Ladies and gentlemen,

The Climate Change Conference in Copenhagen is an opportunity the world should seize. We need a new, shared and comprehensive agreement to curb greenhouse gas emissions.
Given that fossil fuels will continue to be our main energy source for decades, the challenge is how to make use of these carbon intensive energy sources while reducing GHG emissions.

One thing that's clear is that low energy prices don't help. The low oil prices of the last century have promoted unacceptable energy consumption habits. They have pushed energy efficiency off the top of the global agenda. And they have derailed plans for the development of alternative energy sources.  

If we really want things to change, we need to change the way we think about energy. Gone are the days when we could afford to think about oil as a cheap input to economic and social growth, discounting the impact on the environment and on generations to come.
Energy Efficiency and Research and Development on complementary energy sources are the two major tools we have to curb carbon emissions. They are sleeping giants that only stable and relatively high final prices of fossil fuels can awake.

The West, having guzzled energy in the past, should be the first to go on a diet. There are two things we could do starting now:

• The first is a small carbon tax. By attributing a stable cost to CO2, a carbon tax immediately affects investment decisions. It would need to be accompanied by measures to off-set its effects on income distribution. Cap-and-trade-systems – complicated mechanisms which require many years of trial-and-error processes – could be integrated in time, with the aim of optimizing the effects of the carbon tax.

• The second tool could be a complementary "mobile excise tax" on end-use energy products derived from fossil fuels. Such a tax would be applied when product prices fall below the level that boosts R&D investment and energy efficiency. It would shelter environmental policies from energy-price volatility.

Industrial countries would of course be the first to adopt these measures. But they shouldn't be alone in the fight against climate change. Emerging countries should agree to implement these measures after a reasonable grace period.

The delay in adopting the system should be assessed on the basis of their relative level of economic development, to be determined with a shared index. A carbon tariff should also be part of the scheme, to be applied only if emerging countries failed to respect their delayed deadline.
Thank you for your attention.

In December, in Copenhagen, the world will have a first opportunity to find a new, shared and comprehensive agreement to curb greenhouse gas emissions.
The model presented by Eni CEO Paolo Scaroni to the United Nations is based on three main points:

• a carbon tax affecting all economic sectors;
• a cap & trade system to reinforce and optimize the effect of the carbon tax;
• a mobile excise tax on end-use energy products.

In dealing with climate change the world must cope with the importance that fossil fuels will still have in future decades, and the dramatic influence of their prices that can delay energy efficiency and alternative energy investment plans.

During the last century, low energy prices drove the world to adopt unacceptable energy consumption habits, and strongly limited the invention and adoption of more energy efficient technologies and tools. What's more, low energy prices have derailed both most plans for energy conservation, and the development of alternative sources of energy other than fossil fuels.

Therefore, the world needs to interrupt the perception of energy as a cheap input to economic and social growth.

Energy Efficiency and Research and Development on energy complementary sources are the two major tools to curb carbon emissions.

The industrialized world, having guzzled energy in the past, should make the first step and accept to take the burden of CO2 reduction alone for a certain period of time; on the other hand, emerging countries will probably never accept being part of an agreement that charges them with the same burden as countries responsible for the main historical emissions (i.e. USA and Europe together emitted alone more than 55% of total cumulative emissions).

Yet, it's simply useless to take that burden without having a commitment from emerging countries. For instance, the IEA reference scenario assumes an increase of Chinese CO2 emissions on a scale of 4.4 bln tonnes CO2 in 2006-2020: such an amount would be equivalent to having another continent emitting like Europe in the world by 2020.
In sum, the scheme Eni proposed today envisages an agreement signed by most countries at the same time, that will soon be enforced by industrialized countries, and only later by emerging countries. Furthermore, the scheme links together the three, above mentioned elements.

1. First, a minimal carbon tax should be considered. In fact, giving a stable value to CO2, a carbon tax promptly affects investment decisions, accompanied by measures to off-set its effects on income distribution. Cap & trade systems – that are made of complicated mechanisms and require many years of trial-and-error processes – could be implemented as complementary measures, with the aim of integrating and optimizing the effects of the carbon tax.

   
   
   

   The scheme would be composed both of a minimal carbon tax affecting all economic sectors and a cap & trade system with the allocation of allowances both free of charge and for payment. This framework is aimed at obtaining the main benefits from these tools, in particular:

   • A minimal tax would represent a simple, viable and immediate mechanism to get results as soon as possible.

   • b. The cap & trade system would reinforce the carbon tax effects by requiring payment for carbon allowances allocated to those sectors which are crucial for curbing emissions. Moreover, the cap & trade system would optimize the emission reduction efforts allowing cost-effective emission reduction, introducing a certain degree of flexibility in the framework.

   
   

2. Second, a complementary "mobile excise tax" on end-use energy products derived from fossil fuels. Such a tax should be applied when product prices fall below the level that boosts R&D and energy efficiency. It would shelter environmental policies from the energy prices volatility.

The definition of a time delay for emerging countries could be done simplistically by introducing two different starting dates for these measures: one for industrial countries and a later one for emerging countries.
However, such an approach would be inequitable, not taking into account the different development levels of each emerging country.

A fairer solution could be the identification and definition of a parameter - like an index of economic development (to be defined, starting from the classic GDP per capita to a more elaborated one like the Human Development Index) - to differentiate the entry point for each country, on the basis of its relative position with respect to the index.

For emerging countries, the delay in the adoption of the system should be assessed on the basis of their relative level of economical development, to be determined with a shared index.
A carbon tariff should also be part of the scheme, to be applied only if emerging countries do not respect their later starting point.

Finally, R&D on energy efficiency and alternative sources will be an essential part of the fight against climate change. But without the strong incentive created by an increase in the cost of fossil fuels, there will not be the boost necessary to develop innovative projects.