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1、 8 EU Policy Priorities for Global Decarbonization Pathways to European Climate LeadershipProf Jos Delbeke Director-General,Directorate-General for Climate Action,European Commission,2010 2018/EIB Chair on Climate Policy and International Carbon Markets,European University InstituteDr Janez Potonik

2、European Commissioner for the Environment,2010 2014 and for Science and Research,2004 2010/Co-Chair,International Resource Panel at UNEP/Chair,Forum on the Future of Agriculture“Reaching the goals of the Paris Agreement requires a more outward looking EU Climate Policy.The study highlights promising

3、 avenues towards a Global Green Deal,not least through more cooperation on clean technology,sustainable finance and carbon pricing.”“The global food system must meet humanitys need for healthy food and farmers right to a decent liveli hood,while being in harmony with nature.This study emphasizes the

4、 EUs pivotal role and our collective responsibility in the global transition to achieve this.Climate action in the food sector needs to combine supply-side and demand-side solutions,and harness thepotential of nature-based solutions.”8 EU Policy Priorities for Global Decarbonization Pathways to Euro

5、pean Climate Leadership28 EU Policy Priorities for Global Decarbonization Imprint8 EU Policy Priorities for Global Decarbonization Pathways to European Climate LeadershipPublisherFuture Mattersc/o UES Gesellschaft fr effektives Spenden Mllerstr.138 D13353 Berlin,Germanyfuture-matters.orgcontactfutur

6、e-matters.orgProject leadJanina Hennigfeldjanina.hennigfeldfuture-matters.orgAuthorsJanina HennigfeldGabriel Hanrieder(Research Fellow)Nis Fahl(Research Fellow)EditorsCarl Frederick Luthincarl.luthinfuture-matters.orgVegard Beyervegard.beyerfuture-matters.orgContributorsJustus BaumannDr Peter Ruschh

7、auptZineb RajiEkaterina SchalmannCarla KienelDesign&TypesettingNordsonne Identity,BerlinVersion 1.0Online accessAcknowledgementsThis study has greatly benefited from the expertise and insights of more than 100 contributors,including officials from the European Commissions Directo-rates-General and p

8、olicy experts at Agora Energiewende,Clean Air Task Force,Cli-mateWorks Foundation,Future Cleantech Architects,Germanwatch,the Good Food Institute,Potsdam Institute for Climate Impact Research,and Systemiq.Their con-tribution does not imply endorsement of the policy recommendations.For detailed ackno

9、wledgements,see p.119.Responsibility for the content and anyerrors contained within lies with Future Matters and the authors.Suggested citationFuture Matters(2024):8 EU Policy Priorities for Global Decarbonization.Pathways to European Climate Leadership.Photos in useTitle:Robin Parker,;Policy area|A

10、ccelerating the global energy transition:Ryan Searle,unsplash;Portrait WernerHoyer:Raul Mee EU2017EE,CC BY 2.0 DEED;Policy area|Promoting carbon pricing globally:NanoStockk,istockphoto;Policy area|Abating global methane emissions:rawpixel;Policy area|Catalyzing low-emission industries:uslatar,AdobeS

11、tock;Policy area|Advancing future-proof food systems:Red Zeppelin,unsplash3Imprint 2Content 3Introduction 5Overview of policy priorities 7Methodology overview 8Policy priorities Accelerating the global energy transition 12Results-based climate funds to accelerate cleantech deployment inemerging econ

12、omies 14Climate partnerships to facilitate decarbonization and leapfrogging inAsiaand Africa 22Promoting carbon pricing globally 32Bilateral cooperation to enable effective emissions trading in low-and middle-income countries 34Abating global methane emissions 44Global Methane Pledge 2.0 to accelera

13、te international momentum 46Catalyzing low-emission industries 56Industry partnership with India to promote low-carbon steel and cementproduction 58Content48 EU Policy Priorities for Global Decarbonization Advancing future-proof food systems 66Incentivizing future-proof foodsystem transitions throug

14、h market-based instruments 68European Food System ETS to pioneer carbon pricing for food and agriculture 70Ecologically tiered CAP funding to spur low-emission food production 79EU funding to scale up low-emission innovations for the global food system 88EU regulation and funding to meet growing glo

15、bal demand with alternative protein 95Methodology 1021.Foundational research to understand change mechanisms and develop the prioritization framework 1052.Data analysis and limiting criteria toshortlist three sectoral and regional priority areas 1073.Detailed policy research to provide the evidence

16、base for policy prioritization 1094.Qualifying criteria to shortlist 16 policy mechanisms 1105.Detailed assessment of the impact potential of 43 EU policies 1126.Weighted factor model to rank the policies with the highest untapped potential 116Recommendations for future research 118Acknowledgements

17、119Bibliography 1215IntroductionIntroductionIn recent years,the European Union has adopted an ambitious set of climate policies under the European Green Deal,strengthen-ing its role as a leader in achieving domestic climate neutrality and inspiring global action.For the next mandate(20242029),the EU

18、 has a great opportunity to make a difference beyond its borders:The climate path it chooses will not only shape its own economic and environmental future,but,as our study shows,will also influence the course of the93%of global greenhouse gas emissions1 that originate from beyond its borders.The com

19、ing threat of rising emissions outside the EUMany low-and middle-income countries(LMICs)are facing critical choices in areas such as energy,industry,and food systems to provide a decent life for all their citizens.Without adequate support,they are at risk ofincreasing their dependence on fossil fuel

20、s.This path could lock them into decades of high emissions that will have a significant influence on the future global climate.The EUis well positioned to remove major legal,technological,and financial barriers to urgent-ly needed international climate action,but Which policies could the EU adopt in

21、 the next mandate to best accelerate global climate change mitigation?To find answers,Future Matters has undertaken a comprehensive prioritization study.Based on data analy ses,literature reviews and interviews with more than 100 experts and EU policymakers,we assessed a variety of policies against

22、ten criteria,includ-ing mitigation potential,political feasibility,neglectedness,and robustness across future scenarios.This report presents the resulting eight most promising policy opportunities for EU climate leadership during the next mandate.timely action is crucial for safeguarding the future.

23、It would also address the risk of falling behind the United States and China with their colossal investments in clean technologies.Extending the reach of the Green Deal inter-nationally through the policy priorities set out in our study would help the world avert high warming scenarios and strengthe

24、n the EUs industrial resilience and competitiveness.In doing so,it is essential for the EU to continue its commitment to partnering with LMICs.When the European Commission an-nounced the Green Deal in 2019,it announced an intention to form bilateral partnerships with high-emitting countries and LMIC

25、s.The European Parliament and the European Council also emphasize the need to enhance the EUs global influence,stimulate worldwide climate action,and encourage other coun-tries to increase their climate commitments.Crucially,the EUs ability to lead on the global stage hinges on the success of its in

26、ternal climate policies.The Green Deals internation-al dimension can only build on,not replace,ongoing domestic mitigation efforts.1 World Bank(2023d).68 EU Policy Priorities for Global Decarbonization The presented policy priorities have outsized mitigation potentialThe essence of our project lies

27、in the prioriti-zation of policy options rather than the details of policy design.While we make recommen-dations on how to design these policies for optimal effectiveness,the primary value of our work lies in identifying the most impact-ful,yetunderrated,opportunities among apletho ra of policy opti

28、ons in high-emitting sectors.This prioritization is based on ten criteria,including direct and indirect mitiga-tion potential,political feasibility and required policymaking and advocacy efforts,neglect-edness in EU policymaking,and robustness under different future scenarios.These criteria led toa

29、set of policies,each of which plausibly enables the EU to mitigate well over 1giga-tonne of CO2e emissions by 2100,in some cases more than 20gigatonnes.This mitiga-tion potential is orders of magnitude greater than that of purely domestic measures without a plausible global impact pathway.Though,the

30、 EU can only credibly pursue the recom-mended policies if it meets its own domestic climate neutrality commitments.Our report is structured around policy areas that address the greatest global emissions sources,highlighting only the top-ranked poli-cies within each area.These do not encompass all th

31、e necessary policies,but the few out-standing ones that are essential to add to the agenda and see through to implementation.In the energy and industry sectors,the EU can have the greatest global impact by support-ing low-and middle-income countries with high expected emission growth in adopting cli

32、mate-friendly technologies that already exist,and by creating mechanisms to promote locally adapted innovation and deployment.In contrast,in food and agriculture,we rec-ommend EU domestic measures that deliver on the global need for innovative policies and technologies to mitigate emissions in this

33、sector.Simultaneously,we emphasize the pivotal role of supporting farmers in their contribution to a climate-friendly food sector.With these measures,the EU can create a ripple effect through policy and technological leadership as well as trade.The recommended policies align with the EUs objectives

34、for the next mandate:They strengthen the global dimension of the Green Deal and support European industries in theirefforts to decarbonize and to stay competitive by enhancing export markets for cleantech and by promoting innovation in sunrise industries.This report proposes the most impactful,yet u

35、nderrated,policy oppor-tunities for the EU to strengthen its inter-national leadership role during the 20242029 mandate.7Overview of policy prioritiesPolicy priorityPolicies strengths Results-based climate funds to accelerate cleantech deployment in emerging economies+Changes emission trajectories a

36、cross sectors +Very cost-effective Climate partnerships to facilitate decarbonization and leapfrogging in Asia and AfricaClimate partnerships to facilitate decarbonization in Asian countries+Very high mitigation potentialClimate partnerships to facilitate leapfrogging in African countries+Highly neg

37、lected region Bilateral cooperation to enable effective emissions trading in low-and middle-income countries +High feasibility:low-hanging fruit+EUs unique expertise in ETS cooperation Global Methane Pledge 2.0 to accelerate international momentum+High potential to limit short-term warming+Very cost

38、-effective Industry partnership with India to promote low-carbon steel and cement production+Very high mitigation potential+Changes the trajectory of a major global emission source Incentivizing future-proof food system transitions through market-based instrumentsEuropean Food System ETS to pioneer

39、carbon pricing for food and agriculture+Exceptional mitigation potential through policy leadership+Changes the food sectors global emission trajectoryEcologically tiered CAP funding to spur low-emission food production+Highly neglected+Feasible following a Food System ETS EU funding to scale up low-

40、emission innovations for the global food system+Exceptional mitigation potential through technological leadership+Highly neglected EU regulation and funding to meet growing global demand with alternative protein+Changes the food sectors global emission trajectoryOverview of policy priorities Table 1

41、:8 EU policy priorities for global decarbonization88 EU Policy Priorities for Global Decarbonization Methodology overviewThe eight policy priorities in this report are grounded in a review of 585 publications and informed by insights from in-depth discussions and feedback rounds with more than 80 ex

42、perts in academia and civil society,alongside consultations with 18 policymakers,of which 13 are Commission officials.For detailed information on the research process,the calculations underpinning the policy se-lection,and the complete set of criteria used,please see the Methodology section(p.102).S

43、tep 1:Narrowing the search space to3 regional and sectoral mitigation areasWe conducted an analysis of five datasets on global emissions trends through 2100 and applied limiting criteria to narrow down the search space to three priority areas for global mitigation efforts.These priority areas descri

44、be regions and sectors with a high share of global emissions by 2100,where broadly applicable solutions can be pursued.The long-term perspective ensures that potential blind spots,such as emission hotspots expected after 2050,are addressed.Step 2:Focusing on 16 high-impact policy mechanismsBased on

45、literature reviews and expert inter-views,we identified(cross-)sectoral policy mechanisms through which the EU can address these priority areas and applied quali-fying criteria to select the 16 most impactful mechanisms.These leverage strong pathways for EU global influence,have a high global mitiga

46、tion potential by 2100,are neglected in EU policymaking and advocacy,and can be used with reasonable effort.Step 3:Identifying and assessing 43 EU policiesWe conducted further literature reviews and expert interviews to identify 43 EU policies that use the most effective policy mechanisms,and assess

47、ed them against the criteria of impact,neglectedness,and effort.Out of these 43,we shortlisted 26 policies which we then analyzed against an extended set of seven criteria,including five differentiated criteria to assess impact potential,neglectedness inEU policymaking and advocacy,and effort requir

48、ed for policy adoption.This report offers a novel perspective on the long-term,global impact of poten-tial EU climate policies.Due to political,economic,and social constraints,only ahandful of policies are implemented.Different policy options vary significantly in their effectiveness and likelihood

49、of being implemented by other parties.Some have substantial indirect effects,and a select few hold exceptionally high potential for impact,well above the norm.Our analysis is designed to system-atically identify these high-leverage policies.9Methodology OverviewStep 4:Ranking the policies to priorit

50、ize the top 8To rank the 26 selected policies,we created a weighted factor model based on the previous assessment against seven criteria.This resulted in eight EU policy priorities with the highest untapped global climate change mitigation potential.Applying limiting criteria:States or regions with

51、a high share of global emissions by 2100 Sectors or emission sources with a high share of global emissions by 2100 and broadly applicable solutions1Applying qualifying criteria:Strong pathways for EU global influence High global mitigation potential by 2100 Neglected in EU policymaking and advocacy

52、Feasible with reasonable effort2Identifying and assessing policies with a set of 7 criteria:5 criteria to evaluate the direct and indirect impact potential Neglectedness in EU policymaking and advocacy Effort required for policy adoption3 4 To rank the policies and select priorities Based on the pre

53、vious assessment against 7 criteriaApplying a weighted factor model8 EU policy prioritieswith the highest untapped global mitigation potentialAll sectors in all regions26 EU policies shortlisted from an initial 43 that use the policy mechanisms16(cross-)sectoral policy mechanismsto address the 3 pri

54、ority areas 3 sectoral and regional priority areasfor global mitigation efforts Figure 1:Narrowing down the set of policies through consecutive prioritization steps108 EU Policy Priorities for Global Decarbonization Prioritization criteria:Impact,Neglectedness,EffortThe potential impact of an EU pol

55、icy includes notonly its climate effects,but also the additionality of the EUcontribution to global mitigation efforts,andother factors(see below).Additional impact is the dis-tinct difference the EU can achieve with each policy,beyond what other actors,policies,or trends might accomplish.These are

56、the main three criteria by which we narrowed thesearch space and evaluated policies:Impact:This criterion assesses a policys contribution to global mitigation by 2100.It encapsulates the policys immediate mitigation potential,its capacity to alter trajectories of emission devel-opment in entire regi

57、ons or sectors,its role in improving the conditions for further mitigation efforts,its robustness against challenging future scenarios in which international cooperation orother factors may fail,and the EUs additional impact relative to efforts by other players on theglobal level.Impact labels here

58、arenot abso-lute,but relative to the total potential for global emission mitigation until 2100.Neglectedness:This measures the current level of attention and action a policy receives within EU policymaking and advocacy circles.Policies that are less attended to,yet impactful,are deemed more sig-nifi

59、cant,as additional efforts in these areas are likely to yield greater returns compared toareas already receiving substantial attention.Effort:Defined as the extent of additional advocacy and policymaking activities needed to achieve the effective implementation of a policy,this criteri-on ensures th

60、e recommendations are not only exceptionally impactful,but feasible.Frequently adressedSomewhat addressedModerately neglectedHighly neglectedExceptionally neglectedLow impact potentialModerate impact potentialMedium impact potentialHigh impact potentialExceptional impact potentialFeasible with limit

61、ed effortFeasible with some effortFeasible with considerable effortFeasible with substantial effortFeasible with high effort11Methodology Overview128 EU Policy Priorities for Global Decarbonization Policy area Accelerating the global energy transition 13Accelerating the global energy transition The

62、European Green Deal,Global Gateway Initiative,and Just Energy Transition Partner-ships(JETPs)lay the groundwork for necessary energy transitions in LMICs.Yet,to maximize their impact,the EU must implement further measures,utilizing its innovation ecosystem,international standing,and financial streng

63、th.These efforts not only accelerate the global energy transition but also offer economic and political partnership opportunities,boost the EUs cleantech industry,and enhance energy security.The opportunities in this policy area aim to alleviate capacity constraints in LMICs,initiating a domino effe

64、ct.Increased RE and cleantech adoption will drive sectoral electri-fication while also avoiding fossil fuel lock-in,thereby yielding significant emission reduc-tions as well as a range of other benefits for society.We systematically analyzed numerous policy options for the EU to most effectively con

65、tribute to global energy transitions,includ-ing enlarged sustainable finance regulation,long-duration energy storage support,and phasing out EU fossil fuel subsidization.From this range of effective policies,we have iden-tified the following opportunities as bearing The global transition to renewabl

66、e energies(RE)and other clean technologies(cleantech)is a core element of global decarbonization.In low-and middle-income countries(LMICs),however,itfaces obstacles,such as insufficient access to finance,carrying high risks of carbon lock-ins.Implementing policies that remove such barriers and provi

67、ding long-term strategies can significantly boostRE and cleantech deployment.Thus,by accelerating the uptake of renew-ables domestically and abroad through novel finance mechanisms and partner-ships,the EU can advance the global energy transition.The crux of accelerating global adoption liesin overc

68、oming financial roadblocks that currently favor fossil fuels.In2020,global investment in RE was overshadowed by investments in fossil fuel supply,alongside substantial fossil fuel subsidies.the highest untapped mitigation potential and political feasibility:Results-based climate funds to accelerate

69、cleantech deployment in emerging eco-nomies:Enhancing innovation and deployment of cleantech solutions in LMICs by creating funds that subsidize projects that deploy and scale technologies that most effec-tively mitigate GHG emissions in LMICs,thereby raising the cleantech innovation baseline and fo

70、stering international collaboration.Climate partnerships to facilitate decarbonization and leapfrogging in Asia and Africa:Providing technical and financial sup-port to LMICs to implement the policies needed to kick-start decarbonization and address expected future emissions growth.148 EU Policy Pri

71、orities for Global Decarbonization A cost-effective mechanism to avoid gigatonnes of emissionsLack of finance hinders rapidcleantech deployment inLMICsLMICs need access to state-of-the-art technol-ogies,including renewables and other clean-tech,enabling them to minimize the emission intensity of the

72、ir economic development.Otherwise,they risk locking in high-emission trajectories for decades to come.However,insufficient investment,restricted capital,and innovations developed without due consid-eration for the contexts and needs of LMICs hinder rapid cleantech deployment.3About 75%of global gree

73、nhouse gas(GHG)emissions by the end of this century will originate from emerging economies and low-and middle-income countries(LMICs).2 Access to and rapid deployment of affordable and state-of-the-art clean-tech in LMICs therefore is the key to effective global emission mitigation.Results-based cli

74、mate funds would subsidize projects deploying and scaling technologies that mitigate GHG emissions in LMICs based on their actual mitigation impact.Thiswill lower prices,make cleantech more accessible,and accelerate the innova-tion and deployment of low-emission technologies,particularly where emiss

75、ions can be avoided most cost-effectively.While accelerating global decarbonization,the funds would both benefit cleantech industries and foster trusting relationships with LMICs.Policy Results-based climate funds to accelerate cleantech deployment inemerging economiesImpact+Changes emission traject

76、ories across sectors+Very cost-effectiveNeglectednessEffort2 Based on ClimateWorks Foundation(2023a).3 Abdelrazik et al.(2022).4 European Investment Bank(2023).“There is no shortage of technolo gical ideas that can bescaled up.The key is tochannel.capital to breakthrough projects,particularly in eme

77、rging and developing economies.”4Werner Hoyer,former President of the European Investment Bank,at the Climate Ambition Summit 202315Accelerating the global energy transition Patent licensing fees exacerbate these obsta-cles.These patents,protected by WTO intel-lectual property(IP)rules,impose 20-yea

78、r licensing fees for using state-of-the-art tech-nologies.About 91%of patents granted for environmental technologies between 2000 and 2021 are held by actors in G20 countries,and most of them will retain protection until well after 2030.5 Whilesafeguarding IP rights,this system regularly increases t

79、echnology costs toa prohibitive level,forcing governments and companies to use outdated technologies that lock in avoidable emissions that are some-times up to 30%higher than what is technical-ly feasible.6Overcoming these barriers has high untapped potential for both economic benefits and global de

80、carbonization.However,the current levels of international climate finance arein-sufficient to realize this potential:The annual 1.18 trillion euros(1.27 trillion US dollars)currently allocated fall far short of the 9.3 trillion euros(10 trillion US dollars)needed.7 This gap continuously increases mi

81、tigation and adaptation costs that will be faced inthe future.8 By focusing its international climate finance on the most effective projects and blending public and private capital,the EU can support its innovative industries,build trusting international relations,and support LMICs in their climate-

82、neutral development.5 Referring to patents under the Patent Cooperation Treaty;World Intellectual Property Organization(2023b).6 For instance,Indian coal-fired power plants deploying less efficient boilers due to patent licensing fee mark-ups(International Centre for Sustainable Carbon,2016;World Re

83、sources Institute,2010).Patent royalty rates can be very heterogeneous,ranging from 5%to 25%of net sales of the technology user (Podlogar,2018).7 Based on the conversion rate 1 US dollar=0.93 euros(European Central Bank,2023);all further currency conversions in this report use this conversion rate.8

84、 Climate Policy Initiative(2023).Aligned with EU industrial andexternal policyBy piloting a results-based climate fund,the EU can be a critical actor in generating more climate finance for cleantech deployment in LMICs,increasing access to cleantech and avoiding the lock-in of emission-intensive tec

85、hnologies.Results-based climate finance(RBCF)is a very effective mechanism that can take different forms in addressing specific issues.At the time of research,we were able to evaluate an application of RBCF to patent licensing fees(see evaluation box,p.18).Other applications are available and promis

86、e even higher levels of GHG emission mitigation.An RBCF pilot fund would complement the EUs existing policies.By providing results-based subsidies for cleantech investments in LMICs,the fund would facilitate European companies access to new markets and stimu-late their competitiveness.By aligning th

87、e EUs domestic industrial policy and innovation ecosystem with global decarbonization efforts,it would strengthen and extend the benefits of the industrial dimension of the European Green Deal beyond European borders.More-over,the fund would also strengthen trusting relationships between the EU and

88、LMICs,supporting the EUs diplomatic efforts to secure access to critical raw material for the EUs own decarbonization.168 EU Policy Priorities for Global Decarbonization Mechanism:Competitive results-based subsidiesRBCF funds would align the profit motive of companies with the goal of mitigating GHG

89、 emissions by offering results-based subsidies for cleantech investment projects in LMICs.This would help overcome existing financial barriers to cleantech deployment in LMICs,which currently create the risk of locking in high carbon emissions for decades.Therefore,RBCF funds would also stimulate re

90、search and innovation into mitigation solutions in LMICs.High-income countries(HICs)would finance the funds,possibly through new climate finance pledges and novel financial instruments,ideally complemented by philan-thropic contributions.The funds would operate based on a pay-for-performance mechani

91、sm and use competitive bidding processes to distribute subsidies based on achieved results(see figure 2).Before being implemented,cleantech projects in LMICs would submit their proposals to an auction.These proposals would include the requested subsidy per unit of a deployment indicator,such as the

92、capacity of a planned renewable energy plant,that evidences effec-tive GHG emission mitigation.9During the auction,a predetermined total sum of subsidies would be allocated to the projects that request the lowest subsidies per unit.Subsequently,the selected projects would receive payments ex post,th

93、at is,after achiev-ing the predetermined results over a specified period.This approach would resemble the EUs existing pay-for-performance auctioning mechanism for renewable hydrogen10 and adhere to the Commissions guidelines on climate-related state aid.11 While RBCF funds could be established for

94、any industry and mitigation technology,pilot funds should pri-oritize technologies that promise the highest mitigation effects.12Figure 2:Allocating results-based subsidies toeffective mitigation projects in LMICs through competitive auctionsThe process of allocating subsidies through RBCF funds.Sou

95、rce:Matthey et al.(2024).9 Matthey et al.(2024).10 European Commission DG CLIMA(2023c).11 European Commission(2022c).12 See also Hollis et al.(2023).Projects submit bids(requested subsidy per unit)to auction1Bids are evaluated and ranked by subsidy per unit2Projects are implemented and deliver resul

96、ts4Subsidies are awarded to top-ranked projects up to budget cap3Subsidies are disbursed based on results achieved5 17Accelerating the global energy transition 13 See also World Bank(2023e);World Bank&Frankfurt School of Finance and Management(2017).14 In LMICs,efficiency measures promise significan

97、t(socio)economic and environmental gains across all sectors(Fowlie&Meeks,2021;Saleem et al.,2023).15 Matthey et al.(2024).16 See also Hollis et al.(2023).17 World Intellectual Property Organization(2022).the project side,there is an option to pay a small portion of the subsidy ex ante,before impleme

98、ntation,whereas the majority is paid ex post.While results-based subsidies do not primarily lower the cost of capital or de-risk investments,they do serve as a security for obtaining the necessary financing for a project and can thus stimulate local financial markets.15One of several effective appli

99、cations of the RBCF mechanism would be a fund to address the cost barrier associated with patent roy-alties.The fund would provide results-based subsidies specifically to companies that voluntarily forgo their patent royalties for the deployment of cleantech in LMICs.Selected technologies with high

100、mitigation potential but considerable patent barriers would be registered for the fund.Such a fund could significantly accelerate the deployment of patented mitigation technologies in situations where patent royalties for these technologies are at prohibitive levels.16Energy storage technologies are

101、 an especially impactful example of this mechanism,where thousands of patents currently hinder rapid deployment and learning.The fund would solve the chicken-and-egg problem for private investment in renewable energy production,particularly in various African countries,where companies often do not d

102、evelop since energy is not available,which in turn is due to a lack of companies who demand it.Energy storage technologies would break this cycle,since elec-tricity suppliers could produce for demand in external markets.This would lead to increased and dependable electricity supply,spurring economic

103、 activity,creating economic value and export opportunities for states and companies in the region,and enabling the electrification of additional sectors and activities.17Increasing the momentum inclimate finance and cleantech deploymentRBCF funds provide an attractive climate finance opportunity for

104、 HICs and otherdonors,including philanthropists.The results-based mechanism increases transparency and accountability,reduces administrative burden and costs,and lowers the risk of failure for donors.It also ensures that only cost-effective projects receive subsidies.As such,this effi-cient and easy

105、-to-manage instrument is likely to generate substantive additional climate finance.13Prices for cleantech solutions would fall,increasing access to them and avoiding the lock-in of highly polluting technologies.Newtechnological developments would focus on the most effective opportunities to increase

106、 efficiency and update installed technologies,accelerating the uptake of cleantech solutions in LMICs,where the bulk of future energy demand growth is expected.14Cleantech deployment projects in LMICs would also benefit from the increased transparency and predictability of subsidy allocations.The re

107、sults-based mechanisms would also facilitate applications from small-and medium-sized enterprises in LMICs,and they would create strong incentives to develop effective locally adapted innovations,maximize dissemination,and ensure the most efficient deployment.By shifting the risks from donors to pro

108、ject proponents,the mechanism creates strong incentives for reliable project implementation and is particularly promising for projects with high competitiveness and measurable results.To mitigate the risks on 188 EU Policy Priorities for Global Decarbonization Evaluation:An EU opportunity for high-i

109、mpact international cooperationAt the time of research,we were able to evaluate an RBCF fund that specifically addresses patent barriers.The following results refer to this form of an RBCF fund.Exceptional impact potential Effectively designed,the fund would have the poten-tial to avoid 330 Mt CO2e

110、annually 18 exceeding the total yearly GHG emissions of an industrialized country like Spain.This could prevent up to 10 gigatonnes of CO2e by 2050,and even more by the end of the cen-tury.Other applications of the RBCF mechanism could achieve even higher mitigation effects in LMICs.Trajectory-chang

111、ing The fund would create an impact across a range of sectors and activities globally,raising the cleantech innovation baseline and accelerating deployment byrewarding the most effective mitigation solutions tailored to local requirements.This could change the entire direction of and create positive

112、 feedback loops in key industries and whole countries in this century.Highly neglected Mechanisms comparable to an RBCF fund focused on patent barriers have increasingly been pushed for by G20 countries and scholars in recent years.19 However,interviews with Commission officials provided evi-dence t

113、hat this policy has received little to no atten-tion in the political discourse within EU institutions so far,suggesting a high untapped impact potential.20 High global additionality The EU,with its cutting-edge innovation ecosystem,21 is exceptionally well positioned to take a leadership role in es

114、tablishing this fund.The EUs Innovation Fund and its Modernization Fund set good examples of how to use incentives to accelerate cleantech R&D domesti-cally.22 Once the EU advances such a fund on a global stage,other countries are very likely to follow suit,as recent efforts by a set of G20 countrie

115、s and expert interviews confirmed.23 Moreover,established develop-ment cooperation channels and partnerships provide asolid base,promising highly effective collaboration.Feasible with some effort The flexibility and scalability of an RBCF fund focused on patent barriers make it apolitically tractabl

116、e policy.It can be adopted in avariety of schemes,with different levels of ambition,finely customized to sectors and emission sources.Itoperates on a voluntary basis for both participating companies and countries,without binding obligations or sanctions.Fixed budgets for specific time periods and a

117、focus on cost-effectiveness allow participating countries to easily predict and de-termine their financial contributions.We expect other forms of RBCF funds to be feasible with limited effort.18 Assuming 300,000 relevant patents,with 10%registered for the scheme,mitigated emissions through accelerat

118、ed and more effective adoption of 0.01 Mt COe/year on average,and a technol-ogy baseline improvement factor of 1.052,we calculate a bottom line of 330.75 Mt COe/year.19 Gupta et al.(2023).20 Commission officials(interviewed August 2023).21 NGO policy expert(interviewed March 2023).22 European Commis

119、sion DG CLIMA(2023a).23 Gupta et al.(2023);Academic policy researcher(interviewed September 2023).Figure 3:Avoiding more than the annual emissions of an industrialized countryThe annual emission mitigation potential of an RBCF fund focused on patent barriers compared to the annual emissions of Spain

120、 in Mt COe.Source:Own calculation and European Environment Agency(2023b).0100200300330400289RBCF fund focused on patent barriersSpains total emissions(2021)GHG emissions in Mt CO2e per year19Accelerating the global energy transition Fostering EU cleantech leadership and trusting global relationsAn E

121、U initiative to pilot RBCF funds would present a unique opportunity to promote cooperation between HICs and LMICs and to enhance the EUs leadership role in support-ing LMICs decarbonization efforts,avoiding carbon lock-in and pioneering cleantech deployment.Initiating and sustaining this policy woul

122、d not only enhance the EUs cred-ibility and influence as a global climate actor,but also nurture trust and collaboration with emerging economies as a basis for diplomatic and trade relations.Moreover,this initiative would create new markets and opportunities for EU cleantech companies and support th

123、eir innovations and competitiveness.We can expect large socio economic benefits for the EU and other parti cipating countries,such as the generation ofnew employment opportunities in the respective industries.Thus,the EU can rein-force its position as a leader in green tech-nologies and gain a compe

124、titive edge in the global market.Steps towards implementationPolicy design:Effectiveness relies on participationFor this policy to realize its full potential,key cornerstones,like long-term funding and participation commitments as well as strong mechanisms to ensure effectiveness,are required:Strong

125、 incentives for participation The financial incentives for projects to par-ticipate can be increased by paying a small portion of the subsidy upfront.To effectively stimulate new mitigation projects in LMICs,these financial incentives should be mean-ingfully complemented by non-monetary ones.These c

126、an include recognition,techni-cal support,and facilitated access to new markets.Establishing a collaborative plat-form allows stakeholders to share knowledge and experiences and to leverage synergies.Impact focus of RBCF funds RBCF funds should first and foremost be established for technologies that

127、 promise thehighest GHG emission mitigation effects and social development benefits,while suffering from underinvestment.This may include renewable energy,hydrogen,biochar,and permanent carbon dioxide removal.24 Comprehensive scope To have a mitigation effect across sectors,the funds need to cover b

128、oth existing and emerging technologies in various stages ofdevelopment and deployment.If the funds are designed to encourage innovation and adaptation of technologies to local con-texts,they promote wider applicability and adoption.24 Matthey et al.(2024).208 EU Policy Priorities for Global Decarbon

129、ization Pilot phase to refine the policy Resources need to be allocated for a pilot phase to exhibit the mechanism,gauge its impact,and refine the details before a broader rollout.The pilot phase also serves to engage in rigorous monitoring and evaluation,to gather insights,and to make data-driven a

130、djustments for scaling up.Substantial funding for the scheme RBCF funds require sufficient funding,start-ing with at least 35 million euros per year 25 forthe pilot phase,to create strong incen-tives to develop and deploy cleantech for the most cost-effec tive emission reductions across a range of s

131、ectors and technologies.Long-term commitments from countries Achieving continuous commitments from participants is key to ensuring the policys longevity and sustainability.Commitments should be subjected to periodic review andadaptations to align them with evolving global decarbonization goals.Mecha

132、nism to de-risk investments in LMICs To enhance the appeal for EU companies,complementary measures to minimize invest-ment risks in LMICs need to be implemented.Regulatory clarifications,financial guaran-tees,up-front payments,and risk-sharing mechanisms can facilitate a supportive environment for i

133、nvestments.Financing RBCF funds:Two pathways at different levelsExisting EU funding programs and instruments provide a readily available starting point to fund a pilot project that evolves into a global scheme.The Horizon Europe program already offers a structure to support research and inno-vation

134、that could be connected with the EUs Global Gateway Initiative and the Africa-EU Energy Partnership,to be further complemented by the European Innovation Council Fund and the European Bank for Reconstruction and Development.Thus,funding could bedirected to this innovative policy while relying on exi

135、sting programs and partnerships.Funding could also be complemented by philanthropic organizations and private donors,as is done bythe Global Methane Hub.For global RBCF funds,the EU could achieve a highly impactful and stable funding source by pushing for innovative financial instru-ments,particular

136、ly for international levieson fossil fuel extraction,air travel,and shipping.26 These instruments would provide multiple benefits,such as,internalizing environmental cost,creating more efficient market conditions,and shifting demand to more climate-friendly activities,while generating revenue to sub

137、-sidize the most effective cleantech solutions worldwide.25 Including 25 million euros as subsidies,5 million euros for opera-tions and outreach,and 5 million euros for monitoring and evaluation(own estimation);see also Hollis et al.(2023).26 See Climate Action Network Europe(2023).21Accelerating th

138、e global energy transition Anchoring the fund in the international policy arenaImplementation can take unilateral,pluri-lateral,or multilateral forms,based on the EUs level of ambition and cooperation with its partners.If already existing international schemes and contributions are to be used,this w

139、ould most efficiently be managed by multilateral institutions such as the World Bank,Regional Development Banks,or the Green Climate Fund(GCF).Under the GCF,the Global Cleantech Innovation Programme could be expanded by RBCF funds.In any institution,it is crucial to ensure that sufficient capacity i

140、s available to effectively manage thefund.The establishment process could draw on learnings and insights from the devel-opment of the Loss and Damage Fund.For an RBCF fund focused on patent barriers,close cooperation with the World Intellectual Property Organization,in particular its Green Platform,

141、27 could most easily facilitate the connection between innovators and technol-ogy seekers,minimize transaction costs,and maximize the acceleration of cleantech inno-vation and deployment.To avoid unintended effects in participating countries,a broad range of stakeholders needs to be involved in the

142、policy design while accompanying imple-mentation with close monitoring and iterative evaluation processes.28 Next steps:An EU pilot to refine a cost-effective policy designWhile this policy promises substantial miti-gation potential,more research into its implementation would allow for more specific

143、 estimations of the policys mitigation potential and feasibility.Research should evaluate differ-ent scenarios and consider multiple influencing factors,including the type and scale ofdeployed technologies,the country-specific baseline scenarios,and interactions with other policies.Furthermore,resea

144、rch should evaluate clean-tech projects willingness and capacity toparti-cipate,particularly regarding deployment in possibly fragile LMIC environments,which the feasibility of the policy depends on.The EU would be uniquely well positioned to launch and adequately finance a pilot RBCF fund.This fund

145、 could initially become part of the EUs Global Gateway Initiative that aims to spur the global transition to carbon-neutral economies.The pilot would provide invaluable experience regarding the policys feasibility andthe response in LMICs.Furthermore,pro-active engagement with stakeholders,suchas co

146、mpanies,governments,civil society,and international organizations,would provide an opportunity to learn about their interests and queries about this policy.After instituting and evaluating this pilot scheme,we recommend establishing it at global scale.Without additional policy action,existing obsta-

147、cles to cleantech deployment in LMICs are likely tolock in high-emission trajectories.By estab-lishing results-based climate funds to accelerate cleantech innovation and deployment,the EU could effectively leverage synergies between global emission mitigation and the competitive-ness of European cle

148、antech industries,making this a win-win policy for the EU and global decar-bonization.27 World Intellectual Property Organization(2023a).28 Timmermann&van den Belt(2012).228 EU Policy Priorities for Global Decarbonization EU Partnerships to support targeted emission reduction in key regionPartnering

149、 with LMICs iskey to a Global Green DealGovernments worldwide face a policy trilemma of meeting climate targets,ensuring fiscal sustainability,and securing political feasibility(see chapter on emissions trading,p.34).29 Although China and other larger emerging economies possess sufficient domestic f

150、inan-cial resources,many LMICs cannot fund their own transition.For LMICs in particular,taking on more debt to fund climate action poses a serious climate policy trade-off.30 Sinceit appears cheaper in the short term to ImpactImpactDecarbonization partnerships e.g.,with Asian countriesLeapfrogging p

151、artnerships e.g.,with African countriesNeglectednessNeglectednessEffortEffortexpand existing infrastructure than to tran-sition to renewable energy,those countries often give preference to fossil fuel production.In response,all major EU institutions empha-size cooperation and support to other coun-t

152、ries as a part of Green Deal diplomacy.When the European Commission announced the EU Green Deal in 2019,it described an intention to form bilateral partnerships with high-emit-ting countries and LMICs.31 Both the Euro-pean Parliament and the European Council stress the importance of strengthening th

153、e EUs political outreach,stimulating global cli-mate action,and promoting increased climate ambition in other countries.32 Moreover,the European Parliament and the Council of the EU underline the importance of technical and One of the most promising ways to support(future)high-emitting countries in

154、their transition is to form climate partnerships helping them accelerate decarboniza-tion or leapfrog intensive fossil fuel use altogether.Without adequate support,low-and middle-income countries(LMICs)with debt and limited financial resources are at risk of not being able to implement the necessary

155、 policies to counter expected future emissions growth.A partnership can effectively channel finance for renewable energy(RE)investment,as well as for capacity building and technical and financial assistance,while supporting recipient countries development goals.Byfacilitat-ing systemic transformatio

156、n in other regions,the European Union can maximize its posi tive climate impact and demonstrate global leadership.Policy Climate partnerships to facilitate decarbonization and leapfrogging inAsiaand Africa29 While rising debt and interest rates,and low growth are challenges for public finance,costs

157、would be even higher in higher-warming scenarios(Center for Strategic and International Studies,2023b;International Monetary Fund,2023b).30 International Monetary Fund(2023a).31 European Commission(2019).32 European Council(2020);European Parliament(2020).+Highly neglected region+Very high mitigatio

158、n potential23Accelerating the global energy transition Just Energy Transition Partnerships JETPs are a novel approach to climate cooperation centered on multi-donor agreements intended toassist individual emerging economies in transi-tioning from coal to clean energy with funding that is new,additio

159、nal,and tailored to each countrys energy transition investment needs.To date,four JETPs have been formed between an international group of donors centered around the International Partners Group(IPG)primarily comprising EU andG7nations 34 and four countries:South Africa,Vietnam,Indonesia,and Senegal

160、.According to Commission officials and NGO policy experts working on international climate diplomacy,JETPs are impor-tant in overcoming the stagnation of NorthSouth cooperation onenergy transition.35Table 2:Avoiding more than the annual emissions of an industrialized countryPartner CountryEstablishm

161、entIPG leadResourcesSouth Africa2021 at COP26UK8.5 billion US dollars 7.82 billion euros Indonesia2022 at the Bali G20 summitUS,Japan20 billion US dollars 18.57 billion eurosVietnam2022 at the EU-ASEAN commemorative summitEU,UK15.8 billion US dollars 14.39 billion eurosSenegal2023 at the Summit for

162、a New Global Financing Pact inParisGermany,France2.7 billion US dollars 2.51 billion eurosSources:Ecologic Institute(2023),European Commission(2022b).33 Council of the EU(2021);European Parliament(2020).34 In some cases also including international financial institutions.35 Interviewed May,September

163、,and October 2023.financial support,particularly for the energy transition in Africa.33 Civil society representa-tives note that there is room for improvement in both the equity aspect of the recent model of Just Energy Transition Partnerships(JETPs)and in their ability to achieve the desired emissi

164、on reductions.This observation reflects a need for ongoing evaluation and adaptation of these novel partnerships to ensure they meet their objectives.248 EU Policy Priorities for Global Decarbonization EU partnerships would benefit LMICs economically and beyondBeyond the immediate reduction of emiss

165、ions and improvement of local air quality,the climate impact of EU climate partnerships with LMICs includes indirect effects:By demonstrating feasibility and mutual benefits,the EU and its Member States not only con-tribute significantly to global climate action,but also establish a model that may i

166、nspire other affluent nations to undertake similar initiatives,bolstering the EUs prominence in international climate policy.Geopolitically,EU cooperation,particularly through JETPs,could offer an alternative to projects offered under development strategies like Chinas Belt and Road Initiative,provi

167、d-ing potential partner countries with a distinct choice in their climate and development part-nerships.This alternative may become increas-ingly appealing if the differences and benefits are made clearer,which experts suggest has often not been the case.36 However,it is crucial that countries are s

168、elected for partnerships based on their potential for emissions reduc-tion rather than geopolitical considerations,as transparency in this process is essential for building credibility and trust.Economic benefits to partner countries and their communities are manifold.Choosing renewable energy over

169、fossil fuels can create two-to five-times more employment oppor-tunities.37 Partnerships can prioritize the development of local industries,which ensures training and political participation for affected workers.However,the success of these poli-cies hinges on their integration into the debate on lo

170、ng-term and transformative development of the partner countries.Without this,they may fail to generate positive feedback loops or even be reversed.Mechanism:Funds and technical support to enable transitionsClimate partnerships have two main elements:financial support and technical assistance.They ai

171、m to expedite emission reductions by offering assistance in return for stronger climate commitments,accelerating a countrys or sectors emission reduction targets by a specified number of years.By redirecting climate finance and investment to renewables,partnerships can avoid the lock-in of new fossi

172、l fuel infrastructure and assets and the associated decades-long rise in emissions(see chapter on industry partnership with India,p.58).Such partnerships may also inspire other private and public investments in a countrys energy transition.Capacity building,knowledge sharing,and technical support he

173、lp ensure rapid and effective implementation.Key strategies for the EU in enhancing these partnerships include the following:Establishing new partnerships to sup-port the energy transition in additional countries or groups of countries;Improving partnership structures for more effective,long-term in

174、vestments;Raising the total amount of funding from the public and private sectors to accel-erate the expansion of renewable energy;Increasing the share of grant-based funding and strategically leveraging public finance to advance the shutdown of coal-fired power plants and the use offossil fuels.36

175、NGO policy expert(interviewed September 2023).37 An investment of 1 million US dollars(929,627.22 euros)in fossil fuels in Indonesia and South Africa could,respectively,generate 22 and 33 jobs,while the same investment in clean energy could generate 103 and 66 jobs,respectively(UN Industrial Develop

176、ment Organization&Global Green Growth Institute,2015).25Accelerating the global energy transition Figure 4:A few regions pose outsized risks of emission growthSectoral and regional emission predictions by 2100,revealing an uneven distribution and emphasizing the necessity to focus mitigation efforts

177、.The figure shows the cumulative emission data in Gt CO.The AFOLU(Agriculture,Forestry,and Other Land Use)sector is omitted due to lack of data.Source:Riahi et al.(2017).0100200300400BrazilCanadaChinaIndiaJapanUSAOtherAfricaEuropeMiddle EastNorth AfricaNZ&AustraliaRest of AsiaRest of East andSouth E

178、ast AsiaFormerUSSRCumulated emissions until 2100 in Gt CO2EnergyIndustryTransportHousingEvaluation:Partnerships to decarbonize Asian high-emitters are mostimpactfulVery high impact potential Climate cooperation in this region could result in the reduction of several gigatonnes of CO2e by 2050,placin

179、g it among the most effective policy options.For instance,existing partnerships with South Africa and Vietnam are projected to mitigate between 0.7and 1.5 Gt of CO2e over 20 years.38 If implemented effectively,EU partnerships can have the same or higher mitigation potential.Apart from a partnerships

180、 scope and quality of implementation,the greatest impact is achieved by targeting future top emitters.Emission projections point to the Asian continent and especially China,India,and ASEAN countries as significant in this context(see figure 4),39 comprising around 75%of the worlds coal capacity and

181、80%of upcoming coal projects.40Feasible with considerable effort As part of the IPG,the EU has demonstrated that partnerships with top coal producers in Asia are fea-sible and part of the global climate action repertoire that the European Commission is actively pursuing.Itis within the EUs capabilit

182、ies and stated objectives to pursue existing partnerships,to intensify diplo-matic efforts with major emitters,and to establish additional partnerships.However,increased efforts are needed to accelerate this progress,both within the EU and as a member of the IPG.38 These partnerships still need to p

183、rove their ability to achieve this mitigation potential,with the amount of mitigated emissions depending on population size,development status,current and expected emissions,the level of ambition,and the effectiveness of policies and the partnerships.39 Riahi et al.(2017).40 Carbon Tracker Initiativ

184、e(2021).268 EU Policy Priorities for Global Decarbonization Evaluation:Partnerships for African leap frogging are highly neglected High impact potential While African countries currently have a lower miti-gation potential compared to fossil fuel-dependent economies,their role becomes increasingly cr

185、ucial beyond 2050.Projected data indicates that Africas share in annual and cumulative emissions will grow from now until the end of the century.The relative delay in African countries industrialization offers a unique opportunity to bypass traditional,emission-intensive development paths.The contin

186、ents current low emissions and vast potential for renewable energy expansion position it ideally for such atransition,more so than many other regions in the world.Feasible with considerable effort Emissions can be avoided at a lower cost and with less effort in most of Africa than in those regions w

187、here structural fossil fuel dependencies are already established,making these partnerships particularly attractive.Commission officials working on decar-bonization in Africa confirmed the aim to establish further partnerships,mentioning Nigeria and Kenya aspotentially promising candidates.41Highly n

188、eglected Current climate policy,particularly among EU poli-cymakers,42 tends to concentrate on major emitters,with a limited outlook extending only to mid-century.This approach neglects African countries,whose emissions are expected to surge significantly there-after.Reflecting this oversight,a mere

189、 2%of global renewable energy finance is directed towards Africa and the Middle East.43 This disparity has created a substantial energyfinance gap in African countries,underscoring the need for a more inclusive and forward-looking approach in international climate finance and policymaking.4441 Inter

190、viewed May 2023.42 Commission official(interviewed May 2023).43 Ferris&Rayman(2021).44 An estimated 42 67 billion US dollars(39.04 62.29 billion euros)of additional investment will be required annually to achieve universal access to clean,afforda-ble,and reliable energy in Africa by 2030(African Dev

191、elopment Bank Group,2019).Figure 5:Africa receives less than 2%of global annual RE investmentAnnual renewable investment in Africa and the Middle East is disproportionately low compared to Europe and other regions relative to their populations,highlighting the neglect of these regions and their grow

192、ing energy needs.Source:Ferris&Rayman(2021).Energy development indicators,share of annual global total(%)PopulationTotal power investmentTotal renewables investmentRest of worldAfrica and the Middle East2236Europe27Accelerating the global energy transition Steps towards implementationPolicy design:L

193、ong-term empowerment for maximum impactDesigning a climate partnership necessitates a balance between maximum effectiveness inreducing emissions and fostering long-term empowerment of stakeholders for sustained commitment and acceptance.Especially addressing areas sometimes neglected in the early st

194、ages of negotiations,this dual approach can be implemented as follows.Transformative programs for economic,social and environ-mental prosperity Transparency as a strategic advantage Selecting partner countries on the basis of objective criteria and realistic measures builds trust,while cherry-pickin

195、g 45 can reduce countries willingness to cooperate.Relevant information must be available at all stages of the partnership:negotiation,agreement,implementation,and,especially,prior to consultations.46 Clear and transpa-rent communication with partner countries distinguishes the approach from that of

196、 other global players like China.Thisclarity can have a positive impact,especially in making partnerships attractive to those countries where other partners might not require climate commitments.Long-term and transformative context Embedding financial and technical support in a serious national disc

197、ourse about a countrys broader transformation is an opportunity toidentify visions,obstacles,and risks,and to determine the best possible contribution of a partnership.47 Country-specific instruments and ownership By supporting a countrys self-definedpath-ways,a partnership can ensure national agenc

198、y and long-term success.48 This can be done by taking into account the wide diver-sity of a countrys energy needs,including current levels of fossil fuel dependency and contribution to GDP,levels of energy access,existing energy infrastructure,and available skills and employment rates.49 State and a

199、dministrative capacity building Supporting the development of institutional and administrative capacity enables national stakeholders to implement ambitious climate policies.A partnership can ensure that the energy transition does not threaten liveli-hoods by supporting the creation of new jobs,as w

200、ell as local expertise,training,and knowledge.Participatory and multi-stakeholder approach Encouraging the participation of civil society and including effective engagement with broader stakeholders creates legitimacy for the partnership,ensures that policies are sup-ported by the local population,a

201、nd reduces the risk of new governments reversingpart-nerships or related policies.50 Emphasizing mutual respect,trust-building,and shared learning opportunities among key stakehold-ers ensures that a partnership is beneficial toboth or all countries involved.5145 Germanwatch(2022b).46 NGO policy exp

202、ert(interviewed October 2023).47 Okereke et al.(2023).48 Okereke et al.(2023);Commission officials(interviewed May 2021).49 Okereke et al.(2023).50 Commission official(interviewed May 2023).51 Okereke et al.(2023).288 EU Policy Priorities for Global Decarbonization Safeguarding vulnerable groups Ens

203、uring that the needs of the local com-munities are accounted for and including safeguards to cushion social hardships is crucial for maintaining and increasing public support.52 For example,the frequent exclusion ofwomen from the energy sector highlights the need for gender-sensitive approaches when

204、 devising interventions.53Targeted climate finance unlocks a partnerships full mitigation potential Ambition in climate commitments By encouraging and enabling governments toraise their ambitions and make commit-ments to transform the energy system,part-nerships contribute to significant emission re

205、ductions.Selecting partner countries trans-parently based on their mitigation potential and designing partnerships as long-term transformative programs can maximize their full mitigation potential.54 Targeted funding for renewables and neglected challenges By directing funding and investment exclu-s

206、ively to renewable energy sources and avoiding so-called bridge fuels such as nat-ural gas,partnerships can make a meaningful long-term impact.55 Since they can only finance a small part of a countrys transition,they can make the greatest contribution by focusing on the transitions challenging,least

207、 conventionally economically attractive aspects.Securing new and additional sources of funding To ensure any impact is novel and additional,it is critical to guarantee that a partnerships funding is distinct from previous financial commitments.Therefore,it should not divert resources from the UNFCCC

208、 climate fund orongoing national development and climate programs.Credible financial plan and budget Providing a financial plan and a credible budget at an early stage increases recipient countries confidence in the partnership.Doubts about how much of the pledged funding will be delivered are a maj

209、or risk to current and future partnerships.To provide a clearer picture of what is being offered to recipient countries,the financial plan should include a transparent overview of the resources provided,a clear basis for trans-lating concessional loans into grant equi-valents,as well as criteria on

210、which policies the funding will depend on.Large share of grants and highly concessional loans Tailoring financial aid to align with the fiscal realities of partner countries ensures the best possible support for each partnership.Principally,a high proportion of grant-based and highly concessional lo

211、ans is advisable forcountries that are heavily indebted,facing high capital costs,or perceived as high-risk for private investment.By limiting additional debt burdens,these measures provide strong incentives for countries to commit to transforming their energy sys-tems.5652 Climate Action Network So

212、uth Africa(2023).53 Climate Action Network South Africa(2023).54 Okereke et al.(2023).55 Grsan&de Gooyert(2021).56 Okereke et al.(2023);NGO policy expert(interviewed October 2023).29Accelerating the global energy transition Three sets of impactful steps in climate cooperationThree major sets of proj

213、ects are crucial for enhancing climate cooperation,each vital in its own right.They are outlined in the fol-lowing sections.The first demonstrates that initiating success in ongoing partnerships is a foundational step,and the following two outline potential implementation pathways.Ensuring IPG count

214、ries deliver on current JETPsThe significance of recently established JETPs is particularly notable in major coal-producing countries like Indonesia,South Africa,and Vietnam,which contributed to record-high global coal production in 2022.57 NGO policy experts working on JETPs in both Asia and Africa

215、 highlight their signaling effect:Success-ful JETPs set a precedent for future climate cooperation between high-income countries and LMICs,underscore the importance of fulfilling financial commitments,and validate civil society in its stance that development and decarbonization are not mutually excl

216、usive.58 As a member of the IPG,the EU is in astra-tegic position to ensure transparency and commitment fulfillment in JETPs,particularly in Vietnam,where it shares IPG leadership.Progress in these partnerships would build trust among LMICs as a whole,validate the stance of civil society,and improve

217、 the EU and its Member States credibility as reliable cooperation partners.Partnerships with ASEAN members(Thailand,Malaysia,thePhilippines)Many emerging economies in Asia are already heavily dependent on fossil fuels and are obvi-ous candidates for partnerships.59 Focusing on top coal producerssuch

218、 as India,Indo-nesia,and Vietnamis the first step towards decarbonization in Southeast Asia.It should be followed by countries next in line,such as Thailand(currently 67%oil and gas,11%coal),Malaysia(47%oil and gas,32%coal),and the Philippines(55%coal,22%oil and gas)60(see figure 6 for mitigation po

219、tential).Commission officials point out that Taiwan and the Phil-ippines receive comparatively little attention despite signaling interest in the European decarbonization pathway.61 There is an oppor-tunity for the EU to deepen cooperation across the region by supporting the development of renewable

220、 energy infrastructure and financing.Because of their mitigation potential,coopera-tion with these countries should be a priority.57 Statista(2023).58 Interviewed September and October 2023.59 Commission official(interviewed May 2023);NGO policy experts (interviewed October 2023).60 International En

221、ergy Agency(2023a).61 Interviewed May 2023.308 EU Policy Priorities for Global Decarbonization CO2 emissions from combustion(million tonnes)20002010202020302040205020004006008001 0001 200Projectionsolid line=business-as-usualdotted line=climate neutralityIndonesia Malaysia Philippines Chinese Taipei

222、 Vietnam ThailandSupporting the Accelerated Partnership for Renewables inAfricaWhile JETPs primarily target economies dependent on fossil fuels,there is a growing need for initiatives supporting LMICs that are not yet major emitters.The Accelerated Partnership for Renewables in Africa(APRA),launched

223、 at the 2023 Africa Climate Summit,62 exemplifies this.APRA,backed by the Inter-national Renewable Energy Agency(IRENA),Denmark,Germany,and the United Arab Emirates,unites six African nations(Kenya,Ethiopia,Namibia,Rwanda,Sierra Leone,and Zimbabwe)in a collective effort to transition directly to ren

224、ewable energy,bypassing a reliance on fossil fuels.If successfully imple-mented,this would provide a highly visible alternative to the fossil fuel-dependent paths of many other LMICs.Currently,support is focused on mobilizing finance,providing technical assistance and capacity building,and engaging

225、the private sector.According to an NGO policy expert closely following the process,initial consul-tation workshops in participating countries and multi-stakeholder engagement appear Figure 6:Partnerships could mitigate Southeast Asian emission growthEmission mitigation potential in selected Southeas

226、t and East Asian countries,depicted as the differ-ence between a business-as-usual reference scenario and a climate neutrality(CN)scenario.The CN scenario builds on energy efficiency,fuel switching,and technological advancement.Data until 2018 is historical,data from 2019 is projected.The data refer

227、s to carbon emissions from combustion.Source:Asia Pacific Energy Research Centre(2022).62 Africa Renewal(2023).31Accelerating the global energy transition promising,suggesting that the number of supporters should be expanded to secure the success andexpansion of the partnership.63 By joining the APR

228、A and providing further financial support,the EU could fill this gap and help facilitate and secure the envisaged African role model.It is a crucial opportunity for the EU to further develop its political relations with African countries beyond South Africa64 and to support the energy transition on

229、the African continent while focusing on emission avoidance and leapfrogging fossil fuels.Next steps:Monitoring progress andimproving future partnershipsFuture research should closely track and evalu-ate existing JETPs to see if they can deliver on their expected mitigation potential.In addition,less

230、ons learned on how to increase the emissions impact of a partnership need to be applied in future cooperation in order to maximize the contribution to global decarbonization.Various steps are valuable in advancing climate partnerships:By diplo-matically highlighting the unique added value ofpartners

231、hipsgrant-based funding,focus on real transformation,less dependencythe EU can increase its attractiveness to LMICs inthe future.A clear positioning is particu-larly important in order to be prioritized over other partners,such as China,who do not expect climate commitments.One potentially promising

232、 opportunity is integrating debt relief into the financing mix of future partner-shipswithout replacing grant-based climate finance.With 70%of the outstanding debt by LMICs owed to the G7 and EU countries,this presents a relevant lever for the EU and Member States.65 Lastly,governments should harnes

233、s the momentum of recent announce-ments such as the Nairobi Declaration66 to push forward international financial support for LMICs.If LMICs are not supported sufficiently to attain orsustain low-emission pathways,global decar-bonization goals may be missed.By assuring thesuccess of current JETPs,fo

234、rming additional strategic partnerships with emerging high-emit-ting Asian countries,and supporting African countries to leapfrog fossil fuel dependency,the EU can promote emission reductions in the most efficacious locations,multiply its positive impact,and strategically position itself as a global

235、 cli-mate leader.63 NGO policy expert(interviewed September 2023).64 The political relations with many African countries are not well-developed.South Africa is an exception due to G20 membership and the JETP (Commission official,interviewed May 2023).65 Misereor&Erlassjahr.de(2023).66 Africa Renewal

236、(2023).328 EU Policy Priorities for Global Decarbonization Policy areaPromoting carbon pricing globally33Promoting carbon pricing globallyCarbon pricing is widely regarded as the most economically efficient solu-tion to mitigate emissions.67 A global expansion of well-designed national and regional

237、Emissions Trading Systems(ETSs)can effectively curb emis-sions across sectors,helping many interested countries and regions achieve global net-zero targets and generate revenue to support affected sectors and groups through the transition.The European Union can leverage its experience in carbon pric

238、ing to advance ETS implemen tation globally.The success of the EU ETS has made the EU a global leader in carbon pricing.Through its efforts to expand the EU ETS to new sectors and to share its experience in various fora,68 the EU is uniquely positioned to explore further policy innovations in this a

239、rea and to advance the implementation of carbon pricing interna-tionally.Based on the insights of a dozen experts,we identified carbon pricing and the EU ETS as being among the EUs most effective mecha-nisms for influencing global emissions trajec-tories.Among policies that leverage theinter-nationa

240、l dimension of the EU ETSranging from carbon clubs among industrialized nations to supporting ETSs in emerging eco-nomies and to linking ETSsthe following performed best:Bilateral cooperation to enable effective emissions trading in low-and middle-income countries:Providing technical support to low-

241、and middle-income countries to implement effective ETSs as one of the most cost-effective instruments they can use tofund their transitions.See also European Food System ETS to pioneer carbon pricing for food and agricul-ture(p.70):Internalizing environmental costs and benefits to create effective i

242、ncentives for food system transforma-tions,likely inspiring major international emitters.67 High-Level Commission on Carbon Prices(2017).68 Including the World Banks Partnership for Market Readiness(NDC Partnership,n.d.),the International Carbon Action Partnership(ICAP),the Florence Process,and the

243、Call to Action on Paris-aligned Carbon Markets.For an overview,see Verde&Borghesi(2022).348 EU Policy Priorities for Global Decarbonization Emissions Trading Systems(ETSs)are among the most cost-effective instruments for encouraging emission reductions and generating revenues to finance decarbon-iza

244、tion efforts.Reaping these benefits in world regions with limited experience in designing an ETS and managing the economic and social implications requires dedi-cated international support.While the EU is expanding its global efforts to assist third countries,there is a large untapped potential to s

245、cale up bilateral cooperation with low-and middle-income countries(LMICs)to establish well-functioning and effective domestic cap-and-trade systems.Support for growing African countries like Nigeria in establishing the continents first ETS would set an influential prec-edent and multiply the EUs imp

246、act on global decarbonization at a low cost.Low-cost efforts to promote global net-zero emission trajectories20 years of ETS experience puts the EU in a unique positionChallenges in ETS design and implementation are hampering progress on carbon pricing and thus effective emissions reductions around

247、the world,particularly in LMICs.69 These challenges can be addressed through policy dialogue and capacity building,as demonstrated by past EU bilateral cooperation projects.The European Commission has been critically supporting China and South Korea for several years in designing and implement-Polic

248、yBilateral cooperation to enable effective emissions trading in low-and middle-income countriesImpactNeglectednessEfforting two of the first ETSs in Asia.70 The suc-cessful implementation of ETSs by countries at different stages of industrial development and the experience with ETS cooperation pro-j

249、ects encourage the further expansion of the EUs bilateral support on emissions trading.71 Established in 2005,the EU ETS is the worlds longest-running ETS,making the EU by far the most important actor in promoting emis-sions trading globally.Despite low prices and free allocations at the beginning,t

250、he EU ETS implemented a clear and effective emissions cap and has been critically reinforced over time.Now,the EU ETS offers the most expe-rience and lessons for ETSs in other countries.Although it is the second largest ETS globally,the EU ETS currently accounts for less than 5%of global GHG emissio

251、ns.Therefore,its 69 International Energy Agency(2020).70 International Carbon Action Partnership(2023);Verde&Borghesi(2022);NGO policy expert(interviewed September 2023).71 Other examples show that the political hurdles linked to carbon pricing can be overcome(International Monetary Fund,2023b).+Hig

252、h feasibility:low-hanging fruit+EUs unique expertise in ETS cooperation35Promoting carbon pricing globallyFigure 7:EU cooperation projects could increase global carbon pricing coverageWhile about 23%of global GHG emissions are currently(2023)covered by carbon pricing instruments,mainly ETSs and carb

253、on taxes,about 77%of global GHG emissions are not yet covered.Source:World Bank(2023b).Share of global GHG emissions 5%18%77%EU ETSOther carbon pricing schemesNot covered by carbon pricing72 Verde&Borghesi(2022).73 World Bank(2023b).74 Unlike the EU and the US,many countries do not have the capacity

254、 to establish positive incentives,e.g.,tax credits,grants,and subsidies(NGO policy expert,interviewed September 2023).75 International Carbon Action Partnership(2023).future importance depends on how effectively it can stimulate emission mitigation outside the EU.72 Bilateral cooperation with(future

255、)high-emitting countries offers a clear oppor-tunity to use the potential of the EUs flagship instrument and stimulate global climateaction.At the same time,the EU needs to continuous-ly demonstrate that its domestic ETS systems are well-functioning,effective,and resilient,in order to serve as a mod

256、el forinternational climate policy.LMICs are increasingly interested in emissions tradingGlobal interest in carbon pricing and emissions trading is immense,with about 70 carbon pricing schemes in place worldwide,about half ofthem designed as ETSs.Carbon pric-ing is an essential part of decarbonizati

257、on strategies in a growing number of countries.73 Besides directly reducing emissions,an ETS can generate government revenue that can be used to finance a countrys energy transition,e.g.bysupporting cleantech innovation and deployment.Given fiscal constraints around the world,ETSs are gaining appeal

258、.74 A grow-ing number of LMICs,including high-emit-ting Asian countries like India,Thailand,and Malaysia,are exploring the role of an ETS in their climate policy mix.In 2022,Nigeria announced its efforts to establish a national ETS,the first ETS in Africa(see figure 7).75 These trends underscore the

259、 importance of further EU outreach and present tangible windows of opportunity for EU cooperation projects.Mechanism:Enabling effective and socially acceptable ETSsSetting up a domestic ETS as an effective cap-and-trade compliance scheme is a complicated and lengthy process.Especially for LMICs,whos

260、e economies are growing and restructur-ing rapidly,there are significant challenges in setting the emissions cap and stabilizing prices.Implementing an ETS in these countries requires innovation in policy design,taking into account the interlinkages between energy 368 EU Policy Priorities for Global

261、 Decarbonization policies,emission reduction targets,and system structures.76 Building on more than 20 years of experience,EU stakeholders can provide knowledge on policy design,common challenges,and barriers to implementation.This would contribute to additional emission reductions in several ways:E

262、nsuring successful and long-term ETS implementation by contributing to a cri-sis-resilient policy design,77 overcoming the aforementioned and country-specific challenges,and sharing or co-developing solutions,for instance compensation for economic disadvantages;Improving the effectiveness of policy

263、design by optimizing the cap-and-trade system,which limits the yearly total of emission allowances,sets the framework for auctions and trade,and manages market stability;Enhancing the monitoring of CO2 emis-sions to adjust the ETS accordingly;78 Advising on the targeted use of revenues,either to dec

264、arbonize carbon-intensive sectors,subsidize new technologies,and/or to cushion society from high energy prices.76 International Energy Agency(2020).77 The EU ETS recovered from various crises,including the 2008 financial crisis,COVID-19,and the recent energy crisis(International Carbon Action Partne

265、rship,2023).78 A Commission official(interviewed May 2023)highlights the monitoring of CO emissions as a core area of support.In forceUnder developmentUnder considerationEU ETSNigeriaFigure 8:Emissions trading is spreading globallyETSs around the world including systems that are in force,under devel

266、opment,and under consideration.Source:International Carbon Action Partnership(2023).37Promoting carbon pricing globallyEvaluation:Highly feasible and low-cost policyVery high impact potential A sufficiently high carbon price and/or a clear emis-sions cap can change a countrys emissions trajec-tory a

267、s well as the targeted use of revenues.79 A meta study suggests that countries can reduce their annual domestic emissions by 5%to 21%on average through the introduction of carbon prices,despite low price levels and numerous exemptions in most systems.80 Extrapolating this estimation,we can expect th

268、at expanding carbon pricing to the 77%of global emis-sions that are currently not covered would reduce global emissions by at least 8%.For larger emission reductions,higher price levels are needed than in thestudied carbon pricing models.81 The success of previous EU bilateral cooperation projects o

269、n emis-sions trading suggests that the EU can significantly facilitate and accelerate the establishment of ETSs.High emission reductions can be achieved if these EU projects contribute to the successful implementation of ETSs in a number of countries in Asia and Africa.Somewhat addressedThe Commissi

270、on is expanding its efforts to promote ETSs internationally,including in bilateral coopera-tion with LMICs,especially including Asian emerging economies.However,there is high untapped potential in bilateral cooperation with African countries,which has not been pursued yet.Additional capacity in emis

271、sions trading policy dialogue would allow the EU to seize this impact opportunity.82Feasible with some effort Capacity building and policy dialogue can facilitate high emission reductions in key regions without requiring much EU funding.It primarily requires capac-ities in the Directorates-General(D

272、Gs)and increased diplomatic efforts with potential countries.The nec essary effort depends on the target country and increases with the number of partnerships pursued.The Commission has successfully implemented this policy in the past,as the cooperation with China and South Korea demonstrates.79 Aca

273、demic policy researchers(interviewed August and December 2022,October 2023).80 Quantitative projections of emission reductions through carbon pricing remain challenging and depend strongly on the design of the system.A recent meta analysis concluded that the introduc-tion of a carbon price led to an

274、 average emission reduction of about 10%(Dbbeling-Hildebrandt et al.,2023).This could amount to several mitigated gigatonnes of CO by 2100 for a medium-sized country.81 Dbbeling-Hildebrandt et al.(2023).82 Commission officials(interviewed May and August 2023).388 EU Policy Priorities for Global Deca

275、rbonization Steps towards implementationCooperation design:Select high-impact countriesTo what extent the EUs bilateral supportcon-tributes to emission mitigation depends on byhow much it can improve and/or accelerate the establishment of ETSs by LMICs.In designing these bilateral cooperation projec

276、ts,the following dimensions need to be consid-ered:Focus on future high-emitters:Selecting additional partner countries with a projected fossil fuel phase-in and high expected future emissions would result in partnerships with high impact potential.Inaddition,distributional effects of carbonpricing

277、appear to be less severe when coun-tries have not yet developed carbon-in-tensive energy systems,83 suggesting that emissions trading may be politically easier to implement in these cases.84Ambitious cooperation projects:Giving priority to countries that are moving towards an ETS with clear emission

278、 caps and that have ambitious national mitigation targets will ensure that cooperation projects can exploit the full potential of the ETS instrument.Creating partnerships with as many suitable partner countries as possible without compromising quality would then maximize impact and learning.Initial

279、focus on the energy sector:In the initial phase of a new ETS,the focus could be on the energy sector,as electrifica-tion is the basis for climate neutrality and the EU has the most experience in this sector.In addition,distributional effects are generally less pronounced than in the consumer-re-late

280、d sectors of transport and heating,85 and the risk of carbon leakage is lower than in some other sectors.86 If the ETS works well,it can be extended to other sectors.Country-specific context as key guide forpolicy design:Considering country-specific factors anddynamics,such as impacts on vulnerable

281、communities and institutional capacity for social compensation,is critical to the success of an ETS.87 In addition,the use of revenues should be adapted to national conditions.Recent research suggests that a combination of long-term infrastructure investment and household compensation would be a goo

282、d starting point(see below).83 Dorband et al.(2019).84 Steckel,Renner,et al.(2021).85 Distributional effects appear to be low in countries that do not(yet)have a CO-intensive power sector(Academic policy researchers,written exchange November 2023).86 Commission official(interviewed May 2023).87 Acad

283、emic policy researcher(interviewed October 2023).39Promoting carbon pricing globallySetting a precedent for Africa:Work with Nigeria on Africas first ETSTo introduce emissions trading more widely in LMICs,it is crucial to demonstratethat the instrument can be adapted to the socio-economic conditions

284、 of LMICs.Nigeria would present a highly impactful while also challeng-ing opportunity to initiate emissions trading inAfrica.Despite being the continents biggest fossil fuel exporter,88 Nigeria has the largest energy access deficit in the world.89 As the first African country to consider introducin

285、g an ETS,90 Nigerias carbon pricing scheme needs to be carefully planned and implement-ed.It has to take into account the countrys socio-economic conditions,especially poverty rates and access to energy.In 2021,the Nigerian government passed a climate change law 91 with plans for a domestic ETS.This

286、 makes the country a promising candidate for an EU collaboration.Key design elements,such as the timeline and sectoral scope,are yet to be decided.The proposal will be subject to stakeholder engagement before decisions on features such as the allocation framework are made.92 This opens a crucial win

287、dow of opportunity for the EU to engage with the Nigerian government and establish a cooperative relationship on the effective design and implementation of an ETS tailored to Nigerias country-specific energy and develop-ment needs.If the EU can facilitate successful ETS implementation in Nigeria,thi

288、s will create a powerful role-model for other African coun-tries with similar conditions to follow suit.To be effective,the cooperation on a Nigerian ETS would need to address the challenge of widespread corruption in the Nigerian government and energy sector.93 Mechanisms need tobe put in place to

289、ensure that the functioning of emissions trading and revenue redistribution is not compromised.Foster the energy transition in a fossil fuel-dependent economyThe introduction of a domestic ETS would establish the responsibility of large emitters in Nigeria.In a country that relies heavily on oil and

290、 gas exports,this would be a crucial next step.Despite Nigerias focus on fossil fuels,the ETS can accelerate its energy transition and generate domestic revenues for this purpose independent of international funding.An EUNigeria cooperation could go beyond the ETS implementation and take into accoun

291、t existing technical and financial partnerships with European donors,such as the Nigeria Electric-ity Support Program(see table 3).Additional financial and technical support by the EU would promote Nigerias energy sovereignty.94 An enhanced partnership could also mobilize private finance for climate

292、-friendly invest-ments,develop the external market for energy products,and facilitate technology transfer(seethe chapter on climate partnerships,p.22).88 Germanwatch(2022b).89 Almost 45%of the Nigerian population(99 million)do not have access to electricity (Integrated Africa Power,2022;World Bank,2

293、023a).90 International Carbon Action Partnership(2023).In 2021,the Gabonese government issued a decree establishing an ETS framework and a carbon offset system(World Bank,2023b),not yet considered in the ICAP data(see figure 8).91 LSE Grantham Research Institute(2021).92 International Carbon Action

294、Partnership(2023).93 McCulloch et al.(2021).94 With a focus on universal access to low-cost,low-carbon energy services,on the economic empower-ment of citizens,and on the competitive ness of industries(Integrated Africa Power,2022).408 EU Policy Priorities for Global Decarbonization Table 3:Several

295、opportunities to engage with Nigeria in an ETS cooperationPartnersInitiatives/ProgramsSupport providedDurationEU,The German Agency for International Cooperation(GIZ)Nigeria Electricity Support Program(NESP)95 Technical assistance,fundraising support,and policy reform2017 2021Heinrich Boell Foundatio

296、nNigerian Renewable Energy Roundtable(NiRER)Advocacy,training,information on access tofinance2017 presentShell FoundationNigeria Off-Grid Market Acceleration Program(NOMAP)96 Technical assistance2018 presentWorld BankPower Sector Recovery Program(RSRP)97 Financial support2020 2027United Nations Deve

297、lopment Programme(UNDP)Sustainable Fuelwood Management 98 Technical and financial support2016 2022World Bank and African Devel-opment Bank Group(AfDB)Nigerian Electrification Project(NEP)99 Technical assistance2018 2024/25Existing partnerships that support the Nigerian energy transition.An EUNigeria

298、 ETS cooperation could build on and complement these efforts.Source:Integrated Africa Power(2022).95 German Agency for International Cooperation(2022).96 Nigeria Off-Grid Market Acceleration Program(2019).97 World Bank(2023c).98 UN Development Programme(n.d.).99 Rural Electrification Agency(2023).41

299、Promoting carbon pricing globallyImproving revenue use in LMICs to safeguard ETS successGiven the distributional impacts of carbon pric-ing instruments,they need to be accompanied by a mechanism for revenue redistribution.Such mechanisms can alleviate the welfare losses of households and the social

300、implications of competitive disadvantages for affected indus-tries.In particular,severe impacts on finan-cially disadvantaged households impacted by energy poverty need to be addressed.100 Hence,understanding the effect of an ETS on the domestic population is not only essential from an ethical and e

301、quitable perspective,but also key to ensure public support for and successful implementation of an ETS.In the absence of such measures,policies that raise the price offossil fuels carry a high risk of protests and conflicts,101 which may result in reforms that reduce the policys effectiveness.102 ET

302、S revenues can be used to mitigate nega-tive distributional effects.103 However,social compensation is a major challenge for many LMICs104 that lack social registries and institu tional capacity to redistribute govern-ment revenues to the population.105 Thus,the cooperation between the EU and LMICs

303、on emissions trading needs to consider the fol-lowing available options to facilitate a socially equitable ETS implementation:106 Supporting administrative progress be-forehand:Establishing carbon pricing as a suitable and long-term instrument in LMICs requires institutional capacity building.EU coo

304、peration can focus on building and improving a countrys abil-ity to redistribute government revenues,ideally before an ETS is introduced.Helping to set up social assistance programs:There are various options tocompensate households for short-term welfare losses.These include using ETSrevenues to cut

305、 existing taxes or adopt targeted or universal social transfer schemes.Many governments in LMICs would likely consider unconditional cash transfers as an administratively simple and suitable tool.However,some options are prob-lematic since they do not reach all poor households.107 100 A scenario wit

306、h a national carbon price of$40/t CO(37.14)results in median country-wide losses in income between 1.1%and 4.6%in Asian countries(Steckel,Dorband,et al.,2021).Another study finds 0.5%to 8.5%additional costs for household expenditure for the median household in African countries(Steckel,Renner,et al.

307、,2021).For a similar study in Latin America,see Missbach et al.(2024).101 Steckel,Renner,et al.(2021).102 International Monetary Fund(2023b).103 As carbon pricing is usually discussed in upper-middle-and high-income countries,little is known about the specificities in LMICs.Existing studies show tha

308、t different carbon pricing designs(e.g.,differing in sectoral coverage)lead to very different distributional outcomes(Klenert et al.,2018;Steckel,Dorband,et al.,2021).104 Academic policy researcher(interviewed October 2023).105 Steckel,Renner,et al.(2021).106 Academic policy researcher(interviewed O

309、ctober 2023);see also Koh et al.(2021).107 The coverage rates of social assistance programs are low,especially for low-income households.On average,they cover only 56%of the poorest 20%of the population(Missbach et al.,2024;World Bank,2018).428 EU Policy Priorities for Global Decarbonization Encoura

310、ging long-term spending on infra-structure and social services:ETS revenues can also be used to improve access to important infrastructure,health,and education.Many studies conclude that low-income households would benefit from this investment.108 However,this does not increase current disposable in

311、come,which would be insufficient on its own.Making renewable solutions available to households:In response to the ETS,households need to be able to switch from carbon-intensive to renewable energy options.While carbon pricing makes renewable solutions more com-petitive,they need to be made available

312、 to households.A share of the revenues can be used to subsidize renewable solutions.109Next steps:Filling research gaps on emissions trading in LMICsTo ensure the widespread and effective imple-mentation of carbon pricing in LMICs,it is imperative to gain a better understanding of its emission effec

313、ts and economic and social implications in LMICs.All studies reviewed in a recent meta-analysis and systematic literature review target upper-middle-income(UMICs)and high-income countries(HICs).110 Comprehensive studies of ETS newcomers,such as Nigeria,can provide an example and insights to guide ET

314、S adoption and implemen-tation in countries with similar economic conditions.Future research needs to focus on understanding socio-economic impacts better.This can enable further innovations in policy design and the adaptation of carbon pricing to the needs of LMICs.Research projects that fill these

315、 gaps will allow policymakers toadapt ETS policies to the varying conditions in LMICs and to draw differentiated lessons from the EUs rich ETS experience.Allocating more capacities to the applicable DGs and units of the Commission would allow them to seize the opportunities for additional ETS cooper

316、ation projects with high impact potential.To identify high-impact opportu-nities for future ETS cooperation projects,it is crucial to adopt impact-oriented criteria,including high expected future emissions,to select potential partner countries.The eval-uation should include regions that currently 10

317、8 A study on Nigeria found that using carbon price revenues to facilitate access to critical infrastructure would be more progressive than single transfers (Dorband et al.,2022).Other literature suggests modest to strong positive welfare effects on poor households(Franks et al.,2018;Steckel,Renner,e

318、t al.,2021).109 Academic policy researcher(written exchange,November 2023).110 Dbbeling-Hildebrandt et al.(2023).43Promoting carbon pricing globallyreceive less attention,such as Sub-Saharan Africa.Highlighting the specific benefits of anETS cooperation for LMICs will allow the EU to build more impa

319、ctful partnerships.There is high untapped potential in creating more bilateral cooperation projects with LMICs focused on the effective introduction of domes-tic ETSs.By expanding this dimension in a tar-geted way with an emphasis on future high-emit-ting countries,the EU would leverage its rich ETS

320、 experience to achieve a high impact on global decarbonization.448 EU Policy Priorities for Global Decarbonization Policy areaAbating global methane emissions00.51.01.52.0High methane scenarioZero methane scenarioChange of global surface temperature wrt 2015(C)20152020202520302035204020452050+1.90 C

321、Difference:0.98+0.92C45Abating global methane emissionsAs a key initiator of the Global Methane Pledge(GMP)and with the newly adopted EU Meth-ane Regulation,the EU has demonstrated its political will to take rapid action on methane both domestically and internationally.Commis-sion President von der

322、Leyens 2021 statement recognizing methane mitigation as the“low-est-hanging fruit”114 in climate policy lays the groundwork for the EU to further advance global progress in the next mandate.After evaluating policies ranging from leak detection and repair standards to taxes and global alliances on me

323、thane,we identified one policy as the most promising opportunity for the EU:Global Methane Pledge 2.0 to accelerate international momentum:Advancing global methane abatement by encour-aging key missing countries to join the Global Methane Pledge or adopt similar goals and measures,while increasing a

324、mbition and finance under the Pledge.Due to methanes greater warming effect and shorter lifetime compared toCO2,111 additional international efforts to reduce methane emissions will have an immediate cooling effect and can help minimize the extent to which global temperatures overshoot climate targe

325、ts.Cutting methane emissions comes with a global miti gation potential of up to 560 Gt CO2e by 2100 and can prevent up to 0.3 degrees of additional warming by 2050 and 0.8 degrees by 2100 at relatively low cost.112 Themost immedi-ate and cost-effective solutions to seize this opportunity are found i

326、n the energy sector.113Figure 9:Without additional policies,methane emissions may cause 1 degree of warming by 2050The figure contrasts two GHG emission scenarios by change in global average surface temperature by 2050 relative to 2015.The high methane scenario(SSP3-7.0),assuming no new policies ado

327、pted,predicts 1.9 degrees Celsius warming by 2050.The zero methane scenario differs from the first in net-zero anthropogenic methane emissions from 2015.The shaded area represents the maximum poten-tial warming reduction,showcasing methanes significant short-term warming influence.Source:Staniaszek,

328、Folberth,et al.(2022).111 Methane is the second biggest contributor to the greenhouse effect,with a warming effect 86 times greater than that of CO per emitted tonne over a period of 20 years.Over a period of 100 years,the effect of methane is 28 times higher than that of CO.112 ClimateWorks Foundat

329、ion(2023a);UN Environment Programme&Climate&Clean Air Coalition(2021).113 International Energy Agency(2023b).114 Weise(2021).468 EU Policy Priorities for Global Decarbonization One of the most impactful,fastest and cheapest mitigation opportunitiesThe Pledge lacks key components to achieve itsglobal

330、 goal Methane emissions have been neglected in policymaking,even though global methane pollution is on the rise,with a 70%under-reporting in national inventories.115 The GMP,launched in 2021,is the first international initiativeon methane,aiming at a 30%reduc-tion in methane emissions by 2030.GMP pa

331、rticipants have initiated so-called“path-ways”for major methane-emitting sectors and reaffirmed their commitment to reducing methane from the fossil fuel sector through joint declarations.116 Inaddition,European financial institutions have announced techni-By spearheading the Global Methane Pledge(G

332、MP),the European Union has demonstrated its strong commitment to reducing global methane emis-sions.However,to deliver on its mitigation potential,critical components are currently missing.The EU can address this gap by launching a GMP 2.0to stimulate more stringent global action.To effectively redu

333、ce methane emis-sions,the updated Pledge should include a comprehensive measurement and reporting framework,abinding commitment to develop national action plans and mitigation targets,and coordinated technical and financial sup-port for low-and middle-income countries(LMICs).PolicyGlobal Methane Pledge 2.0 to accelerate international momentumImpactNeglectednessEffort115 International Energy Agency