The acclaimed climate agreement in Dubai is showing the first cracks

More than a week after the successful climate summit in Dubai, the first sobering observations follow. End of last week the Financial Times on the falling price of emission allowances. And this week, the European Environment Agency released an analysis showing that it will be quite a challenge for the European Union to achieve its 2030 climate and environmental targets.

According to the British business newspaper, the low carbon price shows that companies are apparently not very concerned about new, major ambitions in climate policy, based on the agreement concluded in Dubai. The tone of the agreement is “weaker than weak,” says carbon market analyst Yan Qin of the London Stock Exchange. No one in the business community will lose sleep over “a call” to contribute to the energy transition.

In addition, negotiations on an expansion of emissions trading have failed. No agreements were made about this in the Dubai agreement. According to Reuters news agency it was mainly the European Union, with the largest and most successful emissions trading system (ETS) in the world, that opposed a deal. The intention was to create a centralized system through the United Nations to buy off emissions through offset projects, such as investments by rich countries in energy efficiency or in electric public transport in poor countries.

That proposal has already been laid down in the Paris Climate Agreement (2015), but has never been properly developed. The EU opposed it for fear that it would weaken its own ETS. According to the EU, supervision of such a centralized system would not be robust enough, with risks for the quality of the projects.

However, most developing countries were in favor and received support from the United States. The Americans felt that stricter regulation would be too burdensome for many developing countries with limited resources.

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“This is a setback for carbon markets,” said Lina Barrera of Conservation International, a conservation organization. “Parties and companies interested in participating in this market do not know what to expect for the time being. The entire process of getting a carbon market off the ground is being delayed.”

Verifiable

The resistance came from, among others, European Commissioner Wopke Hoekstra. These types of projects must be “verifiable, certifiable and transparent,” he said in Dubai. If they do not meet the high standards of the European trading system, this would only lead to distortion of competition and therefore be to the detriment of European businesses.

The voice of the European Union, by far the most ambitious party in the climate negotiations, counts heavily in the discussions. However, there is still some room for negotiation regarding European climate policy. This became apparent this week from the analysis that the European Environment Agency (EEA) made of the enormous package of measures adopted in Brussels under Hoekstra’s predecessor Frans Timmermans. Almost all signals turn orange or red. This means that most goals are not yet within reach. In many cases it is doubtful whether they will be achieved.

Achieving the main short-term climate target, a 55 percent reduction in greenhouse gas emissions by 2030 (compared to 1990), is “probable but uncertain,” according to the EEA analysis. But a second important climate target will almost certainly be missed. The EU has agreed to use more CO₂ from the air through land use – in practice this means planting trees and taking better care of soil conditions.

Additional policy is needed

Land use would produce approximately 310 million tons of CO by 2030₂ must be removed from the atmosphere. Last year that was approximately 244 million tons. The plans of the Member States show that the European Union will not achieve the 2030 target without additional policies, and that 50 million tons of CO₂ takes too little out of the air. And yet these so-called negative emissions are essential to be climate neutral (with net zero emissions) by 2050. Because it is unfeasible to remove all CO₂emissions to zero, it is important that an increasing share of those emissions is absorbed by forests and through smart land use.

To reduce climate pressure, the European Commission has formulated concrete goals: energy consumption must be significantly reduced (almost certainly unachievable, the EEA writes), the share of renewable energy in the mix must be reduced to 42.5 percent by 2030 (probably not feasible), the amount of materials that are reused must double (very unlikely), buses and trains must account for a greater share of mobility (probably not feasible), a quarter of agriculture must become organic (very unlikely).

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“Our analysis shows that Member States need to take much more action to achieve Europe’s environmental and climate ambitions by 2030,” EEA Director Leena Ylä-Mononen said in a statement. According to her, this will only be possible with “full implementation of current laws, more investments in future-proof technologies and putting sustainability at the center of all policies.”

Next spring, Hoekstra must defend the new European climate ambitions for the period up to 2040. During the hearing in October about his appointment, he argued for a CO₂reduction of 90 percent. According to Hoekstra, this was necessary to ensure that Europe is climate neutral by the middle of the century – as established on the basis of the Paris Climate Agreement. The Environment Agency’s conclusions on current climate policy show how big that challenge is.

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