The Failure of Political Leadership on Climate Change

Despite 26 years of international negotiations on reducing greenhouse gas emissions, these emissions have been steadily rising. It is clear that world leaders are incapable of committing themselves and their nations to the required measures. I witnessed this first hand last Thursday when I watched Wales' First Minister dodge question after question on whether he would take the necessary action.

Right: Carwyn Jones, Wales' First Minister.

A brief history of climate change and global negotiations

In June 1988 politicians and scientists attending the World Conference on the Changing Atmosphere in Toronto concluded that "humanity is conducting an unintended, uncontrolled, globally pervasive experiment whose  ultimate consequences could be second only to a global nuclear war." The conference recommended a 20% reduction by 2005. At this point the concentration of carbon dioxide in the atmosphere was 350 ppm.

In November that year the new Intergovernmental Panel on Climate Change (IPCC) has its first meeting in Geneva and was charged by the United Nations with assessing the state of scientific knowledge on climate change, evaluate its impacts and come up with realistic solutions. In August 1990 it produced its First Assessment Report. Subsequent reports have only changed the detail, not the general conclusions.

At the Rio Earth Summit, two years later, 154 nations took responsibility for the overwhelming majority of emissions and pledged to "aim to stabilize" those emissions at 1990 levels by the year 2000. But the Kyoto Protocol wasn't ratified for a further five years. It bound 38 industrialized countries (called Annex 1 countries) to reduce greenhouse gas emissions by an average of 5.2% below 1990 levels by 2012. Concentration of CO₂ has now reached 358 ppm.

Later, President Bush made sure the United States never ratified the agreement and Canada withdrew in 2011. In 2012 an agreement for a second commitment period has never entered legal force.

In July 2009, G8 countries agreed that 2 degrees Celsius of average global warming above pre-industrial levels is a limit which should not be exceeded, but this would mean reducing global greenhouse gas emissions by at least 50% by 2050 and emissions from developed countries should be reduced by 80% or more. It is agreed that global emissions must peak and then decline rapidly within the next five to ten years for this to be achieved.

In November of that year the Copenhagen Accord was signed to endorse the continuation of the Kyoto Protocol, but it is not a legally binding document. Concentration of CO₂ in the atmosphere then reached 388ppm.

Now we are looking towards a legally binding global agreement next year, when concentrations of CO₂ in the atmosphere will be 400 ppm, but it will not take effect until 2020, and then it will still take some time for any effects to kick in.

Meanwhile, concentrations of greenhouse gases in the upper atmosphere continue to increase:



It's for this reason that I'm extremely pessimistic that it is possible for national leaders, whose agendas are all short-term, whose interests are local and subject to lobbying from special interest groups, have the courage or capacity to show the required level of leadership. Even Obama's recent efforts fall far short of the true level required.

Carwyn Jones plays the politicians' game



The basis for his extreme pessimism was confirmed for me last Thursday. I had been invited to give evidence to the Committee for the Scrutiny of the First Minister in Wales about progress made to date in implementing the Welsh Government’s 2010 Climate Change Strategy for Wales. In particular, how actions to tackle the causes and consequences of climate change are being implemented by all departments of the Welsh Government and how this work is being co-ordinated and monitored.

Right: the Welsh Government’s 2010 Climate Change Strategy cover

Wales as a nation has a non-binding target of reducing greenhouse gas emissions by 3% per year to 40% of 1990 levels by 2020 in policy areas of over which it has control (some powers are not devolved but still held in London, such as control over transport spending and energy generation). This compares to the UK overall target of 34% reduction by 2020. Additionally, Wales is almost unique in the world by having the duty of government to take due account of sustainable development written into its constitution.

These facts alone would lead one to suppose that Wales was serious about tackling climate change. But let me tell you what happened in those meeting and committee rooms of the Welsh Government offices in Cardiff Bay on the afternoon of Thursday 26 June.

The first half of the event consisted of three members of the Committee for the Scrutiny of the First Minister quizzing members of the Climate Change Commission for Wales on what they thought the Committee should be asking Carwyn Jones (who is leader of the Welsh Labour Party).

The Commission's members represents a huge body of expert opinion from other organisations such as the Carbon Trust, the Energy Saving Trust, Sustrans, the Federation of Small Businesses, National Resources Wales, WWF, the One Planet Council, and even young people represented by the youth parliament known as Funky Dragon.

There was no shortage of extremely sound advice given to the Committee members. The key points were as follows:

1. The First Minister should take overall responsibility for the climate change agenda, which he currently does not have, in order to show leadership and make sure that all government departments work together to achieve the targets;
2. He should set statutory targets rather than the current non-binding ones;
3. He should benchmark the current level of emissions in different sectors, by end-user;
4. He should quantify by default the climate change impacts of all new developments as part of their impact assessment. In particular, reference was made to a proposed £1.5 billion new extension to the M4 around Newport;
5. He should create a programme of action that would detail how the different sectors would act to reduce overall emissions, which currently does not exist.

There were many other excellent suggestions about land use, transport, education, planning, building regulations and renewable energy. If they were all put in place, Wales would be a beacon of low carbon sustainable development.

This part of the event concluded and the members of the Committee then withdrew to a Committee Room where they proceeded to quiz the Minister. Many of us stayed to watch the proceedings from the viewing gallery.

What happened? Well the first thing to note is that the Committee scrutinises the First Minister on many topics and few of its members are experts on climate change. The second is that as officials, it was clear that they somewhat lack the passion and commitment that the Commission on Climate Change members have. For these reasons they are not equipped to respond to the First Minister's rebuttals with knowledgable counter-arguments or with the necessary level of emotion. Urbane mandarins, their language is couched in measured and leisured terms.

Carwyn Jones was able to refute every suggestion without significant censure.

1. He refused to take ultimate responsibility and show leadership on climate change as a cross-cutting topic because, he said, "there are many cross-cutting topics and I can't take responsibility for all of them. I leave climate change for others."
2. He refused to set statutory targets for carbon reductions on the basis that the government does not have control over transport and energy spending.
3. On the question of the M4 relief road he trotted out the line that cars in traffic jams will emit more greenhouse gases than having them freely moving. Yet, as Paul Pearson pointed out that evening, the consultancy document on the project never even calculated the total comparative carbon budgets for the options under consideration.
4. On the question of why building regulations for the energy efficiency of new homes are being watered down, he said it was because Wales needed more new houses and the big building firms had told him that it was too expensive to make them low or zero carbon. Yet I know several developers who can build affordable zero carbon homes - but clearly Carwyn is not aware of them and nor were the members of the Committee.

Shortly after this, in despair, I walked out. Wales has an opportunity to shine on the world stage by showing leadership on climate change beyond that being shown in England by the Westminster government. But Carwyn Jones is not up to this challenge.

The environment minister who created Wales' climate change strategy, Jane Davidson (right), has sadly left government now. She was the driving force behind several policies that championed sustainable development. Unfortunately Wales no longer has any one of her calibre and commitment in government.

But Carwyn Jones is no different from virtually every other leader of a nation state in the world, as the history of climate change negotiations shows. The fear of missing short-term other targets for housing, jobs and the economy, makes them ignore the bigger picture. They do not have expert advisers on hand – or refuse to give sufficient weight to their advice – to help them understand the multiple economic as well as social and environmental benefits of taking the requisite actions. Instead they respond to the demands of industry lobbyists and a public largely unaware of the issues and potentials.

So, is it possible for the world to act to reduce and turnaround the seemingly inexorable growth of the concentration of greenhouse gases in the atmosphere? Increasingly there are calls from the business sector and leaders of cities for action, but for my part, I fear all this will result in action that is too small and too late. They just do not have the economic and legal clout. I believe what is really required is for people to be paid to leave carbon in the ground – because if there is money to be made then they will take it out and sell it – but this obviously will not happen.

Barring a miracle, within 300 years sea level will have risen by up to 10 metres, the ice caps will have melted, the equatorial areas of the planet will be uninhabitable, and humanity will have suffered a population collapse. The prediction made by the scientists meeting in June 1988 will have been shown to be correct. I do hope I am wrong.

DECC "pleased with progress" towards climate change targets says chief civil servant

Welshman Phil Wynn Owen, Director General of DECC's International Climate Change and Energy Efficiency group.

The British Government is pleased with its progress towards meeting its climate change targets and in steering the European Union and the United Nations climate talks in a satisfactory direction, according to a senior official within the Department for Energy and Climate Change (DECC).

Speaking exclusively to me at The Energy Event at Birmingham's National Exhibition Centre yesterday, the official said that, given the long timescales involved, DECC is happy with progress so far.

Phil Wynn Owen is Director General of the International Climate Change and Energy Efficiency group. Before that, he was an official in the Treasury. His remarks, paraphrased below, give an insight into thinking within senior levels of government.

UN discussions

The top-level Conference of the Parties (COP) United Nations Framework Convention on Climate Change (UNFCCC) talks, designed to reach global agreement on limiting greenhouse gas emissions, happen at the end of each year. At the last of these talks in Durban, it was agreed that nations would put in place by the end of 2015 a binding legal agreement to curb greenhouse gas emissions that will take effect in 2020.

The UK government was pleased and surprised by this outcome, given the pessimism that preceded these talks.

In between these annual talks are interim negotiations. UK officials were disappointed by the progress made at the last of these, which took place in Bonn earlier this year and ended without agreement. They therefore led calls, together with Christiana Figueres, the Executive Secretary of UNFCCC, for a further meeting, which happened in Bangkok at the end of August and beginning of September.

Whereas outside reports expressed dismay at the lack of progress made there, too, DECC officials believe that significant progress was made, laying the groundwork for a legal agreement.

There was also good progress in negotiating a successor framework to the Kyoto Protocol.

DECC had a large team negotiating in Bangkok, who played a significant part in the production of the first draft of a full negotiating text. This will be discussed at the next Conference of the Parties (COP 18) in Doha, Qatar in late November this year.

The UK Government believes it is very important that these forthcoming talks will take place in the heart of the oil-producing Gulf states.

Energy and Climate Change Minister Greg Barker told an All Party Parliamentary Group meeting at the House of Commons on Monday that he feels the talks “offer a unique opportunity to encourage the major oil and gas producing states to recognise the benefits of signing up to a low carbon agenda".

DECC is thinking particularly about Saudi Arabia, which has recently announced a huge commitment to solar power. At previous COP negotiations its team has resorted to blocking and delaying tactics and watering down mitigation targets. DECC believes that this November's talks offer an opportunity for Saudi Arabia to see the benefits of behaving otherwise.

The long view

The senior DECC official turned to the disparity between Government and business attitudes towards the low carbon agenda, the latter of which on the whole are enthusiastic, since the sector is one of the few areas of the economy which is experiencing significant growth.

Here, with the longsighted vision of a long-serving civil servant, Mr Owen paid tribute to the manner in which the UK Government conducts its consultations and discussions on developing its energy policies.

While recognising that some sectors would like government to move faster, most appreciated that, with resources tight due to the ongoing recession, it was necessary to have a debate which took in the views of all sides on the most cost-effective way to decarbonise the country and adapt to climate change.

Dominant thinking is now that the greatest opportunities lie in cutting energy use, reducing demand, and energy efficiency.

The beginning of Mr Owen's presentation to delegates yesterday morning was taken up with extremely depressing figures about the rate of increase of climate-warming emissions and their likely effects on overall average global temperatures.

At present trends, the world is headed for at least 3°C warming, which will create a “very high risk of economic impact", he said.

By 2020 there is likely to be an atmospheric concentration of carbon dioxide greater than 550 ppm, which means that after that year emissions will need to reduce by up to 2.5% per year, a daunting prospect.

DECC is still very aware of the recommendations of the 2007 Stern Review, which said that early action to tackle climate change would be much cheaper than waiting and taking action later. Mr Owen reported that its author, Nicholas Stern, is “very pessimistic" these days.

He, however, remains optimistic. Turning around the behaviour of a whole country, let alone the whole world, is bound to take far longer than turning around the behaviour of any single company, no matter how large.

Moreover, companies have a completely different command structure to government and nations, unless they are totalitarian and can therefore act more quickly. This explains the long timescale required.

Mr Owen said that the measures contained in the Green Deal, the introduction of 53 million smart meters by 2019 in 30 million properties, and the Renewable Heat Incentive, which will increase the proportion of renewable heat from the current 1% to 12% by 2020, all give grounds for optimism.

Within the proposed Electricity Market Reforms, the capacity mechanism, the carbon price floor, and contracts for difference, will all help to leverage the £110 billion of investment required by 2020 to decarbonise the energy infrastructure.

He backed Ed Davey's defence of these measures, published yesterday, saying that they will create at least a quarter of a million jobs.

Moreover, energy intensive users will be compensated for the effects of the measures on their energy bills.

Mr Owen added that DECC is still lobbying within the European Union for it to commit to a 30% target for reducing emissions by 2020.

Mr Owen is clearly proud of his department's achievements; that it, and therefore the UK as a whole, is playing a vitally important role in steering the whole world away from completely disastrous climate change.

Bangkok U.N. climate talks make little progress. World headed for 3°C rise.

 Protesters in Bangkok outside the UN climate talks.

The U.N. climate talks featuring delegates from 190 nations, that have been ongoing for the last week in Bangkok, Thailand, and which conclude today, have produced few concrete results.

The talks were happening against a backdrop of record Arctic ice melt, recent flooding in the Philippines, Asam and other areas, recent drought in the US, and an ongoing food crisis in the Sahel.

Last December at the Durban COP talks, the world's nations agreed that they would sign a legally-binding pact to cut emissions and help developing nations adapt to climate change, from 2020. Part of this agreement included a promise to deepen existing promises to cut emissions by the end of the decade.

However, after one week of talks in Thailand, not a single country has made a fresh commitment, and US negotiators stunned delegates by calling for any new treaty to be ‘flexible’ and ‘dynamic’ rather than legally binding, representing a complete U-turn on its previous position.

In response, 130 developing countries sought to put pressure on developed countries by threatening to deny them access to Clean Development Mechanism (CDM) credits, which developed countries use to offset their emissions by financing projects in the poor ones.

But this tactic could backfire, as Takehiro Kano, a senior climate negotiator with Japan, said that if they went ahead, Japan's response might just be to lower its voluntary target of cutting emissions 25% below 1990 levels by 2020, and Justin Lee, Australia's climate change ambassador, retorted that the Australian government would anyway "take international action that best supports Australia's domestic initiatives".

The United States and other developed countries blamed the global economic crisis for the lack of funds that they are able to make available to combat climate change. In a reaction to this, developing countries earlier tried to play down requests for finance and technology commitments, in favour of greater efforts by developed countries to reduce their greenhouse gas emissions.

But this created yet another deadlock, as Japan, Canada and Russia, which refused to sign up to an extension to the Kyoto Protocol as last December's climate summit, dug their heels in and refused to rejoin the process. The European Union argues that it cannot afford to up its reduction targets, and the United States is in an election year, which paralyses its ability to act.

This has led one observer, Sanjay Vashist, director of Climate Action Network South Asia, to comment that, "the existing deadlock on taking up ambitious climate action will only delay the necessary adaptation finance to vulnerable countries."

Christiana Figueres, executive secretary of the UN’s climate secretariat, Was putting a brave face on it. “Government negotiators have pushed forward key issues further than many had expected and raised the prospects for a next successful step in Doha," she said.

This leaves many political decisions that will have to be taken at this next meeting in Qatar.

With the present level of commitments to reduce emissions, the world is still on for at least a 3°C temperature rise, which would have catastrophic repercussions.

Rich nations failing to cut emissions

At the summit, the U.N. released a report showing that several rich nations will not even meet their existing pledges to cut greenhouse gas emissions by the end of the decade, made at Copenhagen in 2009.

These nations include Australia, Canada, Japan, Mexico, South Africa, South Korea and the US.

The report, from the UN Environment Program, adds that even if all nations do meet their existing pledges, emissions of greenhouse gases will still reach between 50 and 55 billion tonnes of carbon dioxide equivalent, that is 11 billion tonnes, or 20%, more than what is needed to try to keep temperature increases below 2°C.

“It's still possible to meet a 2°C pathway, if there is sufficient political will," commented Niklas Hoehne, and author of the report on Tuesday. "We’re not facing a participation gap here – it’s an ambition gap.”

Meanwhile, developed countries want the industrialised developing countries such as India, China and Brazil, to take more responsibility for cutting their emissions.

They say that if this was resolved, it would allow the issues of technology, finance, intellectual property lies and emissions from aviation and shipping, which are stymied, to be set aside while the responsibilities of the emerging economies are increased in the short and long-term and the rich countries take stronger action after 2020.

But this is unlikely to happen without further commitments from developed countries. Depressingly, it seems the stalemate continues.

Durban: it could have been worse. It should have been far better

This is the second of two posts about Durban. The first gives a run-down of the accords agreed, this gives an assessment.

It was never going to be easy.

Anyone watching or following, as I was, the high drama of the last three days of the climate negotiations in Durban must have thought it more gripping than any Hollywood political thriller.

There was the massive invasion of the conference hall by the protesters, welcomed by some delegates.

There was the issuance of a fake draft text agreement by someone in the South African delegation, widely seen as an attempt to subvert and delay the proceedings.

There were the delaying tactics employed not just by the organisers but by some developed countries in the hope that no agreement would be reached.

There were bleary eyed, desperate negotiators, knowing that the future of the planet was at stake, running on adrenaline after the coffee machines had been taken away because the conference was supposed to have finished.

There was the final, last-ditch huddle of the rich countries, with Russia objecting that it was left out, which patched together a final statement, in an echo of the final moments at Copenhagen.

But away from the conference hall and its echoes in the Twitter and blogosphere, the events there have struggled to gain space in national headlines.

The world seems more concerned with short-term but still vitally important issues, such as the protests in Russia and the future of the U.K.'s relationship with Europe.

Ultimately, however, the decisions taken, or deferred, in Durban are of far greater importance to far more people.

If they fail to capture the popular imagination it can only be because they are so mindbogglingly complex that it is too much to ask most of us, let alone reporters, to find an easy way to get our heads around them.

It's all about trust

At the very root of the discussions and decisions, as with all international negotiations, is trust.

People trust their representatives to come up with the solution that's best for all.

But nations have to be able to trust each other, and so must be able to verify what each other is doing.

Even trying to think about how the emissions inventories of every country on the planet can be quantified, reported on and, crucially, verified to everyone's satisfaction, to globally agreed standards, makes you realise how great is the scale of effort required.

And that's just a small part of it.

There's also the crucial question of how all the required measures are to be financed in a cash-strapped world; a world where every nation is now trying to look after its own economic survival.

The arguments that are going on within the UK government, about the cost of short-term spending on renewable energy versus the benefit of long-term energy cost reductions, are being mirrored in every developed country.

And every developing country is demanding that developed countries pay for similar emission-reducing measures on their territories.

Developed countries say that their institutions and corporations must financially benefit from these actions for them to have the motivation to invest.

Developing nations and their supporters say that this means that only actions which benefit already rich countries and corporations will happen, and the poor will miss out.

There is very little trust to be found here.

"A spectacular failure"?

The World Development Movement calls the outcome of the UN climate talks a "spectacular failure" since, by only agreeing to produce yet another report on financing with no guarantees that anything will come of it, after years of reports, promises and negotiations, "it will condemn the world’s poorest people to hunger, poverty and ultimately, death".

It predicts that the world is now on course for devastating temperature rises because of "the failure of developed countries to commit to action to curb their emissions".

"It is feasible that developed countries could actually increase their emissions between now and 2020, and still meet their pledged emission reduction targets" under the new Protocol, they said.

Their attitude was echoed by every major civil group observing the proceedings.

It is telling that one American report I read on the outcome said it was a victory for George W Bush's attitude that every polluter must pay. This was his reason for not signing up to the Kyoto Protocol.

If commentators are saying that George W Bush was right, then the planet is surely in trouble.

The least bad outcome

But the fact remains that the big emitters, besides America, are now developing countries, the so-called BASIC ones: Brazil, India, South Africa, Indonesia and China.

They have agreed to reduce their emissions.

Countries at Durban made determined efforts not to let the summit break up in disarray, but to come out with some kind of agreement, however imperfect.

Before this conference, it was predicted that Kyoto II would not happen, since Japan and Canada would prevent it.

It was also predicted that a global carbon trading system could not be set up and the best that we could hope for would be a loose network of local trading systems.

Notwithstanding the fact that it is highly imperfect as instituted so far, and criticised by civil groups, carbon trading as a way of raising funds for investment is still the mechanism by which forests will be saved and technology transfer is happening.

The EU has now said that it is determined to make sure that a single set of rules governs carbon trading throughout the planet.

What we have is probably the least bad outcome the summit could have had. It is very far from being the best.

The bottom line is, as I reported last week, that a handful of industrialists, the richest people on the planet, buy and bend the ears and opinions of members of the public and politicians with their extraordinary wealth, gained from profiteering out of fossil fuels.

Their negotiators come to these summits determined to minimise the harm to the fossil fuel and energy-intensive industries.

But the science is irrefutable. The moral force generated by the victims of climate change is undeniable.

As the effects of climate chaos become more and more apparent, and as the science of climate change becomes more undeniable, the ratcheting up of the ambitions stated at Durban, albeit in ambiguous terms, must and will continue.

But only if and because popular pressure will impel it.

The only questions are: will the measures taken be fast enough to avert catastrophe? And for whom: the rich or the poor?

″Historic″ or ″hollow″? These are the Durban outcomes

This is the first of two posts on COP17, the Durban-based UN climate change talks: this summarises the accords reached and others' reactions; the next post following immediately is the Low Carbon Kid's assessment of the accords.
After the longest conference in the history of UN climate summits, a "historic" agreement was reached, that was also described as “hollow" by civil observers.

The Durban Package set up by the conference will, for the first time, bring all greenhouse-gas emitting countries in the world into a common legal regime under UN jurisdiction in 2015, that would force them to cut emissions no later than 2020.

Defying expectations, the Kyoto Protocol has also been extended until 2017, which will "bear in mind different circumstances of developed and developing countries".

The new global legal framework will be decided by 2015 and come into force by 2020. Called the Durban Platform for Enhanced Action, it will "raise levels of ambition" in reducing greenhouse gas emissions.

But the world's most poor and low-lying states say that the accords still leave them vulnerable and the targets agreed are not sufficiently aggressive to slow the pace of global warming, which threatens them most.

The phrasing of the agreement came at the last moment from huddled discussions between the European Union, India, China and the United States that left other nations, especially Russia, feeling left out.

Britain's Energy and Climate Change Secretary Chris Huhne hailed the result as "a great success for European diplomacy".

U.S. climate envoy Todd Stern said he was was satisfied with the outcome, saying it had "all the elements that we were looking for".

But the U.N. climate chief Christiana Figueres expressed regret that "What [the agreement] means has yet to be decided" because of the ambiguity of the language.

The EU's Climate Commissioner Connie Hedegaard said that the EU will lead by example now on tackling climate change. She admitted that the phrase "outcome with legal force" is weak wording, but insists it is at least an improvement on the Bali Roadmap, where there was no legal element.

The view of campaigners representing civil society was less enthusiastic.

A WWF spokesperson commented, "The job of governments is to protect their people. They failed to do that here in Durban today. The bottom line is that governments got practically nothing done here COP17 and that’s unacceptable".

Closing the gap

The agreement does, however, importantly acknowledge that "there is a gap between the aggregate level of reduction in emissions of greenhouse gases to be achieved through global mitigation efforts" and what is needed to avert dangerous climate change.

To reach this 2^oC target, emissions, which are currently rocketing, must begin to fall by 8.5% by 2020 compared with 2010.

At the request of the EU and the Alliance of Small Island States (AOSIS), the delegates agreed to launch a work plan to identify options for closing this gap.

"It's certainly not the deal the planet needs - such a deal would have delivered much greater ambition on both emissions reductions and finance," said Alden Meyer of the Union of Concerned Scientists.

"Negotiating the details will be extremely tough," said Elliot Diringer of the Center for Climate and Energy Solutions, a Washington think-tank.

Many side issues could easily flare up and disturb the highly delicate negotiations.

Although the final documents are not yet publicly available, here is a summary of what was agreed or not agreed:

Finance

Following criticism, developed countries were urged to improve the transparency of their reporting on the fulfilment of their fast-start finance commitments ($30 billion for the period 2010–2012).

How to finance the Green Climate Fund that, in principle, will help channel up to 100 billion dollars a year by 2020 to poor countries, was not agreed, but a group was set up to put forward proposals.

An earlier proposal to do raise finance by charging international shipping for the carbon emissions it generates faced such opposition it did not make it to the final text.

The finance group will have two co-chairs, one from a developing country and one from a developed country and prepare a report for next year's summit.

"We cannot allow the Green Climate Fund to wither on the vine," said Celine Charveriat of Oxfam. "Governments must identify significant and predictable sources of money for the Fund without delay."

Carbon capture and storage

After years of debate it was decided whether and how to allocate carbon offsets under the Clean Development Mechanism to carbon capture and storage projects.

Because of the considerable uncertainty about their yet unproven efficacy, developers will have to put 5% of the credits earned in reserve so they will be awarded only after 20 years, provided that no carbon dioxide has leaked from the underground store.

Joint Implementation (JI) mechanism

This is the means whereby developed countries earn emissions credits under the Kyoto Protocol from low carbon projects financed in their countries by other developed countries.

A decision on whether to extend it after 2012 was again deferred until next year, raising the possibility that those countries with emissions credits may flood the market with them before the scheme ends.

Reporting and verification

Developed countries must prepare biennial reports on their emissions and on their projects to reduce emissions, in accordance with their national circumstances.

The first of these must be submitted by 1 January 2014, along with an even more detailed report; the latter must be submitted every four years.

A common format for these to be reported, through a website, is to be agreed.

Developing countries will go through a similar parallel process, with their first biennial update report submitted by December 2014; by 5 March next year they must also submit information about their nationally appropriate mitigation actions and low-emission development strategies, in order to obtain financial and technical support by developed countries.

Developed countries, the Global Environment Facility and the Green Climate Fund, must submit information on the financial, technological and capacity-building support they can give to support these actions and strategies by the end of 2014, and the first rounds of international consultation and analysis in distributing the support will then be conducted by summer 2015.

Forests

Countries will submit by 5 March 2012, their views on how to finance results-based actions under REDD (Reducing Emissions from Deforestation and Forest Degradation in Developing Countries). These will be discussed before COP18.

Agriculture, aviation and shipping

No proposals were made on reducing emissions from agriculture, and the conference only agreed to continue to consider the issues related to addressing emissions from international aviation and maritime transport.

Sustainable development

Crucially, it was underlined that "any help given to developing countries must also help their social and economic development and poverty eradication" and "promote a just transition of the workforce, the creation of decent work and quality jobs in accordance with nationally defined development priorities and strategies".

Adaptation to climate change

The Adaptation Committee, agreed to last year, had its role is more clearly defined and was instructed to develop a three-year plan for its work.

Capacity building and technology transfer

To facilitate technology development and transfer from developed to developing countries, a new Climate Technology Centre and Network is being set up as soon as possible, once it's decided where it is to be hosted.

It will prepare project proposals for the deployment, utilisation and financing of existing technologies for mitigation and adaptation and R&D of new climate-friendly technologies for sustainable development.

There will also be an annual 'Durban Forum' held to discuss progress on capacity-building. Its first meeting will be during the thirty-sixth session of the Subsidiary Body for Implementation (14–25 May 2012).

Reviews of progress

A review of the adequacy of the long-term global goal for reducing emissions and the overall progress made towards achieving it should run from 2013-2015.

Subsequent reviews should take place following the adoption of an assessment report of the Intergovernmental Panel on Climate Change, or at least every seven years.

CBI urges Government to give investors certainty so business can fight climate change

Businesses want to and must maintain the trend to low carbon innovation, but need more investment, which requires commitment from politicians, both CBI Deputy Director-General Dr. Neil Bentley and Christiana Figueres, Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC) told an audience of business leaders and the Energy Secretary Chris Huhne at the CBI’s first international Green Business Dinner in London last night.

Ms. Figueres also said that when countries like Britain fulfilled ambitious climate change targets this encouraged poorer countries like China and India to follow suit.

Companies are being given the wrong value by world stock markets, because the cost of their exposure to climate change is not being factored in, she said. "As long as these companies [that emit large quantities of greenhouse gases] have a high value, we are giving out the wrong signals," she said. "It has got to be that those companies that are investing in the technologies of the future are recognised."

She said that companies ought to take on board the political target of keeping global average temperatures below 2oC above pre-industrial levels. "We are moving to a low-carbon future – businesses need to understand that signal. This is a megatrend."

She said that by 2031 businesses will need to extract five times the economic value that they do today for every tonne of carbon dioxide emitted, calling on both governments and businesses to unleash the investment needed for "a transformation of the economy".

How committed are the Conservatives?

In the UK, the overwhelming feeling in the environmental industries sector is that George Osborne's speech to the Tory Party conference last week signalled an about-turn in Treasury thinking regarding support for low carbon technology.

Further evidence came from a Sunday Times article that Osborne is delaying rubber-stamping the Renewables Obligation Certificate banding review despite anger from David Cameron and other Ministers from DECC and Vince Cable's Business Department.

The consultation on an increase in speed limits, the proposal to reinstate weekly bin collections and, most importantly, Osborne's commitment to ensure the UK's carbon targets do not exceed those adopted by Europe were defended on Sunday's BBC Politics Show [22 minutes 20 seconds in] by Chris Huhne as marking either no change in the UK's position or not yet proven to have an impact on carbon emissions.

Osborne had hinted in his speech that part of his motivation for being cautious on the low carbon front was that there was opposition to green policies from members of the CBI.

Yet last night at the Green Business Dinner, the CBI’s Dr. Neil Bentley told the Government that British businesses are committed to tackling climate change, but blamed politicians at home and abroad for failing to provide clarity and certainty for investors about issues such as Electricity Market Reform, the Green Deal and a globally-binding emissions deal.

He said, "the case for a global emissions deal is even more compelling".

“Today, we find ourselves not ahead of the pack, but out on a limb," he said. "We’ve got no international deal, no global carbon price, no meaningful EU price and the UK tying itself in costly green policy knots.

"The UK is in danger of straining to hit its targets but missing the point: that we need an economy that’s low carbon and competitive.”

"We wanted first-mover advantage," he said, "We acted on the expectation of a global deal to address our competitiveness concerns. We acted without realising what was around the corner economically."

He blamed dithering and tinkering from Coalition politicians - such as making the Carbon Reduction Commitment into a straightforward tax, "adding to bottom-line costs and doing nothing to help businesses achieve their green goals" - as well as the low price of carbon due to an ineffectively managed EU Emissions Trading Scheme.

Europe's Environment Ministers, also meeting yesterday, are in agreement. They admitted that the number of "Assigned Amount Units (AAUs)" - free permits to pollute given to countries and industry - continues to be a problematic issue affecting the carbon price, but that suddenly reducing the number allocated would cause a mass sale and a price fall, which represents a double bind dilemma.

"We're going to have to continue to work on it," admitted Polish Environment Minister Andrzej Kraszewski after the meeting in Luxembourg.

Dr. Bentley also felt that that "the renewables target has skewed the economics of our energy market". The Treasury's carbon price floor is meant to address this but is not yet in force.

As a result, “investors are struggling to understand how to invest against the proposed framework while the resulting costs could damage parts of our manufacturing sector".

He also said there was "reluctance from financiers to take the risk of underwriting" the Green Deal, which could cause it to fail.

But yesterday, Energy and Climate Change Minister Greg Barker defended the Government's record.

In a statement responding on behalf of DECC to the Environmental Audit Committee's report on carbon budgets, which echoed the CBI leader's criticisms, he said the UK is "doing more than any other country in providing long term certainty to those investing in the low carbon economy".

He added the government was actually doing UK industry a favour by reviewing progress towards the EU emissions goal in 2014, to make sure it wasn't "disadvantaging British industry" and leading to "emissions being shipped overseas".

“Getting the rest of Europe to go further and faster in providing certainty to green investors is vital which is why we’re not letting up in pushing the EU to up its emissions reduction target to 30%,” Barker said.
 

The need for a deal at Durban

Dr. Bentley's speech underlined the necessity for a deal at the upcoming COP17 UNFCCC climate talks at Durban, since "last year saw the highest level of carbon emissions in history".

"Patience is wearing thin," he said, citing the failure at Copenhagen in 2009 and Cancun last year to reach global agreement. Wrangling "mustn’t drag on and on like the Doha Trade Round".
 
“In the absence of a deal," he continued, "companies have committed to get on with it because they understand that it’s not about what business can do for sustainability. It’s about what sustainability can do for business, driving innovation in new products and services."

He said the CBI is calling for two main outcomes from Durban: “Certainty that the Kyoto carbon markets will persist even if the protocol expires: if the Clean Development Mechanism is derailed, we’ll lose the most successful part of Kyoto and potential investment.
 
“And second, getting carbon finance flowing across the world, to places where it can encourage energy efficiency and help countries leapfrog high-carbon development and go straight for those green technologies. This will give the global economy the boost it needs."
 
He called for "a global, binding and comprehensive climate change deal. Otherwise business and nations will lose faith.”

EU ahead of targets

The EU will go to Durban well on its way to meeting its emissions targets from the Kyoto Treaty, which requires 20% cuts in Europe's emissions from 1990 levels by 2020.

Environment ministers in Luxembourg yesterday also committed to signing up to a 'Kyoto II' agreement at Durban, if other countries agreed.

Despite a 2.4 % emissions increase in 2010, and despite economic growth of 41% over the same period, Europe's greenhouse gas emissions were 15.5% below 1990 levels, according to estimates released yesterday by the European Environment Agency (EEA) on progress to meeting the continent's Kyoto targets.

In fact, the EU is likely to overshoot this target, which has inspired some member states, like the UK, to argue that it should be increased by to 30% cuts by 2020.

Climate Commissioner Connie Hedegaard said the figures showed that the EU has successfully decoupled emissions from economic growth through the wider use of low carbon technologies.

"The EU continued decoupling emissions from GDP during the recession," she said in a statement. "Between 2008 and 2009, emissions fell by 7.1 per cent in the EU-27, much more than the around four per cent contraction in GDP."

Of the 15 EU Member States with a common commitment under the Kyoto Protocol (the 'EU-15'), emissions were 10.7 % below base year levels (1990 in most cases), which is well beyond the collective 8 % reduction target. However, Austria, Italy and Luxembourg were still behind their targets.

"Many different policies have played an active role in bringing down greenhouse gas emissions", Professor Jacqueline McGlade, EEA Executive Director, said.

"Alongside renewable energy or energy efficiency, efforts to reduce water pollution from agriculture also led to emission reductions. This experience shows we can reduce emissions further if we consider the climate impacts of various policies more systematically."

Back at last night's Green Business Dinner, Christiana Figueres also was hoping that major progress will happen at Durban.

“Governments are willing to consider a document that is equivalent to a letter of intent of all Governments to move towards a comprehensive agreement that is binding to all and incentivising to all at some point in the future.”

She admitted that any agreement will take years to draw up but it would be a major leap forward if all countries agreed to the principal of a legally binding treaty.

She also hoped that Governments would agree on how to raise the $100 billion per year by 2020 they have committed to for adaptation to climate change, technology sharing and saving forests.

Did Huhne really compare climate change to Hitler?

DECC minister Chris Huhne has compared world leaders who obstruct a global deal to tackle climate change to politicians who tried to appease Adolf Hitler before World War Two.

Does this make climate change a threat akin to the Nazis, who plunged the world into war?

The Energy and Climate Change Minister was at Chatham House, endeavouring to inject new urgency into climate change negotiations.

Huhne evoked the memory of Winston Churchill and the fight against Nazi Germany.

"This is our Munich moment," he said, in a reference to the 1938 Munich Agreement that gave Hitler part of the former Czechoslovakia in a doomed attempt to persuade him to abandon further territorial ambitions. He quoted Churchill - who was both a Liberal and Conservative MP, kind of a Coalition in one - who "once said that 'an appeaser is someone that feeds a crocodile, hoping that it will eat him last'."

But just as a crocodile will eat anyone if it's hungry enough, so climate change affects everyone - but it is the poor who stand to suffer the most.

Many developing nations seek to extend the Kyoto principles, but richer countries - Japan, Russia and Canada - want a different sort of agreement.

Poor countries say rich nations have emitted most of the greenhouse gases since the Industrial Revolution and so must give them more help before they can be expected to sign up to making cuts themselves.

But Huhne said "We cannot wait for every country to become equal, because that would mean waiting for an eternity. At some point, we must draw a line and say: this starts now. This starts here."

He said that it was vital that governments redouble their efforts to find a successor to the United Nations Kyoto Protocol, which controls greenhouse gas emissions only in developed countries and expires at the end of 2012.

However, he feels that it is now unlikely that a breakthrough will be made at the main annual conference beginning late November in Durban, South Africa because of “a damaging rhythm" into which "the annual cycle of UNFCCC meetings is in danger of slipping".

"Although the scientific evidence continues to grow, climate change is getting less political attention now than it did two years ago. There is a vacuum, and the forces of low ambition are looking to fill it," he said. "Giving in to the forces of low ambition would be an act of climate appeasement.

In an attempt to persuade his audience he quoted the Association of British Insurers who said, in 2009, "our assessment of climate change convinces us that the threat is real and is with us now" and he referenced the letter written to the European Union by more than 70 European companies, including Ikea and Coca Cola, asked them to aim for more ambitious carbon cuts.

"This is the last Parliament with a chance to avoid catastrophic climate change," he said. “It will end in 2015. If we have not achieved a global deal by then, we will struggle to peak emissions by 2020. It will be more expensive, more divisive, and more difficult."

He said that the political tactics must include “using soft diplomacy to shift the politics and build coalitions" and "explaining the case for action...on economic and security grounds", and using “targeted financial and practical support to help developing countries build cleaner, more climate resilient economies."


He said temperatures must be kept within 2 degrees Celsius (3.6 Fahrenheit) of pre-industrial levels to avoid the worst effects of climate change. They have already risen by 0.8 degrees Celsius and even if all emissions were stopped today, they would rise by a further 0.5 of a degree, he said.

"Sticking to our 2 degree limit means global emissions must peak by 2020 at the latest," Huhne said.

"From 2013, there will be new political leadership in the world's major economies. We hope to have put the global recession behind us. The stars may be more closely aligned in favour of a binding legal deal," he said.

World Bank attacked for encouraging climate change

The UK must stop funding World Bank aid until the Bank stops financing unabated coal power stations in developing countries, says the Environment Audit Committee in a new report on the impact of UK overseas aid on environmental protection and climate change adaptation and mitigation.

Chair of the Environmental Audit Committee, Joan Walley slammed the World Bank, saying it "should not assume continued support from the UK unless it changes its ways".

She also had harsh words for the Department for International Development (DFID), arguing that it "needs to get tough and use its position as a major shareholder to vote down dirty coal powered energy projects and ensure that the World Bank’s portfolio isn’t making climate change worse".

Last year's Spending Review gave Overseas Development Assistance (ODA) an increase in expenditure, one of the very few budgets to get an increase, from £8.4 billion in 2010 to £12.0 billion in 2013. This is to honour a commitment to match the United Nations (UN) target of providing 0.7% of Gross National Income as aid by 2013.

This is not the first time that DFID's performance on the environment has been criticised. A 2006 report said its processes for environmental safeguarding of aid programmes was inadequate, and concluded that DFID's climate change policy lacked coherence, and was "directly and indirectly responsible for very significant emissions of carbon into the atmosphere".

This new report shows little has changed since then, a fact supported by a National Audit Office report from February of this year, Aid and the Environment, in which DFID claimed it is trying to become more “climate smart” but was unable to provide any evidence that it had integrated environmental sustainability into development programmes.

The EAC also attacks the Government's Export Credits Guarantee Department, saying its activities "are not in line with the Government's wider sustainable development principles" and need immediate reform.

It recommends that "the ECGD should not support fossil fuel projects. It should develop and publish strategies for implementing the Coalition Agreement commitment to shift its support to low carbon and green technologies."

The MPs say also want to see environmental impact assessments conducted "on all the projects that the ECGD supports, irrespective of size or repayment terms".

Climate loans "dangerous and irresponsible"

The U.K.'s relationship with the World Bank also came under attack this week from the World Development Movement.

In a report entitled "Climate loan sharks" it accuses the UK and World Bank of making developing countries pay twice for climate change measures because its help is in the form of loans which must be repaid with interest by already debt-burdened countries.

For example Grenada’s debt is already 90% of its GDP, yet it is to be lent a further $22 million, over 3% of its GDP. The WDM calls such lending "at best irresponsible and at worst wilfully dangerous".

How is this occurring? The UK is providing most of its climate finance for adaptation as capital that can only be dispersed as loans through the World Bank’s Pilot Program for Climate Resilience (PPCR). All but three percent of these loans' capital comes from the UK.

Eleven country proposals have been developed so far under this programme, and at least £704 million of their finance will be loans.

The WDM notes that the idea of climate loans was created by the UK Labour government "as an accountancy trick to make its balance sheet look better, a policy continued by the current coalition government".

In May the Institute of Development Studies (IDS) also criticised the Pilot Programme for Climate Resilience (PPCR), saying the involvement of the World Bank in climate finance is more about keeping its own status than anything else and will "frustrate the ability of those most vulnerable to climate change impacts to shape future adaptation funding flows”.

The World Bank and the Green Climate Fund

The United Nations Framework Convention on Climate Change (UNFCCC) has given the World Bank a major role in the design and management of the new Green Climate Fund (GCF). This Fund is the mechanism which will channel all the climate finance promised by developed countries to help developing countries that was agreed at the annual global climate talks in Copenhagen and Cancun.

Developing countries and civil society groups heavily criticise the World Bank's role in this because of the Bank's record, summed up by Teguh Surya of NGO WALHI Indonesia, at a UNFCCC conference in Bangkok in April. He said, echoing the EAC's criticism, “we deplore the appointment of the World Bank as trustee for the Green Climate Fund. The World Bank does not have any credibility to be involved in climate financing given its long track record in promoting and funding fossil fuel projects that exacerbate climate change”.

At the first meeting of the transitional committee tasked with designing the GCF, in Mexico City last April, three co-chairs were chosen in a behind-closed doors process, with no civil society observers admitted. All three were male, and former finance ministers, and one was criticised for a conflict of interest.

A raft of other criticisms of the bank's processes and outcomes have been highlighted by the Bretton Woods Project, set up to monitor the World Bank and IMF.

DFID's monitoring system

Currently, however, the EAC observes that DFID's power to affect the Bank's behaviour is limited by its lack of expertise and capability. According to the NAO and EAC, DFID has had relatively few indicators to assess performance in this area.

DFID's review of its aid programme has resulted in climate change becoming one of its six priorities in its business plan for 2011-15. Aid spending directly attributable to environmental protection and climate change by all departments has risen over the last five years from £102 million in 2005-06 to around £360 million in 2009-10.

Despite this, it remains a relatively small but growing part of the aid programme. In response to the 2009 Copenhagen Accord, the UK government pledged £1.5 billion in aid for climate change over the period 2010 to 2012. Some £500 million of this was funded from the Environmental Transformation Fund (ETF - jointly funded by DFID and DECC) in 2010-11. Most of the remainder is funded from the International Climate Fund.

The Environment Audit Committee believes that DFID needs to publish a clear strategy on its approach to environmental issues to ensure that it gives them sufficient priority in its programmes and expenditure.

It says that UK aid should be helping developing countries to leapfrog high-carbon development and avoid locking in carbon-intensive infrastructure.

Therefore DFID should set targets for increasing energy access and the proportion of renewable energy usage in developing countries, and report such performance in its Annual Report.

Our privileged levels of consumption here in the UK relative to developing countries increases demand on production in these countries which leads inevitably to degradation of their natural resources.

The EAC exhorts the UK Government to ensure that our economic activity does not cancel out, or even reverse, the positive impact that UK aid is having overseas.

Governments must work harder to avoid global catastrophe

Governments of developed countries must work harder to secure a climate pact to succeed the Kyoto Protocol, and avoid an approximately 3.2 degrees rise in average global temperatures this century.

Christiana Figueres, head of the U.N. Climate Change Secretariat, made this call last Friday, at the end of two weeks of fraught and only slightly productive climate talks in Bonn.

Bonn Climate Change Conference June 2011
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"There is a growing realisation and acknowledgment that resolving the future of the Kyoto Protocol is essential this year and will require high level political guidance," Figueres said.

Ambassador Jorge Arguello of Argentina, Chairman of the Group of 77 and China (G77) agreed, adding, "The chance to reach a successful outcome in Durban to consolidate and strengthen the climate change framework still depends on the level of political will that Parties can show."

Durban is the location of the next top level meeting in November/December. The EU and others have now conceded that an all-encompassing agreement on binding carbon emissions is unlikely to be achieved there.

What is the scientific position?

According to Climate Action Tracker, based on current commitments by nations, the world is headed for an approximately 3.2 degrees rise in average temperatures this century.

Dr. Sivan Kartha, senior scientist at the Stockholm Environment Institute (SEI), said that while developing countries have made credible commitments to address their part of the emissions gap, developed countries' promises are such that, with the current accounting loopholes on the table, their emissions could actually increase when they should be rapidly declining.

"You can't negotiate with science," he said. "You can't negotiate with the Earth's natural limits. At the moment, emission reduction pledges take us far over those limits."

Some progress made

The Kyoto Protocol remains fundamental and critical to success because it "establishes the key rules to quantify and monitor the mitigation efforts of countries" and "contains the market-based mechanisms which allow countries to reach their mitigation levels at cost effective levels," Figueres said in her concluding remarks to the conference.

"Climate [change talks] are the most important negotiations the world has ever seen, but governments, business and civil society cannot solve it in one meeting," she added, in response to criticism that progress is too slow.

Some progress was made at Bonn, on technical issues such as designing a scheme for sharing clean energy technologies, on a system for the measurement, reporting and verification (MRV) of national emissions, on the financing of a $100bn-a-year Green Climate Fund to support adaptation and emission reduction efforts in developing countries, as well as in forest protection and carbon markets.

Despite this, developing nations are feeling that they must resign themselves to expect a weaker deal from the developed world.

"This process is dead in the water," commented Yvo de Boer, former head of the United Nations Framework Convention on Climate Change (UNFCCC) during the talks. "It's not going anywhere".

Pablo Solon, head of Bolivia's delegation added that "there has been no advance in the substantive issue of pledges for reductions in emissions" by developed nations.

The minimum goal envisaged by developing nations is for a core group, led by the European Union, to extend the Kyoto Protocol.

Canada, Japan and Russia have all said they will not sign up to a second commitment period, and the world's two largest greenhouse gas emitters - China and the United States - are not bound by the Protocol. This leaves the European nations as the keystone nations upholding it.

During negotiations, the EU was challenged to sign up to the second period unilaterally, but the European Commission negotiator, Jurgen Lefevere, said renewal of the Kyoto Protocol alone "is not going to cut it", since it accounts for just eleven percent of world greenhouse gases. "We need a solution for the remaining 89 per cent as well," he observed.

The problem of transport

There is one big issue on which China and the United States, the world痴 two biggest emitters, agree: they both oppose the EU's scheme to regulate and reduce emissions from air and marine transport (known as 澱unker emissions.

These emissions were excluded from the Kyoto Protocol because countries could not agree on what to do about them.

They are the subject of a UNFCCC working group which made little progress at Bonn, as they are stalled pending the result of a legal case.

Earlier this year, the EU has got fed up with waiting for these sectors to take action on reducing their own emissions and proposed that they be included in the revised EU Emissions Trading Scheme (EU-ETS) from 1 January 2012.

China and four US airlines are challenging this in the courts and the European Court of Justice is to hear the case in July. The Court will probably not issue its judgment before the EU-ETS enters into effect. Until it does, the UNFCCC working group feels it cannot move forward.

Meanwhile, a proposed objective to cut the EU's transport emissions by 60% by 2050 was considered "too ambitious" by a majority of the EU's 27 transport ministers, meeting in Luxembourg last week, who want the goal to remain aspirational. They believe it would disadvantage European companies compared with their competitors in Asia or the US.

"In order to maintain the Union's competitiveness, similar commitments should be sought at international level. Today there are no alternative to fossil fuels [that is] competitive in terms of technology and price," ministers admitted in a statement.

It is the newer Eastern European members who are the most opposed to a binding 60% target. Others, such as Austria, believe it is achievable and should even be increased.

Soil carbon

Observers at the talks reported that some countries were introducing new market-based proposals such as 'soil carbon' markets into the negotiations which were unproven and had delayed the talks.

Michele Maynard, Policy and Advocacy Officer of thePan African Climate Justice Alliance (PACJA) said, "These markets are a false solution that will only fuel the land-grab in Africa and seriously undermine the ability of poor Africans to feed themselves."

Kate Horner, senior analyst at Friends of the Earth (US) said the United States continues blocking progress on the most important issues in negotiations, including how they will meet their pledges to the Green Fund.

"Perhaps the biggest contribution the US government could make to these talks would be to cut the carbon of sending people to negotiations who refuse to negotiate," she said.

What happens next

The next major milestone is the 17th Conference of the Parties of the UNFCCC and the 7th Conference of the Parties to the Kyoto Protocol, to be held in Durban, South Africa, in November /December 2011.

Before then, there will be a meeting about the Green Fund in Tokyo in July. A ministerial conference is planned for 2 to 3 July in Berlin, and ministers will also meet approximately a month ahead of the UN Climate Change Conference in South Africa.

South Africa is also considering a third ministerial consultation this year, and the incoming South African presidency and the current Mexican presidency are planning to engage heads of state and governments on the margins of the UN General Assembly in New York in September.

Carbon market in a slump as climate talks continue in Bonn

As world environment ministers and representatives meet in Bonn for climate talks this week, investors in the carbon market are hoping, probably in vain, for some kind of certainty as to what will happen after 2012.

After five consecutive years of robust growth, the total value of the global carbon market has stalled at $142 billion due to uncertainty as to what will replace the Kyoto Protocol's Clean Development Mechanism (CDM) after next year. The recession has also had an effect on the market.

A report from the World Bank, The State and Trends of the Carbon Market 2011, covering the last five years up to 2010 and issued last week, shows that the value of the primary CDM market fell by double digits for the third year in a row, ending lower than it was in 2005, the first year of the Kyoto Protocol.

The Assigned Amount Unit (AAU) market, which grew in 2009 with strong governmental support, shrank as well in 2010. Finally, the market that had grown most in 2009 allowances under the U.S. Regional Greenhouse Gas Initiative (RGGI) saw that year's gains erased in 2010.

This meant that the European Union's Allowances (EUAs) market became especially important. EUAs accounted for 84% of global carbon market value last year.

If you take into account the value of secondary CDM transactions, their share, driven by the EU Emissions Trading Scheme rose to 97%, dwarfing the remaining sections of the market. If it was not for Europe's commitment, virtually nothing would be happening elsewhere in the world.

Voluntary carbon market

There is good news, however, in another report released last week about the state of the voluntary carbon market, which posted a 34% gain in 2010, trading a record 131 million tons of carbon dioxide equivalent (MtC02e).

This is an annual report by Ecosystem Marketplace and Bloomberg New Energy Finance which gathers data from almost 300 market participants.

While the US accounted for the majority of trading activity, worth $424 million in total, market growth was strongest in developing countries.

Voluntary offsetting is due to businesses' CSR (Corporate Social Responsibility) commitments. These markets are investing particularly in renewable energy and forests.

The need for political commitment

Loss of political momentum on setting up new cap and trade schemes in several developed economies such as the United States and in the Far East, is a further reason for the decline in the non-voluntary sector.

Last week, California's proposed cap and trade scheme was challenged in the courts and is likely to be delayed by a year.

Christiana Figueres, executive secretary for the UN Convention on Climate Change, lambasted the US for inaction on climate change at the Carbon Expo in Barcelona last week.

Andrew Steer, World Bank Special Envoy for Climate Change, summed up the message of the report at the Expo. "The global carbon market is at a crossroads. If we take the wrong turn we risk losing billions of lower cost private investment and new technology solutions in developing countries. This report sends a message of the need to ensure a stronger, more robust carbon market with clear signals.”

The report's authors predict that in the next two years the difference between the gross demand for the cumulative supply of carbon credits generated under the Kyoto mechanisms will be below $140 million, and virtually all of this demand will be from Europe.

Looking beyond 2012, although potentially the demand for emission reductions could reach 3 billion tons or more, so far the only certain demand is from Europe estimated at just 1.7 billion tonnes.

This means there is little incentive for project developers to invest further and create a future supply of emissions reductions.

This is the effect that political uncertainty is having on political and business efforts to combat climate change at a time when its threat is reported to be even greater than previously assumed.

"Carbon market growth halted at a particularly inopportune time: 2010 proved to be the hottest year on record, while global emission levels continued to rise relentlessly,observes Alexandre Kossoy, World Bank Senior Financial Specialist.

“At the same time, other national and local low-carbon initiatives have picked up noticeably in both developed and developing economies. Collectively, they offer the possibility overcome regulatory uncertainty and signal that, one way or another, solutions that address the climate challenge will emerge."

Eight countries receive $2.8m

The World Bank's response is centred around the $100 million Partnership for Market Readiness, launched in Cancun in December 2010, which aims to support mitigation activities.

Last week it dispersed its first funding to eight countries: Chile, China, Columbia, Costa Rica, Indonesia, Mexico, Thailand, and Turkey. Each received an initial grant of $350,000 to help design, pilot, and eventually implement market-based instruments for greenhouse gas mitigation. They will now develop a "Market Readiness Proposal" to detail their plans. Another seven countries will receive grants shortly.

The fund is supported by ten contributors Australia, the European Commission, Germany, Japan, the Netherlands, Norway, Spain, Switzerland, the United Kingdom and the United States which together have pledged nearly US $70 million.

A number of the World Bank's carbon funds and facilities, such as the Carbon Partnership Facility, the second tranche of the Umbrella Carbon Facility, and a new facility for low-income countries currently under development, also respond to future needs by supporting scaled up mitigation and purchasing carbon credits beyond 2012.

Furthermore, the Forest Carbon Partnership Facility is supporting REDD+ initiatives which, to date, have not been included under the CDM. The Bank sees carbon markets as an important and versatile tool to provide incentives for a shift to lower carbon development paths.

After the disappointment of Copenhagen - where now?

It depended what, or where, you were reading, how December's COP-15 talks were spun to you. Hailed as a success in the US and the Indian Times, they were marked as a failure in Europe.

For those who saw failure for the UN Climate Change conference to conclude with a legally binding and effective deal, the blame lay either with China or the US.

Over in the US, the pro-climate action body World Resources Institute was among those who blamed Somalia and other developing nations most threatened by climate change for nearly scuppering the deal, which they claimed was "rescued" by Obama.

Meanwhile, Lumumba Di-Aping (Sudanese leader of the G77) compared the Copenhagen Accord proposed to the Holocaust and to asking African people to sign a suicide pact.

Tuvalu and other threatened states remain very bitter about the lack of transparency - the text of the Accord had been agreed before midnight by a small group of countries (including China, Japan, India, Brazil, the US and EU) and brought to the plenary.

The EC identified the biggest challenge as finding a way to share global emission reductions between rapidly-developing countries, like China and India, and more industrialised regions, like the US and Europe, responsible for the bulk of historical CO2 emissions. It said it was 'disappointed' by both the Chinese and Ameican pledges at Copenhagen.

After the dust has settled, it does seem that China was more obstructive than any other significant player.

So, after two years of wrangling and stalling, we must now wait for further meetings and talks this year to (maybe) declare a legally binding document, with firm targets.

What was decided at Copenhagen?

A small group of nations negotiated the Copenhagen Accord. However, they are responsible for 80% of emissions, and they promised immediately $28bn of short term support and $100bn/yr from 2020.

When this document was taken to the Plenary on the floor, there wasn't final agreement, but UNFCCC Executive Secretary Yvo de Boer claims there was "overwhelming support", citing the 120 heads of state who came to Copenhagen. But in the end, the Accord was only "noted" by those countries.

Nevertheless, de Boer argues, "it is a political tool we will deploy to resolve remaining issues over the coming year, e.g. on financial support and what developing contries need to do and what bodies need to be established".

The Accord contains no mention of targets for 2020 or 2050, but there is an "intent" to work towards a maximum 2 degree Celsius limit on average global temperature rise.

The document mentions pledges already made by some parties. Other countries can write their intentions into the scheme in the document before 1 February.

Before Copenhagen, financial pledges were made by individual countries and these are in the Accord.

For long term finance: $100 bn each year by 2020 was promised, from public and private sources.

For short term finance (2010-12) the following was promised:

$30 billion - EU

$11 billion - Japan

$3.6 billion - US.

Verification of countries' claims for emission reduction was a contentious issue: large developing countries must report their emissions every second year. There will be some kind of international surveillance but at the same time "respecting national sovereignty". There will not be a review of progress until 2015 to determine if all this action is urgent enough. We already know it is not.

In fact, de Boer said on 20 January that the failure at Copenhagen "makes our task more urgent, as the window of opportunity is closing faster than before". He acknowledged that in "financial, human and economic terms the challenge requires much greater investment". Nevertheless he acknowledged three outcomes:

1. the challenge is being met at the highest levels of government

2. it reflects a gobal political consensus

3. at negotiations away from the camera, a full set of decisions was brought to conclusion.

However, the REDD framework was not finalised at Copenhgen, so REDD money (for forest preservation) cannot be distributed.

The UN is looking forward

The names of those countries who agree with the Accord will be published in the Accord below the title.

De Boer has given countries a deadline of 31 January to be on this list, which will be updated on an ongoing basis on the UNFCCC website.

He was careful to say that signing it meant they do not "adhere" to its contents but agree to "be associated".

They can opt to adhere, or, if they are industrialised countires, to indicate the targets they will set, or, if developing countries, say what actions they will take. "The Accord is a living document" he said. No one is 'bound' to the Accord.

It will be used to advance the formal negotiations inside the UN process.

Of the short term finance pledged, many countries have it in their budgets and will channel it through the existing Kyoto Protocol measures and bodies. No more meetings are therefore required to implement it.

The next COP (16) is expected to be held in Mexico from 29 November 2010 to 10 December 2010. De Boer wants an "incentivised negotiating schedule" before then, in the second part of this year, details yet to be determined.

At the end of May / early June there will be a review of progress towards Mexico. Mexico could conclude in a legally binding agreement, but that can only be decided then. De Boer said he had spoken to 15-20 countries sine Copenhagen, who believe that discussions in Mexico will reach a conclusion after which it will be decided how to package it in legal terms.

The decision making process

The cumbersome nature of discussions came under much criticism at Copenhagen. Individual countries could hold up major discussions on points of order.

Could it be improved upon? De Boer now believes that "You can't have 192 countries involved in all the details all of the time on all issues.

"These are the most complicated negotiations the world has ever seen. They must be broken up into smaller parts. Transparency is vital. Countries will decide where they want to be involved.

"Then, when any decisions are brought back to the whole community, nothing is agreed until everything is agreed. This will build confidence among all parties," he said.

The vulnerable countries strike back

Many countries feel excluded from the UN process. Pablo Solon, Bolivia's ambassador to the UN said on 18 January:“The US climate envoy Pershing must be very deaf if he thinks that only a small minority of countries opposed the Copenhagen Accord. The agreement was roundly condemned in almost every quarter of the world, because it patently fails to tackle the climate crisis.

"The leaders of the world's largest polluting nations have failed us. That is why Bolivia is organizing a Peoples' Conference on Climate Change in April to put forward effective proposals for saving humanity from climate chaos. We invite all people committed to saving our planet to join us.”

Climate Justice will mean radical reduction of emissions in industrialized countries and the transfer of resources and technology to developing countries.

"If the US and other governments can so easily find money for endless wars, bank bailouts and bonanza bonuses for the rich, they clearly have the resources to help save lives and protect future generations.”

Solon added: “The US admission that it wants to exclude the vast majority of the planet from decisions about climate change is deeply offensive, when the climate crisis will fall first on those who are most vulnerable.

"The earthquake in Haiti has shown very clearly how vulnerable impoverished countries will be to environmental crises. The US decision to ignore our voices is the attitude of a colonial ruler.”

Europe struggles to lead the way

The Commission has proposed immediate action on climate finance agreed in Copenhagen, including fast-start funding ($30 billion) for 2010-2012 and long-term finance ($100 billion per year in 2020).

At an informal meeting of European energy and environment ministers in Seville on 16 January there were calls for swift implementation by the EU of the Copenhagen Accord. They urged other countries to follow suit and reach a legally-binding agreement in 2010.

"Doing so will require an active outreach by the EU, including at bilateral and regional levels, but possibly also through facilitating a meeting of 'Friends of the Accord' during the first quarter of 2010," a statement said.

The EU (which accounts for about 14% of the world's CO2 emissions) has committed to achieving a 20% reduction of greenhouse gas emissions by 2020 compared to 1990, as called for in its climate and energy package adopted in 2008. It would commit to 30% if other developed countries commit to comparable emission reductions and economically-advanced developing countries - namely China and India - contribute adequately according to their responsibilities and respective capabilities. 

The nominee for European climate commissioner, Connie Hedegaard, told a European Parliament hearing on 15 January that she hoped the EU's conditions for moving to 30% would be met before a meeting set for Mexico later this year.

The EU's newly-appointed president Herman Van Rompuy (a former Belgian prime minister) has said he will be focusing on Europe's recovery from the financial crisis and on tackling climate change during his two-and-a-half-year tenure. 

Though the Copenhagen climate talks lfailed to meet European expectations, they laid a good foundation for further work, Van Rompuy told the German chancellery. 

Angela Merkel has said that without European participation in the Copenhagen summit, China and India would not have taken any responsibility or confronted the issue of climate change. 

In March there is an EU Summit to endorse the European Energy Action Plan for 2010 onward.

US prospects

The loss of a Democrat majority in the US Senate on 20 January was seen as potentially making it more difficult for the US cap-and-trade climate change bill to be passed.

Steny Hoyer, Democrat leader in the House of Representatives, said the bill was not dead, but parts aimed at increasing energy independence were more likely to pass than those aimed at reducing carbon emissions.

De Boer put a brave face on the news: "No political development in US will mean we go back. US concerns on fuel prices and scarcity and economic problems will not go away.

"At Copenhagen Obama committed to a reduction of 17% - the global community will hold the US accountable to this," he said.