Blog Posts

The Elephant in the Room

Look carefully around you: there is an elephant walking the hallways in Bangkok (it’s not the local type). It’s an intangible but very sizable beast: 7.5 to 10 Gt CO2e worth of surplus assigned amount units (AAUs).

It’s important to understand the scale of the AAU elephant - almost a third of current, best-case Annex I pledges. If this gets off the track, it threatens to undermine real emissions reductions and collapse the price of carbon when carried over from Kyoto’s first commitment period to a post-2012 regime. This represents a serious threat to the goal of limiting warming to as far below 2oC as possible.

The collapse of economies in transition during the 1990s produced real social and economic hardship. Yet emissions fell dramatically, delaying the reduction of carbon space in the atmosphere.

However, this was by no means the result of climate policy, and rewarding this phenomenon as “early action” contravenes the principle that only targeted, policy-driven changes in greenhouse gas emissions should be accounted for. In addition, to no one’s surprise, surplus AAUs are currently the “grubby outcasts” of the carbon market (even worse than HFCs).

It wasn’t the best idea in Kyoto for Parties to allocate the surplus, but they can join together to correct this error in Copenhagen.

If countries with surpluses want to trade, that needs to be part of a credible, environmentally sound solution.

For example, countries holding extra AAU amounts could agree to a stringent discount (e.g., 60%) of the surplus, if carried over, and the remaining Annex I countries could increase their pledges by another 5%, insuring that overall Annex I aggregate emissions stay more than 40% below 1990 levels in 2020. If countries can’t agree to this kind of solution, carry-over should be forbidden under the Copenhagen agreement.

The EU Commission took a strong position on the AAU surplus issue. Options they have been considering should be rolled into the kind of compromise described above. AAUs cannot be used for compliance in the EU post-2012 climate and energy package. Now the EU can set the tone internationally, reaching a solution to absorb its surplus out of the global compliance system before Copenhagen.

Russia and Ukraine have set 2020 targets, but according to IIASA, those levels could actually be achieved by business-as-usual emissions growth from current levels, while still generating hundreds of megatons of credits annually. Talk about a free elephant ride!

This could divert huge financing flows away from mitigation in developing countries.

Russia and Ukraine should set more ambitious targets, well below BAU, and address the current surplus. While their emissions collapse slowed the growth of GHG stocks, this would be reversed if the Kyoto surplus was used to achieve targets, and especially so if future weak targets generate yet more questionable credits. From ECO’s viewpoint, that would be about as absurd as watching a magician pull an elephant out of a hat.

Restoring EU Leadership

Rewind 10 months to December 2008: in Poznan, negotiators prepare for another day of working group discussions. Meanwhile the rest of the continent is intently watching Brussels, where European leaders make the big political decisions on the EU’s 2020 climate package.

Now fast-forward one year to December 2009: it’s mid-session in the climate talks in Copenhagen and European leaders are again meeting in Brussels. What sort of leadership can we expect?

Europe still talks a good game on climate change and headlines their place at the head of the Annex I pack. But the cracks in confidence in the EU’s leadership have turned into chasms of concern as ambition has weakened.

At a moment when the vast majority of countries want a strong agreement but the negotiations remain mired in distrust and distraction, ECO suggests that European delegates consider these steps toward restoring EU climate leadership.

Step one is to communicate a compelling vision of what success looks like at Copenhagen: a vision based on staying as far as possible below 2oC through a global transition to low carbon economies and sustainable development for all.

Step two is to demonstrate that actions lead to success. That means moving onto new ground with mitigation and finance proposals that reflect scientific necessity rather than political expediency, and not simply waiting to see what the others will do first.

Step three is to shift the dynamic of the negotiations from ‘after you’  to ‘follow me’ – to build an “ambition coalition” of countries willing to take round after round of stronger action as others take steps for action and support. Together, ambition and action will lead to success.

The EU showed real leadership when it first tabled its 20%-30% target for emissions reductions below 1990 levels by 2020 - the first major emitter to make a unilateral agreement of this kind. It is ahead of most Annex I parties in its willingness to negotiate seriously on climate finance. But there are some problems.

• Rather than preparing for success by setting out a plan to move to 30%, many European countries seem to be quietly hoping that they can stick to 20% and avoid another battle with carbon polluting industries.

• Rather than sending a strong signal that Europe is serious about building a low carbon economy at home, it has proposed achieving much of its target through land use loopholes and cheap international offsets.

• Rather than recognising the need for additional, innovative and sustained public financing flows to help ambitious developing countries transform their economies and adapt to climate change in the coming decades, it is busy lowering expectations of Europe’s “fair share” of the bill.

It’s still not too late to turn this around. The economic crisis has created an opportunity.

Europe’s emissions have fallen to a point where achieving a 30% reduction is no more difficult or costly than 20% was expected to be when leaders signed on the dotted line. In fact, by adopting more ambitious targets, Europe can ensure that the economic recovery is built on low carbon investment rather than a return to business as usual.

Furthermore, if the EU really wants to reaffirm its role as a climate change leader, it will move toward a 40% reduction target. Not only is it the right economic pathway for Europe, it is also the most credible political strategy for success at Copenhagen.

[Article published in Climate Action Network's Eco Newspaper, Oct. 2, 2009 from Bangkok, Thailand UNFCCC negotiations - full PDF version here]

Comparability of Effort and Chances of Survival

Parties should welcome the ratification of the Kyoto Protocol by the nations of Kazakhstan, Turkey and Zimbabwe. Their action affirms Kyoto’s continued value and demonstrates a commitment to sparing humanity from catastrophic climate change.

A Copenhagen agreement that does not aim for a high probability of ensuring the survival and sustainable development of all nations, and the welfare of the most vulnerable, is not acceptable. The targets currently tabled by developed countries fall well short of guaranteeing these core objectives. Those targets put us on a trajectory to wipe sovereign nations off the map, add to development challenges and increase human suffering.

There is a very narrow envelope of possible emissions pathways to 2050 that have an acceptably high probability of avoiding the worst impacts of dangerous climate change. These pathways require peaking global emissions within the next 5-year commitment period and achieving reductions of at least 80% below 1990 levels by 2050.

Developed nation commitments must be based on a science-driven approach. A weak, bottom-up approach to reduction targets combined with loopholes and offsets creates a race to the bottom and a crash course on the harsh reality of catastrophic climate change.

Carbon markets should play a role in a post-2012 agreement only if the currently tabled developed country reduction targets are increased dramatically. In addition, the hazard of surplus AAUs must be addressed. The rules on LULUCF, offsetting and AAU banking must be consistent with keeping temperatures well below 2oC.

There is no avoiding the fact that deep and real emissions reductions are needed now. There simply is no atmospheric space for evasion of responsibility. For this reason, agreements in the KP track must be consistent with agreements in the LCA track in order to avoid double-counting, promote consistency, avoid loopholes and ensure the environmental integrity and fairness of the overall Copenhagen agreement.

The Kyoto Protocol provides a clear framework for industrialized country action. Rapidly evolving scientific evidence on the growing impacts of global warming does not allow for any more time to be wasted in renegotiating its architecture. Copenhagen must deliver robust, quantifiable, legally binding emissions reduction targets for all developed countries consistent with our world’s shrinking carbon budget.

The existing monitoring, reporting and verification systems are essential to help ensure environmental integrity. The compliance system must be strengthened and expanded to include an early warning system to correct projected shortfalls as well as stronger consequences for non-compliance if early warning does not lead to a remedy. The system of 5-year commitment periods is vital to allow for reviews based on new science, particularly the 5th IPCC assessment report due in 2014.

Developed countries are deliberately blurring discussions by taking different rather than common approaches to negotiating their targets. Agreement must be reached here in Bangkok on a more than 40% aggregate reduction target by 2020 compared to 1990 levels, 5-year commitment periods, and an agreement on supplementarity. Only when these elements are fixed can fair, effective national targets be negotiated and the “comparability of effort” be evaluated, and our chances of survival be elevated.

[Article published in Climate Action Network's Eco Newspaper, Oct. 2, 2009 from Bangkok, Thailand UNFCCC negotiations - full PDF version here]

Time for a Course Correction

The Bali Action Plan (BAP) provides a clear timetable and outline for negotiations aimed toward a fair and effective deal in Copenhagen. That outline differentiates between the mitigation commitments of developed countries and the MRV actions undertaken by developing countries.

The BAP did not, however, provide space for the crucial overarching discussion on architecture. That includes a discussion about the relationship between an enhanced Kyoto Protocol (or a successor Protocol) and the legal outcome of negotiations under the LCA. This architectural debate goes to the heart of the Copenhagen outcome.

Such a discussion will have to include consideration of the comparability of the efforts of those rich countries that have avoided doing so under Kyoto -- especially the United States -- and those who have inscribed their commitments in Annex B.  It should fully consider all architectural proposals that aim to flesh out all the requisite responsibilities, as the climate regime evolves and builds on the solid foundation the Convention provides.

ECO has been a bit surprised by the confusion the US was able to create with its call for a discussion of the “common” elements of the BAP.  Indeed, it is the US that is on review until it is ready to commit to doing its fair share, both in reducing its own emissions and taking on a concrete financial obligation. The clock is ticking on the US Senate turning the good intentions of President Obama into legislative action. Today, the main bill from Senate leadership is being released: game on.  The countdown to Copenhagen continues.

As for the developing countries, based on what they have been tabling recently, like China last week, they have nothing to fear.

Developing countries need not be defensive, and they should welcome a broader debate on architecture.
ECO calls on all delegations to enter into this debate with an open mind, without dwelling too much on the motivations of the US. We welcome political statements if they are used as a means to clarify country positions, rather than as detours slowing down progress towards an equitable and ambitious deal that has real environmental integrity.

These refinements to the course of the debate would help shorten the negotiating text to its bare essence, by articulating areas of convergence and divergence in legal terms and conducting actual negotiations, rather than further process discussions. Yet for all the diplomatic niceties: this is a fight worth having.

[Article published in Climate Action Network's Eco Newspaper, Sep. 30, 2009 from Bangkok, Thailand UNFCCC negotiations - full PDF version here]

Algeria Awarded Climate Action Network's Fossil of the Day for Sept. 29

fossil of the day

First Place: Algeria

Algeria suggested in the LCA Contact Group on Adaptation that response measures should be addressed under adaptation. We award Algeria the fossil of the day for blatantly not representing the interests of the African Group. African countries are vulnerable to climate change, not decreasing oil revenues. Cynical, Algeria, cynical!

Second Place: Kuwait and Saudi Arabia

Both countries attempted to further dilute the rules of the CDM in Tuesday’s informal, proposing that a potential CDM 'positive list' include "clean fossil fuels" without any further elaboration on what that would include. "Clean fossil fuels" is a pandora’s box including a range of technologies allowing coal, gas and oil production into the CDM. These are non-additional and not sustainable, a key requirement for all CDM projects.

Third Place: United States of America

In yesterday's contact group on mitigation, the US, supported by a portion of the Umbrella group, the EU, Costa Rica and Columbia, put forth a proposal to create a sub-contact group on common elements of mitigation between developed and developing countries under the Bali Action Plan. Failing formation of the sub-group, the US threatened that if the proposed new groups were not formed, all discussion should revert to the full contact group, putting a halt to work of multiple subgroups. The fossil is being awarded to the US for rolling out demands on the process when they themselves have yet to help build a constructive process by putting forth emissions targets or figures on finance.

The Climate Action Network (CAN), a coalition of over 450 NGOs worldwide dedicated to limiting climate change to sustainable levels, regularly judges and presents three 'Fossil of The Day' awards to the countries who perform the worst during the past day’s negotiations at UN climate change conferences.  The Fossil-of-the-Day awards were first presented at the climate talks in 1999, in Bonn, Germany.

Parties light-years apart on finance

Mind the gap?!  That looks like the understatement of the year.

While the deplorable lack of funding for climate change adaptation is clearly being felt right now by the millions of residents of Metro Manila, and many more poor communities are suffering from monsoon disruption and related crop failure in South Asia, developed countries seem to be frozen in place, eyes tightly closed and voices strangely silent.

So far this week, the discussions in the LCA finance contact group have plainly highlighted how a good many developed

countries are attempting to renege on the agreement reached in Bali, where the need for their support to developing countries was spelled out and agreed to by all.

A number of developed countries fought hard to get rid of the very first paragraph in the finance text referring to the “substantial gap” between resources required and those that are currently available. Most disturbing was Canada’s intervention suggesting that the entire paragraph was “too negative” and that the negotiating text should have a more positive tone.

While the negotiations have been tied down for months by the stubborn refusal to put forward specific funding commitments from developed countries, the very same countries are now pointing their fingers at the developing countries and suggesting they should put money on the table for climate action.

The US “generously” recognized the need to scale up finance while counting carbon markets as financial transfers. It’s not clear whether they are talking about scaling up offsets, and thereby allowing developed countries more opportunities to avoid their obligations at home, or scaling up crucial public financial support to developing countries.

Furthermore, during Monday’s curtain raiser press conference, chief negotiator Jonathan Pershing made several statements indicating that the US team has not advanced their positioning on finance since Bonn I. The US ought to have come to Bangkok with numbers on the table, and not with a strategy that is sure to continue stalling the negotiations on financing.

Despite cheery advice from Canada, the predictions for the residents of Metro Manila and other climate-vulnerable areas seem bleak, until developed countries come to the table prepared to fulfill their commitments in Copenhagen.

[Article published in Climate Action Network's Eco Newspaper, Sep. 30, 2009 from Bangkok, Thailand UNFCCC negotiations - full PDF version here]

Adaptation is Additional by Definition

As negotiators continue to wrangle over procedural issues in the adaptation contact group, Parties should be preparing for a possibly contentious debate on an issue that is nonetheless essential – the additionality of climate finance.

ECO has overheard very few developed countries in the corridors who are ready to provide climate finance in addition to their obligations to provide 0.7% of gross national income (GNI) for overseas development assistance (ODA). Most developed countries apparently hope to get away with cherry-picking their future aid budgets to meet the potential provisions of a Copenhagen agreement on financial support for adaptation (and mitigation as well) in developing countries.

There are some important reasons why climate finance needs to be additional – and that means not only additional to existing ODA flows, but additional to ODA targets.

First: Finance for adaptation is not aid but advance compensation for climate change impacts experienced by developing countries from emissions by developed countries.

Second: The pledge to deliver 0.7% of developed countries’ GNI as aid was made long ago – and long before the additional burden of climate change became apparent. To be sure, 0.7% is not exactly a huge amount of money if we are to achieve the Millennium Development Goals (MDGs), and the developed countries aren't on track for their ODA targets on the MDGs.  Not even close, in fact.

Third: In a fair Copenhagen agreement, developed countries would have to provide public finance of at least $50 billion per year for adaptation (and $100 billion for mitigation and other needs). If just a portion of these totals were to be obtained by diverting money for climate change purposes from future aid budgets, this would come at the expense of already scarce resources needed for basic education, health care, sanitation, housing and poverty eradication.

The argument is often heard that adaptation interventions cannot be considered as separate from development. However, while it's true that adaptation efforts should be consistent with poverty reduction and development programs, adaptation funding must be additional.

An increasingly hostile climate makes development increasingly expensive. This necessitates new resources for agriculture, increases in social and private insurance, and investment in new buildings and infrastructure, to name only a few.  These are the costs of adaptation, and they are by definition additional. Therefore, adaptation financing should also be truly additional, and not extracted from future aid budgets.

ECO will be listening closely when developed country colleagues speak on their plans to provide new and additional financial resources. If the LCA adaptation text in para 14(p) made the 0.7% target explicit, it would have it just right.  So developing country delegates may wish to focus on this paragraph when working on the finance chapter of the LCA text.

[Article published in Climate Action Network's Eco Newspaper, Sep. 30, 2009 from Bangkok, Thailand UNFCCC negotiations - full PDF version here]

Playing the Convention Against the Plan

The “response measures” discussion – which OPEC countries seem to want included in absolutely every negotiating context, regardless of what Parties have previously agreed – drags on in the most inappropriate places. Why compensation for potential loss of oil revenues should be considered in the same breath as supporting adaptation for the world’s most vulnerable countries and communities has been a deep mystery to many Parties – and to ECO -- for some time.

Sure, response measures is an important issue. It should be discussed, and it is – in the KP and LCA mitigation groups. But shoehorning response measures into LCA adaptation box is a problem. It takes time and energy away from addressing the more urgent needs of countries that see the impact of climate change not only on their bottom line but on their declining elevation above sea levels and their fight against hunger. All this reduces trust, and it diminishes the likelihood of an effective adaptation outcome.

Various Parties have made the call for some time for response measures to be dropped from the adaptation discussion. Despite that, the Saudi intervention on the opening day’s LCA adaptation contact group took a legalistic tone. Response measures are in the same sentence of the Convention as the needs of countries affected by the impacts of climate change. Therefore, it is said, they should remain in the adaptation discussion.

But the Algerian negotiator may have inadvertently given us a way out from OPEC’s desire to keep response measures in the adaptation arena. Speaking in support of the Saudi intervention, he pointed out that the Bali Action Plan does not replace the Convention, and is expressly for the purpose of facilitating its effective implementation. In short, “Don’t play the Convention against the Plan.”

ECO couldn’t agree more . . . though maybe not in the way he was hoping. The Bali Action Plan clearly separates response measures from the adaptation discussion and places it under mitigation. That’s how parties agreed to effectively implement the terms of the Convention.

If OPEC members are truly serious about implementing the Convention, then their course of action is equally clear. Stop playing the Convention against the Plan – drop response measures from the adaptation discussion.

[from Eco, Sep. 30, 2009 from Bangkok, Thailand UNFCCC negotiations - full PDF version here]

No sliding back, New Zealand!

Speaking to Point Carbon, New Zealand's climate change ambassador said that “if our conditions are not met we reserve the right to drop (our target) below 10%.”  So now you know, New Zealand's 10% to 20% is actually “do nothing” to 20%.

The truly off-key note in the interview was New Zealand's excuse for not having a unilateral target: “We didn’t think there was any point in setting a low-ambition figure.”  Mind you, could we expect any more from a country whose emissions trading scheme is slated to be so pathetic that New Zealand's emissions will continue going up well after 2020.

[Article published in Climate Action Network's Eco Newspaper, Sep. 30, 2009 from Bangkok, Thailand UNFCCC negotiations - full PDF version here]

Bonn III: Creative Accountants for Rent

As regular readers will know, ECO prides itself on seeking out the most shocking, least noble attempts by parties to avoid their responsibilities for tackling climate change, no matter how well hidden. And after thirty years of fearless reporting, there aren't many tricks of the climate negotiating trade that haven't been exposed on these pages.

In this year alone, who could forget the shameful 'bar to zero' exposé that rocked the LULUCF closed sessions? Or the moment the news broke that the Japanese 2020 mitigation target was not as ambitious as their choice of base year suggested or their government claimed?

So it is with great excitement this week that ECO stumbled upon the latest trick from developed countries, this time seeking ways to avoid their obligations to provide adequate new and additional public climate financing to developing countries.

It is old news that developed countries are often found seeking to "double count" carbon offsets - both towards their own mitigation targets, and towards financing for mitigation in developing countries. But the EU and US have this week given the story a new twist.Confounded by accusations of "double counting", the big brains in the EU have been working over-time to find ways to get recognition under a Copenhagen deal for all the money they send out of their own countries to buy offset credits for mitigation projects in the South. ECO can understand why - after all, if they don't count funds flowing through offsetting, developed countries would actually have to fulfill their commitments to find and pay the new and additional public money they owe.

They found the solution in a single word: 'rent'. CDM offset credits are sold at the marginal price set by the market, but most are generated at much lower costs, meaning a significant economic rent, or profit, is earned on the sale. It is this profit margin that the EU have been considering counting towards their public financing obligations under a Copenhagen agreement.

It seems the idea is catching on fast. On Wednesday night, US chief negotiator Jonathan Pershing was heard to claim the US would be trying a similar trick. At a stroke it seemed Annex I financing obligations could be slashed without any further effort required beyond clever accounting.

Except there is just one problem. The rent that accrues from the sale of CDM offset credits is captured not by developing country governments, but by private sector companies operating in developing countries. Unfortunately, there is no guarantee whatsoever that this money will be used to take additional mitigation measures in developing countries nor to fund adaptation to climate impacts amongst the poorest and most vulnerable people. It takes real creative accounting to consider this climate value for climate money.

So ECO would like to suggest some homework for the EU, US and any other developed country delegation considering this latest scam as they leave Bonn: think again about what climate financing is needed for. ECO suggests that a minimum of US$150bn annually by 2020 in public finance is needed to cover the incremental costs of mitigation and adaptation for developing countries to meet the <2˚C target. And not a penny of public money less.