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DE RUEHBS #0198/01 0421521
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P 111521Z FEB 09
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUCNMUC/EU CANDIDATE STATES COLLECTIVE
RUCNMEU/EU INTEREST COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHSS/OECD POSTS COLLECTIVE
RUEHGG/UN SECURITY COUNCIL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING
RUEHBY/AMEMBASSY CANBERRA
RUEHME/AMEMBASSY MEXICO
RUEHMO/AMEMBASSY MOSCOW
RUEHNE/AMEMBASSY NEW DELHI
RUEHUL/AMEMBASSY SEOUL
RUEHKO/AMEMBASSY TOKYO
RUEHWL/AMEMBASSY WELLINGTON

UNCLAS SECTION 01 OF 07 BRUSSELS 000198 
 
SENSITIVE 
SIPDIS 
 
OES FOR SPECIAL ENVOY TODD STERN 
OES FOR OES/EGC 
EUR FOR EUR/ERA 
 
E.O. 12958: N/A 
TAGS: ECON EIND ENRG EUN EWWT KGHG SENV TPHY TRGY
TSPL 
SUBJECT: EU'S PROPOSED COPENHAGEN STRATEGY TARGETS OECD 
COUNTRIES, GIVES DEVELOPING WORLD A BIT OF A PASS 
 
REF: A. BRUSSELS 117 
     ¶B. BRUSSELS 190 
     ¶C. BRUSSELS 1171 
     ¶D. BRUSSELS 1439 
     ¶E. BRUSSELS 1629 
     ¶F. BRUSSELS 1686 
     ¶G. BRUSSELS 1770 
     ¶H. ROME 141 
 
¶1. (SBU) Summary: The EU Commission's Communication proposing 
the EU's approach for the UN climate change negotiations 
recommends strong emissions reduction ommitments and funding 
from developed countries, but suggests only "actions" (rather 
than commitments) from developing countries, including the 
major emerging economies.  The Communication is not final EU 
policy, and the Member States will continue to debate the 
issue in the run-up to the December UNFCCC in Copenhagen. 
However, EU Member States will likely adopt a framework for 
their approach in mid-March, defining the best window of 
opportunity for U.S. leadership to influence the outcome. 
 
-- The Communication focuses on (1) binding commitments for 
developed countries based on emissions and GDP per capita and 
"actions" for developing countries, (2) financing for 
mitigation and adaptation, most of which to come from the 
developed world, and (3) development of a global carbon 
market; 
 
-- Several Member States expect changes in the final 
conclusions, as several do not agree with the decisions taken 
by the Commission, notably on financing and lack of binding 
commitments for developing countries; 
 
-- Several non-European OECD countries are also initially at 
odds with aspects of the proposal, and have indicated they 
welcome cooperation with the United States. 
 
-- EU Member States welcome U.S. leadership en route to 
Copenhagen, and an opportunity exists to drive the debate in 
Europe, at least through mid-March.  End Summary. 
 
-------- 
Overview 
-------- 
 
¶2. (SBU) The EU Commission on January 28 released a 
Communication entitled "Towards a Comprehensive Climate 
Change Agreement in Copenhagen."  It details the steps the 
Commission, led by DG Environment, believes should be taken 
to achieve an effective agreement under the UN framework. 
This Communication is not binding for the EU, but sets out 
the Commission's approach which, after elaboration by the 27 
EU Member States (including by Heads of State and Government 
at the March 19-20 European Council), will be incorporated in 
a negotiating mandate that the Council will have to approve. 
 
¶3. (SBU) The Commission addresses what it calls the three key 
challenges: (1) targets for developed countries and actions 
by developing countries, (2) financing both mitigation and 
adaptation, and (3) building an effective global carbon 
market outside the UN framework.  The Communication uses 
details from and builds upon the EU's newly-adopted Climate 
and Energy Package, which implements the EU's "20-20-20 in 
2020" climate targets.  (See reftels for details on the 
Climate and Energy Package.)  The goals set forth by the 
Communication build upon the EU's agreed objective to limit 
the average global temperature increase to less than 2 
degrees C compared to pre-industrial levels though a global 
greenhouse gas (GHG) emissions reduction of 50% from 1990 
levels by 2050. 
 
BRUSSELS 00000198  002 OF 007 
 
 
 
--------------------------------------------- ----------- 
Developed World asked a lot, Developing not bound to act 
--------------------------------------------- ----------- 
 
¶4. (SBU) To achieve the goal to reduce global emissions by 
50% from 1990 levels by 2050, the Commission expects 
reductions for developed countries in the range of 25-40% by 
2020 and 80-95% by 2050, with global emissions peaking by 
¶2020.  The Commission states that developed countries should 
undertake binding emissions reduction commitments, though 
developing countries are asked only to undertake "nationally 
appropriate actions" that will limit emissions growth to 
15-30% below baseline by 2020.  Using the accepted Kyoto base 
year, 1990, the Commission reinforces the concept that 
countries should be allowed to use the more accurate 
statistics from recent years, as the EU has done with 2005 in 
the Climate and Energy Package, but emphasizes that this 
should not be used to "water down" emission reduction 
efforts.  To enforce these targets and actions for all 
countries, the Commission argues that monitoring, reporting, 
and verification (MRV) should be improved. 
 
¶5. (SBU) Developed countries, according to the Communication, 
are expected to handle the brunt of near-term emissions 
reductions.  However, the list of developed countries, at 
least according to the Commission, has increased from the 
days of Kyoto.  Taking into account economic and 
geo-political changes since 1997, the Commission argues that 
the Copenhagen agreement should consider as developed 
countries all Annex I countries under the UNFCCC, all OECD 
member countries, and all current EU Member States, EU 
candidate countries, and potential candidates.  Within the 
EU, this means Malta and Cyprus are now to be given binding 
targets, but both countries already anticipated this as they 
were issued binding targets as part of the Climate and Energy 
Package.  Farther afield however, this new definition 
includes Korea and Mexico, both current OECD countries, but 
defined as developing countries under the Kyoto framework. 
 
¶6. (SBU) To determine the contribution of each developed 
country towards the global emissions target, the 
Communication proposes the following four criteria which it 
calls "fair and ensuring comparability of efforts:" 
 
-- GDP per capita: reflecting the capability to pay for 
domestic emission reduction and to purchase emission 
reduction credits from developing countries; 
 
-- GHG emissions per unit of GDP: also known as GHG 
efficiency, indicating the domestic GHG emission reduction 
potential; 
 
-- Trend in GHG emissions between 1990 and 2005: recognizing 
domestic early action to reduce emissions; 
 
-- Population trends over the period 1990-2005: taking into 
account the link between the size of the population and total 
GHG emissions. 
 
¶7. (SBU) Despite the Commission's claim that this ensures a 
"fair" distribution of the GHG-reduction, a closer look at 
the proposed reduction values shows non-EU developed 
countries bear a larger burden.  The EU, on the surface, sets 
itself up very strongly, committing to a 30% reduction from 
1990 levels.  To reach the IPCC goals, the Commission then 
recommends (in its supporting staff working paper, not in the 
formal Communication) that the U.S. reduce by 24%, the same 
totals for Australia and Japan, and Canada by 23%.  However, 
when compared relative to 2005, it becomes clear that the EU 
 
BRUSSELS 00000198  003 OF 007 
 
 
is taking an easier path than all proposed countries except 
for Ukraine and Russia.  The EU's target relative to 2005 is 
only 24%.  The Commission gives itself substantial credit for 
emissions reductions between 1990 and 2005, a fact that owes 
much of its basis to the large emissions reductions in 
Eastern Europe resulting from post-Soviet 
deindustrialization.  By contrast, the Commission proposes 
reductions relative to 2005 of 34% for the U.S., 39% for both 
Australia and Canada, and 29% for Japan. 
 
¶8. (SBU) In contrast to the binding targets proposed for 
developed countries, the Commission states that it does not 
believe binding targets should be applied to the developing 
world.  Instead, with the exception of Least Developed 
Countries, which should take no actions, the Commission asks 
developing countries to undertake "nationally appropriate 
actions" to limit emissions growth to 15-30% below baseline 
by 2020 and to commit to adopting low-carbon strategies by 
the end of 2011.  Actions to be included in this strategy, 
according to the Commission, should include a rapid decrease 
in deforestation, reducing global deforestation by 50% by 
2020 compared to current levels and by 2030 completely 
halting global forest cover loss. 
 
--------------------------------------------- --------- 
Financing falls on shoulders of West, much to the U.S. 
--------------------------------------------- --------- 
 
¶9. (SBU) The Commission has assessed that it will cost 
roughly 175 billion euro per year by 2020 to address global 
emissions reductions, with over half of that value needing to 
be invested in developing countries.  In addition, using 
information from the UNFCCC Secretariat, adaptation costs in 
developing countries are expected to range between 23 and 54 
billion/year in 2030.  The Commission argues that developed 
countries should provide much of the necessary financing to 
support mitigation actions in the developing world.  In fact, 
Environment Commissioner Dimas stated bluntly that "no money, 
no Copenhagen deal," and that he believes the political will 
exists in the United States to bring money to Copenhagen. 
According to the Commission, the preferred approach is a 
formula based on a combination of the polluter pays principle 
(according to allowed emissions per capita) and its ability 
to pay (GDP/capita).  As the United States has one of the 
largest GDPs per capita combined with the highest emissions 
in the developed world (40% of emissions according to the 
Communication), the Commission will ask the Uited States to 
take the largest portion of the financing burden for the 
developing world, in addition to the financial action 
necessary to address emissions reductions domestically.  Key 
to this discussion, other than distinguishing Least Developed 
Countries and Small Island Developing States, the Commission 
makes no distinction among the other developing countries, 
grouping China and India in with the rest. 
 
---------------------------------- 
En route to a global carbon market 
---------------------------------- 
 
¶10. (SBU) Having just completed the first phase of its 
Emissions Trading Scheme (ETS) and successfully passing the 
revisions for the ETS phase beginning in 2013 as part of the 
Climate and Energy Package, the Commission states that carbon 
markets are critical not only to addressing global climate 
change, but also to financing it.  To that end, the 
Commission calls for the development of a global carbon 
market as soon as possible, though it says that these 
discussions should take place in parallel to the UN 
negotiations.  Using ETS as the basis, the Commission would 
like to see the development of cap and trade systems in all 
 
BRUSSELS 00000198  004 OF 007 
 
 
OECD countries by 2013 and linking them together for an 
OECD-wide carbon market by 2015.  This wide-spread market 
should then be extended to include "economically more 
advanced" developing countries-not further defined-by 2020. 
Focusing directly on the United States, the Commission seeks 
to put in place a U.S.-EU working group on the design of 
carbon markets.  (Note: It appears the EU is convinced that a 
U.S. cap and trade system will be completed soon, with 
Commissioner Dimas going so far as to tell the European 
Parliament to "expect" a U.S. system by the end of 2009.  End 
note.) 
 
¶11. (SBU) In preparation for linking U.S. and EU carbon 
markets, the Parliament commissioned a report, published in 
January 2009, analyzing the possibilities of linking ETS with 
any future U.S.  system.  The report uses as a basis the 
Lieberman-Warner bill from 2007 and generally concludes that 
most aspects of a U.S. cap and trade bill are likely to be 
compatible with ETS.  However, it does acknowledge that the 
form of any U.S. legislation is as yet unknown, so it is not 
100% clear what the reality will be. 
 
--------------------------------------------- -------------- 
Early Council Conclusions similar, but could change quickly 
--------------------------------------------- -------------- 
 
¶12. (SBU) As noted, the Communication represents only the 
Commission's recommendations for the approach the EU should 
take toward the UNFCCC negotiations; the Council of Member 
States will have the final say on the EU's position. 
Commission and Finnish PermRep officials confirm the EU 
intends to speak with one voice in the UN negotiations 
(although the Member States will also be represented in their 
own capacity, particularly on issues remaining within their 
competence), so the final Council conclusions will have a 
strong bearing on the direction of the EU. 
 
¶13. (SBU) The Member States have begun reviewing the 
Communication in the Council working groups in preparation 
for forthcoming Council meetings of EU member state 
ministers.  The Environment Council will have the first cut 
during its meeting on March 2.  The following week, on March 
10, the Economic and Finance (ECOFIN) Council will have its 
say, with Finance Ministers addressing the financial and 
economic aspects of the proposal.  Finnish and Italian 
officials have indicated they expect disputes between the two 
sets of ministers, given the ECOFIN's focus on the current 
financial crisis.  The opinions of both Councils will feed 
into the March 19-20 European Council of Heads of State and 
Government, at which point the first consolidated EU position 
should be released.  This position likely will be an overall 
framework for EU policy, although the Finns explained that 
the June European Council will likely determine more of the 
specific positions.  Swedish officials also told Embassy 
Copenhagen and Embassy Stockholm EconOffs to expect the EU 
position to remain fluid until March and to be locked down in 
June.  It is likely that the Energy Council and the 
Development Cooperation Council will look at the proposal 
during February and March meetings, but the outcome of these 
Councils are likely to carry much less weight than either the 
Environment or EcoFin Councils. 
 
¶14.  (SBU) An early draft of the Environment Council 
conclusions that the EU Member State Ministers would adopt in 
March is similar to the Commission's Communication, confirmed 
by Embassy Prague as the official position from the Czech 
government.  However, some Member States are not comfortable 
with the current text and expect there will be several 
changes before the European Council on March 19-20.  The 
draft conclusions, dated February 6 and after one round of 
 
BRUSSELS 00000198  005 OF 007 
 
 
revisions, reaffirm the 2 degree C target and the need for 
global emissions to peak by 2020 and be reduced by at least 
50% by 2050 as compared to 1990 levels.  The draft also 
argues that developed countries should collectively reduce 
emissions by 25-40% by 2020 and 80-95% by 2050, with 
developed countries defined slightly differently, leaving 
much more room for discussion: all Annex I countries, 
non-Annex I parties at levels of development comparable to 
developed countries, and all EU Member States, EU candidate 
countries, and potential candidate countries.  In the same 
vein, the draft leaves the discussion for comparability a 
little more open, stating that developed country targets 
should be guided by considerations of capability and 
responsibility, which could include the four criteria defined 
in the Communication.  The draft also supports the 
development of an OECD-wide carbon market, "as soon as 
practicable," but preferably no later than 2015, while 
improving the Clean Development Mechanism (CDM) to strengthen 
its environmental integrity.  Dutch officials acknowledged to 
Embassy The Hague EconOff that the United Statesholds a more 
skeptical view of the CDM than the EU does.  The Dutch said 
that although the EU considers the CDM as a crucial 
transiitional instrument, the Council conclusions may include 
language that the CDM should be phased out and only apply to 
Least Developed Countries. 
 
¶15. (SBU) The draft Council conclusions also take a similar 
view of the role of developing countries, but again, the 
early draft leaves more opportunity for debate than does the 
Communication.  Accepting that developing countries, as a 
group, should reduce emissions to 15-30% below business as 
usual by 2020, the Council also believes these countries 
should commit to adopt low-carbon strategies rather than 
accept binding commitments.  Following the line of the 
Communication, the draft conclusions also call on developed 
countries to fund global mitigation and adaptation efforts, 
to the order of EUR 175 billion per year in 2020, with half 
of that going to developing countries.  However, the draft is 
completely open to the manner of financing, stating the EU's 
"willingness" to explore financing under the principles of 
"effectiveness, efficiency, equity, transparency, 
accountability, coherence, predictability, and sound 
financial management." 
 
¶16. (SBU) Member State representatives have told USEU EconOff 
that there are likely to be several more changes before the 
conclusions are adopted in March.  Most Member States appear 
to be in favor of asking major emerging economies to take on 
binding targets.  Finnish, Italian, and French officials told 
USEU EconOff that most Member States want a graduation of 
capability and efforts among developing countries, with the 
Finns arguing that the Commission was not nearly ambitious 
enough in the Communication.  France plans to propose 
language, though the French official stated that it may need 
to be vague so as not to "frighten" developing countries. 
While it appears that Sweden is in agreement as well, Swedish 
officials explained to Embassy Copenhagen and Embassy 
Stockholm EconOffs that it wants to ensure that the 
comparability criteria is not vulnerable to challenge, 
particularly by China.  Not all countries appear as 
determined however.  Embassy London reports that while the UK 
would accept binding targets for developing countries, it is 
only looking for a commitment that ultimately falls short of 
binding. 
 
¶17. (SBU) The financing aspects of the Communication also 
appear to be hotly contested by the Member States, with 
divisions between those that want to see more concrete 
details and those who prefer more vague terms.  As was the 
case during the debate over the EU's Climate and Energy 
 
BRUSSELS 00000198  006 OF 007 
 
 
Package, Italy will have one of the loudest voices, calling 
for recognition of the financial crisis and seeking for 
efforts with concrete effects (likely groundwork for reining 
in ambitious assistance commitments).  The Italian 
Environment Attache told USEU EconOff that the Council 
conclusions need to have a reference to the financial crisis, 
and that instead of money, governments need to focus on 
alternative mitigation efforts, including expanding CDMs and 
technology transfer to developing countries.  Embassy Rome 
confirmed this position, reporting that in a closed-door 
roundtable, Italian Environment Director General Corrado 
Clini said there needs to be a focus on funding for R&D, 
where governments can make a difference, adding that there 
need to be incentives to develop and improve energy 
efficiency outside of the EU bureaucracy.  In contrast, the 
Finnish and French officials explained to USEU EconOff that 
some Member States, Denmark in particular, want specific 
funding figures from developed countries, and that a figure 
of EUR 30 billion for the EU was removed from the final 
Communication.  However, the Czechs absolutely do not want 
concrete figures, and the Czech position is likely to be 
reflected in the March Environment Council conclusions. 
 
---------------------------- 
European Parliament Reaction 
---------------------------- 
 
¶18. (SBU) The European Parliament has not yet formally 
responded to the Communication, other than officially noting 
its release.  However, on February 4, the Parliament adopted 
a resolution on recommendations for an integrated EU policy 
on climate change that included a section specifically 
devoted to external climate change policy and a post-2012 
agreement.  In that section, Parliament espoused many of the 
general concepts promoted by the Communication, though not to 
the same level of detail.  Principally, Parliament stressed 
that the new climate change agreement should come under the 
auspices of the UN and adhere to the principle of "common but 
differentiated responsibility," with developed countries 
committing to domestic emissions reductions and the 
developing countries taking "nationally appropriate 
mitigation actions," all in accordance with the Bali Action 
Plan.  Developing countries, Parliament argues, should be 
supported and enabled by technology, financing, and 
capacity-building from industrialized countries.  Focusing 
specifically on the United States, the resolution "urges the 
incoming U.S. administration to live up to expectations," and 
contribute to the post-2012 framework through the adoption of 
domestic legislation and active participation in 
international negotiations.  (Note: The full Parliament is up 
for election in June, and there will be a break in the 
legislative process during the summer.  While it is possible 
that the incoming Parliament will start the process over and 
make new recommendations, the Finnish Environment attache 
told USEU EconOff that it is unlikely there will be many 
differences from what the current Parliament decides.  End 
note.) 
 
-------------------------------- 
Non-EU OECD Countries' Reactions 
-------------------------------- 
 
¶19. (SBU) Most countries outside of Europe have not had an 
opportunity to analyze adequately the proposals put forth by 
the Commission, but representatives of many of the countries 
listed as developed, including Australia, New Zealand, Japan, 
Korea, and Mexico, have strong opinions on a number of the 
provisions.  Notably, Australia, New Zealand, and Japan 
opined that the four criteria used by the EU to determine 
emissions targets are not acceptable.  Instead, the 
 
BRUSSELS 00000198  007 OF 007 
 
 
comparability criteria need to be country specific; just 
because that set of criteria worked for domestic EU efforts, 
it does not necessarily apply for all countries.  The other 
key question is whether or not offsets and CDMs are included 
in the targets.  The EU, for example, does not truly have a 
20% domestic reduction target; it probably is closer to half 
that number when CDMs are taken into account.  Australia, on 
the other hand, looks strictly at its domestic emissions when 
stating targets.  Beyond the targets, neither Mexico nor 
Korea appears willing to accept the designation as developed 
countries.  The Mexican official told USEU EconOffs that 
Mexico is prepared to accept gradual commitments and 
emissions caps as a transitional country, and the Korean 
official said that Korea does not yet accept the EU's 
position. 
 
---------------------------- 
Opportunity to engage is now 
---------------------------- 
 
¶20. (SBU) The release of the Communication and the current 
debate among the Member States provides an opportunity for 
the United States to engage and lobby the EU.  Despite the 
Commission proposal, the Member States have indicated that 
the EU stance toward Copenhagen remains fluid, and that 
coordination with the United States is welcome.  Embassy Rome 
reports that Environment DG Clini stated publicly that 
President Obama's new energy plan is an opportunity to open a 
new U.S.-EU partnership on technological and financial 
development, and Embassy London reports that in an internal 
UK government paper on Copenhagen, the UK is in favor of 
multiple cooperation paths, including a Major Economies type 
process.  Italy also intends to proceed with Major Economies 
(or similar) leaders' meeting in conjunction with the G8 
Summit in July (see Rome 141).  Underscoring the EU's 
readiness for engagement, Embassy the Hague reports that 
speculation about U.S. policy often dominates internal EU 
meetings on climate change.  The best window of opportunity 
for influencing the process remains until the first couple of 
weeks in March, when the Council conclusions are likely to be 
solidified for adoption by the EU Heads of State on March 20, 
which will detail the overarching framework for EU policy. 
 
¶21. (SBU) USEU therefore recommends a consolidated U.S. 
government approach to engaging the EU, which will continue 
to play a leading role in the negotiations for the Copenhagen 
UNFCCC.  This approach should include both high-level and 
technical meetings with the EU and its Member States in at 
least four key areas: mitigation efforts from developed and 
developing countries; financing; research and development of 
clean technologies; and technical discussions of cap and 
trade systems.  (Note: USEU will report separately on the 
EU's ETS and possible lessons learned for subsequent of a 
U.S. cap and trade systems.  End note.)  These four areas are 
the highest priority to the EU, and EU Member States are 
willing to engage with us at all levels, often citing their 
desire to cooperate with the Department of State and Special 
Envoy for Climate Change Todd Stern, the Department of Energy 
and the EPA on green technology development and energy 
efficiency, the Department of Treasury on financing in the 
current financial situation, and the Congress.  The EU is 
looking for U.S. leadership en route to Copenhagen; we will 
want to use this to ensure EU thinking is in line with U.S. 
policy developments. 
MURRAY 
.