Sarkozy fails to break EU climate pact deadlock

Gabriela Baczynska, Reuters 6 Dec 08;

GDANSK, Poland (Reuters) - French President Nicolas Sarkozy failed to end deadlock with ex-communist European Union states on an EU climate package on Saturday but predicted a deal would be reached by a December 11-12 summit.

"Things are moving in a good way ... I am convinced we will arrive at a positive conclusion," Sarkozy, whose country holds the rotating EU presidency, said after meeting Polish Prime Minister Donald Tusk and eight other east European leaders.

Poland, which relies on high-polluting coal for more than 90 percent of its electricity, has threatened to veto an EU plan to cut greenhouse gas emissions by 20 percent below 1990 levels by 2020 unless Warsaw wins fossil fuel concessions.

"There is still a lot of work ahead of us" before the summit, Tusk said after the talks in the Polish port of Gdansk.

Poland argues it needs until 2020 to curb carbon emissions, for example by using more efficient boilers and carbon-scrubbing equipment and possibly building its first nuclear plant.

Tusk said Sarkozy and the EU Commission agreed to extend a period limiting mandatory purchases of greenhouse gas emissions permits for east European coal plants, in an offer which would need the backing of all EU leaders.

And Tusk hinted at a willingness to compromise at the summit. "At the very end, maybe at the very last minute, we may decide this is a solution we may accept," Tusk said.

East European nations are not the only ones with objections. Italian Prime Minister Silvio Berlusconi has called the EU plan unrealistic and Rome has raised the possibility that EU leaders may approve only parts of the package at the summit.

Poorer east European states say tough caps on carbon emissions will harm their economies at a time of global financial crisis, preventing them from catching up with wealthy western Europe.

CRISIS

"The effects of the economic crisis have been very strong on our countries which are weaker than the western states," Romanian Prime Minister Calin Tariceanu said.

Sarkozy saw reasons for optimism after the meeting with leaders of Bulgaria, Hungary, Czech Republic, Slovakia, Romania, Poland, Estonia, Lithuania and Latvia.

"It's a very strong political signal that despite the financial crisis no state wanted to change the deadline or the objectives" of axing greenhouse gases by a fifth, he said.

Earlier, addressing delegates in Gdansk on Saturday to celebrate the 25th anniversary of Polish pro-democracy icon Lech Walesa winning the Nobel Peace Prize, Tusk called on rich EU nations to show more support for their poorer neighbors.

"Solidarity also means taking responsibility for the weaker," Tusk said. Walesa headed the Solidarity trade union which in the 1980s helped topple communism in eastern Europe.

EU diplomats are keen to wrap up climate talks this month before France hands the EU's rotating presidency to the Czech Republic -- split by a political power struggle and led by a president who doubts mankind is causing climate change.

Poland's drive for more concessions contrasts sharply with its role as host of a 190-nation U.N. climate conference in Poznan, Poland, from December 1-12, at which it is meant to muster support for a new U.N. climate treaty to be agreed next year.

Concessions offered on Saturday would force east European coal plants only to buy permits for carbon emissions above those of the most efficient plant until a set date when they would have to buy them all -- such as 2020 in the case of Poland from a previous offer of 2016.

(Reporting by Gabriela Baczynska and Yann Le Guernigou, writing by Alister Doyle, Editing by Matthew Jones)

FACTBOX: Obstacles to an EU deal to fight climate change
Reuters 5 Dec 08;

BRUSSELS (Reuters) - The European Union plans to finalize the world's most ambitious measures to combat global warming by the end of this year.

Measures to improve energy efficiency in cars, and to promote green energy including biofuels, have already been agreed.

Here are some of the remaining obstacles.

* Poland says it will not agree to current proposals to include all EU power stations from 2013 in the bloc's flagship Emission Trading Scheme (ETS), which makes industry pay for permits to pollute. It says that would create unbearable costs for Poland's coal-fired power plants, which are among Europe's biggest emitters of carbon dioxide.

Poland is backed by Hungary, Bulgaria, Estonia, Latvia, Lithuania, Romania and Slovakia.

* Several EU nations, including Germany and Italy, fear the added cost of paying for permits to emit carbon under the ETS will drive up costs for industries such as steel and aluminum, forcing them to relocate to less regulated countries.

* Italy is demanding a review of the laws in 2014, to see whether they need adjusting to take account of any unwanted effects or in light of a possible international deal in Copenhagen next year.

* The EU wants to promote new technology to capture carbon dioxide from power stations and bury it underground, but has not decided where to find the money for costly pilot schemes. Parliament wants funds set aside from the ETS to contribute about 10 billion euros, but member states have set the limit at 4 billion.

* The European Parliament and member states remain deadlocked over how to treat emissions from outside the ETS, such as transport, heating and agriculture. Member states want to buy carbon offsets from the developing world as a cheap alternative to two thirds of their emissions cuts. Parliament says no more than half should be allowed.

(Reporting by Pete Harrison)

Sarkozy cites limited progress with eastern EU climate refuseniks
Yahoo News 7 Dec 08;

GDANSK, Poland (AFP) – Talks between French President Nicolas Sarkozy and nine ex-Soviet nations on a new EU climate pact yielded "progress" but left key points unresolved, Sarkozy said Saturday.

"We are not yet at the end of the discussion, but we have progressed," the bloc's current chairman told a press conference after the meeting in the Baltic coastal city of Gdansk.

"Today, I am optimistic that we can get there even if there is still a way to go," he said.

Sarkozy is also president of the European Union until December 31, after which the rotating post passes over to the Czech Republic.

"We are still in the middle of negotiations, and there are balances to be found. We still have eight days, which is plenty of time to reach an agreement," he added.

France is pushing for the adoption of an ambitious energy package at a summit meeting of the European Union's 27 member states next week in Brussels.

But the bloc's newest members, led by Poland, have threatened to back out unless concessions are made to ease their transition to less carbon intensive economies.

"We are getting closer, but we still have to settle certain points," said Polish Prime Minister Donald Tusk, who met with Sarkozy separately earlier in the day before the second meeting joined by leaders from Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Romania and Slovakia.

Poland is highly dependent on CO2-belching coal-fired plants, which account for 94 percent of its electricity.

Along with other EU newcomers, Warsaw opposes the original EU plan to begin full auctioning of CO2 emission quotas for industry in 2013, arguing it would see energy prices skyrocket.

"We have obtained a framework for an exemption for a longer period," Tusk said after the meeting with Sarkozy, mentioning the date 2019 without giving any further details.

The other ex-Soviet bloc countries have said they also need longer transition periods before switching entirely to the auction system.

The EU has set a triple "20" objective for 2020: slashing greenhouse gas emissions by 20 percent compared to 1990, increasing renewable energy's share of the market to 20 percent, and improving energy efficiency by 20 percent.

Green groups said the clash did not bode well for Europe's climate pact, and could have a dampening effect on United Nations climate change talks taking place in Poznan, also in Poland.

"We are seeing the further unravelling of the EU climate-energy package, which certainly is not going to help in putting together an ambitious agreement in Poznan," said Damien Demailly, from the WWF's climate and energy programme for Europe.

No deal amid EU climate deadlock
BBC News 6 Dec 08;

France's Nicolas Sarkozy, the current EU president, has failed to break a deadlock with Eastern member states over an ambitious climate change deal.

Mr Sarkozy said there had been progress but that the end had not yet been reached ahead of an upcoming EU summit.

Countries including Poland and the Czech Republic oppose deep cuts in carbon dioxide emissions, saying they unfairly penalise their need for coal.

Polish PM Donald Tusk said a compromise would need a lot more hard work.

But Mr Tusk, whose country has previously threatened to veto the deal, did say some progress had been made.

"We are looking for a wise stand for the EU summit," Reuters news agency quoted him as saying after negotiations in the Polish city of Gdansk. "There is still a lot of work ahead of us."

"Things are moving in a good way," Reuters quoted Mr Sarkozy as saying. "I am convinced we will arrive at a positive conclusion."

Global moves

Eastern leaders argue the cuts also do not take account of the lower levels of earnings in their countries.

The EU plan would cut greenhouse gas emissions by 20% by the year 2020.

While the Poles are leading the opposition to the EU emissions cuts, they are at the same time chairing UN negotiations in the Polish city of Poznan, where they are trying to urge the delegates to accept deep cuts in carbon, BBC environment reporter Matt McGrath says.

Although the talks in Gdansk were not directly related to the meeting in Poznan, they are seen as crucial to maintaining the credibility of Europe's leadership on climate change, our reporter adds.

A new global climate pact is to be signed in Copenhagen in a year's time, succeeding the 1997 Kyoto Protocol, which runs out in 2012.

The EU has told the world that if a global deal is done, then the bloc will cut its emissions by 30%.

The EU package, which is under pressure because of fears of the cost of green energy in the middle of a global economic crisis, focuses on three areas: emission cuts, renewable energy sources and energy efficiencies.

France, which hands over the rotating EU presidency to the Czech Republic in January, needs to win the Eastern states' support ahead of an EU summit on 11-12 December.

Mr Sarkozy wants the climate package completely finished before the handover.

Compromise plans

Eastern countries are seeking to soften the blow to their industries and their populations by giving away permits to emit carbon but Brussels wants these permits to be auctioned off to the highest bidder saying that if you give them away for free, you undermine the EU's emissions trading scheme.

Mr Sarkozy was meeting the leaders of Poland, Estonia, Latvia, Lithuania, Hungary, Slovakia, Bulgaria, Romania and the Czech Republic for lunch.

There had been a suggestion that he would agree to a compromise with the Eastern leaders, giving them more time to catch up with the rest of the EU.

Under one compromise being considered, West European plants would have to buy permits to emit every tonne of carbon dioxide they produce from burning fossil fuels from 2013. But the scheme would only be introduced in Eastern Europe from 2016.

Polish Environment Minister Maciej Nowicki rejected as insufficient the French offer of extra time to meet the new climate caps.

"This is one step in the right direction, but not enough," he told Reuters on Friday.

An unnamed official in Mr Sarkozy's office stressed the importance of striking a deal on Sunday.

"If we do not manage to reach an agreement at the lunch, then the night of the 11th to the 12th [ie the EU summit] will be very long," the official told Reuters.

EU climate package explained
BBC News 5 Dec 08;

The EU is trying to hammer out a final deal on a climate change package that is supposed to become law in the 27-nation EU early next year.

The original package presented by the European Commission in January 2008 is expected to be watered down to some extent, because the financial crisis has amplified concern about the economic cost of green energy. EU countries are divided over how to share out that burden and limit the economic pain.

The package focuses on three areas: emissions cuts, renewables and energy efficiency.

The EU's credibility is at stake as it aims to be a model in the run-up to a new global climate pact to be signed in Copenhagen in a year's time. That pact will succeed the 1997 Kyoto Protocol, which runs out in 2012.

But pressure is mounting from EU member states for other major polluters worldwide to adopt similar targets.

France, which holds the EU presidency until January, has the tricky task of keeping all 27 member states on board at the EU summit on 11-12 December.

EMISSIONS CUTS AND THE ETS

The European Commission and EU governments agreed on the target of cutting greenhouse gases by at least 20% by 2020, compared with 1990 levels.

The target will rise to 30% if an international agreement is reached committing other developed countries and the more advanced developing nations to comparable emission reductions.

The EU launched its pioneering Emissions Trading Scheme (ETS) in 2005. But to meet the new targets for emissions cuts changes to the ETS are required.

Under the ETS, permits for emitting carbon dioxide (CO2) are distributed under a system of national allocations. The permits are traded - so big polluters can buy extra ones from greener enterprises.

The EU aims to reduce the allocations by 21% from 2005 levels by 2020. And there is to be one EU-wide cap on the number of permits, rather than individual national allocation plans.

The ETS covers about 10,000 heavy industrial plants across the EU - notably power plants, oil refineries and steel mills - which together account for almost half the EU's CO2 emissions, the commission says.

All major industrial emitters of CO2 are to be brought under the ETS and the scheme will also include greenhouse gases other than CO2 - nitrous oxide and perfluorocarbons.

Many permits were given away for free in the first ETS phase. But from 2013 enterprises in the power sector will have to buy all their permits at auction, under the EU plans. For other industrial sectors and aviation full auctioning will be phased in by 2020.

The move to full auctioning is proving contentious. German industrial groups say full auctioning will cost them billions of euros - costs that they could not pass on to customers.

Similar warnings have come from new EU member states in Central and Eastern Europe - especially Poland, which is heavily dependent on coal. Italy has added its voice to the protests.

Concessions over the ETS targets may be necessary to prevent Italy or Poland vetoing the whole climate package - a threat that was made at the October EU summit.

Another option may be for the richer EU member states to compensate the poorer ones, to help cover the costs.

Full auctioning might also be delayed for specific sectors where it is feared there could simply be a transfer of jobs or plant to non-EU countries where the rules on emissions are not as strict - so-called "carbon leakage".

Revenues from the auctioning of permits will go to member states' treasuries, but the commission says they should devote at least 20% of that income to low-carbon technology and innovation. National budget pressures are now threatening that target too.

The EU has already softened the targets for reducing CO2 emissions from cars, under pressure from carmakers hit hard by the economic downturn.

A key area of green innovation is carbon capture and storage (CCS) - new technologies that allow industrial CO2 emissions to be captured and stored underground, where they cannot harm the climate.

There are plans to build 10 to 12 big pilot plants in the EU by 2015, with a view to making CCS commercially viable by about 2020. The plants would be funded by revenue from the ETS.

RENEWABLES

The EU package sets the goal of increasing renewable energy's share of the market to 20% by 2020, from around 8.5% today.

Within that goal, 10% of transport fuels will have to come from biofuels. The commission wants a strict certification system to ensure that only biofuels achieving a real cut of at least 35% in CO2 emissions will be allowed.

The use of food-based biofuels is under review because of concern about deforestation and food shortages in developing countries.

The renewables targets for member states differ because they are at different stages in their use of wind energy, solar power, hydroelectric power and other green sources. The UK's proposed target is 15% by 2020, because the UK is far behind many other EU countries in the area of renewables.

The commission says the EU must embrace renewables not only to slow climate change but also because the EU's reliance on imported gas is set to increase from 57% currently to 84% by 2030, and on imported oil from 82% to 93%.

The creation of new jobs in renewable energy technologies is another benefit, the commission argues.

ENERGY EFFICIENCY

Energy consumption is to be cut by 20% by 2020 through improved energy efficiency, the package says.

The commission says state aid can legitimately be used to promote emissions cuts and increase take-up of renewables, so long as it does not breach EU competition rules.

On 3 December the commission came up with new proposals for the EU to co-finance national and local schemes to promote energy-efficient housing.

If the plan is adopted, the EU will help member states install double glazing, wall insulation and solar panels in housing, especially targeting low-income households.

The residential sector accounts for 25% of Europe's energy consumption, the commission says.