Moving to low-carbon society means structural shifts in economy - OECD

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Competitiveness challenges associated with the shift towards a low-carbon economy are real but manageable, according to environment ministers from the 30 member countries of the Organisation for Economic Cooperation and Development (OECD), who debated the issue in Paris last week.

Ministers agreed that 'moving to a low-carbon society will require significant structural shifts in the economy' and admitted this 'can create opportunities, but also competitiveness challenges (though often overstated), for particular industries, sectors, and workers,' according to an OECD press statement released after the meeting.

But 'competitiveness impacts and risk of carbon leakage can be managed, especially in a context of strong international co-operation and common approaches,' the statement said.

A number of EU industries are concerned about the effects on of increasing competition from countries that do not sign up to a global framework for reducing CO2 emissions, such as an emissions trading regime similar to the one in place in the EU since 2005 (EU ETS). They have warned EU lawmakers about the threat of 'carbon leakage', whereby European firms would take their operations and jobs (and emissions) outside Europe to avoid exposure to competition from firms operating with fewer 'carbon constraints'.

In response, Brussels has offered assurances to industry that the EU would put in place measures to prevent carbon leakage, such as a 'carbon tax' on imports or free allocations to select EU industries in the event that an international deal on CO2 reduction is not reached (EurActiv 23/01/08).

So-called sectoral agreements between industries in different countries could also be one alternative to participation in a carbon market, the OECD said. But some ministers were 'less certain about the efficacy of these approaches,' according to the statement.

Sectoral agreements, boosted by clean technology investments and transfers, are favoured by the US and Japan, for example. The EU, in contrast, is pushing for a global carbon market as part of ongoing international climate change talks launched in Bali in December. But there are signs that Brussels may be softening its stance on the matter following a recent EU-Japan summit (EurActiv 24/04/08).

A 'cascade of responsibilities' could be one option for creating consensus at international level on a successor agreement to the Kyoto Protocol that expires in 2012, the OECD statement said.

Ministers are considering 'a wide range of components, such as a shared vision about a long-term goal; binding mid-term targets for developed countries; monitorable, reportable and verifiable (MRV) support for the financing of technology transfer; and verifiable reductions below baseline in developing countries,' according to the statement.  

Further high-level talks on a post-2012 climate change deal are expected during the 6 June G8 summit, hosted by Japan.

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