Thursday 01 December - Day 4: Falling out of love
Progress report on the LCA
Thursday started out with a wrap-up of progress under the AWG-LCA discussions, given by Facilitators of the relevant discussion areas. Developing and non-developing country mitigation discussions are moving forward with parallel streams discussing reporting guidelines and registries. Two parallel finance discussions are also progressing, one on long-term finance and one on the standing committee. As regards technology, the aim is to get the technology mechanism operational as soon as possible. The Secretariat has prepared a background paper which addresses many of the points that need to be dealt with. One of the key issues to be decided is governance of the technology mechanism.
In general, the LCA discussions have moved to informal discussions with a view to the LCA Chair preparing a text to be released on Saturday. We will blog about progress with that on Monday. There will be a plenary meeting on Monday morning to discuss Saturday's draft text.
One of the intended elements of Saturday's LCA text is "legal options" for an agreement under the UNFCCC. This could take the form of COP decisions or a separate treaty. The Facilitator of this work stream went through a list of common principles or ideas in respect of the elements or objectives that parties have suggested. These included enhanced implementation of the UNFCCC, that the outcome must be multilateral and rules-based, that it creates more certainty and trust, flexibility, equity, environmental integrity, that it be facilitative, non-punitive, etc.
Venezuela began by stating that this is the most crucial element of Durban and that it is important to make a linkage between the two tracks (discussions under the UNFCCC and the Kyoto Protocol). Venezuela reminded parties that it had been calling for a more ambitious agreement under the UNFCCC to reinforce the Kyoto Protocol and not to destroy it. Venezuela also outlined some legal issues in respect of principles of international law and the illegality of an absence of the negotiation of a second Kyoto Protocol commitment period.
The Indian delegate said these legal submissions had sent him to sleep and that issues with the Kyoto Protocol mean that he doesn't love treaties any more. India is, of course, keen to avoid taking on any further legally binding obligations under the UNFCCC. After Durban, it will be interesting to see if treaties have any remaining supporters in the climate change community!
AOSIS is seeking to include additional principles around delay, urgency and timeframes. Bolivia has underlined how important it is that the Kyoto Protocol be reinforced, in order to show the world that emission reduction commitments will be complied with. The Bolivian delegation has also rejected proposals for a facilitative, non-punitive framework and concepts of "flexibility". Intractable as ever, Bolivia has also stated it does not trust voluntary pledges.
The EU highlighted that the most important element on the list of common principles and ideas was the "2 degrees goal" and the irony is that the parties which are insisting the EU agrees to a second commitment period, are themselves questioning their faith in legal treaties.
REDD+ discussions started moving forward yesterday with text released by the SBSTA Chair on guidelines for key operational elements such as safeguards, reference levels and forest monitoring and reporting systems (see our previous REDD+ updater for the background). The working group under the LCA on REDD+ finance also met and agreed a mandate for the Chair to produce a short text. This will attempt to lay out the sources of finance that countries could elect to use for REDD+, the linkages to safeguards and reference levels and a work plan to resolve further issues.
The flash point in these discussions - as it has been for some years - is the role of the private sector and markets to finance REDD+. Australia, Norway, Mexico, EU and PNG, all voiced support for markets, although many such as Norway and the EU see this as a longer term step. Against this, Bolivia repeated its concern that markets equate to the commodification of nature. A far more significant objection (in terms of its influence over the negotiations) was raised by Brazil, which repeated that it would not support markets that involve offsets. From discussions with parties it looks likely that a decision on a REDD+ finance text is possible next week and there is talk of a mention of the need for private sector involvement. Whether a mention of markets gets through is difficult to predict.
Yesterday marked the first round of discussions in respect of this year's guidance to the CDM Executive Board (EB). The parties spent some time agreeing the areas that needed to be addressed by the EB. The Chair attempted to steer the parties towards purely administrative and technical areas of discussion. However, Venezuela and Ecuador insisted that the negotiators also address the question of whether the CDM can continue in the absence of the negotiation of a second Kyoto Protocol commitment period.
Wednesday 30 November – Day 3: The camel in the room
"Continuation" of the CDM
The COP reconvened on Wednesday in order to consider a broad variety of issues, including matters relating to the market mechanisms, modalities and procedures for the Technology Executive Committee and the Report of the Transitional Committee of the Green Climate Fund.
The issue of the future of the market mechanisms, particularly the CDM, has become very contentious and once again the vehemently opposed positions of the parties were exposed. Though many parties did express support for the CDM and its future continuation, a striking number appear to have taken the view that it should end in the absence of a second Kyoto Protocol commitment period. We continue to watch the evolving and coordinated presence of the BASIC (Brazil, South Africa, India and China) closely. Brazil made a decided intervention indicating that it would not support the continuance of the CDM in the absence of a second commitment period. In the corridors, however, the Brazil negotiator was very hopeful that a deal would be reached, with a glint of knowingness in his eyes.
Some parties referenced termination of the CDM in 2012, which seems a peculiar cut-off point given that the first commitment period's true-up period (time for parties to demonstrate that they have met their Kyoto Protocol commitments) will not end until sometime during 2015. There were also, however, calls by many developed and developing countries for the continuation of the CDM.
Many parties focused on the need for improvement of the CDM, with African countries, citing in particular, the need for better regional distribution of CDM projects. However, it is clear in respect of many developing countries that absence of a "top down" solution is not necessarily the only barrier to investment in CDM projects. Instead, broader improvements in the investment climate in such countries, combined with the political will (which manifests itself in action, particularly in relation to granting LoAs and other relevant government consents) are necessary.
Technology Executive Committee
Wednesday was an exciting day for the Technology Executive Committee. It was the first opportunity for the COP to consider the Report on modalities and procedures of the Technology Executive Committee (available here). There was broad-based support for the Report. Some of the suggestions included that wide participation of stakeholders was necessary, that technology centres should be established as quickly as possible, and that synergies should be explored between existing centres and other MEAs, including regional centres under the Stockholm and Basel Conventions. Others proposed that there should be a strong link between the technology mechanisms and the financial mechanism under the Convention.
Operationalisation of the Green Climate Fund
Wednesday was also the first day for the COP to consider the Report of the Transitional Committee for the design of the Green Climate Fund (GCF) (available here). This Report, which contains the draft Rules of procedure of the Technology Executive Committee, represents the culmination of a year's work. Many parties acknowledged that the draft Rules of procedure are not perfect and represent a compromise (Ambassador Burhan Gafoor of Singapore joked that "a camel is a horse made by a committee"). AOSIS stated that they would have liked a more ambitious reflection of the Fund's objectives including its transformational nature, dedicated windows for SIDS and LDCs, a stronger relationship with the COP, requirements in respect of the replenishment process, etc. But despite this, many parties seemed prepared to adopt the draft Rules of procedure "as is", as they represent a balanced package. However, the US in particular was adamant that the Rules of procedure had to be reopened for discussion at Durban. This has led to accusations that the US is "holding up" the finance mechanism. There is speculation as to whether this hold-up really is in order to improve the GCF, or whether there are broader political objectives in doing so.
Wednesday marked the first informal meeting on various approaches, including markets. The issues in this area are particularly contentious, with new market mechanisms raising objections on many counts. Some parties remain fundamentally opposed to new market mechanisms, others think that they should be available only in the context of a new Kyoto Protocol commitment period, whilst many more are concerned to establish a new market mechanism at Durban, in order to reduce the potential negative impacts of a fragmented offset market going forwards.
In the short time available, it was established that there was no mandate for the Facilitator to provide his own redraft of the lengthy non-paper, despite its duplications and inconsistencies. New Zealand asked the parties to recognise that jurisdictions are already developing their own approaches to offsets, in the potential absence of a UN framework. The EU said that it seeks agreement to the establishment of a new market mechanism at Durban and that this is an important part of its openness to participate in a second commitment period of the Kyoto Protocol. There was reluctance by the parties to accept the Facilitator's proposal to engage in a drafting group between 9 pm and 12 pm on Wednesday evening, so the parties would liaise on that front in order to find a suitable time.
The strong sense of deja vu of some aspects of the UNFCCC negotiations, was highlighted today by further consideration of whether or not the COP should move from consensus to majority voting. This proposal was tabled jointly by Mexico and Papua New Guinea. It seems apparent that little progress is likely to be made on this perennial issue. However, several parties did express willingness to consider proposals in this regard, as there is widespread frustration that a very few parties are currently able to hold up negotiations.
Tuesday 29 November - Day 2: Firing blanks?
There were a number of key developments today that are likely to shape the negotiations over the first several days. First, the emerging economies have formally registered and been actively taking positions under the moniker of the BASIC (Brazil, South Africa, India, and China) group. This is a marked departure from past years where the unique emissions characteristics of the groups shaped the positions of developed Annex B countries, but were not formally acknowledged by the G77 group of developing countries. This development may signal a willingness of China and the emerging economies to take on greater commitments than they have in the past.
Second, the SBSTA and other CDM working groups appear to have internalised the maxim of "perfection is the enemy of the good". Significant progress was made toward establishing a materiality standard (see below). Unfortunately, we did not see the same level of progress in relation to REDD+ activities, which have yet to give rise to a draft decision.
Another day, another plenary
The morning saw the opening plenaries of the two negotiating groups not convened yesterday, being the AWG-LCA and the AWG-KP. The statements made during their opening reflected those already made at the COP and COP/MOP on Monday. Again, a broad range of desired outcomes was muted, with some parties insisting on the negotiation of a second Kyoto Protocol Commitment Period, in the face of others who have overtly ruled that out as even a possibility. The African Group insisted that it will not allow African soil to be the graveyard of the Kyoto Protocol.
In the face of such apparent paralysis, and with the EU's roadmap not at this stage appearing to gain traction, it seems unlikely that much progress will be made on big picture political issues at Durban. Perhaps most of those will be once again rolled over to next year's COP18 in Qatar.
One issue that has been dragging along for some time, is that of the implications of the establishment of new HCFC facilities seeking to obtain CERs for the destruction of HFCs. This touches on a number of sensitivities, including the role of the CDM in respect of the regulation of HFCs, as well as the more generic but equally vexed question of the shape of market mechanisms.
The Secretariat has prepared a Technical Paper on this issue, which sets out background information and identifies a number of options. At SBSTA 34, the parties took note of the Technical Paper and agreed to continue their consideration at SBSTA 35 (now in session). There was great reluctance among the parties to discuss the Technical Paper and no parties sought to make any substantive comments. After a confused exchange of how best to end consideration of the agenda item (either permanently or temporarily), it was eventually agreed that SBSTA's conclusion should be that no agreement was able to be reached and that the issue should be reconsidered at COP18 (meaning it will not be on the agenda for Bonn's SBSTA meeting in June 2012).
Finance / portal for climate change
The delivery of finance over the short-term, "fast start" (2010-2012), medium-term (2013-2020) and long-term (post-2020) timeframes will continue to remain a contentious issue. Uncertainties include whether or not fast-start finance is actually being delivered, whether it is new and additional, and the form that it should take. The question of medium-term finance is further complicated by the absence of agreement as to how finance should be scaled up during the period 2013-2020.
There is significant discussion of the requirement to match finance to needs, to ensure that it is not double counted and also that more information is available in respect of what is being done on the ground. The UNFCCC has therefore launched its finance portal, which is conceived as a virtual gateway for information provided by parties, a vehicle for tracking the financial mechanisms under the UNFCCC and a tool to inform people about what finance is being provided. It contains three separate modules in respect of fast-start finance; funds managed by the GEF; and national communication, and can be accessed here. Clearly, this is only a first step in addressing a complicated area, but issues surrounding MRV and matching finance to demand by way of registries systems are cross-cutting and this portal is likely to be the first in a number of similar initiatives over the next few years. Fingers crossed that the eventual result is not an overcomplicated mess only suitable for analysis by the most ardent professionals!
In the interim, discussions have continued in respect of the Green Climate Fund and there is concern that this potential poster child may yet fall victim to a dispute between developing and developed countries. There is also trepidation about the implications of the almost-agreed Green Climate Fund text from the Transitional Committee being formally introduced in the COP.
Materiality under the CDM
One issue that has been close to the hearts of CDM professionals for several years is that of a materiality standard for the CDM. SBSTA was asked by the CMP last year to consider the issue of materiality with a view to recommending a draft Decision at COP17. The good news is that all but one significant issue has been resolved, being the level of materiality thresholds for different sizes of projects. Fingers crossed that this issue will be tied up in discussions on Wednesday
So on a day during which it is suggested that the EU's attempt to further leverage in the face of the global financial crisis is falling short, it remains to be seen whether its climate change policy will also be seen as firing blanks. The implications of this won't be known for some time, but China's chief negotiator is reported on Tuesday to have stated that "If we cannot get a decision for the future of the second commitment period, the whole international system on climate change will be placed in peril".
Monday 28 November - Day 1 (Cont.): Drumming up?
Drums beat and warriors danced at yesterday's opening ceremony (Monday). The new COP President, South Africa's International Relations Minister Maite Nkoana Mashabane walked through the COP's agenda. Progress was less hesitant than at Copenhagen and Cancun with few parties seeking to intervene at an early stage.
The parties have been working under draft rules of procedure, and it was agreed that consultations would continue on this issue, with PNG noting its usual objection and calling for majority voting (see our blogs for Copenhagen and Cancun). Equally, it was not possible to formally agree the COP agenda, which itself has become contentious as a result of submissions by India in respect of accelerated access to critical mitigation and adaptation technologies and related intellectual property rights; equitable access to sustainable development; and unilateral trade measures (see agenda items 11, 12 and 13).
The UNFCCC Executive Secretary as part of her opening remarks highlighted two kinds of issues that require consideration. The first is operationalisation of the Cancun Agreements and covers areas such as:
- making progress on adaptation,
- finalising the technology mechanism,
- agreeing the Green Climate Fund's governing instrument,
- continuing progress on MRV,
- defining "the what and the how" of the review scheduled to conclude in 2015,
- gaining more clarity on fast-track finance.
The other category is addressing key political questions that remain unresolved.
Priorities include discussions around a second Commitment Period of the Kyoto Protocol in the context of a broader agreement, a pathway for mid-term finance (2013 to 2020) and reassuring the vulnerable.
All laudable issues, but all big asks.
Parties moved on to opening statements. Opening of the negotiations were characterised not by the usual optimism and hopeful statements of intended progress, but rather by stark statements reflecting the deep (and historic) divisions between the parties.
EU delegations reached out to the private sector and gave a clear indication that agreement on the continuation of the KP was viewed as a precondition to any subsequent, legally binding deal involving all emitters. In sharp contrast, Canada, Russia and Japan have clearly indicated that each country will not agree to another Kyoto Protocol commitment period.
Late in the day, unconfirmed but credible news broke that the Canadian cabinet has taken a decision to withdraw from the Kyoto Protocol later this year. In a reprise of long-familiar arguments, the United States, which has not ratified the Kyoto Protocol, also gave a clear signal that it will not commit to any new agreement unless all major emitters are party to such agreement and the rules are known well in advance of any specific emission reduction commitments being made. On the other hand, developing countries are reluctant to move forward on rules without certainty about commitments that are on the table. This kind of "cart before the horse" argument is entrenched. We also understand that the US has indicated that it will not agree to any new financial mechanisms unless and until the new rules of any new agreement are known.
Monday 28 November - Day 1
Hello and welcome to COP17.
Let's hope Sunday evening's weather was not a metaphor for the next two weeks of negotiations. Things were a bit stormy to say the least. Today however saw the dawn of a bright, sunshiny day.
The Durban facilities are scattered among a series of buildings in the city centre. The queues for entry early this morning were relatively quick. The effect of holding the conference downtown is that there is a bit of a buzz about both the conference facilities and Durban. There is none of the chaos of Copenhagen, nor much of the almost industrial efficiency of Cancun. The venue is intimate and concentrated. The streets around the International Conference Centre (ICC) are filled with a volunteer army dressed in green track suits. Occasionally the sound of Zulu war drums fills the air.
The COP plenary hall feels smaller than those at Copenhagen and Cancun, and the NGO "compound" at the back of the hall is typically crowded. The opening ceremony will be addressed by President Zuma.
In the halls, observers chat about prospects for COP. Much of the focus is on the EU's "roadmap" idea, where targets and actions might "sit" and "the future" of the Kyoto Protocol. The carbon markets community is clearly preoccupied by the idea of having greater certainty with respect to the market mechanisms, something which delegates, NGOs and the Secretariat, all seem to be taking seriously. There is also intrigue as to the implications of new COP agenda items relating to intellectual property rights, access to sustainable development and unilateral trade measures.
We will report back Monday's activities in tomorrow's blog.
Friday 25 November - Tanzania
Today we are publishing a short briefing on:
Mixed messages abound in advance of COP17 in respect of the importance of a new global treaty. We reported yesterday that UNEP had been calling for a tougher stance. Chris Huhne is also reported as having stated that "A global deal covering all major economies is not a luxury. It is not an optional extra. It is an absolute necessity."
However, a report released by Bloomberg New Energy Finance, has indicated that electricity from the wind, sun, waves and biomass, drew $187 billion of investment last year, despite concern over international climate change policy. This could indicate that progress towards a low carbon future may be compatible with a "bottom up" approach being taken in the future. But to what extent would momentum for such investment stall in the absence of a move towards a new global treaty? And how important are other potential elements of such a treaty, such as a harmonised carbon accounting system and compliance mechanism?
Food for thought.
Thursday 24 November - And now to Nigeria
Today we are publishing a short briefing on:
The significance of next week's negotiations, and discussions over the likelihood of entering into a legally binding agreement any time soon, has been underlined by recent comments by Achim Steiner, Executive Director of the UN Environment Programme, who has been quoted as saying:
"Those countries that are currently talking about deferring an agreement [to come into force] in 2020 are essentially saying we are taking you from high risk to very high risk in terms of the effects of global warming. This is a choice – a political choice. Our role, working with the scientific community, is to bring to the attention of the global public that this is the risk that policymakers and governments will expose us to."
But will the Durban talks get off to a bumpy start after relatively plain sailing at Panama earlier this year? There are reports that diplomats from some developing countries may "occupy" the talks. Such bust-ups are nothing new to the negotiations - at Copenhagen there was at least one significant walk out of negotiators.
We'll report back next week!
Wednesday 23 November - REDDy for Durban?
As legal advisors acting across a range of initiatives and projects relating to REDD+, we are active participants in international negotiation forums - seeking to ensure that environmentally robust international mechanisms are deployed that can provide a substantive role for reputable long term investors. If you wish to discuss the prospects of this occurring and what it means for your business then please get in touch with the team in Durban.
Tuesday 22 November - DRC or Kenya anyone?
Expectations are being firmly managed down, not just for class="abbr" title="Conference of the Parties">COP17, but for the prospects of a "global deal" being in place for many COPs to come. But how much should we be worried about this? To what extent does failure to agree at an international level deter investment in a low carbon future in developing countries?
Today we are publishing short briefings on two dramatically different African jurisdictions, class="abbr" title="Democratic Republic of Congo">DRC and Kenya. DRC seems to be making progress with the development of a class="abbr" title="Reducing Emissions from Deforestation and Degradation">REDD framework, which could have a significant impact on global emissions. Kenya is to be assisted by the Program on Scaling-up Renewable Energy in Low Income Countries (SREP) and has already introduced feed-in tariffs for the support of some renewable energy technologies. Both jurisdictions would benefit from further injections of climate finance.
Join us at our side event in Durban to discuss how to bridge the public / private sector divide for financing renewable energy projects in Africa.
Climate finance in Africa – bridging the public/private divide
Auditorium, Standard Bank, 1 Kingsmead Way, 4001 Durban
Following our Durban team
Monday 21 November - One week to go!
This is the first of our "pre-Durban" blogs and with just a week until COP17 starts, we look at the expectations for the next round of climate negotiations. Catch up on our pre-Durban webinar.
The approach now seems to be baby steps. No hope of a bells and whistles treaty until later in the decade, so what can we move forward on?
Our focus for the COP will be:
- more clarity on the rules for measurement, reporting and verification of targets and actions to mitigate emissions, including the process of biennial reporting, International Consultation and Analysis (ICA) and the proposed "Nama Registry"
- progress on the legal form of an international agreement and the framework for mitigation targets and actions
- whether or not the EU can move forwards with its proposal to agree a roadmap towards a legally binding agreement
- greater clarity on the role of market mechanisms
- getting the Green Climate Fund up and ready for contributions in 2013
- more detail on REDD finance.
Hurdles for the negotiators include coming up with something plausible in response to the looming "Kyoto gap" and finding a way to lock in existing mitigation pledges, but with the flexibility necessary to beef them up in the future. Convincing developing countries that fast-start climate finance is being delivered will also be a challenge.
Scaling-up renewable energy in Africa: South Africa
Over the coming week we will roll out a series of short publications which focus on in-country priorities for scaling up renewable energy in:
- South Africa
Come visit us at COP!
If you are at COP, drop by for a chat at our stand on the ground floor of Standard Bank, 1 Kingsmead Way, 4001 Durban – just 10 minutes walk from the ICC.
Also, don't forget to join us at our side events:
Climate finance in Africa – bridging the public/private divide
Auditorium, Standard Bank, 1 Kingsmead Way, 4001 Durban
The emerging Australian carbon and clean energy market: opportunities for international participation
Auditorium, Standard Bank, 1 Kingsmead Way, 4001 Durban
Following our Durban team
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