The sectoral approach for post-2012

Under a sectoral approach, countries would pledge to achieve GHG intensity targets for certain industrial sectors (such as tons CO2 produced per ton steel). Applicable sectors include electricity, cement, and steel. By encouraging sectoral emissions reductions in non-Annex I countries, sectoral playing fields can be leveled in internationally competitive sectors. Such an approach will likely alleviate fears of job loss/migration and leakage.

In a side event entitled “Benchmarking and Project Based Mechanisms: Can they Work Together?,” Holcium’s definition of “sectoral approach” was provided: a “policy, based on multiple systems with efficiency objectives and implementation mechanisms tailored to characteristics of sectors of society and regional socio-economic development.” This definition raises an important issue: the need to consider differences in national circumstances and economic development. A sectoral approach should include financial and technological assistance for non-Annex I countries, and regionally-flexible deadlines, so as not to disadvantage developing countries in this approach. Benchmarks could be first established regionally—taking into account national policies—and then converge into a global benchmark. These ideas must be further developed to ensure the approach encompasses the principle of common but differentiated responsibility.

The sectoral approach—which is dominating the mitigation session today at the Poznan Business Day—is controversial, but has great potential. For example, today’s moderator, David Hone, Group Climate Change Advisor for Royal Dutch Shell plc, stated last week that CCS as a sectoral approach utilized in China and India could fill the gap between the EU’s minimum binding 20% GHG reduction by 2020 and the 30% reduction it hopes to achieve by 2020.