We certainly hope so. Climate change is real and warrants action. It is a global challenge, requiring effective measures to be undertaken by all significant world economies under an effective and clear international agreement. This is where COP-21 is supposed to make the difference, representing a turning point, whereby the EU – so far an almost lone runner – is joined by the global community with ambitious, binding commitments to reduce GHG emissions in an equitable manner.
The EU has already submitted its target: a binding 40% cut in GHG emissions in 2030, with respect to 1990 levels. It is an unconditional commitment: whatever the results in Paris, it will not be revised downwards, but possibly upwards.
In this way, the European Union has set an ambitious model for other regions of the world to follow.
In fact, strong, equitable and binding commitments from all regions in the world are indispensable for two main reasons:
- To effectively address climate change: the EU is responsible for only 10% of today’s global GHG emissions, with a further declining trend. However, no matter what level of ambition its emission reductions achieve, its practical contribution to the resolution of the climate change emergency will be almost irrelevant, unless the other major world economies ‘play the same tune’.
- To restore a level playing field among competing economies: ambitious decarbonisation targets do not come free of cost: the EU economy – so, ultimately its citizens – will be footing the bill. The EU’s industry, and particularly the energy-intensive sectors, such as petroleum refining, chemicals, steel, cement, aluminium, and many others, are posed to further worsen their international competitiveness, unless effective carbon leakage protection measures are implemented.
The possibility for EU industries to compete without asymmetrical decarbonisation costs is an essential condition for their economic sustainability, and ultimately, their survival. Should the distortion remain in place, many industrial manufacturing activities would cease their activity in the EU, and relocate to countries with less severe environmental regulations. The damage would be two-fold:
- Global GHG emissions would increase: for example, the manufacturing of petroleum products in the EU’s refineries results, on average, in 35% lower emissions than in non-EU refineries. Similar detrimental effects would occur for other energy-intensive industries, since these industries have, in many cases, a lower carbon footprint than their non-EU competitors.
- The EU economy would progressively lose, not only the contribution of industry to its GDP and the welfare of its citizens, but also its technological know-how, not to mention many high quality / well paid jobs.
So, the key question is: what does it take for the Conference of Parties in Paris, from the 30th of November to the 11th of December, 2015, to be a success?
- A legally binding agreement,
- amongst all significant world economies,
- with equitable emission reduction targets,
- with strong monitoring / reporting / verification rules,
- and with revenue-neutral market-based mechanisms, including carbon pricing under the right circumstances.
The tone and the content of the policy debate in this preparatory phase to COP-21 is unfortunately, providing more than one reason for concern.
Let’s start with the Intended Nationally Determined Contributions (INDCs), the decarbonisation plans, otherwise known as ‘pledges’, submitted by the vast majority of world countries ahead of the conference. Whilst the number of countries submitting pledges (150+), and the coverage of global GHG emissions (more than 90%) are impressive figures, the level of commitments presents a very diverse picture.
Many key countries do not provide absolute targets (as the EU have done), but commitments to the reduction of GHG emissions per unit of GDP or per capita (meaning that if GDP or population keeps growing, emissions in absolute terms, are allowed to grow).
The peak of the GHG emissions is set at a later time for many important countries, sometimes as late as 2030. In other cases, the reference year for reduction is taken, at a time in the past, when emissions were extraordinarily high, making the real decarbonisation effort unambitious.
Moreover, some of the INDCs are conditional, meaning that the commitment to implement the plan, depends on the occurrence of some conditions (which may or may not happen).
In conclusion, notwithstanding the impressive effect of the sheer number of countries submitting their INDCs, it is clear that there is a long way to go before considering their commitments to be as consistent as the EU’s.
Another reason for concern is the fact that the focus of the policy debate seems to be shifting, from the objective to achieve an international binding agreement, to the idea of a review of the decarbonisation plans in 5 years, for the necessary adjustments and the relevant commitments to be made.
In my view, it would be extremely disappointing if COP-21 ended up solely as an expression of goodwill – with a generic pledge to review the contributions in 5 years’ time, without a legally binding signature on an agreement for equitable reduction targets.
Let’s hope that this will not be the case, and that EU negotiators will have been able – building on the strength of our own ambitious, binding and unconditional commitment – to lead the world to a satisfactory global agreement.
The role of the EU refining industry
Before concluding, I would like to briefly stress the contribution that the EU refining industry can provide, to successfully address the dilemma of answering the growing global demand for ‘secure, reliable and affordable’ energy, whilst at the same time limiting the emission of greenhouse gases.
EU refineries are ‘secure, reliable and resilient’ providers of energy, in the form of petroleum products, to the EU economy.
Mobility is a key contributor to living standards, and is intrinsically linked to economic growth. Today, with alternative technologies being increasingly used in transport, refined petroleum products nevertheless, are, and will remain for many years, the prominent energy source. This is due to a unique and tremendously successful combination of continuous technological advancements in the internal combustion engine, and of affordable, and high quality liquid fuels. The latter, due to their superior energy density with respect to any available alternative, provide economic and technological advantages, which compare well with other competing fuels / energy sources.
Refined products supply 2/3 of the raw material of the EU petrochemical industry, and are converted into light-weight plastics, insulation materials, and other essential components of the low carbon economy.
Moreover, as 60% of the operating costs of refining is for energy, EU refineries have developed a strong capability to innovate, achieving world leadership, in terms of efficient use of energy and lower carbon intensity from production activities. The refining industry is continuously seeking to improve its energy efficiency, based on the valuable technological know-how accumulated by the sector, and, in close co-operation with the automotive, petrochemical and other key industries, contribute to an economically sustainable low carbon economy.
Last, but not least, the EU refining industry has engaged in promoting a more “energy-conscious” behaviour for its customers. A notable example of this is the campaign: “Save more than fuel” [www.savemorethanfuel.eu].
Alessandro Bartelloni, Policy Director, FuelsEurope