NASA predicts that 2005 will be the hottest year ever recorded. Analysis of ice-cores has revealed that greenhouse gas concentrations in the atmosphere are higher now than at any time in the past 650,000 years. Ocean levels are rising twice as fast as in the past.

In Europe we have witnessed droughts, large-scale forest fires and devastating floods. And Hurricane Katrina demonstrated the massive costs associated with extreme weather events.

The Montreal event will be the first time that the parties to the Kyoto Protocol come together since the Protocol came into force last February. Their immediate task is to take the decisions that will ensure that the Protocol is fully operational in 2008. Developed nations must take the lead in reducing greenhouse gas emissions. They have to set an example and pave the way for a stronger and broader global effort.

Our experience in Europe shows it is possible to reduce emissions in ways that are cost-effective and can produce parallel benefits – such as greater energy efficiency and better air quality. Some 30 specific measures have been put in place by the European Union, including targets to increase the share of renewable energy in the overall energy mix, commitments by the car industry to reduce car emissions, a variety of energy efficiency measures and significant funding for research and technology development.

The centrepiece of our approach is the Emissions Trading Scheme which was launched last January. The scheme covers 11,500 energy-intensive plants that are responsible for almost half of the EU’s CO2 emissions. Limits are set and tradable emission allowances are given.

If a plant wants to exceed its emission limit it needs to buy an allowance from a plant that is able to go below its allowance. This approach is the cheapest and most flexible way of cutting emissions and some 230 million tonnes of CO2 have already been traded this year, worth e3 to e4 billion. Our scheme also accepts credits from emission-reducing projects in third world countries and can be linked in to similar schemes elsewhere.

This approach is working. Even if we disregard the 10 new members of the European Union – where industrial restructuring has allowed particularly steep CO2 reductions – emissions of the remaining 15 member states fell by 1.7 per cent between 1990 and 2003 while their economies grew by 28 per cent.

Our efforts to implement what we have signed up to include honouring our obligation to support developing countries in addressing climate change. EU member states will provide the lion’s share of the $410 million in assistance that was promised in 2001. In September this year, the EU launched climate change partnerships with China and India.

The scientific projections are that if worldwide emissions continue to rise after 2025, then significant temperature increases are certain. This leaves very little time to agree on action after the expiry of the Kyoto targets in 2012. We are acutely aware that winning the battle against climate change will require far deeper cuts from developed nations in the future. But it will also need the active participation of all major emitting countries, in line with their respective capabilities and development needs.

We therefore look to the Montreal meeting to launch a process that will lead to official negotiations on a future climate regime that includes a timetable for future action.

The details of any future regime still need to be expounded, but the European position is that it should allow for broad participation, differentiated commitments and the use of market-based instruments to keep reduction costs low. We also need to increase support for technological innovation and put in place policies that will help us adapt to the climate change effects that are already unavoidable.

Stavros Dimas is European Commissioner for the Environment