage, and the green bill is now stalled in the
Senate, where it requires the support of 60 out of 100 senators.
With mid-term elections
approaching, scepticism about the chances of passing major legislation is
growing as Republicans are expected to gain seats in Congress.
US analysts viewed as symptomatic
of the waning support a decision by three large corporations last week to quit
the US Climate Action Partnership, which has been lobbying in
Washington
for a cap on greenhouse gas emissions. Oil and gas giants BNP and
ConocoPhillips and equipment manufacturer Caterpillar said they preferred to
influence the bill from outside of the environmental coalition, which they felt
was too focused on passing the bill regardless of its content.
In the meantime, Obama enraged
environmentalists by announcing an $8 billion loan guarantee to restart the
country's nuclear industry after three decades without building a nuclear
reactor. The move was seen as fishing for Republican votes in favour of the
climate package and was strongly criticised for overlooking the problems of
nuclear waste security and storage.
Europe is observing the
developments amid growing concern that the global community will have to bury
all hopes of securing a new international climate treaty if the US fails to
pass its climate bill.
"Obama's troubles with the
climate legislation package naturally raises concerns on this side of the
Atlantic," said Green MEP Satu Hassi (Finland).
"If the US doesn't manage to
pass legislation limiting greenhouse gas at federal level, this would of course
impact on the climate negotiations and make it more difficult to achieve an
international climate agreement. The US would then give among others India and
China an easy argument to refuse binding actions," she added.
The MEP felt that the industry is
starting to understand the need for climate protection and moving faster than
regulators.
"Many companies are much more
progressive than the lobby organisations representing the industry in question,
whose message reflects the most conservative wing of the sector," Hassi
said. "For some time now, the climate protection situation has seemed to
me to be that new technology and related businesses have forged ahead, but
political decision-making has made less progress."
Russel Mills, global director of
energy and climate change policy at US chemicals company Dow, suggested that
the US should go more fora "hybrid approach" to cutting
emissions.
"In the US, the opportunity
for one big economy-wide cap-and-trade system is probably not feasible this year.
Rather than just do nothing, it's better to start sooner on something which is
manageable," he said. He suggested it might be more palatable to make a
cap-and-trade system work first amongst power utilities, which have had
successful experience with SOX and NOX trading.
Europe faces domestic
choices
Christian Egenhofer, head of the
energy and climate programme at the Centre for European Policy Studies (CEPS),
warned that the EU risks falling behind on new technologies and innovation if
it bases its climate strategy on the assumption that the US will help seal a
binding international deal in Mexico at the end of the year.
"I don't think the US
position is immediately important for the EU directly, but of course, if the US
doesn't have a deal domestically, there won't be an international deal. And
that is of course the situation which Europe is worried about," he said.
The analyst argued that it is now
almost certain that there won't be a binding deal in Mexico. He added that the
Copenhagen Accord had confirmed that commitments by all countries are based on
domestic politics.
"The big driver at the moment
cannot be international, because it's clear that the international deal is on
hold until at least two years," Egenhofer said.
Instead, Europe will face difficult
questions about how to ensure a carbon price that is high enough to stimulate
the development of new low-carbon technologies, he said. He argued that the US
and other countries will not care whether the EU raises its 2020 emissions
reduction target from 20% to 30% but the decision might be taken for domestic
reasons, as the price under the EU's emissions trading scheme is not high
enough to give incentives to decarbonise the economy.
"The EU will have to have a
very difficult discussion about where we want to take it: do we want to ensure
that innovation benefits, technology benefits will be reaped and whether with a
minus 20% target this is possible. I would say it's not possible."