Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - International climate policy post-Copenhagen: Acting now to reinvigorate global action on climate change {SEC(2010) 261}
Date: 2010-03-09
Institutions: European Commission
Subjects: EU environmental policy, climate change, developing countries, energy policy, greenhouse gas, international affairs, reduction of gas emissions, tradeable emission permit

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EUROPEAN COMMISSION 

Brussels, 9.3.2010 
COM(2010) 86 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

International climate policy post-Copenhagen:  
Acting now to reinvigorate global action on climate change 

{SEC(2010) 261} 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

International climate policy post-Copenhagen:  
Acting now to reinvigorate global action on climate change 

1. 

KEY MESSAGES 

The  international  dimension  has  always  been  an  essential  part  of  the  EU's  ambitions  on 
climate  change.  Europe's  core  goal  is  to  keep  the  increase  in  temperature  below  2ºC,  to 
prevent the worst impacts of climate change, and this is only possible through a coordinated 
international effort. This is why the EU has always been a strong supporter of the UN process, 
and why Copenhagen fell well short of our ambitions. Nevertheless, increasing support for the 
Copenhagen  Accord  shows  that  a  majority  of  countries  are  determined  to  press  ahead  with 
action on climate change now. The task for the EU is to build on this determination, and to 
help  channel  it  into  action.  This  Communication  sets  out  a  strategy  to  help  maintain  the 
momentum of global efforts to tackle climate change. 

The EU has always been at the forefront of concrete action against climate change – it is on 
track  to  comply  with  its  2008-2012  Kyoto  commitments,  has  adopted  ambitious  targets  for 
2020, including a commitment  to  reduce its greenhouse gases (GHG)  emissions  by 20%  by 
2020 and to increase this reduction to 30% if the conditions1 are right. We are now ready to 
transform  Europe  into  the  most  climate  friendly  region  of  the  world  moving  towards  a  low 
carbon, resource efficient and climate resilient economy. Realising that, and showing that we 
are putting the Copenhagen Accord into effect, is a key calling card in the effort to persuade 
global partners to take up the challenge.  

The Europe 2020 Strategy has put more sustainable economic growth at the heart of the vision 
for  the  future,  creating  new  jobs  and  boosting  energy  security.  The  Commission  will  now 
undertake  work  to  outline  a  pathway  for  the  EU's  transition  to  a  low  carbon  economy  by 
2050. It will also strengthen resilience to climate risks and to increase our capacity for disaster 
prevention and response. 

The  UN  process  is  essential  for  a  broader  global  commitment  to  support  action  on  climate 
change. Central to this objective is to use the UN process in the run-up to Cancun to integrate 
the  Copenhagen  Accord's  political  guidance  into  the  UN  negotiating  texts.  We  also  need  to 
address  the  remaining  gaps,  and  ensure  the  environmental  integrity  of  an  agreement  whose 
bottom  line  must  be  to  deliver  cuts  in  GHG  emissions  on  the  scale  required.  This  implies 
ensuring  a  broad  participation  and  a  stronger  level  of  ambition  from  other  countries,  and 
addressing possible weaknesses, such as the rules for the accounting of forestry emissions and 

1 

The European Council of 10-11 December 2009 concluded that as part of a global and comprehensive 
agreement  for  the  period  beyond  2012,  the  EU  reiterates  its  conditional  offer  to  move  to  a  30% 
reduction by 2020 compared to 1990 levels, provided that other developed countries commit themselves 
to  comparable  emission  reductions  and  that  developing  countries  contribute  adequately  according  to 
their responsibilities and respective capabilities. 

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the  handling  of  surplus  emission  budgets  from  the  2008-2012  Kyoto  period.  This  also 
includes building a robust and transparent emissions and performance accounting framework, 
mobilising fast-start funding in a coordinated manner and contributing to securing long-term 
finance  for  mitigation  and  adaptation.  In  addition,  the  EU  should  work  to  advance  the 
development of the international carbon market, by linking compatible national systems, and 
promoting the orderly transition from the CDM to new sectoral market-based mechanisms.  

Our  primary  objective  remains  to  reach  a  robust  and  legally-binding  agreement  under  the 
UNFCCC. In order to achieve this, we should first focus on the adoption of a balanced set of 
concrete,  action-oriented  decisions  in  Cancun  at  the  end  of  2010.  This  should  be  as 
comprehensive  as  possible,  but  given  remaining  differences  among  Parties,  the  EU  must  be 
ready to continue the work for the adoption of a legally binding agreement in South Africa in 
2011. Up to Copenhagen the pressure on expectations had very useful effects leading many 
major  economies  to  set  domestic  targets  prior  to  Copenhagen.  Now  we  must  consider  a 
strategy that will keep momentum high without jeopardizing the primary objective.  

That  is  why  the  EU  will  need  to  raise  the  level  of  its  outreach,  building  confidence  that  an 
international deal can be brokered and exploring specific measures to be agreed in Cancun. It 
needs to focus on building support with different partners.  

2. 

REINVIGORATING INTERNATIONAL CLIMATE NEGOTIATIONS 

2.1. 

Taking stock after Copenhagen 

The main outcome of the Copenhagen Climate Change Conference in December 2009 was the 
agreement  among  a  representative  group  of  29  Heads  of  State  and  Government  on  the 
"Copenhagen  Accord".  The  Accord  anchors  the  EU's  objective  to  limit  global  warming  to 
below 2°C above pre-industrial levels2. It requested developed countries to put forward their 
emission reduction targets, and invited developing countries to put forward their actions, by 
31 January 2010. It also provides the basis for regular monitoring, reporting and verification 
(MRV)  of  those  actions,  contains  a  commitment  for  significant  financing  for  climate  action 
and  a  related  institutional  framework,  and  gives  guidance  on  tackling  issues  like  reducing 
emissions from deforestation, technology and adaptation. 

The  Accord  falls  well  short  of  the  EU's  ambition  for  Copenhagen  to  reach  a  robust  and 
effective  legally  binding  agreement,  and  was  only  "taken  note"  of  in  the  conclusions  of  the 
Conference.  Nevertheless,  the  more  than  100  submissions  to  date  by  both  developed  and 
developing  countries3,  many  of  them  including  targets  or  actions,  demonstrate  a  broad  and 
still growing support for the Accord. They demonstrate the clear determination of a majority 
of countries to step up their actions on climate change now. 

Copenhagen also made important progress in the negotiations on a broad range of other issues 
in the form of draft decisions and negotiating texts4. Together with the Accord, these provide 

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The  Accord  even  calls  for  consideration  of  strengthening  the  long-term  goal,  including  in  relation  to 
temperature rises of 1.5°C. 
An  overview  of  submissions  thus  far  can  be  found  in  the  staff  working  paper  accompanying  this 
Communication and on http://www.unfccc.int. 
The  various  draft  decisions  and  negotiating  texts  are  contained  in  the  report  of  COP-16  and  CMP-6, 
available through http://www.unfccc.int. 

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the basis for the next steps, both in the negotiations – where we will now need to integrate the 
political  guidance  from  the  Accord  in  these  UNFCCC  negotiating  texts  –  and  for  the 
immediate start with the implementation of a number of actions. 

2.2. 

A roadmap for the future 

The  EU  should  continue  to  pursue  a  robust  and  effective  international  agreement  and  a 
legally-binding agreement under the UNFCCC fundamentally remains its objective. To obtain 
such agreement, the EU should re-focus its efforts. It should build confidence by responding 
to  the  urgent  desire  for  concrete  action  now  as  well  as  seek  concrete  results  from  Cancun. 
This requires a broad approach, with an intensified bilateral outreach. 

2.2.1.  The UN process 

The 2010 Conference is scheduled for December in Cancun, to be followed by one in South 
Africa at the end of 2011. In the run-up to Cancun, a variety of preparatory meetings will be 
organised, including by Mexico and Germany. 

The  April  and  June  meetings  in  Bonn  should  set  the  roadmap  for  next  steps  in  the 
negotiations,  picking  up  the  negotiations  with  a  focus  on  integrating  the  political  guidance 
from  the  Copenhagen  Accord  into  the  various  negotiating  texts  resulting  from  Copenhagen. 
The meetings should identify the "gaps" in the current negotiating texts, such as the issue of 
monitoring,  reporting  and  verification,  on  which  the  Accord  provides  important  political 
guidance. They should also address issues neglected in the Accord, such as the evolution of 
the international carbon market, reducing emissions from international aviation and maritime 
transport through the ICAO and IMO, agriculture, and the reduction  of hydrofluorocarbons. 
Most  importantly,  the  Bonn  meeting  should  bring  the  developed  country  targets  and 
developing  country  actions  submitted  under  the  Accord  into  the  formal  UN  negotiating 
process. 

The  EU's  objective  for  Cancun  should  therefore  be  a  comprehensive  and  balanced  set  of 
decisions to anchor the Copenhagen Accord in the UN negotiating process, and to address the 
gaps. There should also be a formal decision on the listing of developed country targets and 
the registration of developing country actions, including the methods to account for these. All 
the  decisions  should  come  under  an  "umbrella"  decision  to  provide  the  overall  political 
framework. Most importantly, the outcome of Cancun must strike a balance between issues of 
importance to both developed and to developing countries. 

While  the  EU  is  ready  to  adopt  a  robust  and  legally  binding  agreement  in  Cancun,  the 
substantial differences outstanding mean that we have to recognise the possibility of a more 
step-by-step approach. Under this scenario, concrete decisions in Cancun would still offer the 
right  basis  for  a  fully  fledged  legal  framework  in  South  Africa  in  2011.  It  is  important  to 
anchor  the  progress  made  and  keep  momentum  high  without  jeopardizing  the  fundamental 
objective.  

2.2.2.  Reaching out to third countries 

Negotiations in Copenhagen clearly demonstrated that progress in the UN was conditional on 
the willingness of countries to act. An active outreach programme by the EU will be key to 
promoting support for the UN process. The objective will be to obtain a better understanding 
of  the  positions,  concerns,  and  expectations  of  our  partners  on  key  issues;  and  to  explain 

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clearly  what  the  EU  requires  of  an  agreement  in  terms  of  its  ambition,  comprehensiveness, 
and environmental integrity. It will seek to encourage immediate action to follow up on the 
Copenhagen  Accord  and  facilitate  convergence  on  action-oriented  decisions  to  be  agreed  in 
Cancun.  This  should  also  provide  valuable  opportunities  to  intensify  bilateral  dialogues  on 
domestic  climate  change  developments  and  for  the  EU  to  offer  support  on  domestic  action. 
The  Commission  will  undertake  this  outreach  in  close  contact  with  the  Council  and  its 
Presidency.  

The  Union  and  its  Member  States  should  continue  to  pursue  the  negotiations  within  the 
framework of the UN. A stronger role for the Commission will help ensure that the EU speaks 
with one voice. Building upon the lessons of Copenhagen, we must engage in a discussion on 
how best to increase the efficiency and leverage of the EU in international negotiations. 

In addition, the Commission would encourage and assist the European Parliament to engage 
fully with parliamentarians from key partner countries. 

The  outreach  activities  must  happen  at  all  levels  and  with  all  the  important  stakeholders. 
Bilateral as well as multilateral meetings, including a number of summits and ministerials, are 
scheduled for 2010. These will be complemented by regional and ad hoc meetings to ensure 
that  partners  from  all  regions  of  the  world  are  reached,  including  vulnerable  countries,  and 
that  the  EU  increases  its  understanding  of  their  concerns  and  ambitions.  In  informal  and 
formal,  existing  and  new  dialogues  preparing  Cancun  and  the  immediate  implementation  of 
the  Copenhagen  Accord  parties  must  continue  to  identify  key  issues  and  possible 
compromises  in  the  negotiations.  The  Commission,  supported  by  EU  delegations  of  the 
European External Action Service, will engage actively in all these activities. It will do so in 
close cooperation with incoming Mexican and South African Presidencies of the Conferences 
in 2010 and 2011.  

It is, however, important to underline that there must be a willingness from all Parties to move 
forward.  Without 
lowest  common 
denominator, is likely to remain the only agreement possible. 

the  Copenhagen  Accord,  representing 

this, 

the 

2.2.3.  Environmental integrity 

An agreement to tackle climate change must deliver the reductions needed to get global GHG 
emissions on a pathway compatible with the Copenhagen Accord's objective to remain below 
2°C. Whilst the Kyoto Protocol remains the central building block of the UN process, its key 
shortcomings will have to be addressed – its coverage, and the weaknesses it contains.  

•  The  Kyoto  Protocol,  in  its  current  structure,cannot  alone  deliver  the  objective  to 
remain  below  2°C.  Kyoto  only  covers  30%  of  emissions  today.  The  objective  is  only 
possible if the US and major emitters from the developing world (including Brazil, China, 
India,  South  Korea,  Mexico  and  South  Africa,  who  rank  among  the  world's  15  biggest 
emitters) will do their share. The EU took a huge responsibility under Kyoto, and the EU is 
on track to comply with its 2008-2012 commitments. Others must follow suit. Of course, 
the efforts of developing countries will differ in accordance with their responsibilities and 
capabilities and may require support.  

•  In  addition,  serious  weaknesses  exist  in  the  current  Kyoto  architecture  which  risk 
undermining the environmental integrity of an agreement. Current developed country 
pledges  on  the  table  imply  a  reduction  in  their  emissions  from  around  13.2%  by  2020 

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below 1990 level (for the lower end of the pledges) to around 17.8% (for the higher end of 
the  pledges).  This  is  already  insufficient  to  meet  the  objective  to  remain  below  2°C,  for 
which reductions in the range of 25 to 40% from developed countries are needed. But the 
two following weaknesses would make the real results even worse:  

•  Banking of surplus emission budgets (Kyoto Protocol Assigned Amount Units 
or  AAUs)  from  the  Kyoto  Protocol's  2008  to  2012  commitment  period  into 
future commitment periods: Due to falling emissions, to a large extent resulting 
from the restructuring of industry in the early 1990s, the 1990 benchmark means 
that  over  10  billion  tonnes  of  GHG  emission  units  will  likely  remain  unused 
during the 2008 to 2012 commitment period, especially in Russia and the Ukraine. 
Simply  continuing  the  Kyoto  Protocol  would  mean  banking  this  "surplus",  with 
the  effect  that  headline cuts in emissions would be undermined. Full banking of 
these units into a second commitment period would cut the ambition of developed 
country  targets  by  around  6.8%  in  relation  to  1990,  i.e.  reducing  the  ambition 
from 13.2% to 6.4% for the lower end of the pledges, or from 17.8% to 11% for 
the higher end of the pledges.  

•  Accounting  rules  for  land  use,  land-use  change  and  forestry  (LULUCF) 
emissions  from  developed  countries:  While  the  EU  has  no  difficulties  in 
matching  these  requirements,  it  is  an  issue  of  particular  importance  for  major 
forestry countries outside the EU  and  environmentally critical. The current  rules 
under  the  Kyoto  Protocol,  if  continued,  would  entail  lowering  the  actual 
stringency of the current emission reduction pledges and imply that reductions can 
be claimed without additional actions, which brings no real environmental benefit. 
In an extreme scenario, the worst-case LULUCF accounting rules would weaken 
the  real  level  of  ambition  of  developed  countries  by  up  to  an  additional  9%  in 
relation to 1990. This would mean that for the lower end of the pledges we would 
in fact allow for an increase in developed country emissions of 2.6% above 1990 
levels and for the higher end of the pledges we would only see a 2% reduction in 
relation to 1990. 

The European Parliament in its recent post-Copenhagen resolution explicitly pointed at those 
weaknesses and the need to avoid them undermining the environmental integrity5. 

The Commission will assess the merits and drawbacks of alternative legal forms, including of 
a second commitment period under the Kyoto Protocol.  

5 

Adopted on Wednesday 10 February, available through: http://www.europarl.europa.eu. 

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Impact of the Kyoto Protocol's weaknesses  
(AAU surplus and LULUCF accounting rules)  
on developed countries' reduction pledges in 2020  

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3. 

ACTING NOW 

3.1. 

Europe 2020: towards a low carbon and climate resilient economy  

The  most  convincing  leadership  that  the  EU  can  show  is  concrete  and  determined  action  to 
become  the  most  climate  friendly  region  in  the  world.  This  is  in  the  EU's  self-interest.  The 
Europe 2020 Strategy has defined sustainable growth – promoting a more resource efficient, 
greener and more competitive economy – as a priority at the heart of the vision for a resource-
efficient  future  for  Europe,  creating  new  green  jobs  and  boosting  energy  efficiency  and 
security. 

The Commission will outline a pathway for the EU's transition to a low carbon economy by 
2050,  to  achieve  the  EU  agreed  objective  to  reduce  emissions  by  80-95%,  as  part  of  the 
developed  countries'  contribution  to  reducing  global  emissions  by  at  least  50%  below  1990 
levels in 20506. The EU is committed to a 20% emission reduction below 1990 levels in 2020, 
and to moving to 30% if the conditions are right. Ahead of the June European Council, the 
Commission will therefore prepare an analysis of what practical policies would be required to 
implement  a  30%  reduction.  The  Commission  will  thereafter  develop  an  analysis  of 
milestones on the pathway to 2050, including the necessary scenarios of the ambition level for 
2030 reflecting the contributions from key emitting sectors, including energy production and 
consumption, and transport, and set out appropriate strategies for these sectors consistent with 
the  EU  2020  strategy.  The  goal  is  to  come  with  intelligent  solutions  that  benefit  not  only 
climate  change,  but  also  energy  security  and  job  creation  in  our  efforts  to  decarbonise  the 
economy. 

Such  action  will  need  to  have  a  strong  focus  on  policies  to  accelerate  innovation  and  early 
deployment of new technologies and infrastructure, creating a competitive edge for European 
companies in key sectors of the future (including energy efficiency, green cars, smart grids, 
carbon  capture  and  storage  (CCS),  renewable  energy).  It  will  benefit  from  approaches  that 
maintain and promote strong and resilient ecosystems. 

The Commission will also set out, in the light of the outcome of Copenhagen and in line with 
the  agreed  deadline  in  the  ETS  Directive,  its  analysis  on  the  situation  of  energy  intensive 
industries in the event of carbon leakage.  

3.2. 

Implementing the Copenhagen Accord  

3.2.1.  Delivering on remaining below 2°C: targets and actions 

The  outcome  of  Copenhagen,  and  the  broad  support  for  the  Copenhagen  Accord, 
demonstrates the political will from the majority of countries to start action now. By far the 
biggest  achievement  of  Copenhagen  is  the  fact  that,  by  the  end  of  January  2010,  developed 

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European Council of 29-30 October 2009 concluded that: "The European Council calls upon all Parties 
to embrace the 2°C objective and to agree to global emission reductions of at least 50%, and aggregate 
developed country emission reductions of at least 80-95%, as part of such global emission reductions, 
by 2050 compared to 1990 levels; such objectives should provide both the aspiration and the yardstick 
to  establish  mid-term  goals,  subject  to  regular  scientific  review.  It  supports  an  EU  objective,  in  the 
context  of  necessary  reductions  according  to  the  IPCC  by  developed  countries  as  a  group,  to  reduce 
emissions by 80-95% by 2050 compared to 1990 levels." 

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and  developing  countries  representing  more  than  80%  of  global  GHG  emissions  have  put 
forward their GHG reduction targets and actions7. 

Even  though  this  underlines  a  real  willingness  to  take  action,  the  overall  ambition  level  of 
targets  and  actions  put  forward  so  far  is  hard  to  assess.  Optimistic  assessments  of  the 
economy-wide  targets  and  mitigation  actions  indicate  that  a  pathway  towards  limiting  the 
global  temperature  increase  to  no  more  than  2ºC  is  still  feasible,  but  more  pessimistic 
assessments indicate that this chance is disappearing fast. 

Even  if  the  weaknesses  described  above  were  closed,  the  targets  proposed  by  developed 
countries, even the higher, conditional pledges, do not come close to the 25-40% reductions 
by  2020  that  are  required,  based  on  the  IPCC's  assessment,  to  remain  below  a  2°C 
temperature increase. In addition, so far only the EU has adopted the legislation required to 
guarantee the delivery of its 2020 reduction target. In other developed countries, legislation is 
still at the discussion stage only.  

The  fact  that  developing  countries  have  put  forward  their  actions  is  an  unprecedented  step 
forward.  However,  there  remains  much  uncertainty  about  the  real  action  to  be  taken,  its 
timetable,  and  how  it  might  relate  to  the  established  comparable  benchmark  of  reductions 
since 1990. 

With  a  broad  range  of  pledges  for  targets  and  actions  on  the  table,  the  negotiations  should 
now focus on a clarification of those pledges, a discussion of their overall level of ambition 
and how this ambition could be further strengthened. This should be the first priority of the 
UN process. 

3.2.2.  Building a robust and transparent emissions and performance accounting framework 

Among  the  most  difficult  negotiations  in  Copenhagen  were  those  on  monitoring,  reporting 
and  verification  (MRV).  Transparency  is  key  to  ensure  mutual  trust  and  demonstrate  the 
effectiveness  and  adequacy  of  targets  and  actions.  The  Climate  Change  Convention  and  its 
Kyoto  Protocol  provide  basic  standards  of  MRV,  through  national  communications  and 
inventories. The Copenhagen Accord requires the strengthening of this system. This must be 
one of the priorities in the work to anchor the compromises in the Copenhagen Accord in the 
UN process. 

But transparency must not be limited to the reporting of emissions alone. What matters in the 
end  is  the  performance  of  countries  in  the  implementation  of  their  targets  or  actions.  As 
already explained above, the rules for the accounting of emissions have a huge impact on the 
real scale of action. Robust, transparent and predictable accounting rules that make it possible 
to assess countries' performance properly are essential.  

In  the  meantime,  the  Commission  proposes  to  embark  on  regional  capacity  building 
programmes  for  interested  developing  countries  to  develop  their  monitoring,  reporting  and 
verification capabilities, including emission inventories. 

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An  overview  of  targets  and  actions  put  forward  thus  far  is  provided  in  the  staff  working  paper 
accompanying this Communication. 

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3.2.3.  Mobilising fast-start funding in a coordinated manner 

The Copenhagen Accord provides for fast-start support to developing countries approaching 
US$  30  billion  for  the  period  2010-2012,  with  balanced  allocation  between  mitigation  and 
adaptation. The December European Council set the contribution of the EU and its Member 
States at € 2.4 billion yearly for the peri od 2010-2012. The swift implementation of this EU 
commitment  is  essential  to  both  the  EU's  credibility  and  the  urgent  need  to  enhance  the 
capacity of many developing countries to design and implement effective climate policies in 
the areas of adaptation, mitigation and technology cooperation.  

The EU must engage with other donors and recipients to ensure coordinated implementation 
of the fast start funding agreed in Copenhagen. 

Fast-start actions could cover, for example, capacity  building  for integrating adaptation into 
development  and  poverty  reduction  strategies,  as  well  as  the  implementation  of  pilot  and 
urgent adaptation actions as identified in national action plans; capacity building in the area of 
mitigation,  i.e.  low-emission  development  strategies,  nationally  appropriate  mitigation 
actions,  and  emissions  monitoring,  reporting  and  verification;  capacity-building  and  pilot 
projects for sector-wide carbon market mechanisms; readiness and pilot projects for reducing 
emissions from developing country deforestation, and capacity building and pilot projects in 
technology  cooperation.  Fast-start  funding  must  be  well  targeted  to  different  regions  of  the 
world in order  to  effectively build climate policy capacity, respond to developing countries' 
needs and specific proposals and deliver environmental results where it is most needed8. 

In order to be effective and avoid delay of ambitious action, fast-start funding must build on 
and take account of existing initiatives. A substantial part of the EU fast-start funding will be 
implemented through existing initiatives9, bilateral channels, in particular by Member States' 
own  development  cooperation  programmes,  or  through  international  institutions.  EU 
initiatives  can  build  on  existing  initiatives  or  target  new  needs  like  MRV  and  low-emission 
development strategies. The Commission and individual Member States could take the lead in 
specific countries or regions and for specific themes, depending on their funding priorities and 
on the priorities of their respective partner countries. 

The  EU  will  need  to  act  and  report  on  its  actions  in  a  consistent  and  efficient  manner, 
avoiding  duplication  and  maximising  synergies.  Coordination  of  the  EU's  efforts  will  be 
critical.  The  Commission  is  ready  to  take  on  a  facilitating  and  coordinating  role  in  the 
implementation of the EU's fast-start funding commitment, and proposes to:  

(1) 

(2) 

work  with  the  ECOFIN  Council,  supported  by  the  relevant  Council  formations,  to 
coordinate and monitor EU fast-start funding efforts;  

establish  a  joint  EU  regional  capacity  building  programme  (e.g.  for  low  emission 
development  strategies  and  adaptation  strategies)  to  pool  and  channel  EU  funding, 
complementing  existing  EU  financial  programmes.  This  could  directly  involve 
countries interested in capacity building, e.g. through 'twinning' arrangements;  

8 

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As  per  the  Copenhagen  Accord,  funding  for  adaptation  will  be  prioritised  for  the  most  vulnerable 
developing countries, such as the LDCs, SIDS and Africa. 
Including through the Global Climate Change Alliance (GCCA). 

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(3) 

ensure  transparency  through  the  provision  of  a  bi-annual  progress  report  on  the 
implementation of the EU's fast-start funding commitment, with a first report in time 
for the Bonn UNFCCC session in June 2010. 

3.2.4. 

Securing long-term finance 

In  the  Copenhagen  Accord,  the  EU  and  other  developed  countries  committed  to  jointly 
mobilise US$ 100 billion (€ 73 bn) per year by  2020 for mitigation and adaptation actions in 
developing countries. This finance could come from a wide range of sources: 

–  The  international  carbon  market,  which,  if  designed  properly,  will  create  an  increasing 
financial  flow  to  developing  countries  and  could  deliver  up  to  € 38 billion  per  year  by 
2020.  The  EU  ETS  is  already  providing  significant  flows  to  developing  countries  via  its 
support  of  the  CDM,  and  EU  legislation  provides  for  additional  flows  from  2013.  In 
addition, Member States have committed to use a part of their auction revenues under the 
EU ETS for these purposes from 2013; 

–  International  aviation  and  maritime  transport,  preferably  through  global  instruments10, 
which  can  provide  an  important  source  of  innovative  financing,  building  on  the  existing 
commitment  under  the  EU  ETS  for  all  aviation  auction  revenues  to  be  used  for  climate 
change measures;  

–  International  public  funding  in  the  range  of  € 22  to  50 billion  per  year  by  2020.  The  EU 
should contribute a fair share. For the period after 2012, the EU would continue to make a 
single, global EU offer11. 

The future UN High-Level Panel on Finance and the High-Level Advisory Group on Climate 
Change  Financing  should  explore  how  these  sources  can  be  effectively  used  for  financing 
future  climate  actions,  with  public  finance  focusing  on  areas  that  cannot  be  adequately 
financed by the private sector or used to leverage private investments. The Copenhagen Green 
Climate Fund also needs a well-defined mandate to add value to existing initiatives. 

Governance of the future international financial architecture should be transparent, allow for 
effective  monitoring,  and  should  respect  agreed  principles  for  aid  effectiveness.  A  fully 
transparent reporting system is needed, using a comprehensive set of statistics which build on 
the  OECD-DAC  system.  This  will  ensure  climate  action  happens  in  synergy  with  poverty 
reduction efforts and efforts towards the Millennium Development Goals.  

The international dimension of long-term finance is only a part of the picture. In contacts with 
developing countries, especially the economically more advanced, it must be clear that they 
will  also  contribute  to  the  overall  effort,  including  by  engaging  in  meaningful  mitigation 
actions and transparency on implementation.  

3.3. 

Advancing the international carbon market 

A  well-functioning  carbon  market  is  essential  for  driving  low-carbon  investments  and 
achieving  global  mitigation  objectives  in  a  cost-efficient  manner.  It  can  also  generate 
important financial flows to developing countries. An international carbon market should be 

10 
11 

ECOFIN Council, 9 June 2009 and COM(2009) 475/3 
Cf. COM(2009) 475/3 

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built by linking compatible domestic cap-and-trade systems. The goal is to develop an OECD-
wide  market  by  2015  and  an  even  broader  market  by  2020,  so  this  should  be  part  of  the 
outreach to the US, Japan and Australia, in view of the progress they have achieved so far.  

The EU has proposed new sectoral carbon market mechanisms as an interim step towards the 
development  of  (multi-sectoral)  cap  and  trade  systems,  in  particular  in  the  more  advanced 
developing countries. These mechanisms can provide a more comprehensive price signal and 
generate  credits  on  a  greater  scale.  They  can  also  provide  a  way  to  capture  mitigation 
contributions by developing countries by crediting against ambitious emission thresholds set 
below projected emissions to ensure a net mitigation benefit.  

In addition, the Clean Development Mechanism (CDM) will continue post-2012, but it must 
be reformed to improve its environmental integrity, effectiveness, efficiency, and governance. 
Over  time  it  should  increasingly  focus  on  least  developed  countries.  To  ensure  a  coherent 
transition  from  project-based  to  sector-wide  mechanisms,  the  EU  should  seek  common 
ground with the US and other countries implementing cap-and-trade systems and generating 
demand for credits in a coordinated manner. 

A  major  goal  for  Cancun  should  be  to  anchor  the  improved  and  new  carbon  market 
mechanisms as means to reach ambitious mitigation objectives and generate financial flows to 
developing countries. In addition, it should provide a basis for the creation of new sector-wide 
mechanisms.  However,  over  the  last  years  negotiations  on  market-based  mechanisms  have 
been met with severe criticism from a number of developing countries, putting into question 
whether this can be done under the auspices of the UNFCCC. 

The EU should therefore use the provisions of the current EU ETS legislation12 to incentivise 
the  development  of  sectoral  carbon  market  mechanisms  and  to  promote  the  reform  of  the 
CDM. To this end, the Commission will: 

(1) 

(2) 

work together with interested developed and developing countries to develop sectoral 
mechanisms,  whose  credits  could  then  be  recognized  for  use  in  the  EU  ETS,  in  the 
emerging OECD-wide market and under the EU's Effort Sharing Decision containing 
Member State reduction commitments; and  

dependent  on  progress  in  the  development  of  sector-wide  mechanisms,  develop  and 
propose  strict  measures  for  improving  the  quality  requirements  for  credits  from 
project-based mechanisms. 

4. CONCLUSION 

This communication takes stock of some lessons after the Copenhagen Conference, which fell 
short of initial ambitions, but which nevertheless show the substantial and widespread support 
to  step-up  efforts  to  address  climate  change.  The  Communication  also  maps  out  the  steps 
going  forward  in  the  near-  and  medium-terms,  and  crucially  signals  the  Commission's 
determination  to  continue  its  efforts  to  ensure  adequate  action  is  taken  globally  in  keeping 
with the seriousness of the global challenge confronting us. 

12 

Articles  11a(5)  and  11a(9)  of  the  EU  ETS  Directive  2009/29/EC  and  Article  5(2)  of  Decision  No 
406/2009/EC. 

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