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Saving Kyoto: modest progress but not enough 

First published in The Business Times on 27 December 2012
If there is one word that sums up the achievements of the recent UN climate talks in Doha, it is “modest”. It is little wonder that we are seeing that word time and again in media coverage of the event.

If there is one word that sums up the achievements of the recent UN climate talks in Doha, it is “modest”. It is little wonder that we are seeing that word time and again in media coverage of the event. Let’s start with the good news. The most important outcome is the continuation of the Kyoto Protocol, the legally-binding global agreement under which some countries had agreed to reduce their carbon emissions.

That agreement was due to expire at the end of 2012, placing a question mark over the future of carbon trading and market-based mechanisms such as the Clean Development Mechanism (CDM).

Delegates in Doha managed to agree a second period for the Protocol until 2020, albeit with a smaller group of countries involved, including the EU and Australia but not Canada, Russia or Japan. The countries still signed up for the Protocol account for only 15 percent of global emissions, which is disappointing.

But, on the bright side, a continuation of Kyoto provides ongoing policy direction to businesses based in those countries. It also leaves the infrastructure for carbon trading and market-based mechanisms in place. This is important because I believe the world is inching towards a global carbon market. Australia’s trading system is due to link with the EU’s in 2015 and there is talk of further links to come potentially involving China, Korea and others. By saving Kyoto, negotiators have avoided putting a massive crater in the road to a global carbon market.

The fact that the Kyoto Protocol will now run until 2020 means that it is due to complete at the same time that a new global deal on emissions reduction – agreed in Durban last year – is due to take effect.

We still have no real idea of what form that deal will take. The wording is fuzzy. It could be a “protocol”, “another legal instrument” or “an agreed outcome with legal force”. Doha did nothing to improve clarity around this but it did at least set out a timetable for working towards the new deal which is supposed to be agreed by the end of 2015.

The signals to business are that we are still heading, slowly, towards some sort of global agreement on climate action. Importantly, this will involve all countries including the high-emitting emerging economies such as China and India that were not part of the Kyoto Protocol.

The snail’s pace of the global political process on climate change frustrates many, but I predict it will accelerate sharply in the next three years.

There will be increasing world focus on the fact that the global aim of limiting average temperature rises to 2°C now seems almost impossible. Organizations including the World Bank and the International Energy Agency are making it quite clear that we are on course for temperature rises of 4°C or more by the end of the century.

While Doha did not deliver any increased commitments from major emitters, it did recognize the need for greater ambition. There will now be a review of the long-term temperature goal, intended as a “reality check”. The review is due to complete by 2015, so its findings can feed in to the final decisions on the new global deal. Ban Ki-moon, the UN Secretary General, has announced that he will organize high-level talks in 2014, recognizing that the engagement and commitment of world leaders is essential to achieving real progress.

And let us not forget that the UN-established climate science body, the Intergovernmental Panel on Climate Change, is due to publish its next reports in 2013 and 2014. My conversations with scientists working on that report make me think that report will make frightening reading.

A meeting of world leaders in the wake of that report might just create the new political momentum needed in the run-up to the crucial climate conference of 2015.

This article is contributed by Yvo de Boer, Special Global Advisor, KPMG Climate Change and Sustainability and Sharad Somani, Head of Climate Change and Sustainability Services, KPMG in Singapore.