Meld. St. 13 (2014–2015)

New emission commitment for Norway for 2030 – towards joint fulfilment with the EU

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2 Towards a global climate agreement in Paris

2.1 Need to enhance mitigation ambition

It is essential to enhance mitigation ambition considerably on a global scale between 2020 and 2030. This is also reflected in decisions adopted at the Lima climate conference in 2014. The Government is following up the Fifth Assessment Report from the Intergovernmental Panel on Climate Change (IPCC) and the decisions from the climate negotiations by formulating a more ambitious emission reduction commitment for 2030 than its 2020 commitment, see Chapter 3.5. Further reasons why Norway should have a more ambitious target for 2030 than for 2020 are its position as a rich developed country and its leading role in the climate negotiations.

The degree of anthropogenic global warming depends on the cumulative quantity of anthropogenic greenhouse gas emissions. The total quantity of greenhouse gases in the atmosphere depends on the volume of global emissions and on how much CO2 is stored in marine and terrestrial ecosystems. Greenhouse gases persist in the atmosphere for many years. To estimate what the final global temperature rise will be, a 100-year time horizon must be used, to give time for atmospheric concentrations of greenhouse gases to stabilise. The IPCC published its Fifth Assessment Report in 2013–14. The report concludes that unless emissions are considerably reduced, we risk average global warming of 3.7 to 4.8 oC by 2100 compared with the period 1850–1900. In this case, drought, flooding and other consequences of climate change may have even greater impacts than previously thought. The report also concludes that the risks can be reduced, partly by adapting to inevitable climate change and partly by reducing global emissions and thus moderating climate change.

According to the IPCC, global greenhouse gas emissions rose by 2.2 % per year in the period 2000–10, as compared to 1.3 % between 1970 and 2000. To achieve the two-degree target, global greenhouse gas emissions must be 40–70 % lower in 2050 than in 2010, and must continue to drop until there are net negative emissions towards the end of this century. To achieve net negative emissions, it will be necessary to remove CO2 from the atmosphere by producing energy from biomass in combination with carbon capture and storage, and through large-scale afforestation. The IPCC also points out that there are risks associated with longer-term dependence on net negative emissions.

In practice, achieving an emission trajectory in line with the two-degree target will require the vast majority of countries to reduce their emissions from current levels, and the largest emitters will have to reduce or limit their emissions considerably. This will call for large-scale social transformation, regardless of whether countries start from a high level of emissions or are able to find alternatives to a traditional emission-intensive development path. Although most of the increase in atmospheric concentrations of greenhouse gases so far can be ascribed to historical emissions in developed countries, the developing countries and emerging economies such as India and China are now responsible for almost all global growth in emissions. In only a few years’ time, more than half of cumulative global emissions will originate from other parts of the world than the developed countries.

Textbox 2.1 Emission reductions in different regions up to 2030

The IPCC has analysed how emissions will change from 2010 to 2030 in different regions, based on mitigation scenarios that are cost-effective and consistent with the two-degree target. The table below (adapted from the IPCC Fifth Assessment Report, Working Group III contribution) shows emission reductions up to 2030 relative to 2010 in different regions using what the IPCC calls an idealised implementation scenario.

The analysis is based on the assumptions that there is a uniform global carbon price and deployment of default technology. For the OECD countries, emissions would peak in 2010, and would on average be 32 % lower in 2030 than in 2010 (range 23–40 %). Emissions in Asia would peak in 2020 and would be roughly the same in 2030 as in 2010 (on average 1 % higher, ranging from 15 % lower to 14 % higher). Emissions in Latin America and economies in transition would peak around 2015 and be 32–35 % lower in 2030 than in 2010.

This analysis of emission reductions by 2030 in scenarios compatible with the two-degree target shows peak emissions in 2010 in OECD countries and in 2015–20 in other regions. In practice, it is not very realistic that emissions will peak by these dates. If emissions continue to rise after 2010–2015–2020, deeper cuts in emissions will be needed in the later part of the period up to 2030 to achieve the same results.

Table 2.1 Regional peak years for emissions and emission reductions by 2030 relative to 2010, based on a range of scenarios compatible with the two-degree target. Negative values indicate higher emissions in 2030 than in 2010. The values are averages across a range of models. Figures in parentheses show the range in values. (Adapted from IPCC Fifth Assessment Report, Working Group III contribution.)

Stabilisation goal

OECD 1990

Asia

Latin America

Middle East and Africa

Economies in transition

Peak year of emissions

430–530 ppm CO2-eq

2010 (2010/2010)

2020 (2015/2030)

2015 (2010/2020)

2020 (2010/2030)

2014 (2010/2015)

2030 emission reductions relative to 2010

(Negative values indicate growth in emissions)

430–530 ppm CO2-eq

32 % (23 to 40 %)

-1 % (-15 to 14 %)

35 % (16 to 59 %)

8 % (-7 to 18 %)

32 % (18 to 40 %)

A cost-effective approach, which is the basis for analyses from the International Energy Agency and the Organisation for Economic Co-operation and Development (OECD) and for the Stern report, will ensure that the two-degree target is achieved at the lowest possible cost. Achieving the target will require substantial resources even if a cost-effective approach is used. However, a number of analyses, for example from the OECD, show that over time, the costs of failing to achieve the two-degree target will be considerably higher. In addition, there will be a risk of very serious irreversible changes in the global climate. To achieve the two-degree target, efforts to develop and deploy new technology will have to be scaled up. This in turn will make it necessary to put a price on emissions to a much greater extent than is the case across the world today. Ensuring that the polluter pays encourages changes in production and consumption patterns and the development and deployment of climate-friendly technology. According to the OECD, support for the development of new technology will have hardly any effect without a clear price signal, because it will not be profitable to make use of the newly developed technology. The yield from investments in low-emission installations, technology, buildings and vehicles is spread over a period of time, and it is essential that emission prices are perceived as credible, both now and in the future.

2.2 Towards a new climate agreement

2.2.1 International cooperation on climate change and the basis for a new agreement

Countries’ contributions to emission reductions will be a vital part of a new international agreement, since it is the sum of these contributions that will determine how far we can limit global warming. Efforts to reduce anthropogenic greenhouse gas emissions have already been in progress for many years. The Kyoto Protocol was the first binding agreement that included quantitative restrictions on emissions for a number of countries. However, it only covers a small proportion of global emissions and will therefore not be sufficient to achieve emission cuts on the scale required by the two-degree target. The starting point for negotiating the Paris agreement has therefore been that it must include all the world’s countries. To ensure broad participation, greater flexibility is needed, and countries are to decide which types of emission targets to submit themselves. This means that the effect of the agreement is more unpredictable.

The legal form of the new climate agreement has not yet been decided, but it has been agreed that the parties will negotiate ‘a protocol, another legal instrument or an agreed outcome with legal force under the Convention’. Norway is working towards agreement on a binding international instrument at the UN climate conference in Paris. If agreement is reached on a binding international agreement, the Government will submit a proposition requesting the Storting’s consent to ratification of the instrument, as is the normal practice.

Global participation is necessary to ensure that countries that may become large emitters in the future are also covered by the agreement. Small countries need to be part of the agreement too. If there are countries that do not join an agreement and do not implement a similar climate policy, this may result in carbon leakage (meaning that emissions are merely moved between countries).

Moreover, there are wide variations between countries in economic strength, level of technological development, natural conditions and population trends. Rich countries and countries that are major emitters are expected to make substantial commitments under the new agreement. Developing countries are also calling for large-scale support for climate finance from developed countries. Support for the development and implementation of climate action in developing countries is therefore an important topic in the negotiations, but is not described further here. Countries have been invited to consider including information on national adaptation efforts or including an adaptation component in their INDCs. The decision from the Lima conference does not mention climate finance or other assistance to developing countries as part of the INDCs.

Norway currently provides funding for a range of climate-related activities in fields such as clean energy, reducing deforestation in tropical forests, and climate change adaptation in developing countries (see Box 2.2). These activities contribute to climate change mitigation and adaptation. This type of support and cooperation is a key part of the framework for efforts under the Climate Change Convention, and will be continued in the years ahead. As the negotiations continue in the run-up to the Paris conference, Norway will follow up adaptation and other elements that must be included in the new climate agreement.

Textbox 2.2 Norway’s international climate initiatives

Norway’s International Climate and Forest Initiative

The Climate and Forest Initiative is Norway’s largest contribution to international climate action. From the start in 2008 and up to the end of 2014, Norway has made payments totalling about NOK 14 billion to projects under the initiative. The Climate and Forest Initiative became part of Norway’s climate policy after negotiations on the first cross-party agreement on climate policy, and was launched at the Bali climate conference in 2007. A comprehensive evaluation of the initiative was published in 2014, and concluded that Norway’s work in this field has given satisfactory results in a number of areas. Agreement has been secured that efforts to reduce emissions from deforestation and forest degradation in developing countries are to be included in a new global climate regime. Good progress has been made in reducing deforestation in several important forest countries, and the initiative has also resulted in important (sustainable) development benefits. The budget for the Climate and Forest Initiative in 2015 is NOK 3 billion. It has been decided that funding will as a minimum be maintained at the current level until 2020. The initiative, its goals and strategy, and activities that are in progress are further described in the Ministry of Climate and Environment’s budget proposal for 2015 (Prop. 1 S (2014–2015)).

The Green Climate Fund

Norway played a part in establishing the Green Climate Fund, which was formally launched in 2011. By the beginning of 2015, the Fund had received total pledges of USD 10.2 billion, and has thus become established as the key institution for multilateral climate finance. Norway took over as one of the co-chairs of the board in autumn 2014, and shortly afterwards pledged NOK 1.6 billion in funding for the period 2015–18. It has been decided that in allocating its resources, the Fund will aim for a 50:50 balance between mitigation and adaptation over time, and that at least 50 % of the adaptation allocation will go to particularly vulnerable countries. The most important task for the Fund in 2015 will be reach the point where it can start allocating support to specific projects and programmes.

Clean energy, climate change adaptation and other action

Norway has been supporting clean energy projects in developing countries for many years. In 2015, Norway will allocate approximately NOK 1.1 billion to renewable energy projects in developing countries through bilateral and multilateral channels; some of this is channelled through the international energy and climate initiative Energy+. In addition, Norfund (the Norwegian Investment Fund for Developing Countries) will invest in the order of NOK 0.7 billion in renewable energy projects, thus encouraging the mobilisation of private capital. At the 2014 Lima climate conference, Norway and UNEP (the UN Environment Programme) launched an initiative to measure and report reductions in greenhouse gas emissions resulting from projects and programmes that promote renewable energy and energy efficiency in developing countries. Moreover, Norway will allocate about NOK 1 billion to phasing out subsidies on fossil fuels, reducing emissions of short-lived climate pollutants and climate change adaptation, particularly through work in the following fields: food security and nutrition, weather and climate services, agricultural research, disaster risk reduction and conservation of biodiversity.

Short-lived climate pollutants

Norway is a partner in the Climate and Clean Air Coalition to Reduce Short-Lived Climate Pollutants (CCAC), an international organisation focusing particularly on black carbon (soot), methane and hydrofluorocarbons (HFCs). Reducing emissions of these substances can yield a rapid climate response and slow down global warming, thus improving the prospects of achieving the two-degree target. The CCAC’s aim is to promote rapid reductions in emissions through a range of initiatives, for example targeting waste management, HFCs in products, methane emissions from oil and gas production and black carbon emissions from heavy freight transport. Since autumn 2014, Norway and Chile have been the co-chairs of the coalition. Norway allocated NOK 27.3 million to the CCAC in 2014. Norway is also working at national level to reduce emissions of these substances, and the Norwegian Environment Agency has published a proposed action plan for reducing emissions of short-lived climate pollutants in Norway. On Norway’s initiative, the Arctic Council is seeking to increase knowledge of the effects of emissions of short-lived climate pollutants such as methane and black carbon on temperatures in the Arctic. Norway will continue to play a leading role in promoting closer cooperation between the Arctic countries to reduce emissions of these climate pollutants in the Arctic.

Norway has advocated the inclusion of a long-term global objective of approaching net zero emissions by 2050 in the new climate agreement. Net emissions are greenhouse gas emissions after deduction of removals, for example in forests and through carbon capture and storage. This level of ambition for the trend in global emissions would give more concrete substance to the two-degree target. The EU has also advocated the inclusion of a joint global objective for emission reductions in the new climate agreement, based on the IPCC’s results. A long-term global objective in line with the two-degree target would give a strong, clear signal to the business sector, investors and others that social transformation to a low-emission society needs to be stepped up. At the Lima climate conference in 2014, a group called Friends of the Future was formed to support the inclusion of a long-term objective in the new climate agreement. Norway, many EU countries and ambitious developing countries are all part of the group.

In Norway’s view, the new climate agreement needs a minimum level of common rules to be effective. This will provide a framework that can encourage the necessary intensification of climate action. In addition, a sound international framework is needed to facilitate cooperation between countries, see Box 2.3. The rules adopted under the new climate agreement must also be flexible, since different countries’ commitments may vary widely in type and scope. The INDCs submitted during the first quarter of 2015 will provide important signals about the kind of rules countries wish to see in the new agreement and how they should be formulated. The Government considers it important to make use of internationally recognised methodology and approaches that other countries will also be able to utilise. Norway and the EU share views in this area as well.

Textbox 2.3 Flexible implementation mechanisms

Flexible mechanisms make it possible to achieve greater overall emission reductions without using more resources. Three market-based mechanisms have been established under the Kyoto Protocol:

  1. International emissions trading

  2. Joint implementation (project-based cooperation between countries that have quantitative Kyoto commitments)

  3. Clean Development Mechanism (project-based cooperation between countries that have quantitative Kyoto commitments and countries that do not).

Norway is working towards the continuation of the market-based mechanisms established under the Kyoto Protocol in a suitable form after 2020, adapted to the structure and substance of the new agreement.

There is currently a considerable market surplus of certified emission reduction credits (CERs) under the Green Development Mechanism, and there has also been a sharp drop in the level of new project activity. Norway and a few other actors are maintaining some activity in the development of new projects. Norway is also seeking to further develop the market. At the UN climate conference in Durban, it was decided to develop a new market-based mechanism that could cover a larger share of the economy.

When as many countries as possible have undertaken to reduce their emissions under the new climate agreement, the situation in international emissions trading markets may change. Countries that are selling emission allowances at present may prefer to be credited for the lowest-cost measures themselves. As more and more countries pursue a more ambitious climate policy, the cost differences between them may be reduced. However, emissions trading markets may become further fragmented when emission credits are also generated by mechanisms developed by national authorities, not through the UN system. This will create new challenges relating to how emission credits should be approved and documented under the new climate agreement. At the same time, new regional emissions trading markets are developing in various parts of the world, for example for some US states, in China and in other Asian countries. In the long term, this will open up possibilities for linking together different systems so that carbon prices for a growing proportion of emissions converge.

Although it is uncertain at present what the Paris agreement will include, there is reason to believe that it will continue to provide opportunities for emissions trading/joint implementation. A number of countries have indicated that they wish provision to be made for this, and it is therefore likely that international markets for flexible mechanisms will continue to exist after 2020.

If Norway is to make use of market-based mechanisms outside the UN system in future, it will be necessary to consider further the criteria for participation and the arrangements that must be in place to ensure that international emission credits represent real emission reductions and to avoid double counting of emission reductions by different countries.

2.2.2 The land sector and climate change

The land sector, which includes forests and other land categories (cropland, grassland, wetlands, settlements and other lands) is highly significant in the context of climate change. According to the IPCC, forest management will play an important part globally in achieving the two-degree target, in both the short and the long term. There are currently no clear international accounting rules for the land sector in the new climate agreement. At global level, it is vital that the system provides incentives to avoid and reduce deforestation. A new regime should facilitate the use of both short-term and long-term mitigation options in forest. At the same time, the natural function of forest as a carbon sink must not become an obstacle to mitigation action in other sectors, thus leading to a general reduction in the ambition level. The accounting rules must provide incentives for new measures to reduce emissions and increase removals in the land sector. This will also ensure that strong incentives are maintained for reducing emissions in other sectors, and that they can be strengthened.

In the Government’s view, forest and other land categories should therefore be included in the new climate agreement, and incentives should be created for making more use of the mitigation potential and resources to be found in forest and other land categories. It will be harder to achieve the two-degree target without making use of mitigation options in the land sector, and more difficult to achieve a low-emission development pathway. Norway will advocate the development of a sound common framework of accounting rules for forest and other land categories in the climate agreement after 2020. Norway is also seeking to ensure that the new agreement is based on scientifically sound and verifiable approaches for calculating emissions and removals and changes in carbon stocks in the land sector, which should apply to all countries. The rules should also include good control systems to prevent manipulation of data and carbon leakage.

2.3 The EU’s commitment for 2030 and its role in international climate efforts

The EU has a population of more than 500 million and a varied industrial structure and energy production system. The EU emphasises flexibility and a cost-effective approach in efforts to achieve its climate targets, which are also part of a broader, longer-term transition to a low-emission society.

Internationally, the EU, like Norway, is advocating that all countries should take on emission reduction commitments to make it possible to limit global warming to less than two degrees. The EU was a driving force behind the decision at the Durban climate conference in 2011 to negotiate an agreement that includes all countries. Like Norway, the EU is seeking to act as a bridge-builder between ambitious developed and developing countries. In recent years, Norway and the EU have regularly acted as co-hosts for ministerial meetings to ensure progress in the climate negotiations. Norway has in addition been invited to join the Green Growth Group, an informal forum which brings together the EU countries that are advocating an ambitious climate policy. The Government intends to cooperate with this group in selected policy areas.

At the end of October 2014, the EU adopted its climate and energy package for 2030. This includes a domestic 2030 greenhouse gas reduction target of at least 40 % compared to 1990. The target is binding at EU level and is to be achieved within the EU, without any use of international mechanisms. The target will give a cost-effective emission trajectory towards the EU target of reducing emissions by 80–9 % by 2050, as set out in the Roadmap for moving to a competitive low-carbon economy in 2050. Emissions in the EU have dropped considerably since 1990 because climate policy has been tightened up, coal is being phased out in energy production, unprofitable polluting industrial facilities in Eastern Europe have been closed down, and economic growth has been weak. In 2012, emissions were 19 % lower than in 1990. According to calculations by the European Commission, emissions will decline by 32 % by 2030 compared with 1990 if today’s climate policy is continued. The EU’s emission target is to be achieved through a 43 % reduction in emissions covered by the EU ETS and a 30 % reduction in emissions from sectors outside the ETS, both relative to 2005 levels. The ETS will continue to be the EU’s most important climate policy instrument for achieving its commitment. It covers about 41 % of total EU emissions. The emissions cap in the EU ETS is being progressively tightened, and from 2021, the linear reduction factor is to be increased from 1.74 % to 2.2 % of the calculated emissions in 2010.

The EU’s overall target of a 30 % reduction in non-ETS sectors compared with 2005 is to be shared between member states in the form of a national target for each of them, probably in 2016. According to the Commission’s calculations, emissions in non-ETS sectors will be reduced by 20 % from the 2005 level by 2030 without the use of any new policy instruments. According to the European Council’s conclusions from October 2014, the national targets for emission reductions in non-ETS sectors will vary between 0 % and 40 %; in other words, the target for a country may be set between a minimum of 0 % reduction and a maximum of 40 % reduction relative to its 2005 emission level. No country will have a target that permits a rise in emissions. Targets will be set on the basis of each country’s per capita GDP, relatively adjusted to reflect cost-effectiveness in a fair and balanced manner, as set out in the Council conclusions. This was also the main approach used in the effort sharing agreement on the 20 % emission target for 2020. There is an emphasis on cost-effective implementation, and flexibility within the EU will be significantly enhanced compared with the arrangements for achieving the 2020 targets. According to the Council conclusions, there will be more opportunity for one member state to fund measures in non-ETS sectors in other member states than is the case today. There will also be a limited one-off arrangement, to be decided before 2020, allowing countries to purchase ETS allowances and use them to cover emissions in the non-ETS sector in the period after 2020. The EU has not yet decided on its policy for including land use, land use change and forestry in its target of reducing emissions by at least 40 %. A decision on this will be taken before 2020. For the EU as a whole, removals in land use, land use change and forestry up to 2030 will not be very important, but the situation varies widely from one country to another.

2.4 Other countries’ approaches and climate targets

All the G20 countries except Argentina and Saudi Arabia have confirmed that they are preparing INDCs for the 2015 agreement, either by the end of the first quarter of 2015 or before the Paris climate conference in December. The G20 accounts for more than 80 % of global greenhouse gas emissions and includes the largest emitters (the US, China, India, the EU, Russia, Japan and Indonesia).

The US

In November 2014, the US and China made a joint announcement of their targets for 2025. The US Administration has set a target of reducing greenhouse gas emissions by 26–28 % below the 2005 level in 2025. This corresponds to a reduction of 15–17 % below the 1990 level when land use, land use change and forestry is excluded. The target is intended to keep the US on the right trajectory to achieve reductions of the order of 80 % by 2050. The target will also double the pace of emission reduction from 1.2 % per year on average in the period 2005–20 to 2.3–2.8 % per year on average between 2020 and 2025. To date, the US has no plans to make any use of international emissions trading to achieve its target, and this would require an amendment to the legislation. The US will probably include emissions and removals in the land sector in its target, but no details are available at present.

China

In November 2009, China announced that it would cut emission intensity (CO2 emissions per unit of GDP) by 40–45 % by 2020 compared with the 2005 level. In November 2014, China announced a new target, for CO2 emissions to peak at the latest in 2030. China also intends to increase the proportion of non-fossil fuels to 20 % by 2030. With current policy instruments, China’s emissions are expected to rise slightly after 2030. After the announcement last November, China has provided further information on its targets and announced that coal use will peak in 2020. China is working on plans to limit coal consumption in several provinces and on the introduction of emissions trading systems. There are plans to establish a national emissions trading system in 2016. An environmental protection law was adopted in 2014, and a climate change law is being drafted and according to plan will be adopted in 2015.

Latin America

Several Latin American countries have confirmed that they will submit INDCs in 2015 as a contribution to the Paris agreement: Brazil, Peru, Colombia, Chile, Costa Rica and Mexico. Some of them have introduced new climate policy instruments in recent years, for example climate change legislation in Mexico and a carbon tax in Chile.

Africa and Asia

Indonesia, one of the largest emitters in Africa and Asia (excepting China), has confirmed that it will submit an INDC. Up to 2020, Indonesia has a target of reducing emissions by 26 % from ‘business-as-usual’ levels. India is also preparing a submission. South Africa is planning to submit an emission target, probably based on its current target of an emissions trajectory that peaks at 34 % below a ‘business as usual’ trajectory in 2020 and 40 % in 2025. Several other African countries, including some of the poorest countries, have also indicated that they will submit INDCs.

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