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Cablegate: Portugal's Climate Change Policy

VZCZCXRO0526
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHLI #0437/01 0471734
ZNR UUUUU ZZH
R 161734Z FEB 07
FM AMEMBASSY LISBON
TO RUEHC/SECSTATE WASHDC 5574
INFO RUCNMEM/EU MEMBER STATES
RUEHBS/USEU BRUSSELS

UNCLAS SECTION 01 OF 02 LISBON 000437

SIPDIS

SIPDIS

PASS TO OES/EGH

E.O. 12958: N/A
TAGS: SENV ENRG TSPL PO
SUBJECT: PORTUGAL'S CLIMATE CHANGE POLICY

Summary
----------

1. (U) Portugal is in danger of surpassing its Kyoto Protocol
and EU Burden Sharing Agreement 2012 targets for greenhouse
gas (GHG) emissions. The government has proposed
implementing domestic policies to reduce Portugal's projected
42% increase in GHG emissions (using 1990 as a baseline) to
the agreed-upon 27% limit by utilizing the flexibility
mechanisms of the Kyoto Protocol, including participating in
the European Union Emissions Trading Scheme (EU-ETS) and
creating a Carbon Fund to finance Clean Development Mechanism
(CDM) projects in developing countries. During his January
24 monthly address to Parliament, Prime Minister Socrates
urged greater action and proposed several new initiatives to
address the problem of climate change. End Summary

2. (U) As a signatory to the Kyoto Protocol, the European
Union committed to cut, on average, eight percent of its GHG
emissions relative to 1990 levels between 2008 and 2012. The
Burden-Sharing Agreement apportioned reduction percentages to
member states depending on such factors as population size,
economic structure, GDP growth, and standard of living. Due
to its relative low industrial and economic capacity,
Portugal was allowed a 27% percent increase in GHG emissions
under this internal EU agreement. This permissible amount
equals 77.2 Mt CO2e/year (metric ton of carbon dioxide
equivalent/year). However, current indications predict that
emissions will increase by 42% during the reference period.

National Action Plan Against Climate Change (PNAC)
--------------------------------------------- ----

3. (U) The EU required member states to draft national action
plans outlining the various measures each country planned to
implement to meet individual emissions targets. Portugal
developed its first Portuguese Action Plan Against Climate
Change (PNAC) in 2001 but recently revised it in June 2006 to
include additional, more stringent, measures. PNAC 2006
contains initiatives targeting the energy, transport,
agricultural, forestry, and waste management sectors. Most
of the initiatives focus on the energy sector as it accounted
for 72% of all 2004 emissions, a 52% increase from 1990.
PNAC 2006 aims to achieve a reduction of approximately 7.3
MtCO2e during the 2008-2012 commitment period. Some of the
initiatives include meeting 39% of gross electricity
consumption through renewable energy sources, reducing energy
consumption by 1000 GWH through energy efficiency
improvements, and increasing wind power capacity to 5100 MW
(septel).

4. (U) Prime Minister Socrates urged even greater action
during his January 24 monthly address before Parliament. He
called for increasing the percentage of renewable energy
sources for electricity consumption from 39 percent to 45
percent (septel). He also proposed a tax on less efficient
light bulbs to promote energy efficiency, the creation of a
wave energy pilot zone in Sao Pedro de Moel, and the
substitution of five to ten percent of the coal used in the
coal plants of Sines and Pego with biomass.

Portuguese Carbon Fund
----------------------

5. (U) In addition to domestic emissions reductions and
emissions trading, Portugal intends to utilize the
flexibility mechanisms of the Kyoto Protocol to fulfill its
commitments. To this end, the Portuguese government created
the Portuguese Carbon Fund with an initial endowment of six
million euros in 2006 and plans to contribute an additional
78 million euros in 2007, some of it from increased taxes
(Portugal hopes to raise over 350 million euros between 2008
and 2012 through carbon taxes, including the proceeds of the
light bulb tax, and the sale of government assets). The Fund
money may be used to invest in Kyoto Clean Development
Mechanism (CDM) projects that reduce CHG emissions in
developing countries. Such projects permit Portugal to
receive carbon credits that it may apply to its own national
emissions target. The funds may also be used domestically
for reforestation and other projects that reduce carbon
dioxide levels by serving as carbon sinks. The GOP has
already targeted projects in the Community of Portuguese
Speaking Countries (CPLP) and in Latin America.

Comment
-------

6. (U) With the realization that Portugal will far exceed its
permissible increase of 27% in GHG, the pressure is on the
GOP to augment its existing plan and create new initiatives.

LISBON 00000437 002 OF 002


These new policies must be implemented in 2007 in order for
results to be seen during the 2008-2012 commitment period.
PM Socrates hopes to capitalize on current political will and
sense of urgency to push for more action that will transform
Portugal into a showcase for renewable energy.
Hoffman

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