l Click to edit Master text styles l Second level l Third level l Fourth level l Fifth level Representing the European electricity industry at expert, strategic and policymaking levels.

l Click to edit Master text styles l Second level l Third level l Fourth level l Fifth level General Principles Governing a post-2012 Climate Policy: Participation - based on the GETS4 analysis Stakeholder Conference “Post-2012 Climate Policy for the EU” Brussels, 22 November 2004 Dr Bill KYTE, OBE Chairman Environment and Sustainable Development

l Click to edit Master text styles l Second level l Third level l Fourth level l Fifth level 3/15 1.A genuine global approach 2.Longer timelines 3.Emissions reduction goals 4.Market-oriented policies 5.Participation of all sectors 6.Increased R&D and technology transfer & dissemination 7.Encourage changes in consumer behaviour Principles for a Future post-2012 Regime

l Click to edit Master text styles l Second level l Third level l Fourth level l Fifth level To assess the impacts of future world GHG emissions reduction schemes to 2012 and beyond - In a quantitative manner (€ and tCO2eq) - To 2022 > Kyoto Commitment Period years - Using a wide range of scenarios & sensitivities - Within a single analytical framework > results from all scenarios & sensitivities directly comparable 4/15 GETS4 Aims

l Click to edit Master text styles l Second level l Third level l Fourth level l Fifth level 1.A Genuine Global Approach [the key issue!] -EU emits only 14% of global emissions -Common objectives for the environment, but also for competitive reasons -Developing countries need to play an increasing role 5/15 Principles for a Future post-2012 Regime

l Click to edit Master text styles l Second level l Third level l Fourth level l Fifth level 6/15 GETS4 conclusions: -Impacts are dominated by the positions of Russia and US -If Russia does not participate, compliance costs and market traded prices would double -If US enacted McCain-Liebermann, it would increase world system compliance costs by 3-6 times

l Click to edit Master text styles l Second level l Third level l Fourth level l Fifth level 2. Longer Timelines -Absence of certainty creates excessive commercial risk -Clarity is needed on long-term aim (2050) and on goals and instruments over a long-period of time 3. Emissions Reduction Goals 7/15 Principles for a Future post-2012 Regime -Reduction goals must be based on sound scientific and economic analyses

l Click to edit Master text styles l Second level l Third level l Fourth level l Fifth level 8/15 GETS4 conclusions: -Compliance costs increase exponentially with severity of targets - Increasing all targets in all schemes by 50% leads to system compliance costs 3-5 times higher Targets and Abatement Potential Quantity (MtCO 2 eq) Price (Euro/tCO 2 eq) US Kyoto Bloc - Russia Out Kyoto Bloc - Russia In McCain- Lieberman

l Click to edit Master text styles l Second level l Third level l Fourth level l Fifth level 9/15 GETS4 conclusions: -A 2ºC target has a dramatic effect -GETS4 has simulated targets based on: - Stabilising atmospheric GHG concentration - Equal world per capita emissions (“contraction & convergence”) -If the EU-25 alone transfers to its share of a 550 ppm CO2eq target in the period , EU-25 compliance costs treble: - Leading to a doubling of world compliance costs - The potential costs of “going it alone” are very high

l Click to edit Master text styles l Second level l Third level l Fourth level l Fifth level 4. Market-Oriented Policies 10/15 Principles for a Future post-2012 Regime -Market-based instruments ensure compliance at the lowest cost. They should be the preferred tool to achieve emissions reductions worldwide. -Kyoto’s flexible mechanisms must be available under simplified procedures - Global emissions trading will be an important policy instrument to achieve emissions reductions.

l Click to edit Master text styles l Second level l Third level l Fourth level l Fifth level 11/15 GETS4 conclusions: -Linking significantly reduces costs for participants -Highest benefits accrue when linked schemes all have significant targets -6-17% reductions in system compliance costs are projected from linking the Kyoto scheme to the relatively minor “Other” schemes modelled

l Click to edit Master text styles l Second level l Third level l Fourth level l Fifth level GETS4 conclusions: - A number of factors greatly alter costs of meeting a given set of absolute commitments -Supplementarity (minimum domestic action) is a costly constraint as it restrains trading -High GDP projection increases system compliance costs 2-4 times 12/15 Principles for a Future post-2012 Regime 5. Participation of all sectors - Specific sectors should not be exempted from contributing to emissions reduction goals

l Click to edit Master text styles l Second level l Third level l Fourth level l Fifth level 6. Increased R&D and technology transfer & dissemination 13/15 Principles for a Future post-2012 Regime - Accelerated and increased funding, and international coordination are needed -Increase the use of energy end-use efficient technologies and non- or low-emitting generation technologies, such as: - Renewables - Nuclear power - Combined heat and power (CHP) - High-efficiency natural gas - Advanced clean coal (including CO2 capture and storage).

l Click to edit Master text styles l Second level l Third level l Fourth level l Fifth level 7. Encourage changes in consumer behaviour 14/15 Principles for a Future post-2012 Regime - Consumers and their choices make markets - Policies and measures should be designed to influence consumers to adopt a more climate-friendly behaviour - Promotion of education and training on more efficient use of resources and environmental awareness

l Click to edit Master text styles l Second level l Third level l Fourth level l Fifth level At the forefront of the electricity industry