Blog: UN climate change negotiations, Cancun, December 2010

December 2010

Day 11: 13 December - Can-cun kind of can

The outcome of the Cancun climate conference ( COP 16/ CMP 6)

Introduction

December 2010’s Cancun climate conference faced many challenges. Not least of these was the need to re-establish the legitimacy of the multilateral negotiations process under the United Nations Framework Convention on Climate Change (UNFCCC), following the widely-criticised outcome of last year’s 2009 climate conference, which culminated in the Copenhagen Accord (see our Copenhagen Accord Update for details).

This year’s Cancun negotiations initially struggled to carve out a useful mandate for themselves. Their outcome was pre-determined: No legally binding global agreement would be entered into at Cancun to tackle the problem of global climate change at this stage. Until the final hours of the Conference, it remained unclear whether the negotiations would result even in a baby step towards a new global agreement, and if so, what such a step would entail.

We have set out below an overview of the outcomes of the Cancun conference, and will also be running a webinar on Wednesday, 9.30GMT, please see the invitation for joining instructions. Our ‘Cancun - Understanding the process’ guide explains how the climate negotiations are structured and the role of the different ad-hoc working groups (AWGs) which are working towards establishing a more comprehensive outcome, the AWG-KP and AWG-LCA .

Key results

The key results of the Cancun conference were:

  • An agreement to peak emissions and an overall 2 degrees Celsius target for temperature rise
  • Formalising, to a certain degree, details of what countries have promised to do to mitigate climate change within the UN architecture
  • Agreeing the outline of a system to be able to measure, report and verify how countries are living up to their promises to take action on emissions
  • Establishing a Green Climate Fund
  • Agreeing to slow, halt and reverse destruction of forests ( REDD+ ) and agreeing the rules for delivering REDD+ and for monitoring progress
  • Setting up the mechanisms to help developing countries access low carbon technology, and adapt to climate change
  • Some progress in respect of the existing market mechanisms, CDM and JI , and in respect of the inclusion of carbon capture and storage (CCS) in the CDM.

This is broadly as much as was expected to result from the Cancun negotiations, if not a little more. It falls substantially short of a global agreement that will prevent dangerous climate change, with initial estimates indicating that the existing emission targets and actions proposed will lead to a world with as much as 5 degrees Celsius of global warming. This is predicted to have catastrophic consequences.

Mixed reactions

Praise has been heaped on the Mexican Presidency of the negotiations for the way in which they managed the process during 2010. However, the “Cancun agreement” has met a mixed reaction. UK Ministers have said:

“We’ve worked hard to bring countries together and the expectations have been exceeded. A global deal on climate change is now back on track.”

“Cancun will send a strong signal of confidence to business investing billions in the new global green economy. British companies are poised to reap the huge advantage of being the first movers in this rapidly expanding market. We will be working in partnership with the private sector to drive home that opportunity.”

Friends of the Earth have said:

“The world needed strong and determined action to tackle climate change in Cancun - the outcome is a weak and ineffective agreement but at least it gives us a small and fragile lifeline.”

One negotiator has referred to the talks as a “fiasco grande”.

As ever with the international negotiations, given the diversity of national approaches and priorities, it is impossible to achieve a result that is acceptable to all parties.

Outcome of the work of the Ad Hoc Working Group on long-term Cooperative Action under the Convention (AWG-LCA)

This AWG has been working on a broader international agreement to more fully implement the UNFCCC.

The Decision relating to the outcome of the work of the AWG-LCA begins by stating that not all aspects of the work of the AWG-LCA are concluded, and that nothing shall prejudge prospects for, or the content of, a legally-binding outcome in the future. In other words, the negotiations will continue in their pursuit of securing a global climate deal, and a series of possible outcomes remain on the table.

A shared vision for long-term action

The Parties have “recognised” that:

  • Global warming is unequivocal and that most of the observed increase in global average temperatures since the mid twentieth century is very likely due to the observed increase in human-induced greenhouse gas concentrations
  • 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 temperature below 2 degrees Celsius above pre-industrial levels
  • There is a need to consider strengthening the long-term global goal including in relation to a global average temperature rise of 1.5 degrees Celsius.

This reflects the Copenhagen Accord, which represented the world’s first political consensus around the need to aim for at least a “2 degrees” goal. However, even this remains contentious. Many feel that it is not ambitious enough. Importantly therefore it was decided at Cancun to periodically review the adequacy of the long-term global goal based on best available scientific knowledge. The first review should start in 2013 and should be concluded by 2015.

Adaptation

The Parties agreed at Cancun that work on adaptation is urgently required to enable and support actions aimed at reducing vulnerability and building resilience in developing countries which will suffer the effects of climate change. This is particularly the case given the weakness of current emissions reduction targets and actions on the table (see below).

The Cancun Adaptation Framework was therefore established. Parties will undertake a number of actions to help developing countries to be better prepared, including:

  • Planning, prioritising and implementing adaptation actions
  • Vulnerability and adaptation assessments
  • Strengthening institutional capacities
  • Building resilience of socio-economic and ecological systems, including through economic diversification and sustainable management of natural resources
  • An Adaptation Committee will be established.

Comment

Setting a more ambitious and comprehensive framework for adaptation has been a key objective of many parties. Adaptation has traditionally been seen as the preserve of the public sector, and adaptation finance through the private sector has not been thought of as a likely solution. The adaptation framework appears to open up the possibility of interaction with the private sector, which could be envisaged to be a provider of adaptation services and also to be involved with an insurance mechanism that may be set up.

Mitigation

Nationally appropriate mitigation commitments or actions by developed countries

The need for deep cuts in global greenhouse gas emissions by developed countries is emphasised in the Cancun outcome.

The Decision takes note of targets to be implemented by developed countries as communicated by them and contained in an UN “informational” (INF) document. This is expected to include the targets submitted by Parties pursuant to the Copenhagen Accord. In an attempt to give such targets further legitimacy, communications included in the INF document are considered formal “communications” under the UNFCCC.

Comment

This changes little from the situation reached after Copenhagen. Developed countries will have to significantly improve their emission reduction targets in order for the threat of dangerous climate change to be overcome. However, some developed countries are not at this stage prepared to do significantly more than advanced developing countries like China and India. This is partly on the basis that developed country emissions will represent only 25% of future emissions, despite representing the majority of historical emissions. Developing countries are reluctant to commit to anything that will restrain their ability to develop economically and perceive moves by developed counties to restrain developing counties’ emissions as unfair and to contradict the provisions of the UNFCCC.

Nationally appropriate mitigation actions by developing country Parties

It was agreed that developing countries will take nationally appropriate mitigation actions. These actions are set in the context of sustainable development, supported and enabled by technology, financing and capacity-building (see below). These actions are aimed at achieving a deviation in emissions relative to business as usual emissions in 2020.

The parties ”take note of” the nationally appropriate mitigation actions (NAMAs) to be implemented by non-Annex I Parties as communicated and contained in another INF document. Again, these NAMAs are likely to be those submitted pursuant to the Copenhagen Accord, as updated where Parties have set out further potential actions during the course of 2010. Developing countries are invited to voluntarily inform the Conference of the Parties of their intention to implement NAMAs to the UNFCCC secretariat.

The Secretariat will organise workshops, to understand the diversity of mitigation actions submitted, underlying assumptions, and any support needed for implementation of these NAMAs.

Developed country Parties are required to provide enhanced financial, technological and capacity-building support for the preparation and implementation of NAMAs and for enhanced reporting by these Parties.

Other key features of the agreement are that:

  • A registry will be set up to record NAMAs seeking international support and to facilitate matching of finance, technology and capacity-building support to these NAMAs
  • Developing country Parties are invited to submit information on NAMAs for which they are seeking support, along with estimated costs and emission reductions, and the anticipated time frame for implementation
  • Developed country Parties are invited to submit information on support available and provided for NAMAs.
Measurement, reporting and verification

In relation to measurement, reporting and verification (MRV) of developing country mitigation responses:

  • Internationally supported mitigation actions will be measured, reported and verified domestically and will be subject to international measurement, reporting and verification in accordance with guidelines to be developed under the UNFCC
  • Domestically supported mitigation actions will be measured, reported and verified domestically in accordance with general guidelines to be developed under the UNFCC
  • A process for international consultations and analysis (ICA) will be conducted, in the aim of increasing transparency of mitigation actions and their effects
  • Developing countries are encouraged to develop low-carbon development strategies or plans in the context of sustainable development.

Comment

MRV and ICA have been contentious issues for some time, with developed countries keen to be able to review and assess the implementation of actions by developing countries, and developing countries resisting outside interference with their internal affairs. It is hoped that some of the deadlock has been unlocked by the framework described above, but the implementation of this framework is likely to remain contentious and problematic in the future.

Reducing emissions from deforestation and forest degradation in developing countries; and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries (REDD+)

To the relief of many, a REDD+ framework was agreed at Cancun. Further commentary on REDD+ will be available shortly.

New market mechanisms

International Emissions Trading, the Clean Development Mechanism and Joint Implementation are the existing “market mechanisms” under the Kyoto Protocol pursuant to which emissions can be traded on the international carbon markets and developed country emissions can be “offset” by emissions reductions in developing countries. See our guide to international mechanisms and key considerations for more information.

The establishment of new, larger-scale “market mechanisms” will be considered next year at “COP17” (next year in December). See our guide on market mechanisms for more information on new market mechanisms.

Such mechanisms are to enhance the cost-effectiveness of, and to promote, mitigation actions, taking into account the following:

  • Ensuring voluntary participation of Parties
  • Complementing other means of support for NAMAs
  • Stimulating mitigation across broad segments of the economy
  • Safeguarding environmental integrity
  • Ensuring a net decrease and/or avoidance of global greenhouse gas emissions
  • Assisting developed country Parties to meet part of their mitigation targets, while ensuring that the use of such mechanism or mechanisms is supplemental to domestic mitigation efforts
  • Ensuring good governance and robust market functioning and regulation.

Parties and accredited observer organisations are invited to make submissions in respect of such mechanisms to the UNFCCC secretariat by 21 February 2011. This means that organisations such as the International Emissions Trading Association and the Carbon Markets & Investors Association have little time to submit updated views on what is a very complex area.

Importantly however the Parties undertake to maintain and build upon existing mechanisms, including those established under the Kyoto Protocol.

As the use of market mechanisms is controversial for some countries, Parties will also consider the establishment, at COP17, of one or more non-market-based mechanisms to enhance the cost-effectiveness of, and to promote, mitigation actions. These could include carbon taxes, the use of other policies, levies on bunker fuels, etc.

Comment

The statement in relation to the Kyoto Protocol market mechanisms gives some hope to those who have heavily invested in the existing market mechanisms. This is significant, as securing confidence for existing market participants will be key to facilitating private investment in climate change in the future (see further below). However, this commitment is relatively weak and falls below what many were hoping for in respect of a signal for market certainty in relation to the continuation of the CDM (see below).

Finance

Fast-start finance

The Parties took note of the fast-start finance agreed last year in Copenhagen of US$ 30 billion for the period 2010 to 2012.

Long-term finance

The Parties also decided that scaled-up, new and additional, predictable and adequate funding will be provided to developing country Parties. They “recognised” that developed country Parties commit, in the context of meaningful mitigation actions and transparency on implementation, to a goal of mobilising jointly US$100 billion per year by 2020 to address the needs of developing countries. This was another outcome of the Copenhagen negotiations.

Green Climate Fund

One important issue that has received some further clarity at Cancun is the creation of a global fund for tackling climate change.

A Green Climate Fund will be established which will be accountable to and function under the guidance of the Conference of the Parties (CoP) of the UNFCCC. The Fund will support projects, programmes, policies and other activities in developing countries. The Fund will be governed by a board of 24 members and a trustee which will be accountable to the Green Climate Fund Board. The World Bank will serve as the interim trustee of the Fund.

Comment

In the face of criticism of the delivery of “fast-start” finance, the Parties are invited to submit information to the UNFCCC secretariat on such fast-start finance by May 2011, 2012 and 2013. This should include ways in which developing countries access this finance. This may address a central criticism of many developing countries, namely that the “fast start” finance doesn't seem to be trickling through and/or that developed countries are using “creative accounting” in order to achieve their commitments.

Importantly for many developed country Parties, it is agreed that funds provided to developing country Parties may come from a wide variety of sources, public and private, bilateral and multilateral, including “alternative sources”. This is a departure from the view of many developing countries that the US$100 billion should be provided by way of grants.

Whilst the establishment of a Fund is an important milestone, at the moment it remains somewhat of an empty vessel. Significant further work will be required in order for it to meet the challenges and expectations that it faces.

Technology development and transfer

The transfer of technology to developing countries is another key aspect of responding to climate change. Progress in this regard was keenly anticipated before Cancun. A “Technology Mechanism” has been established which will be under the guidance of and accountable to the CoP. The Mechanism will be consist of:

  • Technology Executive Committee (TEC)
  • A Climate Technology Centre and Network (TCN).

The Technology Executive Committee will:

  • Provide an overview of technological needs and analysis of policy and technical issues related to the development and transfer of technology for mitigation and adaptation
  • Consider and recommend actions to promote technology development and transfer in order to accelerate action on mitigation and adaptation
  • Recommend guidance on policies and programme priorities related to technology development and transfer with special consideration given to the least developed country Parties
  • Promote and facilitate collaboration on the development and transfer of technology for mitigation
  • Recommend actions to address the barriers to technology development and transfer
  • Seek cooperation with relevant international technology initiatives, stakeholders and organisations
  • Catalyse the development and use of technology road maps or action plans at international, regional and national levels.

To do so it will seek input from intergovernmental and international organisations and the private sector and may seek input from civil society in undertaking its work. It may also invite advisors drawn from relevant intergovernmental and international organisations as well as the private sector and civil society to participate in its meetings as expert advisors on specific issues as they arise.

The Climate Technology Centre will facilitate a network of national, regional, sectoral and international technology networks, organisations and initiatives with a view to ramping up, stimulating and encouraging the growth of technology transfer.

Comment

There is likely to be concern about the extent to which the TEC seeks to “take control” over technology disbursement, and the extent to which that is likely to be useful and appropriate. Some had considered that the TEC might be best formed as a body that was comprised entirely of government officials, with a requirement to draw heavily on industry expertise. The proposed framework appears to be able to replicate that model, but the extent to which the views and knowledge of the private sector is taken account of may be essential to the degree of success achieved by the Mechanism.

Extension of the AWG-LCA

The Parties decided to extend the AWG-LCA for one year.

Comment

Last year we saw substantial amounts of reversing away from positions agreed at Copenhagen. This caused significant difficulties in moving forward during the course of 2010. This problem was significantly exaggerated by questions over the legitimacy of the Copenhagen Accord (see above).

Given the outcome of the AWG-LCA, which has been to agree a “lowest common denominator” framework for its future activities, it remains to be seen whether Parties will be in the mood for moving on in 2011, or whether the vagaries of the Cancun outcome will allow old wounds to be reopened, hindering progress. There will be ample opportunity for this to happen, with an extensive list of issues having be shuffled off to other bodies, as well as the AWG-LCA itself, for further elaboration.

Outcome of the work of the Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol (AWG-KP)

The AWG-KP’s mandate is to negotiate a second commitment period of the Kyoto Protocol. The first commitment period ends in 2012.

Progress

The Parties agreed that the work of the AWG-KP will continue and that its results will be adopted as early as possible and in time to ensure that there is no gap between the first and second commitment periods.

The parties also agreed to take note of targets which will be set out in an “INF” document (see above). Developed countries are urged to raise the level of ambition of proposed emission reductions.

Some progress was made in that a “base year” for a second commitment period was agreed to be 1990, though in addition, a reference year may be used by a Party on an optional basis for its own purposes to express its targets.

Further, the AWG-KP Decision confirmed that emissions trading and the project-based mechanisms under the Kyoto Protocol will continue to be available to developed countries as a means to meet their quantified emission limitation and reduction objectives. However, this does little to quell fears of the carbon markets that their fate has been inextricably linked by some to the negotiation of a second commitment period.

Other issues

Land use, land-use change and forestry

A separate decision has been entered into with respect of reducing emissions and enhancing removals in relation to land use, land-use change and forestry (LULUCF) activities.

CCS in the CDM

In another separate Decision, it was determined that CCS will be eligible as a project activity under the CDM, provided that a host of issues are addressed and resolved in a satisfactory manner. The Subsidiary Body for Scientific and Technological Advice (SBSTA) is requested to elaborate modalities and procedures for the inclusion of CCS as project activities under the CDM, with a view to recommending a decision next year at negotiations in Durban.

CDM and JI

Both the CDM and JI were subject to separate decisions. Further commentary will be available on our blog shortly.

Comment

The fate of Kyoto Protocol continues to hang in the balance, with several developed countries seeking to move away from it, whereas developing countries trend to insist on its continuance. This significant issue has not been resolved at Cancun and threatens to loom over future negotiations.

Final thoughts

Despite these uncertainties, several issues stand out:

  • The Cancun outcome received heartfelt and emotional acceptance at the Cancun closing plenary, in contrast to the Copenhagen Accord
  • Bolivia, a dissenting voice, was not allowed to stand in the way of progress
  • The nature of multilateralism seems secure.

Day 10: 10 December - The final stretch

We are now in the final stretch of the Cancun talks. An “outcome” is being intensively negotiated, with discussions taking place over the last two nights. Whilst negotiations are still taking place in the AWG-LCA and AWG-KP , Ministerial-level discussions are taking place in key areas:

  • Vision for long-term cooperative action
  • Finance
  • Adaptation
  • MRV
  • REDD+
  • Technology transfer
  • CCS and response measures

All of these areas, in addition to those that are not being considered at a ministerial level, required further negotiation during the course of Thursday night and the early hours of Friday. It seems that discussions in relation to bunker fuels and new market mechanisms have stalled and that there are difficulties in relation to technology transfer, with the US in particular concerned about governance of the proposed structure.

A stocktaking plenary will be held on Friday morning (Cancun time) which should provide further information on the negotiations that have taken place overnight. However, this has already been delayed from 8:30 am to 9:30 am and revised papers have not yet emerged. It appears that a number of key issues remain outstanding, such as approaches to safeguards in REDD , the question of MRV and ICA and how technology transfer will be taken forwards.

In relation to guidance to the CDM Executive Board, negotiations yesterday evening had returned to informal discussions. Contentious areas included Paragraph 52 which requests the CDM - EB to revise registration procedures to allow the registration date and start period of the project crediting period to be the date at which a complete request for registration has been submitted. There also appear to be disputes over the Annexes to the Decision, relating to the nature of the CDM-EB’s work and the skills and expertise of the board, among other areas.

At this stage it is by no means certain whether there will be enough political will and momentum to lead to a positive outcome of the Cancun talks.

We will report back as the events unfold on http://twitter.com/nrgclimatetalks and provide a broader summary of the final hours of the conference on Monday.

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Day 9: 9 December - Stock-taking

Yesterday morning got off to an earlier start than usual for meetings in the setting of full plenaries. Informal stocktaking plenaries took place from 8:30 am. The AWG-KP and AWG-LCA Chairs had made new negotiating texts available. In the AWG-LCA, many of the more lively areas of discussion moved significantly since the last draft, with sections on finance and mitigation seeing some important changes, for example. These texts were not discussed in the plenaries as they had only just been presented to parties.

Behind the scenes

In addition to the new Chairs’ texts, separate negotiating groups are also discussing their own papers, and Ministers are equally taking some key issues forwards. Chris Huhne (UK Energy and climate change Minister), who will stay on in Cancun after a skirmish over Labour’s unwillingness to “pair” him for the vote on tuition fees, is focusing on commitments under a second Kyoto Protocol period. There aren’t many areas as controversial as that issue. The Japanese have acknowledged the difficulties that their position (like the US, Japan won’t sign up) is causing. Huhne is reported to have described his work as “heavy pounding”.

Elsewhere, REDD+, adaptation and finance are still hoped to be front runners for decisions at Cancun. However parties are hoping for a “balanced” package of outcomes. Whilst REDD+, adaptation and finance might help galvanise support for a “yes” among developing countries, it seems likely that some developed countries would have difficulties if they did not receive anything “in return”, particularly in respect of MRV/ICA. Without progress to take home on those other issues, it will be difficult to “sell” the Cancun package domestically. This difficulty has been highlighted by a group of US senators who are unhappy with the US delivering on its “fast start” finance commitments set out last year at Copenhagen.

Guyana not happy

Though fast start finance was one of the “successes” of Copenhagen, with $30 billion being pledged for 2010 to 2012, the president of Guyana accused developed countries yesterday of cooking the books on fast-start finance delivery, pointing out that it has not been delivered in a transparent or organised way. He was also very vocal about his frustrations about not being able to access money for REDD that has been given by Norway. The money is currently locked out of reach by the World Bank, whereas Guyana clearly feels that it has done its bit to be delivered the funds. The President wants to disburse the money for several purposes, including solar panels for Amerindian communities and securing Ameriandian title to land.

These early moves provide an important lesson for future finance. If promises and pledges are made, many people who could have used land or assets for other purposes will seek quick alternative pay-back in respect of tying up their economic interests. The President of Guyana also underscored the political capital that is put at risk by leaders seeking new ways forwards.

World Bank

During what has been a challenging time for the carbon markets, it is good news that the World Bank Group announced yesterday the establishment of the “Partnership for Market Readiness”. The Partnership received pledges of some $20 million by Australia ($10 million), the European Commission (€5 million) and the US ($5 million) in addition to an early pledge of $5 million from Norway. Germany, Japan and the UK will support the initiative financially. The Partnership is aiming for a total capitalisation of $100 million and is hoped to be operational in early 2011. It will support a range of carbon market readiness initiatives ranging from technical to policy to institutional interventions.

6 PM Friday finish?

The Mexican Presidency would like a deal wrapped up tomorrow morning so that the conference can close tomorrow afternoon. This seems unlikely. One veteran negotiator headed off for a little tourism yesterday, safe in the understanding that he would not be sleeping much between this morning and the early hours of Saturday.

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Day 8: 8 December - Can Cancun?

With only three days of negotiations left, can Cancun deliver even the meagre baby steps that were hoped for at the beginning of the conference?

A new direction

There was intended to be a transformation in the negotiations last night. Yesterday evening was the last opportunity for negotiations in the AWG-LCA before the Chair published another text which will be made available this morning (Cancun time). After this point the negotiating process will change but it is not clear what the new format will be. Whereas earlier negotiations have focussed on individual issues such as mitigation, technology and REDD, they must now start to take account of the interrelationships between issues. For example, MRV and finance are issues that crop up in several different areas.

Differences resolved?

The negotiations often seem to turn solely around the US-China position. It is not clear to us that fundamental issues around MRV (central to this relationship) have been resolved. As such it would be difficult for a Cancun outcome to be “fully blown”. It is also thought that comments made by China in respect of documenting their emissions reduction pledge (see yesterday’s blog) amount to no more than a reaffirmation of their previous position and/or existing requirements under the UNFCCC. There are suggestions that China has started to link what it might be willing to do to progress on the question of a second Kyoto Protocol commitment period, but this is unclear. And likely to be problematic.

Extension of the first commitment period?

On that theme, it had also been suggested that one way forward might be a two-year extension of the first Kyoto commitment period (see yesterday’s blog). This is not understood to be an option that forms part of the formal negotiations as yet. However, as such an extension would be a formal amendment to the Kyoto Protocol which would likely have to be ratified “back home” by the parties (and as such take a while to come into force), this option is far from an “easy win”. It also raises a number of issues around how assigned amounts would be calculated for such an extension which could in turn foreseeably give rise to questions about levels of ambition, etc.

Decisions, decisions

On the Kyoto Protocol side, we understand that negotiations are all but at a standstill, with the existing options in respect of issues like base/reference years and modifications to the CDM still on the table. Progress has stalled recently on LULUCF accounting rules due apparently to a standoff between Tuvalu and “everyone else”. However, it seems unlikely either that a new Kyoto Protocol commitment period will be agreed to on the one hand, or that on the other hand the parties will walk away from the Kyoto Protocol altogether at Cancun.

On the LCA side, there still appears to be a prospect that Decisions could be made in key areas. Where Decisions are made, these could either be “full” Decisions or ones that carry over ancillary issues for consideration during the coming year, with a view to finalisation at COP17. In other areas, little or no progress is likely to be made and so all of the “Tianjin” negotiating text would likely be carried over. Transport emissions and new market mechanisms seem to be issues on which little progress has been made so they are likely to be carried over in full, for example.

REDD example

By way of illustration, these points may well prevent the Mexican hosts having even a REDD decision to hold up as an example of progress. While there remains a substantive issue in the text regarding the role of markets as a future source of finance, it is our view that the ongoing behind the scenes work could generate an agreed form text by the end of the week (with the question of markets left for further consideration at COP17). However, the current stated position of some key parties is that without a ‘balanced package’ including MRV and ICA then they will not support taking a REDD decision at Cancun. It is hoped that in the next few days high level discussions will lead to a more sensible position being taken. If not, another year will be lost on moving from REDD principles to an operational REDD mechanism. Despite this, REDD remains an area of intense activity as various multilateral, bilateral and private sector initiatives operate in parallel. For instance, the World Economic Forum (as part of a series of dialogues initiated by the Mexican President) brought together a small group of leaders from governments, think tanks, NGOs, experts and the active investors yesterday to discuss the state of play in 2010 and possibilities in 2011 on sustainable land use initiatives. After attending this, it is clear that 2011 is going to very active with both new initiatives and the deepening of existing ones. There are also likely to be some significant announcements today at an event arranged by Avoided Deforestation Partners that will include the Secretary-General of the UN, Presidents from Mexico, Norway and Guyana, the President of the World Bank, the financier George Soros and the Chairman of Walmart.

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Day 7: 7 December - Change in China’s position?

Today marked a turning point in some ways as some parties started to work together in “couples” at a ministerial level in order to resolve key differences. We’d love to know what is going on at that level! Not all Ministers are here yet so there may be concerns that some countries have been excluded from this process.

A key challenge for the remainder of this week will be identifying those areas that can be taken forward for decisions, which elements can be dealt with by deciding to roll over negotiations to COP17, and negotiating the finer points of such decisions. There are reports that China has made an interesting statement on mitigation commitments…

Mitigation

The key issue of developed country mitigation remains contentious, with a number of big picture areas up for discussion. Whilst one former senior negotiator recommended that parties accept that it will be several years before more ambitious and legally binding targets are able to be agreed to, the debate over how to best capture targets / commitments continues. Some remain wedded to the idea that a second commitment period of the Kyoto Protocol is essential.

In relation to developing country mitigation, the Chair’s text is apparently being taken up but it is not clear to us whether progress is being made on the elements of MRV and International Consultation and Analysis (ICA), which represent a bridge between actions and their implementation.

In what could prove to be a great scoop, Reuters is reporting that China has stated that “Under the (U.N. Climate) Convention, we can even have a legally binding decision. We can discuss the specific form. We can make our efforts a part of international efforts….Our view is that to address these concerns, there's no need to overturn the Kyoto Protocol and start all over again."

It isn’t clear whether this was intended to signal a significant change in position. Previously it has been thought that larger developing countries were seeking the “extension” of the Kyoto Protocol by the adoption of a second commitment period together with a series of buttressing decisions under the UNFCCC. Being bound by COP decisions in respect of targets, which can be said to be “legally binding”, is less legally significant than being bound at international law by obligations under a Convention.

Further, given the balanced package of decisions under the LCA that is being thrashed out, it must remain a concern for some parties that work will tail off once such a package has been fully agreed (this year and next) and that global efforts will fall short of either a single, legally binding agreement or two legally binding agreements, one of which is being the Kyoto Protocol.

Adaptation and capacity building

Adaptation is a key issue for unlocking negotiations in the absence of a “complete” package. Discussions with a former negotiator pointed towards the interesting and practical work that be done on adaptation, including crops adapted to different conditions, investments to ensure that water infrastructure remains available and improving the construction of buildings to better cope with more extreme adverse weather. All of this requires sufficient financial investment and an organisational framework.

A proposed international mechanism to address climate change related loss and damage, set out in the LCA Chair’s text, could therefore play an important role but a surprising number of issues seem to remain up for discussion.

In relation to capacity building, it continues to be discussed whether this should be a stand-alone pillar or part of a broader response on adaptation and mitigation. If the integrated approach prevails, then parties will need to make sure that adaptation and mitigation texts are sufficiently mature to deal with capacity building issues.

New market mechanisms

In relation to new market mechanisms, apparently the Chair’s revised text has gone down quite well. That text contains a number of important elements:

  • An affirmation that opportunities to use markets should be guided by a series of principles
  • Consideration at COP17 of the establishment of one or more mechanisms
  • Continuation of the AWG-LCA with a view to recommendation of a draft decision for adoption at COP17
  • A request for views of observers to be submitted by 22 March 2011

Whilst it is disappointing, but not unexpected, that new market mechanisms are not being singled out for a full decision in Cancun, this draft text points towards useful input being able to be provided next year. Some parties nonetheless remain ideologically opposed to the inclusion of markets.

CDM and JI

Work continues on draft decisions in respect of the CDM and JI. It seems that these discussions are in for a tough time. In the CDM consultations some parties objected as their text was not included in the revised document to be discussed yesterday. In the JI consultations, a number of larger parties as well as some smaller delegations ideologically opposed to markets appear to be being unsupportive and hampering progress.

Extension of the first Commitment Period?

An additional interesting debate has flared up in relation to whether a possible way forward would be to extend the 2008 - 2012 Kyoto Protocol commitment period by two further years. The details and origins of this proposal are as yet unknown. If this proposal is intended to provide certainty for the continuation of existing market mechanisms, it may have backfired. Many had understood that those mechanisms continue with the Kyoto Protocol regardless of any future commitment period. An implication that a commitment period is required for continuation of carbon markets is uncomfortable for many.

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Days 5 and 6: 6 December - Half Time

This weekend marked the mid-point of the negotiations, and a time to reflect on progress and strive for further energy. The activities of Friday were quickly surpassed by events on Saturday. SBSTA and SBI have now closed, leaving the two AWG and the COP and CMP to finish their business. There is much left to do and there are many uncertainties, even for a conference which is intended to be a staging post.

Mexican text?

At around this point in the negotiations this time last year, they started to disintegrate. Rumours of the Danish Text and the Beijing Text came to fruition. A negotiating process borne out of the desire to “get it done” turned into one that continues to undermine faith in the multilateral negotiating process. This was underlined in Saturday’s mid-COP stocktaking plenary during which Party after Party expressed approval of the President’s assurances that there is no hidden text (a Mexican Text let’s call it) and that secret negotiations will not be taking place. In the mean time, Ministers and a limited number of Heads of State are arriving and parties are attempting to move the negotiations to a political level, which requires a more concise negotiating text.

Half way in the LCA

The Chair of the LCA released a revised Chair’s text early on Saturday afternoon. It is relatively concise. It is also an easy read, largely abandoning square brackets around text, save where they are used to identify choices between a limited range of options. However, it remains unclear to what extent the revised text is acceptable to the parties as a basis for moving forward negotiations.

At Saturday afternoon’s stocktaking plenary, the Chair confirmed that additional work was needed but that a possible outcome could retain options for a political decision next week. On finance, an agreement is thought to be close on both long-term finance and the establishment of a proposed fund. Negotiations on technology transfer were also described as closer to compromise solutions. We understand that more work is required on a “shared vision” and adaptation. Certainly some parties felt that there were not clear enough links between developing countries’ proposed actions and the requirement for them to be implemented. Others felt that provisions surrounding adaptation and technology transfer were inadequate. Still more parties took the opportunity to state their desire that a second commitment period of the Kyoto Protocol would be agreed.

Moving the KP forwards

A progress report was also given in the AWG-KP stocktaking. Paralleling what we had heard earlier in the week, there has been progress on base and reference years for emissions reduction commitments, the length and duration of the commitment period, and AAU carryover. Ministerial consultations will take place this week to seek political guidance on key issues.

Many took the stocktaking plenary as an opportunity to reaffirm the importance of the Kyoto Protocol, whereas others underscored the need to consider all parties’ mitigation targets and actions and not just those of industrialised countries. Australia and the EU both expressed a willingness to sign up to a second commitment period of the Kyoto Protocol (neither of these positions are uncaveated), whereas Japan held its line that this would not be fair or effective as not all major emitters would be included.

Success in SBSTA?

SBSTA closed on Saturday. Three issues that are of significant interest are transport emissions, standardised baselines and the inclusion of CCS projects in the CDM. In relation to transport emissions, draft conclusions have been adopted which provide for the IMO and ICAO to continue to report back to SBSTA on their progress. 

In relation to standardised baselines, draft conclusions were adopted that recommend that the Annex of such conclusions be incorporated in the draft decision on guidance to the CDM-EB. This guidance is still being negotiated. The Annex of the SBSTA text provides for proposals for standardised baselines to be submitted for review by the CDM-EB, for the EB to review them and that their adoption is at the discretion of project host countries. It may be a significant challenge to ensure that such baselines are not kicked into the long grass, but it is very much hoped that this is not the case.

In relation to the inclusion of CCS in the CDM, the Parties were unable to agree in SBSTA whether to recommend that the COP should mandate CCS as a CDM project type. Instead the draft Consultations that were adopted provide for two alternatives. The first provides for CCS to be eligible subject to resolution of a number of issues, such as monitoring. The second provides that CCS will not be eligible until the COP is satisfied that such issues have been resolved.

This week

During the week ahead the negotiations are likely to become increasingly opaque. Fingers crossed for a result on Friday!

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Day 4: 2 December - Thursday’s cocktail of issues

Sense of direction?

So where is Cancun heading? From discussions in the corridors it still appears that there is considerable uncertainty about what the parties are negotiating towards and that the COP Presidency is coming under significant pressure. Certainly it does not seem at this stage that a silver bullet has been identified to unlock the discussions, and many long-held views have been repeated in recent days. There are also concerns that discussions between the Mexican Presidency alongside the formal negotiations do not derail the formal negotiations in the same way as happened at Copenhagen. This seems like a tough call for the Mexicans - on the one hand they face the risk of discussions moving on far too slowly without such. On the other hand, as witnessed at Copenhagen, even if such negotiations do lead to an “outcome”, the legitimacy of that outcome is likely to be thrown into doubt.

The post-COP picture

Efforts to put a clearer framework around an eventual outcome have been ramped up by the creation of a contact group chaired by Michael Zammit Cutajar, the former Chair of the AWG-LCA, to consider the proposals for new protocols which have been on the table for some time and which were not really thrashed out at Copenhagen. However, this is part of a longer-term strategy. It seems to be the intention that this issue is not one that is expected to be resolved at Cancun and that any new protocol discussions would not be resolved until South Africa. Further, it remains the case that much of the content of those proposals is already being negotiated in the existing working groups. This parallel series of discussions therefore seems to add yet another negotiating stream to the mix. It remains to be seen whether this represents a significant opportunity and a key element to be taken forward at COP17.

Japan and the Kyoto Protocol

Perhaps the importance of this move is underscored by Japan’s recent announcement that:

“Japan reiterates its firm position that our 2020 has been pledged under the Copenhagen Accord and that we will never inscribe our target in the Annex B to the Kyoto Protocol under any circumstances and conditions. This is because Japan is aiming at a truly effective global deal. Kyoto 2nd commitment period will never constitute a fair and effective single framework with the participation of all major emitters, which we are aiming at.

There is an argument that we should keep all the options open, not prejudging any legal outcome of the on-going negotiation. It is understandable approach under the non-convergence on this issue. For this very reason, we will never accept any CMP decision implying the setting of the 2nd commitment period or provisional extension of the 1st commitment period since this itself will prejudge the legal outcome.”

Some might find it ironic that the home of Kyoto ended up applying this apparently lethal injection at an important juncture. Others have seen the writing on the wall for some time - Japan has always been open about the pre-conditions to its position.

The KP negotiations

At a briefing yesterday on the negotiations under the AWG-KP discussions, it appears that there have nonetheless been meaningful discussions on the key areas of carry over of AAUs from the first commitment period to any future commitment period, the length of such commitment period, and on what the appropriate base year/reference year should be for emissions reductions. If it is true that Japan, in addition to the US, will not accept a second Kyoto Protocol commitment period, then it remains to be seen how any of these discussions could be folded into an eventual outcome and how they will marry up with discussions under the AWG-LCA. It also appears that, despite vocal support of the CDM in recent CDM contract group discussions, there is reluctance among the parties to commit to the future of market mechanisms post-2012 in the absence of firm targets.

If it goes wrong, please don’t tell anyone

Attempts have also been made to limit the fall-out from any perceived failure of the Cancun discussions. It has been made clear that the international negotiations are threatened by the talks potentially being written of by NGOs. Further, though the stated aim of the AWG-KP is to negotiate a second commitment period, we have been warned that failure to achieve an agreement on this point at Cancun should not in itself be characterised as a broader failure. Though there is limited time between now and the start of a second commitment period, there do remain two years for negotiations to take place before the first commitment expires. However, as it takes time to get climate change projects registered, without any certainty by mid-2011 there will certainly be limited opportunity to take investment forward in that area. We had another discussion with a major energy company yesterday. The result was a refrain which we have heard repeated on many occasions but one which seems to get lost in the mire of these negotiations. The private sector will deploy huge amounts of money in the coming decades. That can go two ways - the green way or the brown way. A failure to set up national and international frameworks that incentivise “green” and discourage “brown” in the short term will result in “brown lock-in” for the foreseeable future.

CDM Contact Group

Moving back to more immediate concerns, the COP President has asked for a draft decision on guidance to the CDM-EB to be prepared for next week. There is only one further contact group for this decision to be discussed in addition to that which took place yesterday. However, informal discussions will also take place.

A list of issues was proposed for consideration by the parties. Discussions were nonetheless slow to get off the ground yesterday, with issues that are for discussion in other fora, such as the inclusion of CCS in the CDM, being brought into a discussion which could perhaps most usefully be limited to procedural and administrative issues for consideration by the CDM-EB. Despite the CDM-EB apparently being reluctant to be faced with a long “to do” list as they were in Copenhagen, it seems clear that parties still have a long list of matters up for consideration.

REDD Update

Today is the likely start of the first LCA meeting on the text for a possible REDD+ decision. As with many other areas, this will initially involve a battle of forms. To recap, the official negotiating text going into Cancun had two optional sets of language - one which was the text from Copenhagen with numerous amendments and bracketing from countries such as Bolivia and Saudi Arabia and one that was essentially the Copenhagen text. In an attempt to move things forward the Chair of the LCA work stream released late last week a text which took the REDD text that was almost agreed at Copenhagen and worked it into the form for a possible decision text. In doing so some changes were included that sought to take things forward. One was the inclusion of a principle of environmental integrity that Bolivia had requested. Another was the inclusion of new text that could enable a decision on the possible sources of finance to be delayed until the next COP. So, rather than deciding now as part of a REDD+ decision, the LCA would be requested to "explore financing options, inter alia, funds and market based sources or a flexible combination for the full implementation of results based actions" and report back at the next COP. The (wishful?) thinking being that by parking this issue, agreement could be reached on other areas.

In the meantime, discussions have been occurring within various negotiating blocs. A number of countries want to work with the Chairs text and see real progress here. However, within groups such as the G77 there has been tension and disagreement as countries such as Bolivia and Saudi Arabia resist engaging with the text on the basis that it does not include their suggestions. It is a measure of the strange world of the UNFCCC that a country known for its deserts can potentially delay progress on a mechanism that would benefit a significant number of forest nations. One of the critical tests today will be therefore be whether the LCA contact group on REDD agrees to use the Chairs text as its starting point. The week ahead will be tough but there are a number of developing and developed countries committed to finding a way forward - despite the delaying tactics of others.

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Day 3: 1 December - Mo’ money, mo’ money

Hot on the heels of the recent furore over climate finance, reported in the Guardian, the pick of yesterday afternoon’s side events related to finance.

It remains the case that it is politically unacceptable in most industrialised countries for governments to agree to transfer the huge amounts of money required to tackle climate change to developing countries by way of grants, particularly in respect of the wealthier developing countries. Any number of reports and government positions point towards the private sector being required to provide in the range of 50 to 80 per cent of the hundreds of millions of dollars needed annually to tackle climate change. Indeed, this was recognised in the Copenhagen Accord, which refers to the “mobilisation” of finance.

How then could such private finance be mobilised and are we on the right lines when considering the institutional arrangements that are required for the disbursement of private, rather than public, finance?

This question was addressed yesterday at a joint side event which included Anant Sundaram, Professor, Tuck School of Business at Dartmouth and Bryce Rudyk, New York University School of Law. It was reported that 83 per cent of existing climate finance was funded “domestically” and 86 per cent was from private sources in 2007. However, the focus on public finance in the context of the international climate negotiations and institutions “misses” a broad range of finance. Further, it is relatively safe to assume, setting aside the proposals for what may be called a “Copenhagen” fund, that private finance mechanisms and institutions are required to grow in this area.

A number of institutional functions that are required in the context of climate finance were identified. These are:

  • Policy and rule-making
  • Securing commitments and raising funds
  • Disbursing funds
  • Promoting institutional coordination and linkage
  • Monitoring performance and securing accountability
  • Compliance

It was felt that many of these functions could be carried out by private entities. In addition, “institutions”, do not necessarily have to have a staffed or physical presence but could amount to “norms” such as guidelines or principles that are adopted. Compliance mechanisms could involve not just international sanctions but also private remedies such as contracts.

Shaping these ideas into a working international finance mechanism would require considerable time but may be a way forward, or may be the inevitable result of the current negotiations.

However, it was also highlighted that when we think about securing funds, we need to think about novel means of doing so. One such means is the use of Special Drawing Rights (SDRs). According to the IMF , the SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. More details can be found at http://www.imf.org/external/np/exr/facts/sdr.htm. There have been several proposals to use SDRs in the context of mobilising climate finance.

A government can use SDRs in different ways, for example it can convert them into hard currency or bolster reserves at its central bank. The conversion of SDRs into currency requires interest to be paid. However, it appears that it could be agreed for SDRs simply to be cancelled for climate response purposes, under which circumstances no interest would require to be paid. This could generate a substantial “pot” of money that could be used in a number of different ways. One alternative, which was discussed yesterday at a side event hosted by the World Future Council, suggested that a Green Money Fund could manage the disbursement of funds generated through entities such as the African Development Bank. This mechanism was not characterised as donating, but as the creation of money. All nations could agree that the new funds should only be used for climate purposes. Apparently such action would not necessarily be inflationary. Everyone’s a winner! If only I could get some SDRs to pay for Christmas...

And getting back to the markets….

Yesterday the CMP  considered reports from the CDM - EB  and JISC . The Chair of CDM-EB went over the range of changes that have been implemented this year at the CDM-EB, including in relation to registration, issuance and review. The Parties were resolute in their support of the CDM (the EU  considers it to be an important PART of the international climate framework). Many used the plenary as a platform to call for the continuation of the CDM in the context of a second commitment period and called for clarity over the post-2012 framework. The “usual suspects” took the opportunity to highlight the importance of issues like standardised baselines and the inclusion of CCS  in the CDM. A CMP decision is likely to result but there is a sense that the CDM-EB does not want to be presented with the extensive shopping list that confronted it after Copenhagen, particularly where some of those issues have still not yet been implemented or are bedding down.

On the JI side, the JISC’s report has generated significant interest among the relatively small JI  club. The concept of offsets within a capped environment is clearly an interesting one, and one that some are seeking to give more air time against a background which seems to assume that JI dies after 2012. However, this is not necessarily the case, and legal memos have recently been written on this point. The JISC report also identifies opportunities in this area.

JI or a JI-like mechanism seems to offer a number of potential advantages. Despite the best efforts of many governments to ensure that every sector is covered by some kind of emissions mitigation policy, there are likely to remain areas where emission reduction projects can be implemented which would benefit from the support of ERU  issuance. This would seem to be particularly the case where governments do not have the resources to implement mitigation policies in every sector of the economy.

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Day 2: 30 November - Let’s get down to business

Yesterday saw the start of “real business”, with closed meetings taking place out of the public glare. SBSTA and SBI, the two subsidiary bodies that feed into the COP and the CMP, opened. They have a matter of days to reach conclusions on a broad range of issues, including aviation emissions, the inclusion of CCS as a CDM project type and discussions surrounding standardised baselines.

SBSTA - CCS

Many counties are ramping up efforts to deploy carbon capture and storage (CCS) technology as a means of reducing emissions of CO² to the atmosphere. This includes developing countries such as China. There have been discussions over a long period of time as to whether CCS projects should be eligible as a CDM project type after 2012. Views are strongly split on this issue, with some parties such as Saudi Arabia and Norway highly supportive. Brazil remains strongly against.

At SBSTA32 earlier this year in Bonn, a draft text was developed but no conclusion was reached. It has been forwarded to the current session and SBSTA agreed to continue its work on the basis of the last report of the SBSTA. Long-familiar positions were restated at the SBSTA plenary yesterday. Draft conclusions are to be consulted on during the week for adoption later this week. Informal consultations are to begin tomorrow afternoon.

SBSTA - Standardised baselines

The ability to move towards standardised baselines under the CDM remains a hot topic (see yesterday’s blog). This issue is currently being discussed in SBSTA. As for CCS under the CDM, Parties have submitted views on this issue. Yesterday, the EU set out a number of reasons for its support of standardised baselines. Brazil is against the proposals. PNG is supportive of the proposals. As for CCS, informal consultations will be conducted with a view to SBSTA reaching conclusions this week. We will endeavour to keep you appraised of developments!

SBSTA - Aviation and shipping emissions

ICAO and the IMO have both made submissions to SBSTA on issues surrounding the regulation of shipping and aviation emissions. Both bodies have climate change policies in place.

ICAO has resolved that States and relevant organizations will work through ICAO to achieve a global annual average fuel efficiency improvement of 2 per cent until 2020 and an aspirational global fuel efficiency improvement rate of 2 per cent per annum from 2021 to 2050, calculated on the basis of volume of fuel used per revenue tonne kilometre performed. It has also resolved that, without any attribution of specific obligations to individual States, ICAO and its member States with relevant organizations will work together to strive to achieve a collective medium term global aspirational goal of keeping the global net carbon emissions from international aviation from 2020 at the same level with the support of member States and to undertake work to develop a framework for market-based measures in international aviation.

On the back of the High-Level Advisory Group on Climate Finance’s (AGF) recent report, the IMO commented that in any attempt to raise finance for climate change finance and adaptation, the shipping industry should not be liable for double regulation (under both the UNFCCC and IMO). Further, the IMO should be required to act in proportion to its emissions, which constitute less than 3 per cent of global emissions. One party went as far as to say that ships should not be used as a milk cow (!). Perish the thought. This may have been a reference to “cash cow”, meaning that shipping emissions should not be regulated simply by way of imposing a tax/levy which is not linked to other issues such as environmental performance.

CDM

One issue to have rocked the carbon world in recent months was triggered by an NGO earlier this year requesting a revision of the methodology to measure emission reductions from HFC CDM projects. It was alleged that manufacturers have been “gaming” the CDM system by altering production in order to change the number of CERs that would be issued. The UN released its findings in relation to this issue on Friday. This was therefore of interest at yesterday’s CDM-EB questions and answers session.

The CDM-EB has put the relevant methodology on hold. Revised rules will be prepared. However, these rules will only apply to existing projects after their current crediting period expires. The CDM-EB was keen to point out that the recent HFC controversy did not involve any “fraud” and that projects had been acting within the rules.

Another issue that was raised by stakeholders was the integration of sustainable development into the CDM-EB’s work. It was pointed out that these issues are largely an issue for host countries to regulate. Members of the CDM-EB also reported on revised CDM procedures. The tentative feedback from interested parties seems to be that things are improving. However, there remains a significant backlog of projects to be worked through and there are still concerns over the length of time required to get projects registered.

JI

Remaining on the topic of market mechanisms, the EU held a side event on Joint Implementation (JI) today. The focus was to discuss issues raised in connection with the Annual Report of the Joint Implementation Supervisory Committee to the CMP. A number of issues were considered, including the future of JI after 2012, how JI could be improved and how the provisions of the EU Emissions Trading System Directive could facilitate the further implementation of JI. The CMP will be discussing JI tomorrow. Cancun provides a useful opportunity for Parties to clarify the future role of JI.

Qatar anyone?

Those of you who like to plan in advance are likely to be interested to know that COP 18, 2012, will be held in Qatar. Rumour has it that accommodation is still available.

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Day 1 (part 2): 29 November - Cancun Can!

Cancun Can! This was the perhaps ominous message sounded by the outgoing Danish Presidency at yesterday’s COP opening ceremony. Ominous, given the recent fate of “Yes we can!”, which was used not only in the US presidential election campaign but also in the early days of the much maligned COP15.

So can Cancun really?

Christiana Figueres summarised where expectations and hopes currently lie, calling for rich tapestry of decisions. Developed countries need to implement the $28 billion of fast start finance in a transparent and timely manner. The Bali Action Plan should be operationalised. But a number of issues need to be resolved. Under the Kyoto Protocol the danger of a “gap” between the first and any future commitment period needs to be addressed. Signals need to be sent to the private sector to encourage investment. Under the LCA discussions, targets need to be formalised, there needs to be accountability, mobilisation of finance, and the creation of a new fund… The list would seem like a long one, despite Christmas being just around the corner, had most of its elements not been discussed for several years now. The full text can be found on the UN website.

Ominously, in the corridors, a key question was whether or not the Cancun outcome would be sufficient to secure the future of the UN negotiations as a viable way forward. Many have pointed towards progress outside of the process, indicating that “things will happen” in any event. However, there is also a strong school of thought that extra-UN activity does require at least some common sense of purpose and a general direction at a UN level.

Consensus?

In a virtuoso “déjà vu” performance, a short debate ensued during the opening minutes of COP16 in respect of whether the parties should continue to adhere to consensus voting. Consensus was in many ways the undoing of Copenhagen, with all but a handful of Parties willing to adopt the Copenhagen Accord as a formal COP decision. As at Copenhagen (and throughout this year) there was no agreement on this point and the Presidency has organised ongoing consultations. Consensus is one of those “can’t live with it, can’t live without it” issues.

On the floor

Back in the negotiations, meetings went late into the evening. Some were more ambitious than others, with Grenada calling for a ratifyable, legally-binding agreement from the AWG-LCA, whilst others focussed on the possibility of a balanced package of decisions. The EU stressed that there was also a need for a balance between outcomes in the AWG-LCA and AWG-KP. In the COP/MOP many of the opening statements were familiar, with some parties calling for increased clarity on targets and others seeking more certainty on “how to get there” first (market mechanisms, accounting rules, etc). The opening of the AWG-KP began with a reminder that the AWG-KP (whose mandate was extended by a year at Copenhagen) is intended to conclude and report to the COP at Cancun. The same is true for the AWG-LCA. The rate of these somewhat plagued negotiating bodies will be interesting to behold.

The halls are alive…

… with the sound of music. Those of us in the EU’s side event on standardised baselines were treated to a good hour or so of traditional Mexican musical entertainment. This did distract slightly from the central messages being conveyed: The CDM requires reform, though progress has been made; standardised baselines may represent a way forward in order to achieving better geographical disbursement of projects and reducing barriers to project implementation; this will be further investigated in detail.

However, without such musical accompaniment, the halls at Cancun Messe would have been unusually empty. There seem to be a number of reasons for that. The absence of negotiators and their teams (the Moon Palace was much livelier) scurrying between meetings leads to a lack of dynamism. The Cancun Messe is really huge and is a sensible size for the task at hand. Many observers seem simply to have stayed away or are coming for a few days. Finally, there were reports of people spending as much as three hours stuck on buses trying to get to the venue. The business NGO (BINGO) meeting, which was crammed full at Copenhagen, counted only a handful of representatives. Many were reportedly still in transit to the venue.

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Day 1 (part 1): 29 November - Andale! Andale! (Starting with REDD)

The buses are still empty on the slow drive along a broad, palm tree-lined highway that winds its way from where most of the hotels are to the Cancun Messe. A journey that took 45 minutes yesterday takes no longer today, perhaps because of the system of “Zil lanes” which has been implemented. Is this true just for the early bird or will transport logistics start to hamper access to negotiations or side events?

The Cancun Messe itself is a large, new conference centre. From the outside, the cream paintwork does little to soften its austerity. This will be the domain of observers, including both business and environmental NGOs . Negotiations themselves will take place at the Moon Palace, a more typical Cancun beach resort. Hopefully this location will facilitate discussions, at least among negotiators, if not between them and the outside world.

We will report back on the opening plenaries on Tuesday morning London time, in the mean time Andrew Hedges has painted a portrait of the current issues surrounding the REDD  negotiations, which are hoped to bear fruit.

Forest Faultlines - Key challenges in reaching a REDD+ decision at Cancun

The strapline for REDD+ since Copenhagen has been consistent: an almost agreed text that, with some negotiation and goodwill at Cancun, could move forward as a COP decision. Nothing in the UNFCCC negotiations is ever that easy though. In practice, as Cancun commences there remain significant challenges to reaching an independent REDD+ decision as part of a “balanced package” outcome.

A Quick Recap

The dominant conceptual theme for forests and climate change at present is REDD+ . This encompasses not only reducing rates of deforestation and forest degradation (the REDD element) but also enhancement of forest carbon stocks, conservation and sustainable management of forests (the + element). Although the country parties at Copenhagen failed to formally agree a new regulated international mechanism under the UNFCCC  to support REDD+, the almost agreed draft text provided some clear guidance on principles, including:

  • participation under the mechanism should be voluntary and in accordance with a country’s capabilities and national circumstances;
  • a definition of the scope of the activities that fall under the mechanism (at present, this is likely to cover the full scope of REDD+ outlined above);
  • the safeguards relevant to REDD+ activities, including the prevention of leakage, ensuring participation of stakeholders such as indigenous peoples and ensuring existing forests are not converted to plantations;
  • the elements to be developed by developing countries wishing to participate, such as national action plans, forest reference levels and monitoring and reporting systems ;
  • recognition that a country’s ability to participate under the mechanism should proceed in phases which move from capacity building to implementation and finally to results based actions; and
  • a work program for UNFCCC technical bodies to assist the mechanism to become operational.
Themes from Nagoya

The recent conference of the parties to the Convention on Biological Diversity (CBD) in Nagoya highlighted some fundamental ideological issues that will recur in the coming two weeks.

The forum for these issues was the heated discussions around the draft decision for the Strategy for Resource Mobilisation. Proposals developed during the year through CBD Secretariat organised workshops were included in the draft decision text. These proposals centred on policy options for innovative financial mechanisms. Examples included, payment for ecosystem service schemes, biodiversity offset mechanisms and markets for green products. A number of developing countries now developing national REDD+ plans under multilateral initiatives such as the Forest Carbon Partnership Facility are considering utilising PES schemes to achieve their objectives.

Bolivia on behalf of ALBA (an alternative trade bloc created in 2004 to develop alternatives to ‘profit and the free market’ which also includes Venzuala, Cuba, Bolivia, Ecuador and Nicaragua) led the critique of the proposals to consider innovative financial mechanisms. As a result, the draft text on these mechanisms was separated into another decision text. With limited time and a text that soon became strewn with brackets, the Mexican chair of the working group successfully proposed the withdrawal of the document.

Challenges at Cancun

The substantive concerns of Bolivia and other ALBA  member countries are likely to be aired again at Cancun. Key concerns can be drawn from the recent declaration issued by ALBA (issued on 5 November 2010). These derive from their view that proposals such as carbon markets or the production of environmental goods and services amount to the commodification of nature. Their stated commitment is to prevent “capitalism from continuing to expand in the spheres that are essential to life and nature”.

Throughout 2010 these concerns have translated into interventions by Bolivia and other countries to propose the re-opening of much of the draft REDD+ text agreed at Copenhagen. Examples include proposed text such as that REDD+ mechanisms “not be market mechanisms on forest related actions” or that they “not be offset mechanisms that implies developed countries will use emission reductions that were made by developing countries in order to fulfil emission reduction commitments”.

With some deft work by the chair in Bonn earlier this year, these and other proposals to re-open the text have been included in a separate option to the negotiating text going into Cancun. Option 1 is therefore the original Copenhagen text with an amalgamation of new text proposals and bracketing of existing text. Option 2 is the Copenhagen text as it stood at the end of Copenhagen.

The challenge will be to move forward with Option 2 but in a manner that can address or remove the objections of the countries behind the significant changes included in the Option 1 text. Their resolution is critical. As the AGF has recently demonstrated, there are significant challenges to reaching the billions annually required to fund mitigation and adaptation if the sources of such finance are limited to developed country public finance. The key will be ensure the means to bring in private finance (whether by carbon markets or other means) is designed and implemented in a way that there are strong safeguards against negative outcomes. To develop these in the short timescales available to prevent dangerous climate change will require recognition under a REDD+ text that such mechanisms can play a role alongside increased and sustained public finance.

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Introduction

The Norton Rose Group climate change team will be attending the United Nations Climate Change Conference to be held in Cancun, Mexico, from 29 November to 10 December 2010.

The team will be providing insight both before the negotiations start and during the negotiations as they happen. Daily updates will be posted on this blog, and can be received on email by sending a reply email. Follow the team on twitter at www.twitter.com/nrgclimatetalks.

The Conference encompasses
  • The sixteenth Conference of the Parties (COP) to the UNFCCC .
  • The sixth Conference of the Parties serving as the Meeting of the Parties to the Kyoto Protocol ( CMP )
  • The thirty-third session of the Subsidiary Body for Implementation (SBI)
  • The thirty-third session of the Subsidiary Body for Scientific and Technological Advice (SBSTA)
  • The fifteenth session of the Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol (AWG-KP)
  • The thirteenth session of the Ad Hoc Working Group on Long-term Cooperative Action under the UNFCCC (AWG-LCA)

Please see the links to our “Building blocks” (pdf 201 KB), “Understanding the process” (pdf 193 KB) and “NAMAs” (pdf 200 KB) briefings for Cancun on the right hand side of this page. This will be updated with further publications during the week.

View the recording of our pre-Cancun climate change negotiations webinar, hosted by Tim Baines and Andrew Hedges of Norton Rose LLP.

Overview schedule of the Conference.

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