Mlex: CO2 reduction of 20pc by 2020 is 'probably' not enough

The 20 percent reduction in greenhouse-gas emissions targeted by the EU for 2020 will probably not be enough to keep Europe on track to meet its mid-century goal of an 80-95 percent reduction, a senior EU climate policy official said today in Brussels.

Speaking at the launch* of a carbon pricing study, Yvon Slingenberg, head of the ETS implementation unit in the commission's climate department, said: “I think that when we look at where we want to be in 2050, probably the conclusion will be that minus 20 percent by 2020 will not be the right pathway."

“[The target] will provide a framework for further discussions of where the ETS is going as well. If you look at the trajectory, the default trajectory, no one should expect it to be easier. If anything it will be tighter,” she warned, referring to the annual decrease in allowances issued in the ETS.

In addition, “there will probably be other complementary policies that need to be done [to reach the 2050 target],” she said.

The commission’s climate action directorate is working on policies - which it expects to present next month - that the EU could adopt to help it reach a low-carbon economy by the middle of the century.

- Accounting rules -

Financial reporting standards are “not something we are actively working on, but that doesn’t mean we aren’t interested," she added. "If others could take this forward, such as an international accounting body, that would be good for us.”

The study published today by think tanks the Climate Policy Initiative and Climate Strategies found that current international accounting rules, such as the International Financial Reporting Standards, “do not capture the impact of the EU ETS adequately.”

Prevailing accounting practices take into account the value of free allowances, even though they have the same economic value as those that are purchased. 

“The differential treatment creates distortions between countries and sectors with different free allocation levels, and hides potential future risk exposures that will emerge with declining share of free allowance allocation,” the study says.

The International Accounting Standards Board and the Financial Accounting Standards Board are preparing draft guidance for late 2011 (see MLex comment here).


* Carbon Pricing For Low Carbon Investment, Edelman The Centre, Brussels, 1 February 2011