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Cancun wrap up: the text

Still reading through the text but it looks like its a big win for the USA and the Copenhagen Accord. My overwhelming feeling reading it is that it is simultaneously modest, promising and promising too much!


A rousing endorsement

Fmr UN Climate Chief, Yvo de Boer’s answer to CDM reform: don’t let the UN near it!

Some quotes from a recent side-event in Cancun (from point carbon today):

The UNFCCC is not the right place to discuss details of the carbon market, its former chief said.

Speaking at an event hosted by the International Emissions Trading Association (Ieta) in Cancun, former UN climate chief Yvo de Boer said the body is better suited for setting overarching climate goals.

“The thing the UNFCCC is most useful for is agreement on an international level of ambition – it is not a forum for implementation,” he said Thursday.

He added that questions about how emission rights or permits are allocated and generate revenue “is a matter for national and regional governments to deal with”.

De Boer spoke on a panel with Ieta president Henry Derwent, a former UN climate negotiator for the UK, on the current state of negotiations.

Derwent added that the UNFCCC doesn’t have the expertise to handle the technical and operational aspects of a global emissions trading system.

“A much greater level of administration and detail at the UNFCCC (would be needed) than it currently has,” he said.

De Boer said that the UN as a whole needs to undergo system-wide reform in order to focus on a global “green growth agenda”.

“It struck me, especially with my job in the UN, that we are really handicapped,” he said. “There is not really a coherent body or system in the UN to respond to climate change.”

He added that agencies like the UN Development Programme and World Bank currently play climate change roles “that cannot be distinguished”.

“We need to create a new body with a responsibility for sustainable development and green growth,” he said, noting that the body could pull together relevant sector agencies.

On prospects for the outcome of the climate talks currently underway in Cancun, de Boer said he hopes negotiators will be able to adopt the text on long-term cooperative action (LCA).

“What we need to see is the adoption of the LCA text that is currently on the table in a modified form and a decision to push some of the issues on the text forward,” he said.

Such issues could include the details on a proposed body that would oversee a climate aid “green fund”, and a “mumble on the future of the Kyoto protocol”. He said a decision on the future of the legally-binding climate treaty cannot be reached in Cancun, as it runs the risk of “ruining the process”.

The last day and night

So, according to the Hindu – my new favourite news source –  it seems as if the plan B will be some more text with more details about finance and adaptation architecture.

“Time is running out, and we still have much work ahead of us,” said Mexican Foreign Minister Patricia Espinosa, who is chairing the Cancun summit. But she added, “A broad and balanced package of decisions is indeed within our grasp.” Chairs of various working groups reported a “consensus” on initiatives that would help poor countries adapt to climate change, and “convergence” on the creation of a global climate fund to channel money from wealthy to poor countries. Deals were less certain on protecting forests and improving technology cooperation.

That’s disappointing. But it kind of reflects the bear minimum expectations that people had going in, I guess.

I’ve also seem some claims – probably unreliable – that there may be some more details on an MRV compromise which come out. How momentus that is will depend very much on the level of detail.

CDM at Cancun

Well well, the saga over the clean development mechanism (CDM) continues (subs’n req’d)…

Prior to the Cancun talks, there was a lot of focus on the future of the CDM. In particular, about how the mechanism can be reformed to help a) deliver more private sector money into developing countries to reduce emissions in exchange for carbon offset credits, and b) to develop methodologies that can spread the benefits of the CDM around more geographical space (at the moment most of the money goes to China, India and Brazil!). Now, those countries still need it, and there is in fact an argument that those are the best  places for the money to go in terms of aiding low carbon development that will change the emissions trajectories of these nations. However, if the mechanism is supposed to help deliver funds to poorer countries to aid development, then there is argument that more should go to Africa and others.

And there’s the rub, for the problem with the CDM for me is that people keep second guessing the mechanism’s true purpose.  For some, it’s meant to be about lowering abatement costs through the emissions offsets it generates for developed countries with emissions targets. For others, its meant to be a source of funding to aid with the development of low carbon infrastructures in developing countries. For yet others, it’s meant to deliver technology transfer. For yet others, it’s meant to drive sustainble development and growth itself in poor countries.

So all in all, that’s a lot of different goals to achieve at once!  And at the same there is a lot of concern and confusion about how one defines what are in fact “additional” emissions reductions under the CDM. In other words, what is a true emissions offset? Not a good starting point!

But more immediately, what is happening is that the CDM is in the process of dying on the vine: because  of regulatory/legal uncertainty about what will happen to it after 2012, when the first period of the Kyoto Protocol ends, investors don’t want to invest in those projects if they can’t get a return back after that date.

Personally, I believe that this is a shame. What we really need are as many ways to get funding to developing countries as possible to develop low carbon infrastructure. And the CDM has delivered, according to the World Bank, between 4-8 billion USD a year recently in financing for projects in these countries, coming from developed countries – particularly the private sector. Sure, the public sector in developed countries could theoretically, provide this as well, plus more, but will it?

Therefore at Cancun it was hoped that the COP/MOP could take a decision making clear that the CDM will be retained after 2012 regardless of whether there is a new Kyoto Protocol commitment period or not. In theory this is not that difficult to do. However, it turns out that in practice these commitments can’t be made yet, because parties – particularly developed countries – don’t want to make it look like they are reinvigorating the Kyoto Protocol 2.0 track of negotiations, instead of supporting the Copenhagen Accord track. In many ways this is an absurdity, since the CDM could still function independently of the Kyoto Protocol’s existence after 2012. However, one suspects that aside from the psychological boost reaffirming the CDM would give to supporters of Kyoto (who, if it fails to come back to life here, should really start seeing the writing on the wall, like India surely does – kinda),  it’s probably also an issue of the EU and othes feeling that the CDM is a significant bargaining chip for it with developing countries and so it doesn’t want to give ground until it gets something in return. The problem with doing that deal, however, is that what the developed countries really want in return is for India and China and others to give up a second Kyoto commitment period that does not include internationally binding targets for themselves. they want to bind developing countries into action. So you withold your CDM joker card until later.

Now, in some ways this might be a good thing. Yvo de Boer – fmr UN climate chief – recently said he thinks its better to wait to do CDM reform after other issues are resolved and the market can be reformed and redesigned more comprehensively in a less politicised setting. That’s probably sensible. And he would probably know! But all the same, waiting 2-3 more years to relaunch what was already working (with some hiccups, admittedly) seems like a massive waste of precious time.


I have to confess, I’m starting to feel less and less optimistic about what is ultimately going to come out of Cancun. Much could still happen, but I’m increasingly conscious – reinforced by comments coming out by major parties – that there’s a lot that can’t happen now. So what can’t happen?

1. There cannot be progress on a binding international agreement. Why? Because the rift between developing country parties Kyoto who want Kyoto 2.0 and developed countries who see it as a sideshow to the real negotiations is simply too wide. Even for those developed countries like many EU states and Australia, who would be prepared to buy into a new Kyoto commitment period after 2012 (when the first one ends), they are simply not prepared to wear new legally binding international commitments, when so many key countries would not (i.e. US, China, Canada, Japan, Russia) (really the key here is the US-China combo, the others could be made to fall into line, I reckon).

2. We can’t apparently have a deal when much progress is made on the details of smaller elements of an  overarching deal – e.g. Monitoring of emissions commitments under the Copenhagen Accord, technology transfer, reducing deforestation, financing architecture for mitigation and adaptation in developing countries – because that involves the US or China and India having to cede ground without obtaining enough in return for the result to appear like a credible win for them. Progress can thus only advance all at once on many fronts or not much at all. This is a shame, because apparently there are deals virtually waiting to be signed off on, on basically all of the above issues (maybe less true of financing).

3. It doesn’t  appear that we can get a wide-ranging deal on all elements at once. Why? Because developing countries – particularly India and China – won’t agree to key monitoring details (which is what the US wants along with a reinforcement it will bring to the Copenhagen Accord framework for future action) unless the US and other big countries accept the Kyoto 2.0 framework (see point 1!). In truth, this seems to be a bit disingenuous of India and China. As they well know, they signed off on the Copenhagen Accord and made commitments under it (even if they said they were simply reporting voluntary commitments that were unconditional) and now they say to honour the agreement of the Accord they want Kyoto 2.0 instead of, or as well as, the Copenhagen Accord!

My theory is that China is being recalcitrant and obstructionist and trying to pin the blame on the USA as usual. But India, India doesn’t really have a problem with moving forward on the Copenhagen deal – provided that it feels its domestic interests (and extremely low per capita emissions) are taken into account in setting future commitments, financing deals, etc. There is, in theory, room for the US and EU to work to isolate China by getting India on board – and it is actually in India’s interest to do so. Even if the US seems like its not taking action at home – and it’s certainly not to any satisfactory extent – , that’s jsut domestic politics and that is best helped by time and, as unfair as it sounds, the Indians and others do not help the US domestic situation by not working with the US to move ahead globally.

The US, recall, is really the most recalcitrant child in the world in terms of reducing its domestic emissions in terms of large developing countries (at least, not including the oil states) and so it has be teased and accepted for the troubled domestic political soul that it is on climate change. It  is in China’s and India’s long term interest to realise that. But China, don’t worry, will play the stubborn fool until the end. India should isolate China and allow its negotiators the support to get a deal with the US and EU that is comprehensive.

Steven Chu’s Presentation at Cancun

Here’s a link to an excellent presentation by Obama’s Energy and Climate Secretary, Steven Chu, made in Cancun recently.

Look out for an excellent refutation of climate sceptics and a great summary of what the Obama administration is doing on technology development to tackle climate change.

The Nordhaus Shuffle

Via Michael Levi’s excellent blog, I was alerted to this article by famous (conservative) environmental economist Ted Nordhaus and co. on technology transfer and a technology more supply sided approach to tackling climate change as opposed to demand side approaches like carbon pricing and subsidies for feed-in tarrifs. (Here it is.)

For mine they raise a number of very interesting practical questions about the phase in low-carbon technology.

At the same time I find practically  every concrete suggestion to be either impractical or much more limited in reality than what they would seem to imply.

They seem to think that developing stand-alone competitive  clean technologies in time to avert disaster is both do-able and more or less a free lunch (if so, its only because they seem to think the tax payer should pick up the bill for it!).

And what about placing a price on carbon? What role does that have in making marginal technologies compete? They are silent on this question, under what I find to be the bad faith argument that economic growth would be reduced and no government wants to accept that. Well, actually the normal estimates are like 0.1% of GDP a year in terms of reduced output in the economy for carbon pricing that is relatively strong (50-150 euros a tonne), so global growth is hardly going be killed by pricing carbon.

In general, while there are plenty of fruitful ideas to follow up in the Nordhaus article, I find the conclusions very much smack of a capitalise your gains but socialise your losses approach to economic policy making: i.e. by asking the taxpayer to pay the larger share for businesses to develop the solution to climate change.

Compare this with demand side approaches…Carbon pricing says: no the atmosphere is a public good, therefore you the polluter should pay to use it (ie emit). Making cleaner technologies more competitive though carbon pricing is therefore fair and sensible.