Displaying great diplomatic skill, Mexico has brought the UN climate change process back from the brink. After the generally perceived failure of the Copenhagen Climate Change Conference in December 2009, trust has been restored in the negotiations, important political principles have been captured in a series of decisions and significant advances made on finance, technology, action to address deforestation and intensified reporting obligations. Important questions regarding the legal framework for the long term response to climate change remain unresolved and clarity on the future of markets could not be resolved, leaving a significant challenge for next year’s climate conference in Durban. The main sense however, is that the process has moved forward significantly and that new energy has been injected into the multilateral process.
Faced with the daunting challenge of picking up the pieces from the Copenhagen Climate Conference, the Mexican Government sensibly set modest expectations and went on to deliver well beyond them. In the immediate aftermath of Copenhagen, the ability of the UN to deliver on a complex issue such as climate change was called into question. The continuing economic crisis and failure to adopt climate change legislation in the U.S. Senate further complicated the political landscape, with many doubting the willingness of nations to aggressively address climate change when many key economic issues crowd the international agenda.
Major investments were made by President Calderon, Foreign Minister Espinoza and her team in restoring trust in the process. A series of informal ministerial meetings organized throughout the year and during the conference itself brought political leadership and trust back to the process. At the same time the Mexican hosts placed their trust in the formal documents under negotiation, rather than coming with own texts of the kind that created so much suspicion in Copenhagen. These careful efforts were more than rewarded.
Cancun was able to incorporate many key political elements that had been agreed upon informally in Copenhagen into formal decisions of the conference. The long term goal to maximize temperature increase to 2 degrees centigrade is now universally embraced, as is the need to revisit the adequacy of this target by 2015, based on the latest scientific findings. The commitments to limit and reduce emissions made by some 100 countries in the aftermath of Copenhagen are now formally recognized and will be subject to intensified procedures for reporting, consideration and verification. Financial promises made to assist developing countries in reducing their emissions and adapting to the impacts of climate change has been firmly anchored. US$30 billion in short term finance for the period of 2010-2012, rising to US$100 billion per year from 2020 on will be mobilized. New institutions have been created to manage significant portions of this financial flow and to enhance technology deployment, capacity building and national adaptation programs. A phased program to support countries in addressing deforestation has also been launched.
The main outcome of the Conference - the Cancun Agreements - consists of a ‘balanced package of decisions’ under the Convention and under the Kyoto Protocol. While the Cancun agreements do not provide clarity over the future of the Kyoto Protocol and its second commitment period, they reaffirm the intention to avoid the gap between the commitment periods. They formally recognize the emission reduction pledges for the post-2012 period submitted by developed countries since Copenhagen, and require that developed countries implement low carbon development strategies. Developed countries will be required to intensify their reporting on emissions, actions taken to reduce emissions and on financial support provided to developing countries. They will be expected to submit annual emission inventories and bi-annual reports on progress. To develop the details for these requirements, a work program to enhance guidelines for reporting and review, including development of common reporting formats and methodologies for finance was launched in Cancun.
Developing countries, according to the Cancun agreements, will implement nationally appropriate mitigation actions (NAMAs) in the context of sustainable development, aiming at a deviation in their business-as-usual emissions by 2020. The agreements formally recognize the planned actions to reduce or limit greenhouse gas (GHG) emissions communicated by developing countries since Copenhagen and are open to countries making further pledges. At the moment more than 40 developing countries had submitted, in the course of 2010, their proposed or planned mitigation actions. These planned actions will be compiled in a new document and will be placed within the formal framework of the United Nations Framework Convention on Climate Change (UNFCCC).
The Cancun agreements also set up a registry for developing country actions (NAMAs), which will record the proposed actions, external support required for their implementation and the support being offered by developed countries, and will facilitate matching of actions with support. While the details of the mechanism remain to be developed, the agreement launched a work program on the modalities for NAMA support and measurement, reporting and verification (MRV) of actions and support. It was also decided that developing countries will enhance their reporting on GHG emissions and actions undertaken. National communications will need to be submitted at least every four years, complemented by bi-annual update reports on emissions and mitigation actions undertaken, taking into account countries’ national capabilities. The bi-annual reports will undergo an international consultation and analysis process. Mitigation actions by developing countries that receive international financial support will need to go through an international MRV process, while national support can be measured, reported and verified through a national procedure, in line with the guidelines to be established in the future by the Conference of the Parties (COP).
The area of most concern to the private sector is the role of carbon markets in the future: the Cancun Agreements confirmed that the existing market-based mechanisms under the Kyoto Protocol (such as the Clean Development Mechanism (CDM), Joint Implementation (JI) and emission trading) will continue to be available as means to meet emission reduction targets. This gives a much needed renewed signal of confidence to investors. At the same time, little progress has been made on determining the shape of new market-based mechanisms under the Convention. It has been agreed that this work should continue in 2011 and carry forward the existing market mechanisms, while input from Parties and observers is requested on the shape of the new mechanisms by 21 February 2011. Important decisions have been made in the area of finance. In addition to formalizing pledges for financial support made in Copenhagen, as noted above, the Cancun agreements established a Green Fund, which will act as the main financial entity under the Convention, replacing the Global Environmental Facility in this role, and provide financial support to developing countries in combating climate change and adapting to its impacts. The World Bank has been designated as the Trustee of the Fund.
Furthermore, it has been agreed that developing countries should aim to implement actions to reduce emissions from deforestation, forest degradation and forest conservation (REDD plus), in which the activities are to be implemented in stages. Financing options to support these activities will be considered at the 2011 talks. To facilitate adaptation to climate change impacts that cannot be avoided, the Cancun Framework on Adaptation has been adopted, with an Adaptation Committee established to facilitate implementation. Of interest to the private sector is the work program launched in Cancun to consider mechanisms to address loss and damage, including insurance mechanisms. This was established to strengthen regional centers and networks on adaptation.
The Cancun agreements also established a framework to promote technology development, deployment and transfer internationally. A new institution was established to facilitate this- a Technology Executive Committee, as well as a Climate Technology Centre, which is tasked with developing a technology network and providing advice, information & training, enhancing cooperation and facilitating partnerships in this area. To work out the details of action to enhance technology development and transfer, a work program has been launched from now until 2012. Another notable outcome of the Cancun conference was the decision on the continued improvements to the CDM. While some key issues of the CDM reform have not been addressed, such as the details of the appeals procedure, there were several significant wins for the private sectors in this area in Cancun. The decision to include Carbon Capture and Storage (CCS) as an eligible CDM project activity, taken in Cancun, has long since been advocated by many in the private sector. The decision on CDM also creates a loan facility for countries with ten CDM projects or fewer, which will help cover the costs of project development and registration. Several improvements were also requested from the CDM’s governing body, including standardization of baselines and improving guidelines for programatic approaches, which will, among other things, allow for implementation of city-wide programs under the CDM.
Important issues however do remain unresolved. Many of the institutional frameworks created will have to be fleshed-out over the coming year, subject to final approval in Durban. The future of market-based mechanisms is recognized in principle, but their nature and scope is undecided, which is of major concern to the private sector. Private sector investments are key to a low carbon future. Without clear policies and frameworks, private financial flows will not be mobilized and as a consequence climate goals will remain out of reach. Defining a clear and robust role for markets must be a top priority for Durban.
The future of the Kyoto Protocol, which bedevilled talks in Copenhagen and continued to do so in Cancun, also remains unclear. Canada, Japan and Russia have made it abundantly clear that they see no future for a treaty that fails to bind the US and major developing countries such as China and India. Developing countries on the other hand have been unequivocal in maintaining that without Kyoto there is no future for a broader regime. This issue will have to be resolved in Durban, if the good progress made in Cancun is to have a real future.
Three possible ways of dealing with this conundrum present themselves. The first – a somewhat unlikely option – is to persuade Canada, Japan and Russia that the broader progress made should not prevent Kyoto continuing to exist in parallel to a new treaty. This option is unlikely since it would mean a legally binding commitment for all industrialized nations bar the United States. A second option would be to ignore stated opposition, launch a second Kyoto period and hope that it enters into force. This option is highly unlikely to succeed, since without consent of the objecting countries, the necessary trigger for entry-into-force (55% of industrialized country emissions covered) would not be reached. The third, and perhaps most promising, option is to give such force of conviction to the foundation Cancun has laid, that moving forward with two separate legal instruments is generally seen as meaningless. Getting to this option is no mean feat. In all probability it implies accepting the end of international legally-binding commitments since the U.S. will not enter into one without China doing the same and vice versa. This, added to the inadequacy of commitments currently on the table, remains a very difficult bridge for many nations to cross. South Africa will have to bring all its diplomatic skills to bear if the resurgence seen in Cancun is to be sustained.
Blog posting from Yvo De Boer , Global Advisor, CC&S