Climate security: The new paradigm Hungarian Climate Summit II 19 February, Budapest. Sanjeev Kumar, E3G

February 2010E3G2 Outline Post Copenhagen context EU climate diplomacy –International offset markets –End of cheap oil EU agenda - Getting the target right - EU infrastructure - Breaking the political deadlock

February 2010E3G3 Post Copenhagen analysis Prepare for 4oC world BASIC grouping is a basket of contrasts. US is in a difficult state but changed the game on finance. New global order emerging. Tallest tree catches the wind. Impacts in the south likely to drive new urgency in future debate. EU agenda EU still central player in global drive to stay below 2oC. Lack of preparation and political coordination was the main problem is year of international consensus building and domestic delivery. Clean recovery from the economic downturn dictates EU’s future. CDM is key to international relations and trust building.

February 2010E3G5 Outline Post Copenhagen context EU climate diplomacy –International offset markets –End of cheap oil EU agenda - Getting the target right - EU infrastructure - Breaking the political deadlock

February 2010E3G6 International offsets Contributing to fast start finance for LDCs CDM wasted on non-politically edged projects and regions. Allows countries with little access to international private finance to build energy infrastructure. CDM for climate diplomacy Set-aside for bilateral linking with upcoming schemes. Step-by-step approach to sectoral carbon markets starts with MRV transfer and financing on a bilateral basis. Focused on key technology development/deployment.

End of cheap conventional oil

February 2010E3G8 Problems with oil dependence and consumption EU produces 14% of oil that it consumes. 44% imported from Russia (29%) and Norway (15%). Since 1998, diesel consumption growing and gasoline consumption falling. Refining capacity has remained split since. So diesel subsidy policy driving closure of gasoline refining capacity increasing oil dependence. Biofuels are likely to be imported so not indigenous. Solution Speed in which surface transport is electrified is key to prosperity.

February 2010E3G9 Outline Post Copenhagen context EU climate diplomacy –International offset markets –End of cheap oil EU agenda - Getting the target right - EU infrastructure - Breaking political deadlock

February 2010E3G10 Getting the target right 2050

February 2010E3G11 EU power generation infrastructure Age of power generation capacity

February 2010E3G12 Breaking the political deadlock Carbon leakage has been proven to be false EU data shows that many sectors qualified due to trade intensity and 30euro carbon price has minimal impact. Sectors that do have large price increases are oligopolies and prone to cartels and price-fixing. Free allocation supports a company’s bottom line profits not jobs! Is there a cost burden? Cost of inaction is far greater than cost of new investments New markets create wealth. Failure to invest leads to higher costs for social security and loss of state income. Public procurement brings down costs and attracts private capital.

February 2010E3G13 Further Information I can be contacted at E3G materials can be found at