Guest Article #41

A Way Forward from the Current Impasse in Climate Negotiation

Our climate negotiation is now fragmented and we are pulled in three directions: three separate forums (AWG-LCA, AWG-KP and the Copenhagen Accord group) and three draft texts (two AWG reports plus the Accord). Worse still, there are suggestions of negotiation outside the UN or of waiting until 2012 in South Africa. We seem to have lost the drive. Confusion and inaction have set in. These circumstances are totally unconducive to reaching an agreement. We must analyze the current positions and find a way forward to produce an agreement that protects the interest of all stakeholders.

The prospects for the Kyoto Protocol (KP) must be realistically reassessed. Some developing countries support the KP because under the treaty the Annex 1 parties are legally committed to emission reduction and the Clean Development Mechanism (CDM) revenue goes to fund adaptation projects in developing countries. They also consider it important to retain such principles as polluter-pay and common but differentiated responsibilities enshrined in the Protocol. Understandably, these countries do not want to risk losing what they perceive as valuable commitments without having in their hands a much better regime for the future. But time for the KP is waning and those commitments are difficult to attain under present circumstances. Thus, insistence on the KP breaks up negotiation and increases the risk of losing the opportunity for a universally acceptable treaty beneficial to the developing countries.

The KP's principal objectives of emission reduction and carbon trading have been seriously curtailed largely because of the US' rejection of the KP and the exemption of the large emitter developing countries under the KP. As a result, only 38 Annex 1 KP parties representing less than 30% of current global emissions are bound to reduce an average of 5% below their 1990 levels by 2012. At best, no more than a few percentages of current global emissions can be achieved under the KP.

The emission targets will expire in 2012 but few Annex I KP countries seem willing to extend the targets for themselves without the participation of the other large emitters. If this is true, the KP will have little role to play in mitigation. Even though developing countries may use their majority to extend or amend the targets under the KP, only those countries that have ratified such extension or amendment will be bound. As an international treaty, the KP will continue and the principles enshrined therein will remain intact, unless the 191 contracting parties decide to decide otherwise.

As to the KP's role in carbon trading, the results of the Joint Implementation (JI) and the CDM, which are the main instruments, fall short of expectation. This means that the 2% CDM revenue will not provide much funding for developing countries' needs.

The CDM projects have mostly benefited the larger emitter developing countries like China, India, Brazil and Korea totaling 91% of the carbon credits. Small developing countries have been left out because their small economies cannot generate large enough carbon credits to attract interest.

This analysis indicates that we need to look for better alternatives offering more realistic possibilities. This brings us to the Copenhagen Accord. Notwithstanding what happened last December, all the world major emitters, including the 38 Annex 1 KP parties, have signed on to the Copenhagen Accord and are all promised to reduce emission either on a fixed rate basis (e.g., the EU), from business-as-usual (e.g., Brazil and Korea) or in carbon intensity (China and India). Altogether, over 114 countries have formally associated with the Accord. This indicates clearly the thinking and direction of all these countries, which, again, lessens the prospects for the KP.

These major emitters produce more than 85% of global emissions. Their willingness to participate in the Accord represents an unprecedented opportunity for a worldwide coverage which is over 200% increase from that of the KP. Most critically, their participation will enable the creation of a far more effective, efficient and cheaper world market for carbon trading. Such a world market is likely to generate large and sustained revenues which may be drawn on to fund adaptation and mitigation.

The AC includes essential elements that must be included in a successful agreement acceptable to all the stakeholders, namely: a flexible approach which includes fixed-rate for those who want it for themselves as well as nationally appropriate mitigation actions (NAMAS); simple, effective and inexpensive  monitoring measures; and funding opportunities.

To reach a succesful agreement, it is imperative to transform currently fragmented negotiation processes into a focused, single negotiating forum using a single negotiating text. Three forums and three texts serve only to delay any possible agreement and must be combined to move ahead. Given the inseparable relationships, mitigation, adaptation, funding, REDD plus, technology and capacity building should all be included in a package negotiated under a single negotiating group of all stakeholders so as to accommodate the divergent interests and to produce a workable agreement for all.

The text just released by the Chair of the AWG-LCA is just what we need and provides a solid working basis to move ahead.  On the basis of the group's reaction, she should be encouraged to suggest trade-offs and compromises so as to construct an overall package satisfactory to all stakeholders.