Focus on energy storage
The energy storage industry is not a completely new industry and there have been short lived booms before.
Yesterday’s debacle in the AWG-KP over legal issues relating to amendments to the Kyoto Protocol pursuant to Article 3 of the Kyoto Protocol raised fears here that some Parties are in no mood for moving forward.
Legal issues being discussed in relation to the mandate of the AWG-KP - is its remit merely to come up with new targets for a second commitment period or can the forum be used to debate broader issues? - centred on the potential inclusion of “Option A” and “Option B” in the negotiating text (KP/AWG/2010/CRP.2).
Both Option A and Option B begin with the inclusion of additional text pursuant to which Parties would agree to emissions reduction target(s), with room for discussion in the current text around the ambition of the target(s) and its time horizon(s).
So what is controversial about “Option B”? Option B includes a number of new provisions, including those that would set out:
Addressing these issues reveals a “them and us” tension. Whilst a number of Parties, including the EU, want to agree to the rules before agreeing to targets, developing countries want to have targets on the table before considering changes to the rules. Given the contentious nature of these topics, it is perhaps not surprising that many Parties preferred not to address them, or even be seen to address them, for fear of contaminating entrenched negotiating issues. However, as many have highlighted, the failure to address these issues hinders, rather than supports, attempts to negotiate a second commitment period under the Kyoto Protocol.
The AWG-LCA is the real heartland of discussions about new market mechanisms that would compliment the existing Clean Development Mechanism. New mechanisms have received little attention this year. However, interest has started to develop and a paper is being discussed today. Its key provisions include the following:
There has been quite a lot of enthusiasm for the new proposal among those Parties that support the use of market-based approaches to raising finance for combating climate change. However, those that do not support this approach are believed to be insisting on a further “Option B” alternative to the current proposal, which may very well drive a coach and horses through the text.
Today’s AWG-KP plenary provided little evidence of changes in negotiators’ fundamental positions over the course of this week. Support for market mechanisms in the AWG-LCA from some developing countries is surprising news, and provides some comfort.
Thick smog loomed overhead in Tianjin today. Thick enough to encourage me to consider taking on a binding target. Though the weather alone does not explain the extent of the “bad day” had in the AWG-KP, it’s fair to say that the atmosphere in some negotiations could have been cut with a knife.
In relation to developed country emission reductions, there have been discussions about the various options for dealing with the carry over (or “banking”) of AAUs (rights for countries to emit CO2) and how to move forward on base/reference years for calculating emissions targets. There have been debates over how to reduce the length of and update the negotiating text. This afternoon the Parties briefly talked through a number of options relating to developed country emission reductions, including preferences for base years, length of commitment periods and overall levels of ambition. The discussions were stilted and some have commented that it appears that little ground has been gained over the last year or so. Issues were not advanced today either, with only a handful of Parties willing to make interventions. What followed was awful to watch: yet another session marred by arguments over the mandate of the AWG-KP and whether it was able to discuss certain controversial issues in the legal drafting group.
It is not always possible to get a sense of what discussions are taking place behind the scenes, outside of the ambit of the open contact groups. Here are some of the issues under consideration in the AWG-LCA as of yesterday:
Shared vision: We understand that the text is getting messy and becoming over-loaded and that Parties are being encouraged to be more “visionary” and limit crossovers with other areas of the negotiations.
Finance, technology and capacity building: There is discussion of the extent to which the $30 billion Copenhagen Accord financing should be referred to in the Decision text. Also under consideration is how capacity building should be dealt with: as a stand alone issue or dealt with under several agenda headings?
Mitigation: A problem child. In relation to developed countries’ mitigation, it has been suggested that separate groups discuss targets and MRV. As for developing countries’ mitigation, again it was suggested that one group focus on a registry/mitigation mechanism, including how to deal with NAMAs (nationally appropriate mitigation actions), and MRV of actions and support. A second group would focus on MRV in relation to national communications / inventories. In relation to “various approaches”, including markets, we understand that some of the reticence to discuss “new market mechanisms” has vanished due to the realisation by some Parties that such mechanisms will take hold outside the UNFCCC process if they are not addressed in it, which may have served to focus attention on this issue.
Meanwhile, some new negotiating texts have been made available (see more tomorrow).
Outside the formal negotiations, the air cleared in the evening as representatives of Chinese exchanges from Shanghai, Beijing and Tianjin described the efforts they have gone to in order to investigate the use of market mechanisms, with serious research having been done in relation to carbon leakage, the economics of trading and data collection. Whilst it is clear that it will be a while before anything more than voluntary targets will be imposed on these cities, the contrast of such research taking place is striking in comparison to the difficulties that many developed countries are having in passing emissions trading laws through domestic legislatures.
Avid readers will recall that the Copenhagen Accord resulted in two finance pledges - $30 billion “fast start” finance in the period 2010-2012 and $100 billion annually by 2020. This was a commitment to mobilise finance rather than to deliver cash into developing country bank accounts.
So, are things going to plan? Well, the High-Level Advisory Group on Climate Financing (AGF) is planning to deliver its report imminently, in the run-up to Cancun. Fingers crossed that the AGF’s report is genuinely innovative. Suggestions that it may simply run over green bonds, special drawing rights, Tobin taxes and aviation/shipping taxes or levies have not inspired or excited thus far. There also does not currently appear to be much confidence among investors that such proposals will bear fruit. $100bn is a lot of money. Much of it is intended to be provided by the private sector. We hope the AGF will issue indications, with their report, as to how the present risks associated with investing in developing countries will be overcome.
In the meantime, negotiators have been busy this week working out details of the Green Fund that will provide climate finance. Problematic areas apparently include the governance structure of the fund and its inter-linkage with other areas of the climate architecture, such as technology.
We are now a third of the way into the 2010-2012 window for providing $30 billion. It is proving very difficult to assess what has actually been raised due to a total absence of a process to check pledges (and then to ensure that, for example, the same action has received funding from more than one government). Estimates are that north of $25 billion has been rustled up. No mean feat in such straitened times. Interestingly, measurement, reporting and verification (MRV), is now spoken about not just in terms of reviewing the implementation of Mitigation targets and actions (pledges), but also in terms of the “additionality” of climate finance.
Today marked a mid-point in the discussions at Tianjin. The AWG-LCA Chair and the facilitators of the various drafting groups that she had convened to address key areas began in a relatively upbeat fashion. It is clear however that some areas are moving ahead of others. Mitigation and “shared vision” discussions appear to be lagging behind technology, for example. Despite this, a number of new papers are to be released for discussion. It is hoped that papers will lead to Decisions that can be adopted in Cancun.
The Chair invited views on what kind of agreement could be delivered at Cancun. Parties responded duly and each response revealed a very different perspective. Those buoyed up by the Chair and her Facilitators’ earlier comments were soon brought down to earth. Japan expressed disappointment at the lack of progress made at Tianjin, particularly in certain groups, and sought that the rest of the time be used in order to reach Decisions based on the Copenhagen Accord. Japan asked that the Chair prepare draft Decisions which are concise. This led to a series of calls, particularly by developing country Parties, for the process to remain “Party driven”. Many of us will recall the outpouring of anger at Copenhagen when the Danish presidency sought to introduce text that was not felt to reflect the views of all Parties or to respect UNFCCC procedures. The EU response put things a different way, with its representative stating that the process is “magnificent but it’s not negotiations”. Other Parties queried how the delicate balance between different elements of the AWG-LCA negotiations would be respected at Cancun, and also what the balance between the AWG-LCA and AWG-KP would be. Finally, AOSIS accused Parties of using procedural tactics to block progress being made.
Copenhagen should have taught us, if anything, that finding a consensus is the only game in town. If Parties feel that their own priorities are unlikely to be reflected in the eventual Decisions, so that the proposed outcome will be lopsided in favour of other Parties’ interests, it will be hard to salvage a deal from Cancun.
A further point of contention in the AWG-LCA was the brave decision by the Chair to disseminate a text setting out possible elements of a Cancun outcome. This did not go down well with all Parties. The requirement for an AWG Chair to “bang heads together” in these meetings must be balanced against the likelihood that Parties will reject a solution imposed on them from above.
Yesterday’s plenaries were short, with only larger negotiating blocks being given the floor. Plenty of time was left for the parties to get going in earnest in smaller groups. The AWG-LCA discussions relating to a broader climate change agreement under the UNFCCC (the AWG-LCA) are now largely closed to observers. Those relating to a second Kyoto Protocol Commitment Period (the AWG-KP discussions) remain open.
There is of course an overwhelming sense that agreement cannot be reached on all of the key areas at Cancun. In the face of this reality, where do parties’ priorities lie and what is their focus for the remaining three weeks of formal climate change negotiations in 2010?
Views in the AWG-KP indicated that there should be a focus variously on:
Views expressed in AWG-LCA included the following:
The above do not distil down to a clear set of objectives, which is no great shock given the multiple deadlocks in the negotiations that we have seen over the last couple of years. This has not been relived by the Copenhagen Accord, to the apparent surprise and disappointment of some.
However, there is perhaps a degree of commonality at a superficial level. Agreeing the measurement and reporting of emissions reductions in a consistent manner is fundamental. Progress is unlikely to be made unless finance is seen as actually being provided to developing countries. REDD+ and technology transfer are still backed as winners. Institutional arrangements for finance and technology require clarity. It seems equally unlikely that overall progress could be made without greater clarity around Annex 1 (developed) and non-Annex 1 (developing) country mitigation. All this skirts around the difficult issues of what new market mechanisms may be available to help countries meet their targets (emissions trading) and the level of ambition of such targets, not forgetting a host of other issues such as transport and agricultural emissions, the details behind nationally appropriate mitigations actions (NAMAs) and establishing a “shared vision”.
The parties are now supposed to be drafting the decisions that will be adopted at COP 16 / CMP 6 in Cancun. Our understanding is that progress on different aspects of the negotiations is unequally advanced, with negotiations on some topics, such as shared vision, going laboriously line by line. Other groups are starting to look at key concepts, such as how individual aspects of funding arrangements will be taken forward. Those of us who remember the distilled versions of negotiating text that were being passed around in the closing days of the Copenhagen COP look forward to something more bite-size reappearing on the table. Above all, the parties seem to be aware that the future of multilateral negotiations now hangs in the balance. Whether or not this will provide the impetus for them to reach agreement on even a limited range of key issues remains to be seen.
An interesting “side bar” was organised by the Chinese NRDC, which drew an enthusiastic crowd. The similarities between the Chinese approach and that of the EU belies some fundamental disagreements in the broader negotiations. However, like the EU, China has set an emissions target and a non-fossil energy target and is putting in place energy efficiency policies. Unlike that of the EU, the Chinese emissions reduction target is intensity-based (not absolute), and its non-fossil energy target takes account of the promotion of nuclear energy.
Whereas the EU already has an established cap and trade scheme, China has been reported to be investigating the application of trading schemes to help it achieve its targets. This was confirmed by the NDRC who launched into a relatively detailed discussion of the challenges faced by China in applying market mechanisms to key sectors or regions in the absence of politically unacceptable binding emissions caps. However, the NRDC appeared pleased to report on pilot emissions trading schemes taking place in Beijing, Shanghai and Tianjin.
The physical challenge of combating climate change, in the face of the rapid growth of major developing economies, is all too tangible in Tianjin. This city is an apposite choice of host for this UNFCCC negotiating session. Tianjin, with a population of 6 million, is a city that seems to extend endlessly, to the horizon and beyond. Here, unlike in European cities such as Bonn, Lyon or Manchester which have a more sedate rate of growth, there is no visible end to the high rise buildings and wide expressways and no sense that the city, or its demands on the environment, will ever taper off. The rapid creation and expansion of such mega cities and their energy demands bring home the imperative that we incentivise low-carbon growth all over the world.
Here is a new city of wide expressways, filled full of luxury cars (with comparatively few bicycles), whose size and greenhouse gas emissions will grow exponentially in the coming decades. Incomes in many areas of China are 10 per cent of those in larger cities like Shanghai, but this is not intended to remain the case. The environmental efforts made by Tianjin were highlighted in the opening ceremony. What will power this and other cities’ growth (and what such growth entails) if not unabated coal, and what international climate finance architecture and incentives could realistically be put in place to encourage the adoption of an alternative tack?
This week’s meetings in Tianjin have been attracting media attention. Perhaps not as much as the Commonwealth Games, but with reporting, for example, on BBC World News, there is a greater level of awareness than of the usual rounds of meetings in Bonn. Our hosts have gone to great lengths to make sure that things run smoothly, with drivers and an extensive coach network available to whisk delegates and observers to their destinations. The conference facilities are lush and brand-spanking new. In the words of Christiana Figueres, now is the time for the delegates to rise to the challenge.
The immediate priority for delegates this week is to focus on the deliverables for COP 16 which starts next month, not far away now. Has progress been made over this year? The official message is that it has, that the Kyoto Protocol draft text is in good shape and that there are areas of the AWG LCA text which are relatively close to being agreed. As highlighted by the Chair of the AWG-LCA, the session will be “make or break for the Cancun outcome”. Her desire is to present a set of draft decisions to COP that is close to agreed. This upbeat assessment contrasts with comments from some delegates that expectations for Cancun are low and that there appears to be further backsliding from positions established in Copenhagen. Certainly, negotiating texts are being loaded up with extensive additional language once again, a sure sign that Parties are not making headway. The negotiations appear to be hindered, too, by overarching uncertainties about whether richer nations will deliver on the $30 billion finance they pledged in Copenhagen and what this “fast-start” package comprises.
Unfortunately, it appears that there is a wide variety of views on what level of ambition Parties will be bringing to Cancun. Are we to expect a repeat of Copenhagen, where everything was left on a knife edge until the last minute? If so, would that lead to another flawed outcome that will seal these negotiations’ fate for good and give rise to a definitive swing towards bilateral and multilateral negotiations outside the UN process? We hope more clarity will be available later this week as new papers emerge and the Chairs of the different working groups report on the negotiated outcomes.
The fourteenth session of the Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol (AWG-KP 14) and the twelfth session of the Ad Hoc Working Group on Long-term Cooperative Action under the Convention (AWG-LCA 12) are being held from Monday 4 to Saturday 9 October 2010 in Tianjin, China.
Both groups will present their decisions to the 16th session of the Conference of the Parties to the UNFCCC (COP 16) and sixth session of the Conference of the parties serving as the Meeting of the Parties (COP/MOP 6), in Cancún, Mexico, which will take place between 29 November and 10 December 2010.
We will be attending the negotiations. We will be reporting back on interesting developments over the course of the week.
The energy storage industry is not a completely new industry and there have been short lived booms before.
The maritime industry is bracing itself, who is ready for IMO 2020; and who is not?