What Cancun achieved

Posted on December 18, 2010 by


The COP16, recently held at Cancun was able to deliver a broadly agreed strategy to combat climate change. This strategy includes

  • a fund to help developing nations address climate change
  • a draft deforestation treaty, and
  • an aim to establish a ‘global goal for substantially reducing global emissions by 2050’, but not binding emissions reduction targets.

At any rate, the achievement is not stellar, but rather modest and it still remains unclear as to how binding emissions commitments will be made.

The Cancun strategy has lent support to the Australian Governments’ renewed attempts to develop

  1. a binding carbon price, following the failed Carbon Pollution Reduction Scheme (CPRS), and
  2. a voluntary Carbon Farming Initiative.

These developments will significantly affect Australian businesses with carbon exposure. 2011 is expected to be a year in which action happens on a number of carbon issues.

 

Key points in Emissions reductions

The strategy document

  1. states the aim of establishing a ‘global goal for substantially reducing global emissions by 2050’, acknowledging ‘that deep cuts in global greenhouse gas emissions are required according to science … with a view to reducing global greenhouse gas emissions so as to hold the increase in global average temperatures below [2oC] above pre-industrial levels’, and
  2. formally recognises that the world’s GHG emissions should peak ‘as soon as possible’, but does not set a date. This will be the subject of scientific review in 2013. In the meantime, the pledges which many countries, including countries such as China, the US and Australia, made over the past year under the Copenhagen Accord are ‘officially recognised’ in the conference documentation. However, this term ‘recognition’ does not have a legal status enough to create a binding target.

 

Key points on future of Kyoto Protocol

There was no agreement possible on the future of Kyoto Protocol at the COP16. This Protocol commits 38 developed nations (including Australia but not the US) to emissions targets, with the first commitment period getting over in 2012.

Japan and Russia have resisted commiting to a second phase of emissions reductions under Kyoto. Their argument being that, with the rise of China, India, Brazil and others, the committed industrialised nations now account for only 27% of global greenhouse emissions, and that a new, legally binding pact obliging the US, China and other major emitters to cut greenhouse gases was therefore required.

The outcome at COP on these subjects allows negotiations to continue under the auspices of the UN, and preserve them from collapse, but have only deferred many hard decisions until the climate conference next year in Durban, South Africa.

 

Monitoring
The strategy agreed upon advances systems for monitoring of climate pledges of individual nations. The agreement was reached on India-sponsored version of the original monitoring proposals that the Chinese at Copenhagen had rejected as too intrusive.

 

Green Climate Fund
A new $US100 billion Green Climate Fund is being created to help developing nations obtain clean energy technology for emissions reduction and for adaptation.

The fund will be steered by a board of 24 members chosen evenly from developed and developing nations. In the first three years, the fund will be overseen by the World Bank, an interim trustee. The fund will be used to disburse large sums in annual aid for ‘climate defence’ in developing nations. As per the Copenhagen Accord, developed countries had committed that the fund would reach $100 billion by 2020.

Issues and concerns on the fund’s operation and the mobilisation remain but are expected to be ironed out at COP17.

 

Draft forest treaty
The draft forest treaty, which is known as ‘REDD+’ (Reducing Emissions from Deforestation and Degradation (plus other things such as replanting)), foresees the eventual ‘monetisation’ of the rainforests of countries such as Brazil, Congo, Indonesia and Papua New Guinea. These nations are expected to receive funding for preserving forests, eventually in the form of tradable carbon ‘credits’.

 

CCS is now included in CDM
Cancun draft accepted Carbon Capture and Storage (CCS) as an offsetting mechanism under the Kyoto Protocol Clean Development Mechanism. This will potentially increase the support for CCS.

 

Was Cancun different?
There were a number of factors that drove the outcome to be finally produced which were distinctly different from those at Copenhagen.

China and the US have honored a ‘non-aggression pact’. Prior to the conference, they seemed to intend to ensure that the other was blamed for failure of conference. However conference, both seemed to tow their own line of remaining out of a binding committment, which eventually led to mutual support rather than aggression.

The importance of UN process staying alive was well understood and appreciated by all parties. Failure after Copenhagen could have been near-fatal to the process. The conference was able to move beyond ‘binding-or-nothing’ attitudes towards the package of incremental steps ultimately agreed.

 

International implications
Stating that Cancun’s success was spectacular would be misleading, it was modest.  It is important that the essential elements of the Copenhagen Accord have been ‘recognised’, and some initial steps have been taken towards their implementation. How and if it gets converted binding emissions commitments after 2012 remains to be seen.

The next UN Climate Change Conference will be held at Durban in December 2011, when a successor to the Kyoto Protocol will be of overriding importance. Low level meetings will be held throughout the year in the lead up.

At a minimum the positive moves on REDD+ and CCS present opportunities for Australian businesses.

REDD+ has been promoted as potentially acceptable under a proposed California emissions trading scheme. Federal US carbon price legislation has stalled for the time being given the political lookout. The US EPA however has said it will take emissions enforcement action and the US SEC continues to watch climate change issues closely.

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