Brussels: 29/10/2004

1 The first priority for the EU is to ensure global participation. EU leadership must focus on developing a feasible global approach for the future through which this can be realised. Taking unilateral action in EU alone after 2012 will serve no useful purpose in reducing global emissions of greenhouse gas reduction, whilst further damaging competitiveness.

2 Global agreement to participation first and then setting policies and targets - that has to be the progression. Targets laid down in the Kyoto Protocol are unlikely to be met by reduction measures and emissions trading will be needed. While trading may provide short term answers, only technology will counter the expected longer term growth in global emissions by 2012. Part of the reluctance of UNFCCC signatories is due to the gap between Protocol targets and the capability of technologies available to deliver these. Setting targets does not automatically deliver the means by which they are met, as is becoming clear.

3 Other global players have shown that they will not introduce measures beyond the expected developments in technologies and the ability of their economies to absorb the effects. It is also evident that other states will happily leave EU to adopt more stringent policies. The focus needs to be on technology change and innovation in energy raising technique and EU has to take a leading role in ensuring the emergence of focused action which gains global support. This approach should also allow non Annex 1 states to commit, as energy efficiency should be a primary incentive in new technologies and equally important to developing economies.

4 IFIEC appreciates that within the EU there is a desire by Governments to set more stringent targets beyond 2012. The principle of continuing reduction is supported, but this has to be in line with technological means of delivery and the economic feasibility, otherwise EU economies will shrink with the associated social and economic implications. Both the Kyoto Protocol and the EU intentions to 2012 are already foundering on the lack of means of delivering over-ambitious targets.

5 The different treatment of developing and developed countries stems from the Kyoto regime and even the earlier Convention. This needs to be rethought, as it is proving a fundamental flaw in whether practical action is taken. Without any doubt developed and developing countries must work together in complementary programmes. There will be no benefit to global programmes or sustainability principles if all that happens is that investments move between regions because both economic conditions and climate targets are softer. Also, current investments in sub-optimal technology will last for 30-40 years, as is pointed out so well in the consultation paper, so short term thinking must be avoided.

6 Absolute emission caps for countries will discourage developing countries and probably other signatories as well. Instead, requirements per unit of product should be considered for sectors and processes worldwide, based on realisable technologies. With a limited number of efficiency requirements - say between 50 and 150 - targets can be set for the emission of all greenhouse gases per unit of product. All technologies should be supported initially using criteria based on suitability to regions rather than "cherry picking" specific technologies as acceptable based on developed country criteria. Developing countries still have a large number of very inefficient processes in use. The flexible mechanism approach should be retained and developed, with arrangements agreed between the parties. The test of effectiveness should be the carbon reduction values, with acceptance that any step forward is valuable. Experience will be needed in the detail workings of these schemes and trying to impose stringent and artificial criteria into early arrangements will minimise opportunities to learn and benefit. UNFCCC also has to learn how to optimise the benefits coming from such programmes rather than trying to impose criteria initially.

7 If in future JI and CDM are to play a role, then they must be developed further with the aim of unambiguous requirements. In the current form JI and CDM are linked with arbitrary and unclear baselines, which will result in unequal interpretations and application.

8 Electricity demands will increase as developing nations economies grow and their populations make increasing demand for electrically powered products and facilities. Efficiency improvements in traditional EU industrial processes alone, including the generation of electricity, cannot reduce emissions sufficiently to compensate for such growth. It should not be a case of restricting any technology, but adopting that which best suits the regional situation and gives best carbon output

9 New technologies based on sound science will be needed and this should be the focus of the UNFCC process. The nuclear option should also be reviewed as there are no technological grounds for excluding this no-carbon option from the basket of measures. IAEA controls exist over such installations and it is evident that a number of developing economies are taking this route.

10 Renewables will play a vital role, although more focus will be needed to draw from experience in adapting policies. For example:

10.1 Wind energy is being adopted at inappropriate points and raises questions of cost and visual blight, whilst not replacing the need for active fossil based capacity to provide security of supply;

10.2 Biomass is an undeveloped option, yet provides a new opportunity for developing nations as suppliers;

10.3 The technologies for solar power are promising but still in the infancy stage. Increased R&D and pilot projects are required.

10.4 Wave and current power is virtually unexplored, yet is potentially limitless.

11 Carbon capture and storage (sequestration) as well as high efficiency clean coal technologies can be expected to remain cheaper than most renewables for the foreseeable future. This should be included as an intermediate solution to stabilise greenhouse gas emissions within an agreed global policy. Reserves of coal are still a magnitude larger than reserves of oil and gas and this will enable a second life for this fuel.

12 This was answered in Q3.

13 The place of a carbon reduction programme is recognised and accepted. The costs and impacts arise largely from the unbalanced way in which the Protocol has been enacted, with EU taking stringent measures whilst little progress is either made elsewhere or real intent shown. It is not a question of taking further action, but ensuring agreements already made are met. The inequalities accepted in the existing Protocol should be replaced with technological and market criteria acceptable globally.