EU's internal laws target global climate deal

( dpa ) - The laws on climate change that have been put forward by the European Union were written for its member states, but they are also aimed at superpowers such as the United States, India and China.

The EU is using the laws "as a political tool, almost a bargaining chip, to incentivize others to sign up to an international deal on climate change," Henrik Hasselknippe, carbon-markets manager at Oslo-based consultant Point Carbon, told Deutsche Presse-Agentur dpa.

"It could potentially swing developing countries, even ones as big as China and India, and influence their voting" on a successor to the Kyoto Protocol on climate change, he said.

On Wednesday the EU's executive, the European Commission, proposed laws aimed at cutting Europe's emissions of carbon dioxide (CO2), the gas most linked with global warming.

The proposal was primarily aimed at the EU's 27 member states, who pledged in March to cut their CO2 emissions to at least 20 per cent below 1990 levels by 2020.

But analysts agree that the laws are also intended to put pressure on the world's other great powers in the debate over a successor to the Kyoto Protocol on cutting CO2 emissions, which expires in 2012.

"It's a message to maintain the pressure so that as many countries as possible ratify (a post-Kyoto agreement) as soon as possible," Stephan Singer, head of the European climate and energy section at conservation organization WWF, said.

The international leverage which the EU is trying to exert through its internal laws falls into two parts.

Firstly, when member states signed up to the 20-per-cent emissions cut by 2020, they also said that they would boost that cut to 30 per cent if other developed economies "commit to comparable reductions."

That has widely been seen as a challenge to the US, which is the world's largest emitter of CO2, but which refused to ratify the Kyoto Protocol on the grounds that it could damage the US economy.

Secondly, the proposals limit the use of Clean Development Mechanism (CDM) projects - a system set up by the Kyoto Protocol whereby firms in developed countries can pay for certified emissions-reducing projects in developing countries, and then sell the certificates on international emissions-trading markets.

Under the proposed laws, once a successor to the Kyoto Protocol is agreed, EU-based companies will only be allowed to trade CDM credits for projects in countries which have ratified that successor deal.

That could give the bloc enormous influence over rapidly developing economies such as China, India and Brazil, analysts say.

"Carbon-market participants based in the EU are by far the main players in the CDM market, (and) China is by far the biggest host of CDM projects, followed by India, then Brazil ... I would say it's a strong piece of leverage," Hasselknippe said.

It could also increase the pressure on the US, where individual states - notably California - have already said they want to launch their own emissions-trading systems.

"Even if a trading regime in a US state such as California is set up, it could not buy CDM credits because the US hasn't ratified Kyoto ... The EU's proposal is a strong reminder that countries who want to be involved (in the CDM system) should ratify fast," Singer said.

Indeed, analysts say that the EU's weight in the global CDM trade is so great that it could significantly influence the international ratification of any post-Kyoto deal.

The original Kyoto Protocol was signed on December 11, 1997, but only came into force on February 16, 2005, because individual states were so slow to ratify it.

"The EU's laws are meant, once a deal is struck, to accelerate the ratification process (of a Kyoto successor)," Singer said.

Ironically, however, the laws unveiled by the EU on Wednesday could themselves face a difficult ratification process. Issues such as the protection of heavy industry, for instance, have already sparked heated debate within the EU.

And given that the proposed laws still have to be approved by the EU's member states, the commission may well find it has to turn its persuasive powers on its own members before it can put any pressure on the rest of the world.

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