Blog Post

Dedicated to tackling climate change?

Our response to climate change probably the most pressing policy challenge we face needs to be speedy and global in scale. The EU needs to take an approach that is more concerted and broader than at present and, to achieve that, it needs a commissioner dedicated to the task. That approach should be pro-innovation. To […]

By: Date: October 28, 2010 Topic: Green economy

Our response to climate change probably the most pressing policy challenge we face needs to be speedy and global in scale. The EU needs to take an approach that is more concerted and broader than at present and, to achieve that, it needs a commissioner dedicated to the task. That approach should be pro-innovation. To keep the costs of adaptation and mitigation ‘manageable’, we will need a portfolio of technologies. That will require us, firstly, to increase use of technologies that are already commercially viable; secondly, to scale up technologies that are near commercial viability; and, thirdly, to dedicate resources for fundamental and applied research in order to develop breakthrough, green technologies. To switch on the private-sector innovation machine, government intervention is needed.
    
A policy framework is required that can harness the power of markets, through the provision of incentives for the investment in new technologies. Markets and entrepreneurs need governments to provide a policy framework that is strong, credible and predictable. Governments can use three sets of instruments. Carbon pricing is one. Support for research and development including support for the early deployment of clean technologies and neutralisation of the installed base advantage of older, dirtier technologies is a second instrument. And, thirdly, governments can eliminate non-market barriers for green technologies and use regulatory tools to ease the substitution of dirty technologies. The more-developed countries should provide less-developed countries with subsidised access to new clean technologies. These principles appear in the EU’s current climate-change action plans, but they are too poorly developed for them to switch on the innovation machine. Public commitments for supporting green research and development are too low, vary too much over time and are not co-ordinated internationally. As for carbon pricing, current carbon taxes and the cap-and-trade system have failed to produce a carbon price high enough and predictable enough to give investors a sufficiently strong incentive to invest in green technologies. A pro-innovation approach to climate change requires a change in current EU policymaking. A commissioner dedicated to climate change could not alone set this new direction, but creating the post would help. Why? Firstly, the new European Commission would give a clear and strong political signal to governments and the private sector that works on limiting climate change is a priority.
 
Secondly, much of the climate change-related work to be done at the EU level cannot easily be combined with other responsibilities. That is particularly so since a pro-innovation approach requires more than implementing the EU’s existing 20/20/20 plan to reduce emissions by 20%by 2020 and increase the contribution by renewable energy to 20%.A 20/20/20 Mark II is in order. It should improve the cap-and-trade system to ensure a high and predictable carbon price emerges. It should stimulate new technologies by providing funds, co-ordinating international co-operation, and providing an integrated EU market with clear regulations and standards. And the EU should lead international negotiations on an internationally linked cap-and-trade system and an efficient and equitable transfer of know-how and funds to developing countries. The third reason to have a dedicated climate-change post is that a pro-innovation approach requires intense co-ordination across policy areas such as energy, competition policy, the internal market, research and trade. A mandate is needed to cut across the work of so many departments. A commissioner for climate change would have such a mandate.


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