EN    EN EN 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 28.1.2009 
SEC(2009) 102 
  
COMMISSION STAFF WORKING DOCUMENT 
accompanying the 
 
COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT , THE COUNCIL, THE EUROPEAN 
ECONOMIC AND SOCIAL COMMI TTEE AND THE COMMITTEE OF THE 
REGIONS 
  
Towards a comprehensive climate change agreement in Copenhagen 
 
- Additional background information-  
  
{COM(2009) 39 final} 
{SEC(2009) 101} 
EN 2   EN Table of content  
1. Low carbon development strategies............................................................................. 3 
2. Technical provisions for monito ring, reporting and verification................................. 5 
3. Public funds and international carbon crediting mechanisms to support developing 
country mitigation ........................................................................................................ 6 
4. Compliance and enforcement....................................................................................... 6 5. Funding early action through a Global C limate Financing Mechanism (GCFM) ....... 7 
6. Financing global research, technolog y development and demonstration .................... 8 
EN 3   EN  
1. LOW CARBON DEVELOPMENT STRATEGIES  
Low carbon development strategies need to include: 
– a credible pathway to limit the country’s emissions through nationally appropriate 
mitigation actions 
– an emissions inventory in cluding key parameters (e .g. emission intensity) and a 
projection of business-as-usual  emissions for key sectors; 
– a portfolio of action to address emissions in key sectors following a two-track 
approach: 
– autonomous action (mainly “win-win” and lo w-cost action), that are mainly to 
be financed and implemente d by the country itself, a nd that could be supported 
by capacity building and targeted international loan schemes; 
– supported action requiring assistance due to  the incremental costs, in the form 
of financing, technology or capacity  building for implementation; 
– estimates of emission reduction targets from  each category of action, in the short 
term (2020-2030) and with an identifi cation of long-term (2050) targets; 
– specific needs to support implementation. 
The first set of strategies shoul d cover a period of five years, but individual action and support 
could be updated more frequently. Developing country strategies should iden tify the support required to enable the 
implementation of proposed action resulting in incremental costs that cannot be sustained by 
the country itself. This could include: 
– Financial assistance, if possible perfor mance-based, to implement policies and 
measures, e.g. action to reduce defore station and other mitigation action; 
– International crediting mechanisms, includi ng no-lose sectoral cr editing approaches 
as well as “classic” CDM fo r less advanced sectors; 
– Technology cooperation, includ ing joint technology development, cooperation on 
policies for technology de ployment (including stan dards) and technology 
demonstration projects. 
Key to the low carbon development strategy appro ach will be ensuring a sufficient level of 
ambition, which is linked to the ability to raise appr opriate support for concrete proposals for 
action. Discussions on linking pr oposals for action to support should be facilitated by 
independent technical analys is of the proposed strategy and action, in particular: 
– Methodology and assumptions to estim ate business-as-usual emissions; 
– Technology and policy assumptions  underlying proposed action; 
– Proposed support to implement the action, in particular an estimation of incremental 
costs; 
Methodology and assumptions to estimate the mitigation impact of proposed action. 
Discussion of a country’s st rategy in the Fac ilitative Mechanism for Mitigation Support 
should be based on the indepe ndent technical analysis. 
EN 4   EN .

EN 5   EN  
2. TECHNICAL PROVISIONS FOR MONITORING , REPORTING AND VERIFICATION  
Developed countries Developed countries should improve the measur ement, reporting and verification of their 
emissions. Future inventories should be pr epared on the basis of the improved 2006 IPCC 
inventory guidelines. Sufficient resources should be made available to ensure a robust annual 
expert review of those invent ories. Developed countries sh ould furthermore provide every 
two years an update of their climate-related policies and emission pr ojections, building on 
current EU practice. An in-dep th review of these reports should include learning from good 
practice and early identification of problems in meeting emission targets on the basis of 
projections. 
Developed countries should also significantly  improve the measurement, reporting and 
verification of support provided to developi ng countries. Support for both mitigation and 
adaptation actions should be annu ally measured and reported in  parallel with “traditional” 
Official Development Assistance (ODA). This  should build on existing reporting practices, 
such as the OECD Development Assistance Co mmittee (OECD DAC) database and should be 
complemented by new indicators on technology transfer. 
Developing countries 
Developing countries should regularly monitor and report action on mitigation and adaptation. 
This should form the basis for exchanging information, identifying and sharing good practice and regular peer reviews. Following the assessment of a developing country’s low carbon development strategy in the Facilitative Mechanism for Mitig ation Support, developing countries could enter mitigation 
action (both autonomous and sup ported action) in a registry  for nationally appropriate 
developing country mitigation act ion. This registry, which shoul d be operational as of 2012, 
will include a description of th e action, quantified mitigation bene fits and any other benefits. 
It will increase the visibil ity and recognition of action unde rtaken by developing countries. 
Developing countries do not cu rrently provide regular emissi on inventories, which makes it 
hard to identify opportunities for action and impo ssible to determine the effectiveness of their 
mitigation efforts. The Copenhagen agreement s hould ensure that all developing countries, 
except the Least Developed Count ries, provide annual emission in ventories, at least for the 
key emitting sectors of their economies, as of  2010 using the 2006 IPCC inventory guidelines. 
Comprehensive capacity building and technical and financial support must be provided to 
help them prepare these inventories. 
In addition, a credible peer review process, building upon experience with  the expert reviews 
under the UNFCCC, is needed to  assess actual implementation of  mitigation and adaptation 
policies and the quality of emissi on inventories. This should al so include the support received 
for implementation. All action ente red in the registry should be subject to this verification, 
even if they do not receive third country or international support. 
Sectoral Approaches as a tool to engage the private sector  
Several sectoral approaches have  arisen as a promising tool to facilitate action on climate 
change: 
– Industry led sectoral approach es have demonstrated that they are capable  of building 
globally industry cooperation on climate cha nge, leading to a bett er understanding of 
existing emissions and potential improvements as  well as the sharing of best practice.  
EN 6   EN – Further opportunities exist in  using sectoral approaches as an element in  
– building low carbon development strategies,  
– developing sector-specifi c technology development an d demonstration as well 
as  
– realising sectoral crediting mechanisms as part of a future global carbon 
market.  
In conclusion, sectoral approaches, built on public private partnerships, can help mobilise 
action by business in both developed and devel oping countries and assi st the transition 
towards a global low carbon economy. 
3. PUBLIC FUNDS AND INTERNATIONAL CARBON CREDITING MECHANISMS TO SUPPORT 
DEVELOPING COUNTRY MITIGATION  
Support for the incremental costs of such inve stment should come from a range of sources. 
The UNFCCC1 estimated the annual additional investment and financial flows needed in 
developing countries at US $ 65 billion per year by 2030.  
Public funds 
These should leverage larger private finance flows and can be employed in a variety of 
instruments, including pure gr ants, interest reduc tion, publicly supported loan facilities and 
venture capital funds. Support for mitigation action should include: 
– Capacity building. Public grants can  focus on up-front capacity building and 
monitoring systems and be mobilised as of 2010. A significant amount will be 
required for mitigation and technology cooperation until 2015. 
– Project-based programs such as the Global Energy Efficiency and Renewable Energy 
Fund (GEEREF), providing equity to the i nnovative private sector in developing 
countries.  
– A Global Forest Carbon Mechanism that pr ovides performance-based incentives to 
reduce deforestation emissions.  
International carbon crediting mechanisms 
Project-based offsetting in th e Clean Development Mechanism (CDM) has demonstrated its 
limits both in scale and environmental inte grity. New sector-wide mechanisms, including 
sectoral no-lose targets, shoul d be developed to provide br oad incentives and credit only 
action that that are additional and go beyond lo w cost options. The EU, as part of its 2020 
unilateral 20% reduction target, has already committed to using up to 3 Gt CO 2 reductions 
through the CDM and Joint Implementation (JI) until 2020.2 In addition, a pilot phase should 
start in 2013 for reduci ng emissions of deforestation and fo rest degradation by establishing 
forest carbon credits that can be used excl usively for government compliance. Certain pre-
conditions would need to be met before any in clusion of forests in carbon markets could be 
considered as a realistic option. 
4. COMPLIANCE AND ENFORCEMENT  
A robust compliance and enforcement system is  key to ensure the implementation of a 
Copenhagen agreement. Such system will need to build upon the existing system under the 
                                                 
1 UNFCCC secretariat. 2007. Investment and Financial Flows to Address Climate Change. 
2 Equivalent to €45 billion for the period 2008-2020 at a price of 15 €/t CO 2. 
EN 7   EN Kyoto Protocol, which has already proven its e ffectiveness in the first non-compliance cases 
brought before its Compliance Committee. The expe rience with the applic ation of the current 
system provides a solid basis to adjust the current system to the needs of a Copenhagen 
agreement. One particular aspect that should be explor ed in this context is how to deal with 
Parties that would not ratify the Copenhagen agreement which could potentially undermine 
the overall environmental eff ectiveness of a global accord. 
5. FUNDING EARLY ACTION THROUGH A GLOBAL CLIMATE FINANCING MECHANISM 
(GCFM) 
The Global Climate Financing Mechanism could be a short-term EU answer to the challenge 
that poor and most vulnerable developing countri es are facing when tackling climate change. 
It aims to  allow spending immediately  on priority climate-related investments in those 
countries, contributing to rapidly reduce the cu rrent gap between the limited availability of 
funding and the need for climate-related priority  investments (estimation of adaptation needs 
for developing countries by UNFCCC Secretaria t amounts to € 23 to 54 billion per year in 
2030). It will contribute to provi ding valuable returns on the gr ound in terms of development, 
in particular building climate resilience.  
The GCFM has a temporary nature. It is conceive d as a bridging facility to deliver substantial 
funding while a new architecture for climate fina ncing is being built for the post-2012 period, 
paving the ground for its effective implementation in  the longer term. Timing of the initiative 
is also important for the strong political signal it provides to the target ed countries during the 
negotiations. Being an EU initiative of significa nt size, this signal would be much stronger 
than smaller individual Me mber States initiatives. 
The GCFM is not a new fund, but a fundraising  mechanism which EU Member States would 
join on a voluntary basis. Funds raised would be used to complement existing instruments 
with their proper ways of delivery. Funds raised  would be predominantly allocated to existing 
funding instruments depending on their comparativ e advantage. In this context, various 
criteria such as efficiency, effectiveness, c oordination and coherence, support to approaches 
which integrate climate change into nati onal planning processes and budget, the Paris 
Declaration principles, as well as absorption capacity, could be used. 
The GCFM would raise funds on the capital ma rket through the issuan ce of "climate" bonds. 
Repayment of the bonds over a long-term period (20 years) would be ensured by legally 
binding commitments from supporting EU Member States. They would agree on contributing 
to the overall level of funding according to releva nt criteria, such as their GDP per capita and 
their level of GHG emissions.  
The funds would be used with a priority for adaptation activities in poor developing countries 
most vulnerable to climate change (e.g. in ag riculture, water, health, sustainable natural 
resources management). It is expected that adaptation costs will rise over time as climate 
impacts will worsen before effects of mitigati on are felt and global temperature is stabilized. 
Even with reduced emissions from now on, the impact of past emissions would be felt for 
quite some time. Delaying interventions in adaptation actions risks putting in danger investments already done to reach development objectives. One clear ex ample justifying early 
intervention in adaptation is disaster risk reduction. Studies reveal that for each dollar 
invested in disaster risk reduc tion, benefits between two and four  dollars can be expected in 
terms of avoided or reduced social and economic impact of natural disasters. 
Given the importance of early mitigation activiti es in some targeted developing countries, 
there is some flexibility to allocate a share of  the funds raised to mitigation activities, still 
through the appropriate existing instruments.  
EN 8   EN As the poorest and most vulnerable developing  countries would be targeted, many of which 
are facing problems of debt sust ainability, grants should be the main financing modality. 
However, in order to increase the financial leverage, an additional option could be blending with loans from European development financia l institutions having experience in this field 
(EIB, KFW, AfD, etc). 
6. F
INANCING GLOBAL RESEARCH , TECHNOLOGY DEVELOPMENT AND 
DEMONSTRATION  
Financing for global researc h, technology development and demonstration should include: 
Capacity building 
This would comprise support for identifying country-specific needs and existing capacity, 
support for expert training and best practice guidance,  support for designing and 
implementing domestic policies, including data  collection and the pr ovision of technology 
information. It could be impleme nted by existing organisations. 
Technology-oriented cooperation 
For a number of specific key technologies, co untries should agree to joint R&D and large-
scale demonstration and deployment projects. RD&D projects should be taken forward in 
cooperation with developing countries to e nhance ownership of ne w technologies, in 
particular intellectual property rights, and to accelerate the deployment and diffusion of 
advanced technologies, e.g. th rough technology roadmaps. The IEA has identified 17 key 
energy technologies on both the dema nd and supply side that could initially serve as a starting 
point for discussing such roadmaps3, as well as those technologi es identified under the EU’s 
Strategic Energy Technology (SET) Plan. It shoul d also be considered how to strengthen 
existing international and regi onal technology initiatives, such  as the Carbon Sequestration 
Leadership Forum, Interna tional Hydrogen Partnership. 
Action should also be taken to strengthen innovation and diffusion systems in developing 
countries, to enable them to develop and adopt new technology suita ble for their local 
circumstances and markets. This could be done through, for example, regional centres.  
Reducing market barriers 
Within the context of the WTO, tariffs a nd non-tariff barriers on clean environmental goods 
and services should be eliminated  as early as possible in order to reduce the cost s of advanced 
technologies and to spur their deployment. Using trade is an efficient and effective way to 
spread these goods and technologies internationall y. Trade liberalisation in  this area therefore 
would bring environmental, economic and commercial benefits for all sides. 
Intellectual Property Rights (IPR) 
Protecting IPRs is necessary  to encourage research, t echnology development and 
demonstration, as well as large-scale deploymen t. Well established and enforced IPR rules 
also help technology transfer through increasing  the willingness of ente rprises to invest and 
license technology in emerging a nd developing countries. Countries  should explore options to 
                                                 
3 Supply side:  CCS fossil-fuel power generation, Nuclear power plants, Onshore and offshore wind, 
Biomass IGCC & co-combustion, Photovoltaic systems, Concentrating solar power, Coal: integrated-
gasification combined cycle, Coal: ultr a-supercritical, 2nd generation biofuels; Demand side:  Energy 
efficiency in buildings and appliances, Heat pumps, Solar space and water heatin g, Energy efficiency in 
transport, Electric and plug-in vehicles, H2 fuel cell vehicles, CCS industry, H2 and fuel transformation 
Industrial motor systems. 
EN 9   EN strengthen IPR frameworks to protect and share technol ogy and further strengthening 
incentives for innovation. 
Strengthening of knowledge  
Advance understanding of the processes, evol ution of climate change and its impacts to 
society, economy and ecosystems is required fo r the preparation of efficient and effective 
climate policies to adapt and mitigate. In particular, strengthening the research and 
observation on the economic and social dimensions of climate change mitigation and adaptation should be further enhanced.  
Governance 
The Copenhagen agreement will need to establis h a consultative group that brings together 
government, private sector, civ il society and other stakeholders’ expertise. This new body 
should provide strategic guidance for research and technology development and international 
cooperation drawing on technology needs iden tified in national low carbon development 
strategies. It could also provide advice on the co urse of action with respect to actual barriers 
to technology diffusion and social uptake of technological innovations.