POLITICO Pro Morning Energy and Environment, presented by GasNaturally: Politics take over in Bonn — China’s carbon trading plans — Acting on nature


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**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 Kalina Oroschakoff, Anca Gurzu, Marion Solletty and Emily Holden

COP23 — LAISSEZ LES BONN TEMPS ROULER! Politicians roll into Bonn today to take over the final three days of the COP23.  The opening ceremony will be joined German Chancellor Angela Merkel, French President Emmanuel Macron, and U.N. Secretary General António Guterres. Look out for official statements from around 4 p.m.

— EU preparations: EU environment ministers will also be in Bonn to help push some of the bloc’s political priorities, holding a coordination meeting this morning. We hear the issue of ratifying the Doha amendment will be on the agenda, part of a broader push to get Poland to (finally) adopt the amendment and so let the EU submit its instrument of ratification. Siim Kiisler, the environment minister of Estonia, which currently holds the rotating presidency of the Council of the EU, told reporters on Tuesday that he expects movement on the issue soon. “I am sure that the ratification is imminent. It will happen, it will happen in a matter of months, if not weeks.”

— Working the rulebook: The goal over the remaining days of the summit is to make as much progress as possible on the complex rules supporting the Paris climate agreement. Those updates are only due in late 2018, but EU Climate Action and Energy Commissioner Miguel Arias Cañete said it’s time to start editing the rulebook. “At the moment we put the positions on text, the only problem is that the text is a little bit long,” he told reporters in Bonn on Tuesday. The text mitigating climate change still stands at more than 180 pages, while the one on transparency is 44 pages, he said.

— Encouraging Americans: There’s a difference between the U.S. government, where President Donald Trump said he intends to withdraw from the Paris climate agreement, and the country, Arias Cañete said. Democratic governors and other lawmakers pledged their support on the COP23 sidelines over the weekend. “[I’m] very encouraged about events in the American pavilion, because that reflects what happens in the United States on the ground.” But the U.S. position in the negotiating rooms remains to be seen as political talks begin, he added. Read about how Trump is being blasted in Bonn here, or below.

— US delegation head isn’t coming: Tom Shannon, who was expected to be the top politically appointed U.S. diplomat at the COP23, will not attend. Acting Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs Judith Garber will travel to Bonn today to lead the delegation.

**A message from GasNaturally: More and more people find it difficult to pay their energy bills, which leads to energy poverty. EU consumers pay per kWh three times more for electricity than for gas. Gas not only provides clean energy, it also makes energy bills more affordable. Check out here.**

WELCOME TO WEDNESDAY! And good morning from Bonn, where Kalina, Emily and I are tracking the COP23’s grand finale. In non-COP news today: European Parliament members vote to save the bees, and France’s Engie dumps its traditional gas business for new green opportunities.

COP23 — BROACHING THE TRANSPARENCY DIVIDE: Negotiators have made good progress on the transparency and accounting system, with an informal note on the table that lays out all the views on the issue. But an old source of tension — the differentiation of responsibilities between rich and poor countries — is rearing its head again. The EU and U.S. want a single and robust transparency and accounting system that applies to everyone. Emerging economies such as China, Brazil, Ecuador and Iran instead want flexibility and support in getting their record-keeping skills up to speed, since industrialized countries have the experience of following emissions reduction requirements under the 1997 Kyoto Protocol. On top of that, emerging economies tend to be wary of public scrutiny of their pledges to, for instance, funnel money into helping poorer countries deal with climate change.

— What to watch for: Will they agree on a common transparency and accounting system? If so, does that mean it will have uniform rules, or just a common set of guidelines that differ according to countries? Differentiated guidelines could make it harder to assess what developing countries are doing, and therefore harder to pressure them to do more.

— Loss and damage: Negotiators are also dealing with loss and damage caused by climate change-related events, especially financial support for affected, vulnerable countries. According to the U.N.’s climate change secretariat, in 2017, extreme weather events caused more than $200 billion worth of damage. Wealthy countries have long been wary of the issue, concerned over possible liability. But, unsurprisingly, it’s a priority for Fiji, the current president of the COP and first small island nation to hold that position. And there’s been movement on the issue, we hear, with an announcement possible today. Separately, an initiative called InsuResilience to provide insurance to hundreds of millions of poor people by 2020 got a boost on Tuesday. It  is now a joint effort between Germany, the vulnerable country group, the U.K., and the World Bank.

COP23 — CHINA’S CARBON MARKET IS COMING: China is ready to launch a national emissions trading system later this year, pending final government approval, Xie Zhenhua, China’s special representative for climate change, said Tuesday in Bonn. The country plans to expand the nationwide scheme’s coverage across different sectors “step by step” and so far there are no plans to link up with other schemes like those in the EU and California. “We will build and complete China’s system first,” Xie said.

Air pollution targets in Chinese cities: Much of China’s efforts to tackle emissions from fossil fuel-fired power, cars and elsewhere is driven by choking domestic pollution, by recommending people to install house air filters. But there’s still work to be done — in October, 24 out of 28 Chinese cities failed to meet their air quality targets, making it unlikely that the governments will meet a 15 percent year-on-year reduction target for fine particulate pollution, Reuters reported.

ENVIRONMENT — MEPs VOTE ON STRENGTHENING NATURE PROTECTION: The European Parliament’s plenary votes today on a non-binding resolution urging the European Commission to go further to protect nature. The plan would call for the EU to protect bees and other pollinators and to give NGOs and individuals more power to challenge its decisions on environmental matters. The resolution is Parliament’s response to the Commission’s Action Plan for Nature, which increased funding for nature protection across the bloc and promised improved guidance for national governments on how to apply EU nature laws.

— What about the bees? The Action Plan on Nature was initially expected to include initiatives to protect bees, but the measure was delayed partly because it’s closely linked to the ban of neonicotinoids, pesticides accused of killing bees, being worked on by the Commission’s agriculture department. The plan could suffer further delay after Europe’s food safety watchdog said Tuesday that it would delay its assessment on the pesticide’s risks to bees, initially expected for the end of the year, until February.

**HAPPENING TOMORROW — POLITICO’s Brussels Playbook Breakfast with Maroš Šefčovič, European Commission Vice-President for Energy Union. Share your questions and watch the event LIVE tomorrow on our website from 8:50 a.m. CET**

FUELS — THE ROADMAP TO HYDROGEN: Hydrogen could account for nearly one-fifth of total energy use by 2050, reducing annual CO2 emissions by around 6 gigatons compared to current levels, according to study released Tuesday at the COP23. The Hydrogen Council said the fuel could power 10 to 15 million cars and 500,000 trucks by 2030. It could also be used in industrial processes and feedstocks, heating and electricity in buildings and energy storage. That would push hydrogen demand up tenfold between now and 2050, to nearly 80 exajoules.

— But … we need money and policies: A scale-up like this requires some $20 billion to $25 billion a year of investments to 2030. It also needs long-term and stable policies, the Hydrogen Council said. The group is made up of 18 CEOs from international companies supporting the technology, including carmakers Audi, BMW and Daimler and energy groups Engie, Shell and Statoil.

— Engie drops fossil fuels for green gases: The Franco-Belgian energy company will sell its liquefied natural gas production, shipping and trading business to France’s Total for $20 billion and set up a new unit focused on developing renewable hydrogen. It will also become Total’s preferred supplier for the fuel, as well as for biogas. More broadly, Engie said it will re-focus its work on low-carbon power generation, downstream customer business and infrastructure, especially for gas. The deal is expected to close in 2018, pending regulatory approvals.

CLIMATE & FUELS — MORE FROM THE WORLD ENERGY OUTLOOK: The International Energy Agency’s (IEA’s) World Energy Outlook this week gave a confident nod to the rise of renewables by 2040, reflecting a fundamental shift in the way the world uses energy — especially away from coal. But here are a few more tidbits from the annual industry ledger:

— Gas takes over: Natural gas will represent a quarter of global energy demand by 2040, becoming the second-largest fuel in the global mix after oil, it said. But 80 percent of the projected growth in gas demand takes place in developing economies, led by China, India and others in Asia, where much of the gas needs to be imported.

— Energy access and air pollution are problems: Universal access to electricity remains elusive, the IEA said. Although 100 million people have gained access to electricity every year since 2012, around 675 million (90 percent of them in sub-Saharan Africa) will still be without power in 2030 (down from 1.1 billion today). Premature deaths from outdoor air pollution, meanwhile, is expected to rise from 3 million today to more than 4 million in 2040, even though pollution control technologies are applied more widely.

— The rosy scenario: The IEA’s findings are based on an assessment of existing and announced policies. But the agency also played with a scenario that looks at how to achieve energy goals faster. Here, low-carbon energy sources double their share in the energy mix to 40 percent by 2040, coal demand goes into an immediate decline, power generation is almost fully decarbonized and electric cars move into the mainstream quickly.

ENVIRONMENT — NGOS UPDATE COMPLAINT ON BULGARIAN MOTORWAY: A group of NGOs on Tuesday doubled down on their complaint to the Commission against the Bulgarian government’s plan to build a motorway through the EU protected site of Kresna Gorge, in a letter sent to Environment Commissioner Karmenu Vella and obtained by POLITICO. The Commission on Monday greenlighted €330 of EU funds to help finance the Struma motorway — part of an EU-sponsored trans-European motorway. NGOs filed a complaint to the Commission in July, calling on it to launch an infringement procedure against Bulgaria.

— Vella under fire: The NGOs met in late September with Vella and Corina Crețu, commissioner for regional policy, to raise their concerns. Needless to say, they are not happy with this week’s approval. “EU environmental chief Karmenu Vella is sleepwalking into irreversibly decimating one of Europe’s most vibrant protected wildlife hotspots,” said Robbie Blake, from Friends of the Earth Europe. The Commission was not immediately able to answer to a request for comment.

POWER — FILLING THE RENEWABLE VOLATILITY GAP: Tumbling solar and wind costs will boost the share of renewables to 50 percent of the energy mix of Germany and the U.K. by the mid-2020s, according to a report from Bloomberg New Energy Finance published Tuesday. However, the variable nature of renewables means that reliable back-up capacity will still be needed, either in the form of hydro power from the Nordics or energy storage solutions.


EIB puts money into climate action: The European Investment Bank’s board approved €9.2 billion in new financing for 38 projects in 16 EU countries and Africa, Asia and Latin America. The projects include on- and offshore wind energy, as well as high-speed mobile broadband and industrial innovation.

Norway and Unilever put money into climate resilience: They announced $400 million in funding to help countries withstand extreme weather linked to climate change.

You can (mostly) swim safely in England: Just over 98.3 percent of England’s beaches and lakes achieved the minimum quality standards set by the EU for bacterial presence in 2017, according to the U.K. environment department. There is, however, a slight decline from 2016, where 69.5 percent achieved the “excellent” standard compared to 65.4 percent in 2017.

Russia targeting UK power grid: In a speech to be delivered today, the U.K.’s National Cyber Security Centre head Ciaran Martin will accuse Russia of trying to hack Britain’s power grid, as well as its telecoms and media firms over the past year. The Sun has the story.

Russia hits back at gas extension proposal: The Commission’s proposal to regulate Nord Stream 2 by extending the EU’s gas rules to third-country pipelines is an attempt to kill the project, Russian Prime Minister Dmitry Medvedev said, according to TASS.

France helps save its songbirds: The Commission closed an infringement case against France over poaching of the ortolan bunting, a practice banned under EU law. The songbird was reportedly a favorite of former French President François Mitterrand, who allegedly put it on the menu of one of his last meals.

NGOs protest proposed TAP funding: A network of civil society groups on Tuesday staged a series of protests to try to dissuade the European Investment Bank and the European Bank for Reconstruction and Development from funding the Trans Adriatic Pipeline.

**A message from GasNaturally: EU policy makers should evaluate the impact on consumers and vulnerable customers of all initiatives that aim to decarbonize the energy system. More and more people find it difficult to pay their energy bills, which leads to energy poverty. EU consumers pay per kWh three times more for electricity than for gas if all taxes, levies and network charges are included. In energy terms, the transportation costs of gas are significantly lower than those of electricity. Therefore, GasNaturally supports the completion of a truly interconnected and well-functioning European gas market with diverse supply sources and transport routes as this will ensure that gas is a competitive, affordable and reliable lower-carbon source of energy for the European customers.**

*** POLITICO Pro Articles ***

Trump is blasted at climate talks, but Paris accord lives on

— By David Siders, Emily Holden and Kalina Oroschakoff

BONN, Germany — U.S. President Donald Trump is taking a beating at the United Nations climate conference here.

Politicians from across the globe mischievously pose for photographs beside a sign at a French pavilion that reads “Make Our Planet Great Again.” Climate activists repeatedly chastise Trump in panel conversations and throughout the convention halls. The leaders of Mexico and Canada formalized an agreement to circumvent the president and work directly with mostly Democratic governors of climate-minded states.

Yet despite the vitriol and disregard for Trump — and his announced withdrawal from the Paris climate agreement — the diplomats and other officials in Bonn are breathing a sigh of relief. Climate advocates had feared the worst — that the White House would make moves to undercut the pact, a disruptive posture that might do serious damage to the international accord.

Instead, the Trump administration made no notable efforts other than to hold a single public event promoting clean coal, leaving hope here that the Paris agreement would endure.

“They haven’t thrown a bomb yet, have they?” said California Governor Jerry Brown, who was at the conference promoting state- and regional-level efforts to address climate change. “So that’s good.”

Christiana Figueres, a former United Nations climate envoy who helped orchestrate the Paris agreement’s adoption two years ago, said that in the long-term effort to reduce greenhouse gas emissions, Trump is “going to be a blip” in history.

Several Democratic governors, mayors and lawmakers from the United States were beginning to filter out of the conference Tuesday, after a coordinated push to persuade world leaders that Trump does not represent the United States on climate. Earlier this week, leaders of Canada and Mexico agreed to enter into discussions about clean-energy initiatives with an alliance of 14 states and the island territory of Puerto Rico, which have pledged to meet their share of the U.S. commitment to the Paris accord.

Catherine McKenna, Canada’s environment minister, said at a meeting with Brown and Washington Gov. Jay Inslee that the agreement was a “great example that we’re all in this together.”

Inslee said: “This strategy is working. Not one single country has expressed one single word of doubt or lack of confidence in the Paris agreement just because Donald Trump is still a climate denier.”

The specter of Trump loomed large over the conference, where activists wore “We are still in” buttons, drank from reusable water bottles and traveled between buildings on free, shared bicycles.

Trump has called climate change a hoax, and the White House sparked a protest Monday with its event promoting coal. Protesters yelled that “clean coal is bull—-“ and that White House officials are “a bunch of liars.”

Laurence Tubiana, France’s former ambassador for climate change negotiations, said: “The United States is really isolated from the process point of view … Nobody’s backtracking. And even the discussion, the negotiation is going well — with its normal difficulties — it’s going well.”

While Trump has announced the United States’ withdrawal from the Paris agreement, the exit cannot take effect until 2020. Miguel Arias Cañete, European commissioner for climate action and energy, said he did not yet know how to assess the White House’s position in the talks. But he said he was encouraged by U.S. governors and mayors insisting that they will still move to cut emissions.

“America is still in,” Cañete said. “Our perception is, fortunately, there is real action on the ground, and we’re very pleased.”

He said as long as the U.S. hasn’t left the agreement, the country is “entitled to participate” in talks.

With higher-level politicians from other countries expected to arrive at the conference Wednesday, Cañete said, “We’re now landing in the political level, and we’ll see what the positions of the United States are.”

Few observers were expecting a dramatic shift, however, from the previous week. Dave Banks, Trump’s energy adviser, who led the controversial coal panel, told POLITICO that U.S. policy on fossil fuels is separate from what American diplomats are quietly discussing in negotiation halls.

“There’s a reason we didn’t talk about negotiations, because negotiations are over there,” Banks said, referring the other side of a sprawling campus here where global environment leaders are discussing implementation of the Paris agreement. “Over here is where you can have more general policy discussions.”

Tom Shannon, a State Department veteran who has served as ambassador to Brazil, will not arrive Wednesday as planned to take the reins from career negotiators who were in charge for the first week, the State Department said Tuesday.

But Banks said Shannon would not have taken up the White House’s coal banner.

“So you think he’s going to say, ‘We’re going to promote coal’?” Banks said. “No, that’s a policy discussion. It’s not a negotiation.”

Banks also insisted the controversial U.S. panel on coal wasn’t meant to push exports of U.S. fossil fuels but rather to open a practical discussion that wouldn’t otherwise occur at a climate conference.

“We’re not selling coal or gas or nuclear power,” he told reporters in a huddle

In their official discussions with foreign diplomats, State Department negotiators are taking positions similar to the Obama administration on technical issues, including on how countries should report on and demonstrate their progress in reducing greenhouse gas emissions. Banks confirmed that the delegation has the same goal to require more developed countries to meet the same standards as the U.S.

One senior African negotiator described the situation for U.S. delegates as “a bit weird.”

“I think the mandate is not to be a blocker,” he said. “They engage, but in the end they’re not the ones calling the shots.”

American negotiators are also taking a “tough line” against industrialized nations paying more for less-developed countries to address climate change, said Alden Meyer, director of strategy and policy for the Union of Concerned Scientists.

While the negotiations on technical matters continued to unfold, climate activists were looking forward to a potentially difficult climate conference next year in Poland, a major coal-producing state — and to the next presidential election in the United States.

As Inslee told one audience, “The next president of the United States is not going to be a climate denier.”

Source: Politico

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