POLITICO Pro Morning Energy and Environment, presented by GasNaturally: EU-China tensions — Merkel on coal — Macron for climate science


By Sara Stefanini | @SaraStefaninii | Send tips to [email protected] | View in your browser

**This POLITICO Pro Morning Energy and Environment newsletter is free in partnership with COP23 this week. Have you heard of our POLITICO Pro premium news service? Contact us to learn more here.**

With help from Anca Gurzu, Kalina Oroschakoff and Marion Solletty

BONN CHANCE! Two days to go in the COP23 climate summit here in Bonn. Political leaders rolled into town for  speeches Wednesday afternoon, kicked off by German Chancellor Angela Merkel and French President Emmanuel Macron. It all got started a little late, however, after Merkel kept Macron, U.N. Secretary-General António Guterres, Fijian Prime Minister and COP23 President Frank Bainimarama and U.N. Climate Change chief Patricia Espinosa waiting on stage for at least 15 minutes. Totally awkward.

COP23 — FRICTION IN THE EU-CHINA BROMANCE: The EU and China are the new power couple in international climate negotiations, with Europe quickly stepping in to replace the U.S. after Donald Trump said he’d pull out of the Paris agreement. But there’s one issue that’s raising tension between the two, and which is set to grow as talks continue in 2018 — the transparency and accounting system that should make sure countries calculate and report their emissions cuts and financial aid in the same way. Talks over the rules, due at next year’s COP24 along with the entire Paris agreement rulebook, are driving calls for an old principle in climate change circles known as differentiation of responsibilities, or bifurcation. Read my story with Kalina or find it below.

COP23 — HEY POLAND, WHERE’S DOHA? EU ministers meet in Bonn this morning to “see what is the strategy of the European Union” on completing its ratification of the Doha climate amendment, EU Climate Action and Energy Commissioner Miguel Arias Cañete said Wednesday. Translation: Warsaw, get a move on. Poland, host of next year’s COP24 climate summit, is the only EU country that has yet to ratify the amendment agreed in 2012. Some states have already submitted their approvals to the U.N., but they don’t become official until the EU can deposit all 28 together, plus a 29th for the bloc as a whole. “Let’s hope Poland will do that before the COP in Katowice,” MEP Adina-Ioana Valean, head of the European Parliament’s environment committee, said at the press conference alongside Arias Cañete. Still, the EU’s ratification wouldn’t push the Doha amendment to take effect — it needs 144 sign-offs, and had 84 as of October 31, according to the U.N.

— We may even do more than we planned: The EU has come under huge pressure from developing countries to ratify the Doha amendment, but the Commission stresses that its existing energy and climate policies are designed to meet the requirements up to 2020 regardless — and that it’s overshooting them. And it could go even further for 2021-2030, if the European Parliament has its way on EU climate and energy policies now in negotiation, Arias Cañete noted. MEPs are pushing to raise the Commission’s proposed goals for adding renewable energy to 35 percent, from 27 percent, and for improving energy efficiency to 40 percent from 30 percent. Negotiations on those policies should conclude in first half of 2018.

**A message from GasNaturally: Scientists warn that COP21’s 2-degree target is the threshold of dangerous warming. Innovative technologies such as carbon capture and storage (CCS) — can deliver significant CO2 emissions reductions at the lowest cost. The IEA foresees a fundamental emission mitigation role for CCS in its 2°C scenario.**

HELLO, THURSDAY! Merkel broached the uncomfortable topic of Germany’s coal addiction at the COP23, as talks to form a coalition government get down to the wire. Macron, instead, shot for climate inspiration.

CLIMATE & FUELS — GERMANY’S COAL PROBLEM: The question of how and when to exit coal is a tricky issue in Berlin coalition talks. “We know we have a long way yet to go,” Merkel said in her speech. But she cautioned that any discussion about ending coal also had to consider social issues. “Is such a scheme economically viable, is it affordable?” Still, coal has to make a “very important contribution” to cutting emissions, and that will be discussed “very precisely” in the coming days, she said. A leaked discussion paper jointly drafted by Germany’s energy and economy ministry and the federal network agency, seen by POLITICO and dated November 14, found that shutting down 7 gigawatts in coal power capacity in 2020 wouldn’t hurt security of supply because Germany currently generates too much electricity, and would continue to be a net exporter after a coal power reduction.

COP23 — FRANCO-GERMAN CLIMATE MANTEL: The message from Merkel and Macron to the summit’s plenary was clear: Europe will continue strengthen its efforts to reduce its own greenhouse gases and help poorer countries do the same. Macron was the more news-savvy speaker, throwing out four initiatives France plans to fight for: 1) A border tax for carbon emissions from imports to the EU, 2) A plan to build on the “excellent” Emissions Trading System (ETS) reform deal reached last week in order to get the EU’s CO2 price closer to €30 per ton, 3) The addition of environmental goals in trade deals, and 4) Encouragement for electricity interconnectors to allow for more renewable energy.

— Merkel thinks ETS is a winner too: She called the reform “a very important agreement.” But that wasn’t all, she also appears to be a fan of efforts to boost the Market Stability Reserve, which is meant to suck excess emissions permits out of the EU’s oversupplied market. “This is why certificates are going to be taken out of the scheme to make it a meaningful instrument,” she said.

— Money for climate scientists: Macron also called on Europe to step up and fill the U.S. funding gap at the U.N.’s Intergovernmental Panel on Climate Change, after Washington blocked funding for 2018. The U.K. must have heard Macron’s call, because the Department for Business, Energy and Industrial Strategy tweeted that it will double its 2017 funding for the panel and “make multi-year pledge to support climate science crucial to informing climate policy.”

COP23 — CLIMATE POLITICS ON THE AGENDA: One of the major — and more public — fights at this year’s summit was not about money or transparency, but about including efforts to cut emissions and come up with financial support before 2020 in the formal agenda for the talks, anchoring them in legal text. Why? Developing countries say the plan, originally put forward by Iran, is to ensure that industrialized countries do their utmost in the coming years to cut emissions and stump up the cash they promised. Observers say that the push is also about reopening the developed vs. developing divide, and ensuring that the burden of cutting emissions remains solidly on the rich.

— Pre-2020 is a BASIC need: Ministers from the BASIC emerging economies (Brazil, South Africa, India and China) welcomed the inclusion of pre-2020 work Wednesday while loudly upping pressure to accelerate negotiations and chastising developed countries for resisting talk of putting pre-2020 on the agenda. “A clear, functional, streamlined text is necessary, and that still requires a lot of work — that means all countries will need to hit top gear,” Brazilian Environment Minister Sarney Filho told reporters. India and China also stressed the work that BASIC countries are already doing, suggesting the developed side could do more. “I believe BASIC countries have taken better actions than we are asked to do,” said Xie Zhenhua, China’s special representative for climate change. “For example in China we will lower our carbon intensity by 40-45 percent by 2020 … we have now fulfilled 42 percent.”

— Let’s do this again — and again: Arias Cañete agreed that there’s a lot more work ahead before the Paris agreement’s rulebook is finalized at next year’s summit. He believes climate negotiators may need a second “intersessional” meeting, on top of the usual one held in Bonn in May, “because it will be a challenge for the Polish COP.”

POWER — NEW RENEWABLES DRAFT OUT: EU countries don’t want to be forced to open their renewable energy support schemes to power generators in other EU countries, according to latest draft Council text on renewable energy policy for the 2020s. The European Commission wanted to require national governments to allow companies with renewable energy production capacity in one country to apply for a minimum level of financial support offered by another country. But the Council text, dated November 13, replaces the binding word “shall” with “may,” making it more voluntary. The Commission pitched its original proposal as a way to better integrate the bloc’s power markets and allow renewables to flow more freely across borders. The Estonian Council presidency said the move to make the system voluntary was supported by more than 20 countries.

— Renewable energy transfer: The text also calls for the creation of the so-called European Union Renewable Development Platform to help countries better track each government’s contribution to the binding EU-level renewable target and make it easier to transfer and trade surplus green energy between members. The move follows the first such transfer in the EU late last month, when Lithuania agreed to sell part of its surplus renewable energy to Luxembourg between 2018 and 2020, helping Luxembourg meet its 2020 target.

— Lowering the transport target: Another important change in the Council text lowers the proposed renewable energy target for the transport sector for 2030 from 15 to 12 percent. The Estonian presidency reintroduced the sub-target in an earlier draft text following support from EU countries, although the Commission scrapped it from its original proposals. The 12 percent figure is set in square brackets, which means it’s still up for debate.

POWER — SHADOW MEPs TALK ELECTRICITY MARKET REFORM: MEPs from different political groups in charge of the electricity market design file meet in Strasbourg today to try to find suitable compromise amendments on the policy. It will be the first time they talk about the section on state support for backup power capacity, including the controversial proposals to introduce emissions limits (and effectively exclude coal-fired power). The Parliament’s energy committee is provisionally scheduled to vote on the file, led by Latvian MEP Krišjānis Kariņš, on December 11. However, several parliamentary officials raised doubts about whether that will be possible.

COP23 — BRAZIL VIES FOR COP25: The government “has made itself available” to host the 2019 climate summit, it said Wednesday. The COP annual summits are on a five-year regional rotation and due to be held in Latin America or the Caribbean that year. Brazil is no stranger to hosting international events — as well as the 2016 Olympics and 2014 World Cup, the country hosted the 1992 U.N. conference that launched the Framework Convention on Climate Change (under which these COPs are held).

ENVIRONMENT — SHAPING THE EU BIOECONOMY: The Commission today unveils a stock-take of progress and room for improvement in its Bioeconomy Strategy, ahead of a revision planned for 2018 under the Commission’s work program. The EU wants to foster the use of renewable biomaterials (forest and agriculture products as well as vegetal residues from industrial processes) in the economy, and is expected to focus on how to channel investment in the sector.

— What the sector wants: Industry representatives, NGOs and researchers have drafted a manifesto, which will be presented today, laying out their shared vision. The sector “should be sustainable in terms of people (jobs, inclusiveness), planet (limits to resources, biodiversity, ecological balance and climate) and profit (resource efficiency, competitiveness),” it said. The challenge is how to move from demonstrators and small scale installations to a full-blown industrial sector. “Our key point is that we shift phase, from a research-driven strategy to an industrial policy,” Marco Mensink, director general of the European chemical industry group Cefic, told us.


Stockholm court extends Naftogaz-Gazprom timeline ruling: A Stockholm arbitration court has pushed back the dates by which it plans to make its final awards in the legal cases between Ukraine’s Naftogaz and Russia’s Gazprom. A decision regarding the supply contract will be delayed until the end of December, while a decision on the gas transit case is expected by February, Naftogaz said on Wednesday.

India and China help slow global warming: Their work over the past year has helped lower the projected global temperature rise by 0.2 degrees Celsius in the past year, to 3.4 degrees by 2100, according to research released Wednesday.

Court says Groningen gas production could be cut further: The highest Dutch administrative court has rejected the government’s plan to cap production at a major gas field that has caused damaging earthquakes, saying it might be possible to cut output further without endangering supplies, Reuters reported.

**A message from GasNaturally: Without CCS — innovative technology that captures and stores CO2 and prevents it from entering into the atmosphere — the likelihood of keeping global warming to 2 degrees in 2030 is significantly reduced. CCS is a key technology for delivering important CO2 emissions reduction in this century. Without CCS, deep cuts in CO2 emissions are likely to be unachievable. Early commercial implementation of CCS projects in the power and industrial sectors should be treated on a level playing field with other mitigation options. CCS should be developed at the most suitable hubs-and-clusters areas of Europe. The North Sea is a logical region for a start, given its storage potential and the numerous clustered CO2 point sources. GasNaturally, a partnership composed of six associations from across the whole gas value chain in Europe — IOGP, GIE, Eurogas, NGVA Europe, GERG and Marcogaz — promotes the role of gas in making a clean future real.**

***POLITICO Pro Articles***

China, Europe climate buddy act flounders

— By Sara Stefanini and Kalina Oroschakoff

BONN, Germany — So much for the Sino-European climate bromance.

The EU and China were supposed to become the tag team of international climate diplomacy, buddying up after President Donald Trump announced his intention to pull the U.S. out of the Paris climate agreement. Brussels and Beijing, the world’s other big polluters, are publicly committed to tackling global warming.

Now this relationship is under strain. The main culprit? With the U.S. marginalized on this scene, the EU is left to carry the standard for rich countries — and China for the developing world.

The strains created by this dynamic has emerged behind closed doors at the COP23 climate summit here. The EU is pushing to level out the share of responsibility between rich and poor countries for man-made climate change and for reducing emissions. For its part, Beijing wants developing countries to have greater leeway to meet targets set out in the 2015 treaty.

The differences are likely to grow more stark at next year’s COP24, when the complex set of rules for meeting the goals of the Paris climate agreement is due to be finalized.

At the technical talks in Bonn that ended Tuesday, China pushed hard to demarcate responsibilities between developed and developing countries — called differentiation — throughout the text of the Paris climate agreement in a draft handed to ministers on Wednesday, according to negotiators and observers following the discussions. The political negotiations involving ministers run through Friday.

“China was putting differentiation in anywhere and weren’t agreeing to the text,” Mark Lutes, head of the World Wildlife Foundation’s delegation, said of last week’s technical talks.

China is particularly emboldened on the issue now that the U.S. — which has always been staunchly opposed to differentiation — has stepped to the side in the wake of Trump’s call to quit the Paris accord.

Bifurcation makes a comeback

The idea of treating rich and poor countries differently is called “bifurcation.” The Paris deal managed to paper over the issue by calling on everyone to pitch in and help slash greenhouse gases to the extent that they could.

Now developing countries are returning to the idea that wealthy countries should bear more of the emissions cuts. More than a century of their pollution, after all, is what many scientists say caused a lot of the problem of global warming. In response, developed nations point to burgeoning greenhouse gas emissions from countries like China, India and Brazil to say that everyone should shoulder the weight.

“We thought we put it away in Paris, that we went beyond that. But bifurcation is coming back,” said a European diplomat in Bonn, asking not to be named. “It’s quite a big fight and it’s a very important issue for the EU.”

The call to differentiate burdens and standards is especially loud in talks over the transparency and accounting system that will be used to keep track of emissions reductions, financial aid and other steps intended to tackle climate change. It is part of a broader set of rules that countries are negotiating at the COP23 to help them meet the Paris climate agreement’s voluntary goals.

‘We argue as good friends’

The EU and U.S. have long argued for a single, robust system to make sure everyone is measuring and reporting their emissions and aid in the same way. Without it, there’s no way to know, for instance, that one ton of CO2 cut in one country isn’t then emitted somewhere else. The poorest and most vulnerable countries are also keen to adopt a tough system, particularly to verify that developed countries fulfill their promise to spend $100 billion a year in public and private aid on climate change from 2020.

Emerging economies, however, are wary of public scrutiny of their record books, and argue they need time and support to catch up to the developed side’s experience. They’re balancing the need to show that they’re acting to curb global warming, without wanting to upset their growing industries.

“Developing countries will need both flexibility and support to implement the framework,” said J. Antonio Marcondes, Brazil’s chief negotiator. “Brazil also believes that developed countries should increase the level of ambition in respect of transparency, and there should be no backtracking from current commitments on transparency.”

Lax transparency and accounting rules, however, could further weaken a landmark climate accord. It is already under criticism for so far failing to do much other than promise to keep global warming well below 2 degrees Celsius and eventually 1.5 degrees by 2100.

The key will be to find a framework that sets all countries on the path to strengthening their data, while recognizing that they’re starting from different points, said Yamide Dagnet, a senior associate at the World Resources Institute. Flexibility remains the most contentious issue, but negotiators made good progress on the issue in the first week of the COP23, she added.

EU Climate Action and Energy Commissioner Miguel Arias Cañete stressed this week that the EU would not accept divisions in the Paris deal’s transparency and accounting rules — but said Brussels may allow some room for developing countries to catch up.

“Some countries opted for a bifurcated approach; we think that with enhanced transparency there is a single [system],” he said. “There is lots of flexibility to accommodate the different capabilities of the countries.”

Any compromise could follow the example set in international agreements to reduce emissions from aviation and refrigerants and coolants, Arias Cañete said. Both give developing countries more time to comply with rules that will eventually apply to everyone.

The trick, however, will be to decide how far to go, as some worry too much wiggle room would make it harder to assess what a developing country is doing to cut emissions, and to pressure it to do more.

The tussle is likely to intensify over 2018, with the Paris rulebook due at the end of next December’s COP24 meeting.

While there is tension in the negotiating room, neither Brussels not Beijing want to undermine the narrative of a China-EU climate alliance.

“We do argue quite a lot, but we argue as good friends,” Xie Zhenhua, China’s special representative for climate change, said Tuesday of Arias Cañete.


Source: Politico

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