Article by Guest Contributor: Adalberto Maluf

The fourth meeting of the BASIC country ministers (Brazil, South Africa, India and China) on climate change took place in Rio de Janeiro on the 25th and 26th of July 2010 to further discuss their common positions regarding the Copenhagen Accord.

The BASIC countries were part of the final agreement reached in Copenhagen, although, officially, they left the conference “frustrated” with the final results. The joint statement after these two days of meeting in Rio “reiterated the importance of the two pronged approach – Working Group on Long-Term Cooperative Action and the Ad Hoc Working Group on Further Commitments by Annex I Parties” as crucial for an “equitable and balanced outcome in Cancun”.

The joint statement also shares concerns about those sensitive issues for the developing countries regarding differential (historical) responsibility between developing and developed countries, which is related to “equitable burden sharing” of past emissions within an context of sustainable development and also “demands the implementation of ambitious financing, technological support and capacity building.”

Despite the fact that the official joint statement didn’t differ much from what these countries have formally agreed in Copenhagen, there were some advances in Rio which can’t be underestimated. Overcoming Brazilian initial opposition, they all agree to develop a common methodology to assess their total emissions. The group, led by China’s chief climate negotiator, also agreed to have a “panel of experts” which would be responsible to establish a common baseline that could be equally measurable, reportable and verifiable (MRV methodology). Brazil opposed it but didn’t block the initiative.

It could be the starting point for the development of a common methodology to assess and measure the real implications of their pledges for the economic and social development of these key countries. It’s a direct response of the Chinese government to the agreement made in the last hours of the Copenhagen conference between President Obama and Prime Minister Wen Jiabao, with the intermediation of India’s Prime Minister Manmohan Singh and Brazilian President Lula da Silva.

There is a common feeling inside the BASIC countries that the Kyoto protocol won’t prevail in the near future, which could mean that they would have to change their positions for future negotiations. India insisted that it is rather clear that the Kyoto protocol is no longer a feasible route. With that in mind, they should all work together towards a single, inclusive climate change agreement.

The BASIC countries are still awaiting further developments around the world before moving forward with their pledges, however, there was a common understanding that developing countries with advanced economies, like Brazil and China, would have to abandon their rhetorical demand and start discussing ways to push concrete proposals in the table. The decision on a common methodology for MRV could be the beginning of that change.

Mystery in China (Image by: **Maurice**)

China’s Copenhagen pledges, along with fifty four other nations, have recently been announced. China has pledged to reduce its carbon dioxide emission per unit of GDP by 40-45% by 2020 compared to 2005 levels, raise the level of non-fossil fuels in primary energy consumption to 15% and increase forest coverage by 40 million hectares with a rise in forest stock volume of 1.3 billion cubic metres by 2020 from 2005 levels.

How significant are these pledges? All of them are as China promised before Copenhagen got under way and as such come as no surprise. As has been much discussed elsewhere, these pledges do not amount to any reduction in carbon emissions, but rather a deceleration of rising emissions. The actual level of emissions in 2020 is therefore very difficult for anyone to predict, with some estimates suggesting that at current growth trends China could still see a doubling of emissions by 2020 with the targets. It is also interesting to note that of those countries that have made some sort of pledge, only China and India have specified emissions per unit. All others have offered some form of real cut, albeit often conditional, if they have made an offer.

A more worrying issue is that verifying these targets will be a serious problem. China has already stated that it has no intention of allowing international verification with the exception of projects that are funded with help from abroad. Without any verification it is difficult to take even these pledges seriously. Chinese statistics are notoriously poor with regular falsification from local level governments. It would therefore come as no surprise to find in the coming years that emission statistics are being falsely lowered by the local and national governments in order to meet these targets.

Moreover, in its emission pledge China reiterates the point that these pledges are on an entirely voluntary basis. This is of course true for all pledges made, but its reiteration serves to drive home how little has actually been accomplished at Copenhagen in terms of concrete emissions targets. Taking all of this into account, it seems doubtful that China will be meeting even these targets in 2020.

Environmentally friendly in Chengdu, China (image by: preetamrai)

Back in the mid-2000s China began to experiment with the notion of Green GDP as a new way of accounting for its growth in an environmental context. This was touched on in a previous blog post, but I thought a more in depth look into exactly what Green GDP showed and why it failed would provide some insight.

The Green GDP for 2004 was published in September 2006 which calculated the loss for the year at 511 billion yuan ($66 billion) or 3.05% of growth. Within that figure it was calculated that water (286 billion yuan) and air (216 billion yuan) pollution were the most significant costs, followed by solid wastes and pollution accidents at 5 billion yuan.

On its publication SEPA director Pan Yue announced that “This marks only the beginning of our efforts in a Green GDP calculation”. But of course it was the first and only year that Green GDP was calculated, its results of near zero (or worse) growth in many areas considered too politically damaging by China’s authorities.

However, the expectation at the time from many such as the World Bank was that Green GDP accounting would show a loss of GDP of between 8-12%, far higher than the actual estimate. Much of this larger estimate owed to large water shortages, air and water pollution, desertification and ecological losses.

And indeed, the SEPA admitted it was a conservative estimate, as it only included environmental pollution costs (such as healthcare for air pollution – direct and relatively easy to measure). A more accurate estimate would also have included not only the costs of environmental pollution but the ecological damage done and the costs of natural resource depletion as well. As a result problems such as soil contamination, desertification, depletion of fish stocks and wildlife etc. had all been excluded from the estimate. Further accounting issues meant that even those items included in the measure were often underestimated or not fully included due to what was described as issues with “localization of departments, limits of technologies, and the limitation of basic data”.

The estimation of Green GDP also suffered further challenges. Such practices are relatively few and far between and most countries have declined to attempt to make them. Any true measure of Green GDP would have to make estimates of goods such as forests which have no obvious market value. Compounding statistical issues is the nature of the Chinese political system. While some regions certainly stood to benefit from the calculation, seeing in it an opportunity to demand greater subsidies from the central government as their environment has been depleted. However, many more local officials objected to the scrutiny that Green GDP would put on them and as a result of pressure they placed on the central government the detailed regional breakdowns were not published.

Future Green GDP results were to attempt to correct for some of these deficiencies and as such it is perhaps not so surprising that the authorities ultimately decided to kill the project before more accurate, and more politically damaging estimates could be made of the true extent of environmental damage in China.

The elimination of Green GDP was a significant step back for the Chinese government’s attempt at environmental preservation and it exposes wider issues facing China’s attempts to repair its environment. One such issue is that any attempt to set targets or evaluate local official performance within the context of the environment is bound to meet strong resistance. At the same time, any attempt to do so is likely to be met with the challenge of insufficient data, issues of computing value and the statistical manipulation that China is notorious for.

What has been made apparent however, is that even with the very low estimates of the Green GDP report, Chinese are at best experiencing a modest improvement in their overall welfare and at the worst may, despite rising GDP, be seeing a fall in their welfare over time. While Green GDP was unpalatable to many Chinese officials, it does suggest that China’s current growth strategy may actually be doing more harm than good today and in the future.

That said, studies (and here for some results from the Index of Sustainable Welfare) into the developed world’s environmental track record (and other factors), pioneered by William Nordhaus and James Tobin in their 1973 paper, suggest that our own welfare may not be doing so much better when we factor in issues such as the environment into calculations of our GDP. While these measures are in themselves contentious and do not solely focus on the environment – the basic point is the same and as such, perhaps China’s reluctance to use Green GDP shouldn’t come as too much of a surprise.

Fever is rising for Copenhagen, as delegates and key global players in the climate field descend on the Danish capital in readiness for the official opening of the 15th Conference of the Parties on Monday. Expectations have rollercoastered in the last few weeks, with negative sentiment peaking when it was plausible Obama would not attend and the key emitters, namely the USA, China and India were yet to stipulate plans regarding emissions reductions.

The recent email scandal from the Climate Research Unit based at the University of East Anglia and James Hansen, NASA’s head of the Goddard Institute for Space Studies in New York, vehemently stressing the talks ‘must fail’ will add further dent to expectations.  However pledges for emissions cuts, announced by the USA and China and the anticipation that India’s Environment Minister Jairam Ramesh will today announce cuts in carbon intensity by 24 percent in 2020, bring hope. The cumulative result of these pledges is a positive signal that the COP could deliver a tangible structure for an agreement by the closing on December 19th.

One of the most contentious issues likely to dominate the discussions is the standoff between developing and developed countries, referred to as Annex 1 under the existing Kyoto Agreement. The key emerging emitters from the developing world, China, India, Brazil and South Africa have remained firm that developed countries must provide finance and technology to help developing nations fight global warming. This was further reaffirmed this week in Copenhagen, when the key negotiators from these four countries indicated after a preparatory meeting that they would represent a “different position” compared to a separate outline for the global climate talks by Denmark.

After a recent meeting in Beijing it also emerged that this group at Copenhagen will formally ask “developed countries to assume responsibility for emissions reduction targets in the second commitment period (from 2013)”. As Kim Carstensen, head of WWF’s Global Climate Initiative, further advocated “the developed world needs to have deeper emissions cuts, more new money on the table and much more willingness to share the technologies for low carbon development”. Developed nations are however adamant that this group of big emerging economies must also commit to mandatory emissions cuts.

Arguing aside, the fact remains that the world must cut its emissions, by around 80% of 1990 levels by 2050 if any form of climate stabilization is to be achieved.  Nonetheless discussions are likely to stumble and potentially get deadlocked over the issue of historical responsibility. This issue of ‘burden sharing’ is hugely sensitive as it ultimately involves responsibility to give money, billions of dollars of it, needed for low carbon investment and in adaptation funding, especially in key areas vulnerable to the onslaught of climate change.

Developing countries will not vacillate over the need for comprehensive adaptation funding, and will not compromise on the need for this to be in addition to official development assistance (ODA). The EU’s negotiators recent written blunder, referring that they “cannot accept reference to ‘additional to’, and ‘separate from’ ODA targets” could gravely undermine discussions on this issue.

In addition to the issue of funding, developing countries will be pressing for a firm agreement on Reduced Emissions from Degradation and Deforestation (REDD), where large swathes of land covered by forests of high biodiversity have the potential to earn countries money by keeping forests standing. However, as with many negotiations at Copenhagen, issues need to be ironed out with regards to the details.  A major hurdle for REDD is corruption and mismanagement in the forestry industry in developing countries. For example this costs Indonesia, which has one of the highest deforestation rates, two billion US dollars a year, equivalent to its entire health budget as a Human Rights Watch report released on Tuesday indicated. Many feel the negotiations surrounding REDD are fundamental if Copenhagen is to achieve anything, and will be hoping there is not a ‘no deal’ on this.

I will be traveling to Copenhagen for the second week of deliberations to cover issues related to developing countries.

©MIT Press

It is a long-held truth that China will inevitably stride on to the centre stage of world affairs as it grows in power and influence. China has no doubt become a major player in trade, development and the environment. More crucially for the topic at hand, China became the world’s largest emitter of carbon dioxide in 2007, overtaking the United States for the honour and in the last two years has only widened the gap. As one of the largest contributors to climate change Chinese consent is clearly crucial to any agreement (however limited) in Copenhagen and its now necessary successors. However, does this all add up to make China the linchpin of Copenhagen? In short, no.

China has a lot to gain from any potential agreement that will be reached. While Chinese emissions are clearly of enormous damage to the global environment they are no less deleterious to the Chinese themselves. Plenty of statistics are available that illustrate just how much of a problem this is for China. A 2007 paper (free summary) found that the loss in GDP due to losses in national health were 1.8% in 1997 with thousands dying prematurely each year. The paper further argued that pollution controls could actually raise China’s growth rate. While a more up to date World Bank report in conjunction with the Chinese SEPA (State Environmental Protection Agency) found that water and air pollution in China has cost the country 3.5%-3.8% of its GDP in public health costs and premature deaths.

China’s own independent attempt to measure the damage caused was also a shock for its leadership. ‘Green GDP’ was first calculated for 2004 and was an attempt to include environmental damage in growth rates. That damage was estimated to be in excess of $510 billion Yuan (or 3% of China’s economy). So damaging were these estimates that in 2007 the entire project was scrapped for lowering growth rates to levels considered politically unacceptable by the Chinese government.

All of this paints a clear picture of a tremendous cost to China in its quest for growth, costs that it has found increasingly difficult to ignore, taking some, though generally tentative, steps toward addressing. Copenhagen represents a potential boon for China; the perceived necessity for the developed world to pay the developing world would give China the chance to be at least partly compensated for steps that it increasingly acknowledges it must take. The biggest hurdle is exactly how much that final sum of money will be and how much China will have to cut its emissions by to get it. But at the same time, the cut in pollution for China, while costly, will also have a beneficial effect on its citizen’s health and its own growth rate.

Looking to Copenhagen and beyond, the ball is very much in the court of the developed world. China wants an agreement and very much needs to start cutting its emissions for its own sake and benefit. While the developed world certainly has its own motivations to ensure cuts in world emissions, most justifications tend to look some way into the future and the dangers of a temperature rise beyond two degrees. China’s environmental costs are very much in the here and now for it to tackle.

Just in time for the UN summit in New York next week, Senate Majority Leader Harry Reid warned earlier this week that due to the Senate’s busy schedule it might not act on a comprehensive climate change bill until 2010. Health care and regulatory reform are also high on the Senate’s agenda, and according to Reid’s statement, the climate change bill might have to wait until the other two are dealt with.

This follows Senators Boxer and Kerry’s announcement at the beginning of the month, that rather than early September, they are now aiming to unveil their version of the bill at the end of the month. A target that was repeated this week by Sen. Kerry saying that “We are aiming for this month.”

Reid’s statement naturally caused quite a stir, though it was later somewhat retracted by Reid’s spokesman, who commented that “no decisions have been made” on floor timing for a comprehensive climate and energy bill. And two days after his original comment, Reid insisted that he hopes to move a climate bill “as quickly as we can”

In response though, the EU ambassador to the US expressed his concern by the delay which will push the decision about a US climate policy until after the UNFCCC meeting in Copenhagen, noting that “if this were to happen it would open the United States to the charge that it does not take its international commitments seriously, and that these commitments will always take second place to domestic politics“

This feeling is echoed by the concerns expressed by environmental organisations such as Environmental Defense Fund, whose international counsel Annie Petsonk pointed out that “The appearance to the international community would be that the U.S. Congress is just adrift,” and others who worry that this lack of domestic progress in the US will give other countries an excuse not to act as well.

Obama’s administration also acknowledges the importance of US legislation to international progress as was evident when Todd Stern, the State Department’s special climate change envoy, testified in front of the House Select Committee for Energy Independence and Global Warming saying that “Nothing the United States can do is more important for the international negotiation process than passing robust, comprehensive clean energy legislation as soon as possible” and stressing that “President Obama and the Secretary of State, along with our entire Administration are committed to action on this issue“

Progress Nonetheless

Even though the legislative process is delayed, the US is still making progress in its attempt to curb GHG emissions, as evident by two developments in the past week.

On Monday Interior Secretary Ken Salazar signed an order setting up a Climate Change Response Council and eight regional response centres to study and respond to the expected impacts of climate change on wildlife and historic places. The order also includes a commitment to produce a plan to reduce the Interior Department’s own greenhouse gas emissions, including setting a firm target. The Interior Department, which manages 20 percent of the land in the United States, will also explore methods to sequester carbon by storing it underground and by absorbing it through forests and rangelands.

The following day the EPA ,along with the Department of Trasport, moved ahead with car emissions regulations – unveiling the proposed rules based on the outline presented by the president in May.

These two developments give somewhat more weight to Todd Stern’s warning to countries such as China and India, that if there is no cooperation on international action to reduce emissions, Congress is more likely to put in place protectionist measures, as at least the US can show some domestic progress.

These actions though, while beneficial in mitigation of CO2 emissions, are not as reassuring to other countries of the US willingness to tackle climate change as actual legislation. The US failure to ratify Kyoto is still very much on everybody’s mind and Obama will have to work hard to convince other countries, especially major players like the EU and China, that any agreement signed in Copenhagen – if one is at all signed – stands a good chance of later passing Congress. This might motivate him to be involved more closely with the legislation than he has been so far (more like he has been with health care reform), which in the end might result in a better bill. If that happens, Reid’s statement would have been for the better.

© Laura Padgett

Following two days of high-level discussions held in Washington at the beginning of last week, the U.S. and China signed an agreement to increase cooperation on climate change and energy.

These discussions were the first meeting in the China-U.S. Economic and Strategic Dialogue which was launched by Hu Jintao and Barak Obama at the G20 meeting in London in April, and are set to continue later this year. They consisted of two parallel tracks – an economic track, co-chaired by US Treasury Secretary Geithner and Chinese Vice Premier Wang Qishan; and a policy one, co-chaired by U.S. Secretary of State Hillary Clinton and Chinese State Councilor Dai Bingguo

In the Memorandum of Understanding (MoU) which was signed at the end of the meeting the two nations agree to “strengthen and coordinate our respective efforts to combat global climate change, promote clean and efficient energy, protect the environment and natural resources, and support environmentally sustainable and low-carbon economic growth”. The countries agree that cooperation between them is crucial to reaching these goals, and that they both have an important role in global negotiations. The document also states that this future cooperation will also strengthen and improve the relationship between China and the US, something that will benefit both countries in areas other than climate change as well.

As far as practicalities, the MoU doesn’t contain a whole lot of those. There are no exact targets and no detailed plans for cooperation other than stating that the two countries will “establish Climate Change Policy Dialogue and Cooperation as a platform for the United States and China to address global climate change and to identify and resolve areas of concern.”

So this agreement is no more than a general outline for future cooperation, which while it is definitely a step in the right direction, as US Senator John Kerry pointed out “the fully defined mutuality of effort between our two countries—did not materialize.”

This does not mean though that the improved relationship between the US and China since Obama took office has not yielded more concrete developments. These came two weeks previously when – during secretaries Steven Chu (energy) and Gary Locke (commerce) visit to China – the two countries agreed on several joint projects including an agreement between the U.S. DoE and the Chinese Ministry of Urban-Rural Development to foster collaboration in the development of more efficient building designs and sustainable communities; and an announcement of a joint Clean Energy Center to which the two countries pledged $15 million in support of initial activities.

These increasingly closer ties with China also provide opportunities to expose the US public and members of Congress to the progress made within China in fields such energy efficiency, renewable energy and clean energy technologies. This is important as the perceived lack of progress in other major emitters, especially China, is often used as an excuse to oppose and water down the US climate bill.

Copenhagen's famous mermaid (source: about.com)

The leading think-tank Chatham House held a conference on Monday and Tuesday this week, entitled “The Politics of Climate Change Agreement”.  There were some high-level speakers, including Joan Ruddock (DECC minister), the head of UNEP, and the chief negotiator of Papua New Guinea (he who told the USA to “show some leadership or get out of the way” at Bali).There was a vein of optimism running through the discussions – after all, who would have thought three years ago that the US would (almost) have a cap-and-trade bill, that India and China would have mitigation plans, and in 2008 investment in renewable energy would exceed investment in both nuclear and fossil fuels.

The main focus of the conference was what needed to happen politically to get a good deal at Copenhagen. The position of most developing countries is that annex 1 countries must provide binding targets for emissions reductions by 2020, consistent with keeping us on a 450ppm pathway or below. Secondly, there will be no deal without clear commitments by rich countries on adaptation financing. There was general agreement that Gordon Brown has broken the logjam on this with his speech last week finally putting a price tag of $100bn a year.

These are both likely to be forthcoming, but the extent of rich country cuts are still unclear – the Waxman-Markey bill in the US is unambitious, and recent figures put out by Russia and Japan were also disappointing. An aggregation of commitments so far gives a 16-26% reduction on 1990 levels by 2020. This is not good enough, as the IPCC says we need 25-40% cuts by 2020 to stay on the 450ppm pathway.

On the rich country side, the US in particular wants developing countries to commit to binding emissions cuts (cf. previous stand-offs with India), which many of them see as unjustifiable. This will probably be the major sticking point at Copenhagen. The piece of UNFCCC jargon for developing country emissions cuts is “Nationally Appropriate Mitigation Actions” (NAMA) by poor countries, which implicitly mean a move away from business as usual. This move is critical, because even if OECD emissions were zero, developing country emissions would still need to fall in order to meet 450ppm.

It is clear that we need a political deal at Copenhagen, even if the technical aspects take another year to hammer out. Regional or national negotiations targets around CCS and industry will be important, but a global political agreement is needed to hold it all together. The worst outcome would be a deal with vague or insufficient emissions reductions, including lots of greenwash around REDD. In conclusion, four essential elements for a good deal probably include (i) emissions targets for rich countries consistent with staying below 2 degrees warming, (ii) NAMAs for developing countries, (iii) a decent institutional framework, (iv) financing for adaptation.