Risk Mistakes to Act on Climate Change, EU Businesses Say

First-hand observations of the stumbles of the European Union in its implementation of its carbon trading scheme reveal that President-elect Barack Obama is set to make mistakes, a panel of European business executives told the United Nations Climate Change Conference December 5. They added that while mistakes are unavoidable, time is of the essence and Obama must act quickly. Climate change is “a long-term problem that needs an immediate solution,” said Martin Berg, Merrill Lynch vice president of carbon emissions. The panel discussed the problems that have plagued the EU’s market development, some of which have been resolved and others which are ongoing. The European Union Emissions Trading Scheme (EU ETS) started slow because of an uncertain regulatory framework, according to Berg, but developed over time. Uncertainty has been a continuing obstacle, as companies need two to five years to make regulatory decisions. (Phase I of the EU ETS lasted two years, Phase II is set to last five years.) At first, carbon was seen as a liability, said Berg. But, once companies received greenhouse gas emission credits for free, it began to be viewed as an asset, he added. Inaccurate emissions data became a major issue in Phase I of the EU system. Europe initially relied upon installations for the data, which often resulted in exaggerated greenhouse gas numbers. However, the companies “shot themselves in the foot” in the long run, said Peter Zaman, senior associate, Clifford Chance, because they didn’t make money off of the nearly-worthless assets. This misinformation also decreased their lobbying power in Phase II. The commission no longer has to heed them as much, but they still have the ears of politicians. Obama “will have to engage on this relatively soon, otherwise it will be a bit of a pointless exercise for everyone on this planet,” Berg warned. - By Elisa Walton Editors’ note: Circuit’s journalist was on the ground in Poznan, Poland, for this assignment. For a more detailed version of this story, please see our sister publication E=MC2 – Energy Meets Climate Challenge. You can find it at www.energymeetsclimate.com Edited By

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Risk Mistakes to Act on Climate Change, EU Businesses Say

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