EU, China roll forward CO2 market ties, go quiet on aviation and CCS

Published 01:30 on June 30, 2015  /  Last updated at 01:30 on June 30, 2015  /  China, EMEA, EU ETS  /  No Comments

The EU and China agreed to continue their cooperation on carbon markets as part of a wider bilateral climate agreement late on Monday, but failed to match the G7 on long term action and were weak on aviation.

The EU and China agreed to continue their cooperation on carbon markets as part of a wider bilateral climate agreement late on Monday, but failed to match the G7 on long term action and were weak on aviation.

The pair also marked the 40th anniversary of their cooperation at a summit in Brussels with agreements on trade, customs and investment and call by Chinese Premier Li Keqiang for Greece to reach a deal with its creditors to stay in the euro zone.

Though Li did not announce China’s long awaited INDC, only saying it will come by the end of the month, which would be Tuesday.

As expected, the agreed carbon market cooperation lacked detail and did not include any reference to linking what will be the world’s two biggest carbon markets, given constraints due to the huge EU ETS surplus and China’s tight schedule for launching its system in 2016 or 2017.

“The Two Sides agree to: further enhance existing bilateral cooperation on carbon markets, building upon and expanding on the on-going EU-China emission trading capacity building project and work together in the years ahead on the issues related to carbon emissions trading,” the document said.

While any possible link is judged to be at least seven years off, close collaboration between the two on rules could effectively become the global standard given the scale of the emission coverage involved.

AVIATION FLY PAST

While a draft text earlier this month had shown the EU was aiming to agree wording to “call for a timely agreement on ICAO on a global market-based measure in 2016”, the final text only agreed to promote “dialogue and cooperation on domestic mitigation policies”, including aviation.

The EU backed down from regulating flight emissions on all flights using EU airports in 2013 after angering China and other major trading partners

But the 28-nation bloc had been hoping it could count on China to provide more active support for the faltering work to limit global aviation emissions at ICAO given Shanghai has included the sector in its regional carbon market and central government officials are studying whether to include it in China’s national scheme.

The EU-China text also contained no firm plans to continue the pair’s collaboration on CCS, merely agreeing to “study ways to continue this cooperation”. The EU has fallen behind North America and China in developing the fledgling technology in recent years.

In contrast, in a similar bilateral climate pact last week, China and the US announced two new pilot CCS projects on Chinese territory.

GLOBAL PUSH

On working towards a global climate deal at the UN this year, the text stressed the long-held CBDR principle that has differentiated action between historically rich and poor nations but said that the new “legally binding” pact should be “applicable to all”.

It also said the pair would work under the UN to “increase ambition over time” but failed to include wording for climate action beyond 2030. This contrasts with the G7 industrialised nations earlier this month which backed deep global GHG cuts by 2050 and decarbonisation this century.

In one of the few outright new climate initiatives, the two agreed to launch a Low-Carbon Cities Partnership to promote mutual exchange on policies, planning and good practices.

The EU and China also agreed to step up co-operation on research and innovation by setting up a new co-funding mechanism to support joint projects in strategic areas, including a new agreement to work together on remote sensing studies to address climate and sustainability challenges in areas such as air quality and agricultural monitoring.

By Ben Garside – ben@carbon-pulse.com

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