Developing a sectoral new market mechanism – Wolfgang Obergassel, Hans Bolscher, Jeroen van der Laan, Jelmer Hoogzaad and Jos Sijm

Reflections on “Developing a sectoral new market mechanism: insights from theoretical analysis and country showcases”, by Wolfgang Obergassel (né Sterk), Hans Bolscher, Jeroen van der Laan, Jelmer Hoogzaad, Jos Sijm, published in Climate Policy, Vol. 15, issue 4

At the 2011 COP in Durban, Parties decided to establish a ‘new market-based mechanism’ (NMM) to promote mitigation across ‘broad segments’ of developing countries’ economies. So far, they have only defined some broad outlines of how it is to function. The Doha COP in 2012 identified ‘possible elements’ of the NMM to be addressed in the development of the NMM’s modalities and procedures but Parties have so far been unable to make progress on details. At last year’s COP in Lima and the recent session in Bonn, proceedings effectively stalled due to controversies about whether agreeing on details of the NMM at this point would prejudge elements of the Paris Agreement. Nonetheless, submissions by various Parties and groups of Parties such as the Environmental Integrity Group and the EU continue to advocate for the establishment of an NMM. For example, in its INDC, Switzerland explicitly indicated its intention to use the NMM for achievement of its post-2020 targets.

Our article in Climate Policy identifies available options for the NMM elements defined in the Doha decision and reviews these options against a number of criteria, including environmental effectiveness, economic efficiency, political and administrative efficiency, and others. On this basis, the article identifies options that are best suited to fulfil the main objectives of the NMM as decided at the Durban conference, namely, ‘to enhance the cost-effectiveness of, and to promote, mitigation actions’. In addition, the article analyses potential applications of the NMM for five country-sector combinations: the power sector in Chile and South Africa, the steel sector in Brazil, the refineries sector in Indonesia, and the cement sector in Vietnam. The analysis assesses the emission reduction potential that could be mobilized through the NMM as well as the institutional market readiness of the sectors.

Our analysis finds that, although there are often trade-offs, several design options recommend themselves for maximizing mitigation outcomes and economic efficiency. These include broad coverage, starting with indexed targets instead of absolute targets to enhance political acceptability and minimize the risk of over-crediting, keeping crediting/trading periods short to avoid long-term lock-in of low ambition, and establishing independent governance bodies nationally and internationally.

The examination of five country-sector combinations finds that lack of data and of institutions that could manage the NMM are key bottlenecks. In addition, the analysis reveals the existence of substantial no-regret reduction potential, suggesting that either the incentives to improve the efficiency of operations or the means to do so may be lacking, for example due to the existence of monopolies/oligopolies. Governmental capacity building and Nationally Appropriate Mitigation Actions (NAMAs) might be more appropriate in the short-term, preparing the ground for the adoption of market-based approaches at a later stage. For example, if a government has a preferential feed-in tariff for power generated with renewables, the NMM could help provide the financial means to increase the price differential with power from fossil sources or to increase the scope of the policy, either in terms of more expensive technologies or in terms of volume. Such a system would require less preparation than an entirely new programme because the institutional capacity is already largely in place.

Looking forward, the Paris Agreement will pose new issues for the NMM and market mechanisms in general. One key motivation of the NMM’s proponents was the desire to draw developing countries more strongly into global mitigation efforts. This objective may be deemed to have been overtaken by time, given that the Paris Agreement is envisaged to contain mitigation contributions from all Parties. The purpose of the NMM will therefore need to be recalibrated. The most recent submissions by the EU and the Centre for European Policy Studies (CEPS) suggest that the primary route for international emissions trading should be linking of domestic market-based systems. The NMM would in this view have a complementary role, covering countries that do not have domestic systems or do not meet eligibility criteria for linking their systems internationally.

Another aspect is that while the Kyoto Protocol’s Clean Development Mechanism (CDM) so far operates in an uncapped environment, in the post-2020 period, market mechanisms will to a large extent operate within the boundaries of countries’ contributions. In terms of accounting needs, market mechanisms operating in developing countries post-2020 will therefore be more similar to Joint Implementation (JI) than to the current CDM. If not properly accounted for, emission reductions could be claimed double, by both the host countries and by the credit buyers. Therefore, the Paris Agreement will need to contain clear provisions to prevent double-counting of emission reductions.

However, this may be easier said than done. If the pledges under the Cancún Agreements are an indication of what to expect, there may be a broad range of types of contributions under the Paris Agreement, including emission reductions relative to business as usual, intensity targets, low-emission development plans and strategies, sectoral mitigation plans and strategies, or individual policies and actions. How to reconcile transfers of emission units with some of these types of contributions is far from straightforward.

The work on how to operate market mechanisms under the UNFCCC is hence far from over.

From Lima to Paris, part 2: Injecting ambition – Michael Grubb, Heleen de Coninck and Ambuj D. Sagar

In Climate Policy’s latest editorial, Editor-in-Chief, Michael Grubb, together with Climate Strategies Chair Heleen de Coninck and the director of Indian Institute of Technology Ambuj D. Sagar, reflect on the current state of play in the climate negotiations in the run-up to Paris 2015.

They suggest that forming a plurilateral mitigation “club”, including those governments most committed to ambitious mitigation, would provide the most compelling, economically coherent and politically stable package for making genuine progress towards the global 2 degree goal.

They argue that three main areas of coordinated action by club members could mutually reinforce each other, lead to a positive dynamic, and deliver reciprocal benefits for those members.  These would be:
– A domestic price on carbon, or equivalent measures, appropriate to the stage of economic and climate policy development;
– Domestic technology programmes and international technology cooperation, spanning the full chain of innovation from R&D to accelerated international deployment of zero-carbon
technologies; and
– Agreed treatment of international trade in both energy/carbon-intensive commodities, and low-carbon technologies and products, potentially to be taken forward as a plurilateral agreement in accordance with the broad principles of the WTO.

Read the full Editorial, then come back to the blog to comment.  All Michael Grubb’s Editorials 2010-2015 can be found here (scroll to the bottom of the page).

Insights from South Africa – Emily Tyler and Brent Cloete

Reflections on “Combining price and quantity instruments: insights from South Africa”,  by Emily Tyler and Brent Cloete, published in  Climate Policy, Vol. 15 issue 3

The Paris COP in November 2015 is expected to usher in a dramatic change in the international climate negotiations. A global climate agreement is on the cards that for the first time will require all countries, both developed and developing, to undertake actions to combat climate change.  Exactly what form the agreement will take is unclear, however a new concept, Intended Nationally Determined Contributions (INDCs) will be central.  INDCs highlight an evolution of thinking within the UNFCCC processes. In 2009 the Copenhagen Accord called on developed countries to “commit to implement individually or jointly … quantified economy-wide emissions targets for 2020” and developing countries to “implement mitigation actions” on a voluntary basis.  In 2013, at COP 19, these two qualitatively different undertakings now converge into “intended nationally determined contributions … applicable to all Parties”. The Lima Call for Climate Action shed some light on what INDCs could look like, but significant discretion is left up to countries. INDCs are however expected to “represent progression beyond the current undertaking” of countries.

What this is likely to mean from the perspective of mitigation policy development at the country level is that a growing number of developing countries may offer quantitative mitigation aspirations, and that quantity based mitigation policy instruments are thus going to be required.  In many of these countries, including South Africa, an Emissions Trading Scheme, the most efficient way of addressing a quantity goal, may not be appropriate for various reasons.

The 2011 South African National Climate Change Response Policy (NCCRP) called for both a broad-based carbon tax (which had already been under development for quite a while by the National Treasury) and a “carbon budget approach” to drive mitigation action.  At the time it was not clear exactly what form this carbon budget approach would take, but it was expected that it would include the use of quantity-based policy instruments to drive emissions reduction outcomes.  The Department of Environmental Affairs rightly identified that combining the use of a broad-based price instrument (the carbon tax) with quantity-based instruments could lead to policy incoherence and potential unintended consequences if not managed carefully, and it commissioned the research underpinning our paper in Climate Policy to consider how these two approaches could be integrated successfully.  The analysis showed the complexity of such an undertaking, and how beneficial developing both in a co-ordinated manner could be to policy coherence, efficiency and effectiveness.   We hope that the analysis in our paper of the challenge of combining price and quantity policy regime in South Africa will be useful for countries that put forward quantitative contributions as part of their INDCs.

However since our analysis, very little further attention has been paid to this issue in South Africa. The National Treasury has been working incrementally on the carbon tax, and it has successfully remained an item within each successive Budget.  The Department of Environmental Affairs has focused on fleshing out the carbon budget approach, which combines voluntary (initially, at least) sector-level emissions targets (referred to as Desired Emission Reduction Outcomes or DEROs) and company-level carbon budgets. But there is no influential platform for engaging with the design of both approaches together, and exactly how these approaches will interact has not been finalised.  It is also not clear to what extent the two departments driving the different approaches have a common vision of how local mitigation policy is to be implemented (i.e. the role of market-based versus regulatory approaches, the importance of economic versus environmental integrity, etc).

The inability to co-ordinate at a departmental level is most likely rooted in two related factors.  The first is the lack of an executive level commitment to the low carbon agenda beyond the rhetorical. The National Development Plan speaks to both a carbon price and carbon budgets within an ‘equitable transition to a low carbon society’ in its environmental chapter, but these concepts are not integrated into the remaining chapters covering Economy and Employment, Economy Infrastructure, etc. There are major inconsistencies between the National Climate Change Response White Paper, other government policies like the Industrial Policy Action Plans, and the ruling party (ANC)’s State Intervention in the Minerals Sector strategy document.  The country’s on-going and deepening electricity crisis has deprioritised the low carbon issue further down the political agenda, with unanswered questions around the role of a carbon tax in an environment of an electricity monopoly and steeply rising electricity prices.

Secondly, the lack of an explicit strategy as to how the country will transform from one with a high dependence on coal and mining at a central level makes it very difficult for departments to work this out individually. How will the losers in this transition be dealt with? A low carbon transformation is in any event an extremely difficult challenge for South Africa’s coal- and minerals-based political economic structure given the broader development context of fragmenting governance, skills scarcity, resource constraints and corruption. Without a strong steer from the centre, it is going to be very hard to ensure consistent policy implementation.

The South African experience appears to be exemplifying that in developing countries mitigation policy is complicated by complex political economy backdrops (ranging from excessive market power in some sectors to very interventionist government policies in others, often driven by opaque goals), limited capacity (which ironically can lead to very complicated policies as seemingly clever ideas remain unchecked), pressing developmental challenges, and a lack of coordination.  Within such a context, policy co-ordination is especially challenging, and it is likely that what is currently considered unorthodox climate policy approaches in the developed world will become more prevalent.

The paper to which this post relates is thus very topical from a South African, and increasingly from a broader developing country perspective. Both a broad-based carbon price and quantity instruments are quite far down the line in terms of development in South Africa, and it looks as if the issue of how these approaches are going to be aligned is only going to be addressed as they move towards implementation. As suggested in our paper, this is going to seriously complicate the task of aligning these two approaches. And the risk exists that many, if not all, of the potential benefits of combining price and quantity instruments may be lost. Whatever happens, though, this will provide an interesting case study for other countries that are considering going down the same route.

Emily Tyler and Brent Cloete

The Political Economy of Readiness for REDD+

Scientists with the ASB Partnership for the Tropical Forests Margins at the World Agroforestry Centre have published a special  issue in Climate Policy vol.14, no. 6, that focuses on the Political Economy of Readiness for REDD+, guest edited by Dr Peter Minang and Dr Meine van Noordwijk.  All articles in this special issue are available for free as “open access” publications.

The REDD+ process is an internationally agreed mechanism whereby developing countries are rewarded for reducing emissions through various actions that include reducing emissions from deforestation, reducing emissions from forest degradation, conservation of forest carbon stocks, sustainable management of forests, and enhancement of carbon stocks. The structure is such that countries can get ready to implement REDD+ by going through several steps in which their technical, institutional and political capacities are developed. But circumstances at the national level offer a different reality altogether.

According to the special issue, the process of REDD+ readiness is shaped by a host of complex political and economic factors largely influenced by the national environment, history and circumstances specific to each country.

“The game changes at country level, and the process has to account for complex political and economic realities involving multiple actors, institutions, political and sectoral ideologies that require an iterative, rather than a simple linear, global process,” says Dr Peter Minang, one of the special issue editors.

The special issue covers six papers, and a substantive editorial, four of which focus on the process of REDD+ readiness in different countries –Cameroon (two papers), Indonesia, and Peru- and the interplay of various national political economy factors that affect the process. Another paper on Kenya presents a case study emphasizing the role of the private sector and the learning loops between subnational and national level processes.

Key messages from these country case studies include: i) That readiness progress has, to a large extent, been shaped by historical forest governance dynamics (showing path dependency), implying that great effort is needed to achieve concrete emission reductions through REDD+; ii) Attention should also be given to the subnational processes as they determine the level of success at national and international levels; iii) Readiness processes need to pay more attention to drivers, and potential levers, of deforestation in a substantive way, given that this is largely determined by political economy dimensions.

A further paper (Minang et al) is an overarching global comparative analysis study that develops a new readiness assessment framework that was used to analyze how the REDD+ process plays out in these countries and monitor how it has evolved. The framework has potential for wider application.

Ultimately, there is no denying that REDD+ initiates structures and offers lessons that are useful to the next focus of efforts exploring efficient, practical ways to reduce emissions.

Global Climate Policy Conference 2014 – summary and reflections

by Heleen de Coninck along with CS and CDKN teams

What can researchers contribute to the current efforts to break the logjam at the international climate change negotiations? Over 80 participants representing various groups of stakeholders gathered at ODI in London on May 7th and 8th to take part in the first Global Climate Policy Conference. The organisers – Climate Strategies and CDKN – wanted to provide a space for discussing new ideas provided by researchers in a variety of climate fields, that could push climate negotiations forward and contribute to breaking the deadlock. Issues and perspectives seem to come and go in the negotiations in what can seem to external stakeholders like confusion and isolation. The conference agenda was based on solid contributions from researchers taking some of these issues and subjecting them to rigorous analysis. Does “green growth” really offer a new narrative for achieving climate progress? Are the notions of equity behind the original UNFCCC treaty changing? Are aspirations for effective levels of public and private financing at all realistic? Does the idea of “clubs” of countries cooperating on adaptation, mitigation or both, hold promise or will it undermine the chances of a global solution? These and other questions were tested by presenters and an invited audience, mainly pf experts in their field, with enough time to hold the issues and positions up to the light and debate them fully.

In the opening session chaired by Mattia Romani of GGGI, the conference started with changes in economic thinking bearing on sustainability. Carlo Jaeger and Michael Grubb presented their ideas on sustainable development and green growth and whether this was a “new focus or an optical illusion”. Carlo Jaeger emphasized that the green growth idea could be helpful but that the narratives behind it need development. One such story was told by Michael Grubb, whose book “Planetary Economics”, based on over 20 years of policymaking and academic experience, observed that for transformative change, it is not helpful to argue over whether standards and regulation, markets and pricing or strategic investment (in infrastructure, knowledge or innovation) would deliver the best result. As contexts differ, we need experimentation and implementation in all of these policy pillars. Focusing on only one will lead to disappointing results, as all have shortcomings. For a global agreement, the lessons learned in the Planetary Economics approach contain useful lessons, for instance for NAMAs, the Technology Mechanism and carbon markets. Respondent Radhika Perrot, from South Africa confirmed that all three pillars were recognized as important, but not consistently observed, in her country’s strategy for green growth.

In a session chaired by Ambuj Sagar of IIT, on how mitigation and adaptation packages could secure finance, Jose Garibaldi explained how current initiatives between like-minded countries in Latin America and the Caribbean were succeeding in “cross-subsidisation” of local mitigation policies through adaptation mainstreaming and country to country cooperation. Adaptation, over time, was a bigger cost for most countries than mitigation, and the case for support in adaptation was improved if action on mitigation could be demonstrated. Progress could be made if language was changed to emphasise differentiated but ambitions action by all, a “small is beautiful” approach, the availability of support, and the benefits of crossing the boundaries of the traditional negotiating groups.

A conclusion from these two sessions was that cooperation in clubs, or coalitions of the willing, could be a useful complement to UN-based systems. Examples like the Quisqueya case that Jose Garibaldi introduced could be formed by clubs of countries where cost of climate change exceeded their mitigation costs. Michael Grubb argued that coalitions of countries that depend on fossil fuel imports could work for agreeing on mitigation. In the consensus-based UNFCCC negotiations, countries who do not share such interests could block such deals. Tom Brewer argued that such clubs could be helpful by forming coalitions that further efforts, but also highlighted risks of exclusion and regulatory capture. The idea of clubs (covered more extensively in the last session) could be also risky, as boundaries in the negotiations are often deep-rooted in history, emotions and tactics – argued Michael Cutajar, who went on to chair the next session on CBDR.

Common but differentiated responsibilities and respective capabilities (CBDR/RC) is a term that almost defines the UN Convention on Climate Change, but could use a rethink, argued both Xiaohua Zhang from the perspective of China, and Christoph Schwarte from an international legal perspective. Xiaohua Zhang argued that the term remains highly relevant, but more differentiation than Annex I/ non-Annex I is now needed. He introduced a grouping of developing countries with high capabilities to implement low-carbon growth strategies: “Capable DCs”. Christoph Schwarte ran through the recommendations of the recently-completed work of the International Law Association. He argued that in the spirit of the Convention, the distinction between developed and developing countries should to some degree be maintained but that more differentiation is needed, and mentioned a “spectrum of States’ commitments” and making a framework more flexible in order to manage the remaining atmospheric space as a common natural resource. The implication of this latter suggestion would need to be further investigated.

In Sonja Klinsky’s presentation at the session on equity and fairness, chaired by Daniel Klein of UNFCCC, socio-psychological viewpoints of what people perceive as fair played a crucial role. She argued that there was not a single concept of equity, and often what is fair cannot be easily expressed in words or argued. Sometimes, something just is not fair. The ultimate injustice done to people or groups occurs in situations of war. Still, some communities succeed in overcoming the aftermath of war; peace and reconciliation processes can provide useful lessons. To agree on a way forward after injustice, perpetrators need limited liability; a limit to the claim that can be put on them. Victims need a new deal, or a structural change that convinces them that things will get better. This was summarized as ‘backward-looking justice and forward-looking peace’. It was also noted that compensation payments can undermine such an approach, and that it is important for all participants to have a sense that there is procedural justice. A conclusion could be that future narratives about a climate-resilient future that are credibly implemented (forward-looking peace) could be accompanied by gradually phasing out the rhetoric of historical responsibility (backward-looking justice).

Ari Huhtala of CDKN chaired the session on private climate finance, where Christa Clapp spoke about growing investor interest in green bonds, renewable energy in China and divestment campaigns. While more investment from the private sector should be encouraged, governments, researchers and UNFCCC have lots to do to create an enabling environment and to reach a scale that could make a difference. Problems along the way include adequate definitions or certification of “green” , to avoid the re-badging of BAU, achieving sufficient liquidity in the green bond market, persuading Governments to engage in de-risking (there were examples from developing countries, but the financial crisis has made all governments nervous about putting their balance sheet at risk), and persuading more investors that “green” is not just a synonym for “poor returns”. Different views were expressed about the importance of disclosure of risks and green activity by companies.

The last session, chaired by Heleen de Coninck, focused on clubs.Carlos Rossi presented a proposal by Peru for COP20 in Lima. The key was technology integration approaches, with a new focus on regional technology centres, producing technology that can be widely shared in a global pool. Globalization of technology, regionalization of application and diffusion, respect for capabilities and trade implications all played a role in the Peruvian proposals. Tom Brewer highlighted an area where such integration of technology could be furthered by developing the “club” approach: reducing methane leakages from LNG transport and processing, where emissions are increasing as a consequence of booming LNG trade globally. Such an agreement could develop general rules for methane leakage, certify exporters, importers and shippers, and verify whether agreed leakage rates are not exceeded. However, the incentives on clubs to achieve real reductions, and the possibility of undermining the international approach to a global problem, needed to be watched carefully.

Simon Maxwell of CDKN brought the conference issues together. Climate policy would not make progress unless it was grounded in research, linked to theory, multidisciplinary to reflect the “wicked” nature of the problem, alive to the changing structure of the world economy, and connected to the intellectual trends that moved today’s politicians, the public, and other stakeholders. The conference could not find all the answers, but asking the right questions was a major advance; it should never be forgotten that even policy research had to follow the basic rules of research: generate testable propositions and, for each of them, do the work necessary to assemble the evidence and refine the hypothesis.

Looking back over the event, other participants raised issues about effective and acceptable developing country participation and agenda-setting, capturing and accelerating the signs of positive momentum in the areas of finance, clean technology and donor initiatives, how technology can be developed for all and not just for the elites, and how to educate the public, generate a social movement and allow and help individuals across the world to look beyond their personal self-interest.

What happens next

The conference proceedings are being made available on video, accessible from the CDKN and Climate Strategies websites. A summary will be presented in a UNFCCC side-event in the Bonn Negotiations in June, featuring some of the papers presented to the conference. The full presentations will be assembled in a peer-reviewed publication which will appear later in the year. And Climate Strategies will be picking the most suitable issues and ideas from among those presented to turn into substantive research projects.

The general reaction to the conference so far has been very favourable; if this continues a further conference in the run-up to the UNFCCC Paris negotiations in 2015 will be considered, perhaps in a form that allows a multidisciplinary “laboratory approach” to some of the most intractable issues.

Signed: Heleen de Coninck along with CS and CDKN teams

 Climate Strategies and CDKN wish to thank all presenters, chairs, respondents and participants for a though-provoking event, and express their hope that such questions, and many others, may get addressed at the Global Climate Policy Conference 2015 – which – we hope – will become an annual event. Please let us know your interest in participation by emailing: info@climatestrategies.org

Presentations as well as the video from GCPC 2014 are already available on Climate Strategies website.

Conference contributions by the speakers along with the summary of the discussions will be published in late August / early September 2014 in a professionally edited volume. Please check Climate Strategies and CDKN websites for announcement (www.climatestrategies.org and www.cdkn.org)

The UNFCCC – 20 years on

By Joanna Depledge, Cambridge

Twenty years ago today, on 21 March 1994, the United Nations Framework Convention on Climate Change came into force.   The world was, of course, very different then.  The EU had only 12 members.  The Russian Federation and Eastern Europe were in the throes of massive political and economic dislocation.  The internet was in its infancy, and unheard of throughout much of the globe.  Mobile phones were newfangled gadgets for business executives (and only made phone calls).   The idea that PV solar technology might bring telecommunications – largely through mobile phones – to vast swathes of Africa was pure fantasy.  Oil cost under $14 a barrel.  China’s impending dominance over the world economy was on the horizon, but still far out into the future.   The idea that Asian companies would end up “owning” substantial parts of Western industries would have seemed fantastical to mainstream analysts.

Climate change was just emerging as a major issue on the international stage.  Public awareness was limited, especially so outside of North-Western Europe.  National emissions data was sparse – few countries, outside the most advanced, knew much about their own emissions profile.  Carbon trading was but an eccentric idea peddled by maverick academics.  The notion of funding carbon offset projects in developing countries to gain emission credits was almost taboo (remember AIJ – Activities Implemented Jointly?).  Atmospheric CO2 concentrations had risen to around 359 ppm, but the landmark figure of 400 ppm – now inevitable within the next two years– was reassuringly distant.  Most significantly, there was still time to act, and a sense of optimism that temperatures could be stabilized at a safe level.

Since then, the climate scene has become much bleaker.  Advances in climate science have brought more bad news than good.  Global emissions have risen by 50%, and the upward trend shows no signs of decelerating.  Although emissions have largely stabilized, or even fallen, in many (not all) of the richer OECD nations, these gains have been cancelled out by huge increases in many developing countries.  The prospect of limiting global temperature rise to 2 degrees is growing slimmer by the day.

This lack of concrete progress in curbing emissions trends is an inglorious feature of the UNFCCC’s first two decades.  There are many reasons for it.  One is the lack of effective institutional mechanisms for countries to automatically “graduate” into stronger commitments, once they reach a certain level of development.  The major Asian and Latin American economies have therefore grown over the past 20 years without any serious prospect of future constraints on their carbon emissions.  This was no oversight – some of the countries that were first in line to face pressure to curb their emissions growth (read China, India and the oil exporters) made quite sure such mechanisms were not included in either the Convention or the Kyoto Protocol.  The fact that the US is such a laggard on climate change – as reflected in its persistently high emissions, in aggregate and per capita – has made it infinitely more difficult to persuade these emerging powers that they should restrain the growth in their carbon emissions.  The distancing of Canada, Japan and the Russian Federation from the Kyoto Protocol – and Australia’s negative domestic stance – has made things much worse.

A frustrating feature of the climate landscape is the apparent disjuncture between domestic action and the international negotiations.  This is a theme taken up by Michael Grubb in his Editorial in the latest issue of Climate Policy (vol. 14, issue, 3) – out soon.  In many countries, notably China, some US states, Mexico, South Korea, Brazil, South Africa and elsewhere, there are promising moves towards effective emission reduction policies and a lower-carbon development path.  And yet these do not follow through into a positive “can do” atmosphere in the negotiations – anything but, as (almost) everyone tries to argue why they should do less than anyone else.  Why?

This disjuncture – where the UNFCCC negotiations always reflect the lowest possible ambition – is also apparent in the context of other international arenas.   It is becoming almost commonplace, now, for major countries to make solemn pledges and promises in bilateral or multilateral (eg G20) forums, not to mention such big jamborees as Rio+20, only to renege on these in the UNFCCC or related negotiating forums (China’s reported failure to follow through on bilateral promises made before Copenhagen is an obvious example; India’s alleged backtracking on G20 pledges to soften its stance on HFC controls is another).  Why?  There are many puzzles here for students of international relations.

And yet the story of the UNFCCC is much more complex, and perhaps more positive. Counterfactual questions are impossible to answer, but this one is worth posing – where would the response to climate change be without the UNFCCC?  Consider the following achievements – many of them largely unsung – of the Convention:

  • Massively raising awareness of climate change, and throughout the world.   Part of the reason why the climate negotiations are becoming more difficult, is because there is a whole new crop of countries – rather passive in the early days – that are now actively participating in the talks, with high levels of awareness and understanding of their own particular interests and concerns.  In the long run, this can only be a good thing.
  • Keeping climate change on the political agenda.  The annual cycle of negotiations ensures that climate change can never fall completely off the international radar.
  • Catalysing action on the ground, even in laggard countries, and even without the imperative to comply with legislation.  Without the awareness-raising and agenda setting of the UNFCCC, would California have set up its own trading scheme?  Would Abu Dhabi and Qatar be rebranding themselves as pioneers of the green economy? Would certified carbon neutrality have become fashionable among large business brands?
  • Establishing a rigorous reporting and review regime.  Over 40 countries have now been reporting their greenhouse gas emissions, in considerable disaggregated detail, on an annual basis for nearly 20 years.  The quality of these emission inventories has increased significantly over time, largely due to training materials and opportunities within the UNFCCC.  This knowledge is passing on to the developing countries, who are now required to submit biannual reports on their emissions.  This extension of the reporting regime for developing countries is a huge recent achievement in the negotiations.
  • Setting a limit on global temperature rise.  The 2 degree goal may be inadequate for some, too ambitious for others, and legally unenforceable, but it is there, and provides an important marker towards establishing commitments that are actually based on science.
  • Pioneering new ways of controlling emissions, through emissions trading and offset mechanisms.  It is difficult to imagine, now, how controversial the market mechanisms were when they were first launched under the Kyoto Protocol.  Emissions trading and the offset mechanisms – joint implementation and the CDM – were largely untested and required sophisticated rules and regulations that would enable transparency and rigour, while attracting investment.
  • Designing a ground-breaking emissions accounting system.  The credible functioning of the market mechanisms required the establishment of unprecedented system for accounting of emission transfers.
  • The market mechanisms under the UNFCCC/KP have catalysed a multitude of trading schemes around the world aimed at controlling emissions, now increasingly so in developing countries.
  • For all its flaws (well rehearsed in the literature), the CDM has engaged a wide group of countries for which the notion that saving carbon could generate value was previously alien
  • Making progress on deforestation.  Although the REDD+ mechanism is perhaps not as ambitious as initially hoped for, the climate change regime – under the UNFCCC – seems to have made more progress in setting up concrete mechanisms to reduce deforestation than in many other areas of specifically forestry negotiations in the international system.
  • Harnessing and leveraging funding for mitigation and adaptation.  There will never be enough money to tackle climate change, but without the UNFCCC and its funding arms, there would be a lot less.  The climate change regime has also pushed other multilateral funding institutions to up their game on climate finance.

Perhaps most importantly, the regime is inching towards the ultimate goal of an emission control regime that covers the globe.  Until Bali in 2007, the issue of concrete emission targets for developing countries was the great unmentionable in the negotiations.  Now, all but two (Iran and Saudi Arabia) of the top 20 GHG emitters have quantified emission pledges on record.  This is a huge political turnaround.  For all their blustering and posturing, the negotiations are – gradually – moving forwards and starting to deliver.   The negotiating process – and the wider response to climate change that takes its cues from it, and in turn feeds back into it – is desperately messy, but it is nudging the world towards a lower carbon future.  Of course, it may all be too little too late, but one important lesson from the history of economic and technological transformation is that, once change gets underway, it can happen much faster than could ever be expected.  The contrasts between the world of 1994 and of 2014 pay testimony to this, even if those changes have not all been in the right direction for climate change.  The next two decades may well be the ones in which low-carbon systems finally take hold and start to steer global emissions onto a downward trend; and indeed they will have to be, if we are to stabilize global temperatures at anything resembling a safe level.  Progress under the UNFCCC during its first 20 years has laid the groundwork for this transformation.  The next 20 years must build on those achievements.

Happy anniversary UNFCCC!

Going beyond two degrees? – Tim Rayner & Andrew Jordan

Going beyond two degrees? The risks and opportunities of alternative options                     in Climate Policy Journal, Vol. 13, issue 6.

As the Conference of the Parties to the UN Framework Convention on Climate Change convenes for the 19th time in Warsaw, the likelihood that the world can fulfill the Convention’s ultimate objective of avoiding ‘dangerous climate change’ is looking ever slimmer. Since the mid-1990s, that objective has been widely interpreted as preventing a mean global temperature increase of more than two degrees Celsius. The increasing likelihood that the two degrees target will not be achieved was re-iterated by results of the Intergovernmental Panel on Climate Change’s (IPCC) science report published in September. It shows that the target implies a remaining global carbon budget equivalent to about one third of the greenhouse gases pumped into the atmosphere since industrialisation. At present rates, this budget could be used up entirely by 2040.

In a new Open Access paper in Climate Policy (Vol. 13, issue 6) written with colleagues from the Tyndall Centre, we argue that however uncomfortable a prospect, the time is now ripe to debate the future of the two degree target as the central aim of international climate policy. If the opportunity is not taken, by 2020 international climate policy could be premised on a target widely acknowledged to be unrealistic, leaving policy with even less credibility and society under-prepared to adapt to a significantly warmer world. Our paper begins to identify, for the first time, key uncertainties, risks and opportunities associated with four policy alternatives:

  • Adjust climate policy to an amended goal of ‘Mitigate for 2 but adapt for 4 degrees’, thereby ‘hedging our bets’ by taking steps to adapt to higher temperatures whilst stepping up to a higher level of mitigation effort.
  • Adopt new goals’: since the two degrees target appears unable to stimulate significant decarbonisation in the short-term, more specific and near-term targets should be adopted.
  • Be politically more pragmatic’: society should accept that science-informed targets such as two degrees have failed to drive change and instead concentrate on taking politically achievable steps in the short to medium term (without an explicit ‘target’ structure).
  • Re-commit to staying within 2 degrees’: the growing likelihood, recently confirmed by the IPCC, of high rates of warming makes it even more important to recommit to what it referred to as “substantial and sustained reductions” in GHG emissions, whatever the cost.

Significantly, therefore, one of the possible options is to acknowledge how radical the changes required to deliver two degrees would really be – potentially including restrictions on economic growth and exploring new definitions of prosperity – and to act meaningfully on this acknowledgment. However politically unpalatable this may be to western societies, could it be that given the choice, citizens might prefer this radical future to the kind of radical future associated with dangerous climate change?

Tim Rayner and Andrew Jordan                                                                                                    Tyndall Centre for Climate Change Research                                                                          University of East Anglia