UN talks, water matter most to Cyprus: minister

NICOSIA Fri Jul 6, 2012 11:45am EDT

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NICOSIA (Reuters) - Cyprus will focus on shoring up European Union water supplies and on preparation for U.N. climate talks in Doha as the green priorities for its six months at the EU helm, its environment minister said on Friday.

Just before beginning its first stint as holder of the rotating EU presidency on July 1, Cyprus asked for 10 billion euros ($12.4 billion) in emergency funding for its financial sector.

For a nation scarred by a severe drought that forced the import of water from Greece in 2008, its cash crisis will not detract from sharing the lessons of water management across the EU.

"Environmental issues are more important than the economic issues," Sofoclis Aletraris, Cyprus' minister of agriculture, natural resources and environment, told Reuters.

To cope with recurrent drought, Cyprus desalinates water and has four plants, plus two under construction. Critics cite extra energy and CO2 costs, as well as the impact of discharging brine into the sea, which Aletraris said was strictly monitored.

"I admit there is a cost, a financial cost and to the environment, but Cyprus is a small island surrounded by sea water. It does not have any other alternatives. You can't afford to go through the trouble that we had in 2008. It was a nightmare," he said.

"The reservoirs were completely empty. It's about the economy as well. Tourism. You can't tell tourists they can only have a shower every other day."

Desalination is relevant for other EU nations, such as Malta and Spain. For the bloc as a whole, Cyprus aims for ministerial conclusions in December on a water blueprint to lay out best practice on managing resources.

Agriculture, in particular, needs to get greener, the minister said, adding that would be linked to debate on the budget, of which the Common Agricultural Policy accounts for the largest chunk.

CARBON MARKET REFORM

Aletraris, who will lay out his environmental priorities to the European Parliament in Brussels next week, said deeper structural reform of the carbon market was not one of them, although he thought a quick fix was feasible.

The EU's executive is expected to put forward this month a review of the carbon market, including plans to delay the auction of allowances to reduce a surplus generated by recession.

Environmental campaigners and some sections of business are impatient for more far-reaching reform to prop up the Emissions Trading Scheme (ETS) after the price of allowances has sunk far below the levels needed to spur low-carbon investment.

For Cyprus, opening the debate on a more permanent solution could undermine efforts to build on a fragile deal forged last year in Durban to keep the Kyoto climate change pact alive.

"It's unrealistic at this stage. The political agreement is not there," Aletraris said of more sweeping ETS changes. "It is wiser to see what is in the review."

The Commission has said it cannot comment before publication.

EU sources have said that apart from proposing to delay the sale of allowances during the next phase of the carbon market beginning 2013, the Commission would raise more radical ideas.

These could include the permanent withdrawal of allowances and tightening a cap on how much carbon polluters can emit.

Aletraris said such steps would take far longer under EU processes and would open fault-lines between those keen for a stronger carbon market and opponents, just when the EU needs to provide leadership at U.N. talks in Doha starting late November.

Poland, which is heavily dependent on carbon-intensive coal, has repeatedly cited economic concerns in its opposition to anything that would boost carbon prices, including a deeper cut in emissions than an EU goal of a 20 percent reduction by 2020.

Cyprus will try to persuade Poland to shift its position.

"There are definitely ways," Aletraris said, without being specific. EU sources have suggested judicious use of cohesion funding to provide leverage.

The Cypriot presidency will oversee negotiations on the almost 1 trillion euro EU budget for the period 2014-2020, which includes the Common Agricultural Policy and cohesion funds, used for projects such as transport, education and infrastructure. ($1 = 0.8077 euros)

(Editing by Charlie Dunmore and Jane Baird)

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