EU MEMBER STATES REMAIN DIVIDED DESPITE EU COUNCIL

UNCLAS SECTION 01 OF 03 BRUSSELS 001541

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON EIND ENRG EWWT KGHG SENV TRGY
SUBJECT: EU MEMBER STATES REMAIN DIVIDED DESPITE EU COUNCIL

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USEU would like to thank Embassy Stockholm for its reporting during
the European Council.


1. (SBU) Summary. Although the European Council took several steps
forward in defining its efforts to mitigate the effects of climate
change, it failed to resolve several open issues, notably around
financing. Even among the agreed conclusions, it is apparent there
remains disagreement among Member States as to their actual meaning.
The lack of agreement on at least two of the key open issues could
impact the EU's flexibility in Copenhagen:

-- How the Member States will internally share the EU's financial
burden. The EU will create a Working Group to propose a solution,
though the work is not likely to be completed in time for
Copenhagen;

-- The EU's concrete financing contribution remains undefined.
Lack of agreement on internal burden sharing could prevent the EU
from bringing concrete numbers to Copenhagen; and

-- Eastern and Western Member States continue to disagree on how
to address unused ssigned Amount Units (AAUs). The EU only agree
that the issue must be handled in a non-disciminatory manner,
treating EU and non-EU partes equally. End Summary.

EU Further Defines Mitigation Targets
--------------


2. (SBU) The EU reiterated its ommitment to an agreement at
Copenhagen that imits global temperature rise to two degrees
elsius through reducing developed country emissions by 80-95% by
2050 compared to 1990 levels and reducing global emissions by 50% by

2050. Specifically, the EU calls on developed countries to commit
to ambitious emission reduction targets and advanced developing
countries to commit to "appropriate mitigation actions, reflecting
their common but differentiated responsibilities and respective
capabilities."


3. (SBU) For the first time, the EU presented its own 2050 objective
to reduce emissions by 80-95% from 1990 levels. The Council also
restated that the EU will move from 20% to 30% reduction targets by
2020, assuming comparable commitments from developed countries and
adequate actions from developing countries. However, comparability
remains a significant gap in EU decision making, and a British
official explained that ultimately, whether or not other countries'
efforts are considered "comparable" will be a political decision
made in Copenhagen.

Financing remains almost completely unresolved
-------------- -


4. (SBU) The Swedish Presidency quickly touted the Council as a
success, noting that the EU put forth a target of 100 billions euros
per year by 2020 for global financing, to come from a combination of
public finance (in the range of 22 to 50 billion euros per year from
all sources),an international carbon market, and self-financed
efforts in developing countries. However, key issues, including
what financial amount the EU plans to contribute, how the EU Member
States will internally share that financial burden, and according to
an Italian official, even the 100 billion euro figure, remain open
issues. Prior to the Council, both Swedish and Danish
representatives told USEU EconOffs that they wanted to come to
agreement on all financing issues, particularly more clarity on what
the EU will contribute, indicating the Council was not the success
promoted by the Presidency.


5. (SBU) Despite a strong push from the Presidency and several other
Member States, including the United Kingdom and the Netherlands, the
final Council was unable to secure agreement on concrete numbers for
the EU's financial contribution to mitigating climate change in
developing countries. A British official told USEU EconOff that the
repercussions from the failure of the Economic and Finance Ministers
nt the week before wereh. Poland and Hungary ln Member
States opposication of financing numbees on how Member States wid
financial burden. pete numbers; a German@ff that Germany wants
wait to see what other cUnited States, put on
thhe lack of decision on Criven
entirely by an @ernal burden sharing,e emissionle) as promoted by sevQ.
Poland and the groQtes explained that furth heir already fragile econn
agreed to set up aa proposal on how toQurden. The results of

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must be agreed by a consensus of the Council, to ensure full
agreement. Embassy Stockholm reported by both Swedish PM Reinfeldt
and Polish PM Tusk said that the EU will develop an internal
mechanism that takes fully into account the ability to pay. Poland
has been pushing for heavy weighting on GDP, though a UK official
told USEU EconOff that the UK is pushing for a 50/50 split between
GHG emissions and GDP, with emissions given more weight over time.

AAUs continue to be contentious
--------------


7. (SBU) In addition to financing, the EU remained undecided on how
to handle unused Assigned Amount Units (AAUs) from the Kyoto
Protocol in any post-2012 efforts. The EU has a unique situation
with about half of its members owning large numbers of AAUs from
substantial emissions reductions resulting from post-Soviet
deindustrialization. These Eastern Member States want to be able to
continue to use their AAUs, but several Western Member States,
notably the Swedish Presidency, are opposed, arguing that the
environmental integrity of any deal will be compromised. The issue
is compounded as several EU Member States are concerned by the
effect unused AAUs from Russia and Ukraine will have on a Copenhagen
agreement. The EU only could agree that the issue must be addressed
in "a non-discriminatory manner treating European and non-European
countries equally." According to Council reporting from Embassy
Stockholm, Polish Prime Minister Donald Tusk stated that unused AAUs
are staying, unless there is global agreement on the symmetrical
elimination of AAUs. Several Member State representatives, both
East and West, have explained that it is likely the AAUs will
remain, but at a discounted rate.

Lack of agreement may harm EU Copenhagen position
-------------- --------------


8. (SBU) That the EU was unable to agree either on Copenhagen
financing or internal financial burden sharing could put it in a
difficult position entering Copenhagen. Most Member States,
including the EU Presidency, do not expect the Working Party to
present its findings (or possibly even start its work) in advance of
Copenhagen. An Italian official told USEU EconOff that the EU may
not be able to bring concrete financing numbers to Copenhagen with
the burden sharing not agreed. He explained that Poland would be
unwilling to agree to EU financing if it did not already know its
required contribution. Instead, the official said that the
financing discussion could move into 2010 in both the EU and the
UN.


9. (SBU) However, the "lack" of agreement could be part of a
negotiating strategy. Environment attaches from the Norwegian and
Australian Missions to the EU had a different perspective on the
Council's conclusions. They heard that an informal agreement had
been reached among the Member States to devise an equitable burden
sharing arrangement on a finance package. They also said that the
EU would be prepared to discuss finance at Copenhagen, but for
"strategic reasons" EU leaders did not want to publicize any figures
or agreements on the subject. A German official explained that
Germany did not want to put forth any figures until it sees the
potential contributions by other parties.

Member States disagree on how to interpret Conclusions
-------------- --------------


10. (SBU) Even with agreement by the 27 Heads of State and
Government, EU Member State representatives have displayed
inconsistency iuncil ompleted in time for Copenhagen, but it appears that there
is overwhelming opposition from other Mmber States to do so, with
Embassy Stockholm eporting that Swedish PM Reinfeldt said that thQ
Working Party will be established after C/penhagen.


11. (SBU) Comment. The results of he Council struck a blow to the
EU's efforts to head to Copenhagen with a strong mandate.
Troughout 2009, the EU and the Swedish PresidencQ have argued that
the EU would bring concrQte positions to the negotiations after the
October Council. However, inability to agree to soe of the key
financing and AAU discussions has left the EU in a more difficult
position. Environment Ministers will meet informally on November
23, and there looks to be an extraordinary EU Council prior to

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Copenhagen, but neither of these meetings is expected to provide any
further clarity to financing. Several Member States, notably
Germany, are waiting to see how other countries act in Copenhagen.
However, if others move ahead of the EU, particularly on financing,
it has the potential to put the EU further on the defensive; the
Council was strongly attacked for its failure to provide clarity.
The EU is looking to maintain a leadership role, but there was clear
concern regarding the EU's position among some Member State
officials when discussing the results of the Council. End comment.

MURRAY