What does Doha mean for European utilities?

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21 December 2012, Gas, Electricity, Nuclear, Solar, Wind

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The success of the original 1997 Kyoto Protocol is debatable due to failures in its original scope, insufficient financial measures, and a sluggish transfer of technology between committed nations. China, India, Brazil, and the US, the world's largest polluters, were not bound by the protocol and have actually increased global emissions by significant amounts since 1997, while a 5.2% reduction in Annex 1 emissions under the protocol amounts to just 1-2% of emissions on a global scale; to further compound the problem, it is arguable that the majority of these reductions have been due to recession and not climate policy.

As the original Kyoto agreement draws to a close, a new agreement will take effect from the start of 2013 with voluntary measures and uncertainty over funding arrangements; however, Russia, Japan, and Canada have failed to make any new commitments. A new legally binding agreement will be put into effect in 2015, but without further commitment its scope could be as limited as 16% of global emissions with a mainly European base. While announcements following the Doha agreement have trumpeted a smooth continuation of the Kyoto Protocol, this owes more to spin than reality.

The main positive that provides a glimmer of hope for global co-operation in reducing emissions lies with a global emissions trading scheme, and the talks in Doha put in place conditions necessary to allow carbon trading to expand further. Doha also agreed that developed nations would provide $100bn per year in additional funding from 2020, but there was no agreement on interim levels of funding. Furthermore Doha introduced the idea that developed nations should be held responsible for "loss and damage" in developing countries, but with the possibility of almost limitless remuneration costs the US was especially reluctant to accept this idea, and detailed arrangements will be needed before the idea may take effect.

Making real progress toward tackling climate change requires many more nations to make voluntary sacrifices on a larger scale, but giving up competitive advantage does not make for good politics. While the world looks to Doha for protection from climate change, the US, China, Brazil, and India have so far been unable to agree upon legally binding commitments, leaving a mainly European core of climate-responsible nations, with Australia and New Zealand due to join in 2015.

Datamonitor's report The Key Outcomes from Doha, and How They Impact European Utilities (December 2012, EN00037-042) provides detailed explanation and insight in light of Doha 2012.

Source: MarketLine

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