EU Set to Discuss CO2 Goal After China, India Pledge Action

The European Union is set to resume talks early next year about moving to a stricter carbon goal after countries worldwide backed its plan to start work toward a climate treaty that would be enacted by 2020.

Europe pledged yesterday after the conclusion of a two-week United Nations climate summit in Durban, South Africa, to adopt a binding post-2012 emission-cutting target under the Kyoto Protocol in exchange for a vow by both industrialized and developing countries including China and India to commit to carbon cuts under a new deal with “legal force.”

The 27-nation bloc, which already has its own internal target of lowering greenhouse gases by 20 percent below 1990 levels by 2020 and has said it may move to 30 percent if other countries follow suit, is due to submit its new Kyoto goal by May 1, 2012.

“Decisions on the second-commitment Kyoto targets will be taken next year,” Isaac Valero-Ladron, climate spokesman for the European Commission, the EU executive arm in Brussels, said in an e-mailed response to Bloomberg questions. “Discussions are most likely to start at the meeting of environment ministers in March.”

Talks about the future stringency of the EU climate- protection policies, an area over which member states have been divided since the adoption of the bloc’s climate legislation package in 2008, may also get new impetus after Denmark, which has called for more ambitious goals, takes over the rotating presidency of the bloc in January.

Increased Target

“Given the relative success of this summit, the EU now needs to urgently deal with its low low-emission reduction ambition and start increasing its target well beyond 30 percent,” said Wendel Trio, director for Europe at environmental lobby Climate Action Network.

At stake is the price of carbon dioxide in the EU emissions market, the world’s largest, which has plunged 46 percent this year amid speculation that the euro-area debt crisis may worsen and concerns that oversupply of permits may increase following the introduction of new energy-efficiency legislation.

Stepping up energy savings would enable the bloc to exceed its 20 percent carbon-cut goal, and reduce greenhouse gases by 25 percent domestically by 2020, according to the commission. The most cost-efficient scenario to meet the bloc’s long-term emission targets is to cut discharges by 40 percent in 2030 and 60 percent in 2040, it said in a policy paper published in March.

The EU regulatory arm is due to present early next year an analysis on the costs of reaching more ambitious climate targets at a national level.

Global Deal

The European cap-and-trade program covers about 50 percent of the region’s emissions and was valued at 120 billion euros ($160 billion) last year.

EU emission permits for December rose as much as 6.1 percent to 8.32 euros today, before falling back to 7.77 euros as of 1 p.m. in London after the decision by UN envoys yesterday to start a process leading to a global deal. The European pledge to extend the Kyoto Protocol targets will create a bridging mechanism for the period between the current goals expire and the new legally binding agreement comes into force.

UN envoys agreed that the end-date for the so-called Kyoto second commitment period will be decided next year. During the talks negotiators considered two options, 2017 and 2020.

Distant Prospect

“The Durban outcome seems to confirm that the EU is likely to remain almost on its own in making significant emissions reductions until at least 2020,” according to BusinessEurope, a lobby. “A global level-playing field for European energy- and trade-intensive industry remains a distant prospect.”

The extension of the Kyoto targets by developed countries was a key demand from poorer nations, including India, China and Brazil, which have voluntary goals under the protocol and argued that they need more time for a shift to mandatory commitments that would impact their economic growth.

The EU agreed to extend its Kyoto goals after the current ones expire next year even as Canada, Japan and Russia declared they won’t do so. The U.S. has never ratified the treaty.

“Durban is a clear signal that the EU succeeded to take others on board and that global action is starting,” said Valero-Ladron. “We were leaders here and we will continue to be in the future. The truth is that when the EU moves, other follow; sometimes under pressure, but they do.”

To contact the reporters on this story: {Ewa Krukowska} in Brussels at ekrukowska@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net