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Prime Minister Socrates, Minister Nunes Correia, President Barroso, Governor Corzine, Governor Spitzer, Minister Gabriel, Minister Halvorsen and other distinguished guests from the political and business world. It is a great pleasure to be with all of you today to lay the foundation for ICAP, an initiative of pioneers from around the world who share the vision that we need a global carbon market.
A few weeks ahead of the next UN climate summit in Bali, we send a powerful message to the world that the global carbon market is a crucial element of the future international climate regime. We also demonstrate that an increasing number of countries and regions around the world have put in place a carbon market or will do so soon and that it is time for others to join us in credible and stringent efforts to combat climate change.
When Europe started its process to establish a regional carbon market early this decade we were the first mover. At the verge of entering the second phase of the EU ETS, next year Europe's carbon market is now seen as the supertanker and a standard setter.
Europe's carbon market in the second phase creates an economic asset that is worth at current market prices more than 40 billion Euro[1], which equates to almost 60 billion US dollars.
As others embark on the road to establish carbon markets, Europe's early move allows us to share our first hand experience and we are fully committed to do so in the context of ICAP for the benefit of the our partners.
The carbon market is the bridge between environment protection and economic concerns. It delivers real reductions in greenhouse gases at the lowest economic costs. I am happy to see the strong involvement of the private sector and their support to our efforts.
We are keen for other emerging carbon markets to match Europe's quality standard. This is needed to ensure the sustained success of the carbon market.
One of the lessons we have learned in Europe is that the most important decision the designer of a carbon market has to make is to set the overall number of allowances, the cap as it is called in technical jargon. For a variety of reasons Europe's cap in the first period of operation was not stringent enough. This has resulted in a low price for emission reductions and created limited incentives to change daily business decisions.
After a lot of work we have put in place a robust cap for the second phase of the EU ETS. The market has recognised this. The EU ETS encourages business to mobilise significant investments to develop and deploy low-carbon technologies.
We are today taking a new step in our climate policy. Together, we can provide part of the solution to the challenge of climate change. At Bali, we look forward to all countries joining us in our efforts by supporting the launch official negotiations on the international climate co-operation post-2012.
I look forward to working with you
Thank you.
[1] Technical note: Based on the annual EU-wide cap in phase 2 of 2.08 billion and an allowance price of over 20 Euro.
