This article was originally published on the City AM website.
Last week, a conference known as the Conference of the Parties 23 (COP23) drew to a close in Bonn, Germany.
COP23 was the latest UN conference debating how best to deal with the challenges posed by climate change, bringing together thousands of delegates from all around the world.
So was this colossal meeting of minds a success from the EU point of view? In a word, no.
First, there was the acknowledgment that attempts to turn the EU away from fossil fuels have failed.
Germany’s state secretary for the environment confirmed that reforms to the system of carbon credit trading (the basis of the EU’s climate action) were insufficiently robust to incentivise a switching to cleaner fuels and renewables.
Nor does the future of the carbon trading system look positive. The EU has taken a step backwards and entered into talks to link its carbon market to those of California and China, meaning that EU power and industrial firms will be able to import carbon credits from both California and China.
Prices in the EU system are currently flat, languishing around €7.4 per credit, which is down around 80 per cent from their highs because of an oversupply of credits in the market. The Chinese carbon market is set for launch by the end of this year, and if the early years of the European system are anything to go by, will be chronically oversupplied.
This will mean that Chinese industrials and power companies will be able to export their carbon credits to the EU for cash, creating another extended period of low prices, which will subsidise fossil fuel consumption in the EU and hand China billions in subsidies.
Finally, the EU’s Innovation Fund is to help finance Carbon Capture and Storage (CCS) projects. CCS is often viewed as the have-your-cake-and-eat-it solution for curbing carbon emissions: the CO2 is caught at the plant, and then injected into disused oil wells and similar underground depositories.
But employing CCS technology can involve up to 25 per cent more energy to strip out the gas, increasing both pollution and prices.
According to the NGO Climate Vision, particulate matter and nitrogen oxide are both predicted to increase due to the additional fuel consumption. Ammonia is expected to increase by more than three times current levels from energy plants, due to the degradation of the solvents in the process of capturing the CO2 .
The combination of higher power prices will lend a hand to cheaper competition from overseas, and the increase in particulate matter will pose a significant risk to public health.
There is also an additional environmental hazard posed by injecting CO2 into oil wells: if the gas leaks it could acidify the sea and threaten aquaculture.
From an EU perspective, COP23 has, If anything, kicked the opportunity to deal with climate change well and truly down the road.
Brexit brings the UK the opportunity to go our own way regarding the climate and environment. I look forward to entering this exciting and optimistic phase once we have broken away from the EU, and can negotiate for nationally appropriate CO2 mitigation actions.