Our burden-sharing model
The EU’s emission trading system is the first and largest of its kind and is a step in the right direction. However, the obvious shortcoming is the scope; the trading system is addressing a global problem on a regional scale. Consequently, the system does not have the power to substantially curb global emissions. The climate issue is global, therefore the solution must be global too; all countries must participate if we are to see results.
As a leading European energy company, Vattenfall has a responsibility and a unique possibility to make a difference even globally. To stimulate discussion, and to place a focus on reaching acceptable CO2 concentration levels in the atmosphere, Vattenfall has outlined a global adaptive burden-sharing model. The model is built on the principles that all countries should participate in relation to their share of global GDP, that no country should be denied its right to economic development and that no country should have to go through disruptive change.
The model stretches over 100 years and is meant to present a ‘third way’, in relation to the Kyoto path and the American way, combining cap and trade mechanisms with initiatives on accelerating technological development. There are two important steps forward from the EU’s emissions trading system to Vattenfall’s proposal: the global perspective and the long-term view.
In practice, carrying out system changes will take time. Readjusting technologies takes 20 to 40 years, equal to the investment cycle in most capital-intensive industries, as the economic reality requires existing technology to play out its service life. The time span of Vattenfall’s proposal is a century, 2013–2100, which allows for stability and predictability throughout the transitional period. As new knowledge is accumulated, the system should, however, provide room for flexibility, although the underlying principles must be robust.
Developing countries will not be hindered in their development, but will be provided incentives to start industrial development with better environmental performance. In the same way, rich countries will not suffer any abrupt cost increases due to new emission requirements.
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