UNFCCC Bonn conference – June 2011. (Image by: Adopt a Negotiator)

The UN Climate Change Conference kicks off this week in Bonn, Germany as governments continue framework discussions in preparation for the Seventeenth Conference of Parties (COP17) to be held in Durban, South Africa, at the end of the year. Over three thousand participants representing 183 countries are attending the conference in Bonn from June 6-17, including government delegates, business and industry representatives, environmental organizations, and research bodies.

Speaking on the first day of the conference, UNFCCC Executive Secretary Christiana Figueres reminded governments that they hold an unavoidable responsibility to make clear progress towards the 2011 climate objectives agreed to at COP16 in Cancun.

“Governments lit a beacon in Cancun towards a low-emission world which is resilient to climate change. They committed themselves to a maximum global average temperature rise of 2 degrees Celsius, with further consideration of a 1.5 degree maximum. Now, more than ever, it is critical that all efforts are mobilized towards living up to this commitment.”

Ms. Figueres expects that the meeting in Bonn should provide clarity on the architecture of the future international climate change regime to reduce global emissions. In addition, negotiators will focus on the design of the finance, technology and adaptation institutions agreed to in Cancun which will allow developing countries to successfully adapt to climate change while still building their own sustainable futures.

The conference comes amid a backdrop of new warnings from the International Energy Agency (IEA) of a sharp rise in the volume and concentration of greenhouse gas emissions in the atmosphere. The IEA announced last week that 2010 emissions from global energy generation have returned to record highs, marking an unexpectedly sharp rebound from the reduced emission levels caused by the financial crisis. Reports now show that carbon dioxide concentrations have once again peaked at just under 395 parts per million (ppm).

The two week conference includes the thirty-fourth sessions of the Subsidiary Body for Scientific and Technological Advice (SBSTA 34) and the Subsidiary Body for Implementation (SBI 34), the sixteenth session of the Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol (AWG-KP 16), and the fourteenth session of the Ad Hoc Working Group on Long-term Cooperative Action under the Convention (AWG-LCA 14).

New items under discussion include: SBI’s consideration of proposed items on work programmes relating to reporting by Annex I and non-Annex I countries, adaptation, and response measures, as well as SBSTA’s consideration of the work programme on agriculture, the impacts of climate change on water and water resource management, and the initiation of a new work programme on issues regarding reducing emissions from deforestation and forest degradation in developing countries (REDD+) identified within the Cancun Agreements.

Article by: Krishna Krishnamurthy

After failing to reach a detailed agreement in Copenhagen (COP-15), the Parties of the Conference nevertheless agreed to advance negotiations on a post-2012 regime in Cancun (COP-16). Among the achievements in COP-15 is the so-called Copenhagen Accord which, apart from recommending a limit in the rise of global average temperatures to 2 degrees Centigrade, also requires scaled up, new and additional, predictable and adequate financing for adaptation, as well as improved access to these funds.

An outcome of the Accord was that Parties agreed to target financing amounts for adaptation to $30 billion for the 2010-2012 period, and $100 billion per year by 2020. In particular, Annex I Parties would support during 2010. A Fast-start website (www.faststart.finance.org/content/contributing-countries) was set up to monitor the amounts pledged and the commitments of Parties.

Three main finance mechanisms for adaptation in developing countries have been generated:

• The Least Developed Country (LDC) Fund ($221.45 million committed, $169.19 million paid, and $141.91 million disbursed);
• The Special Climate Change Fund (SCCF) is also available ($147.77 million committed, $110.48 million paid, $97.14 million disbursed); and
• The Adaptation Fund ($372 million of estimated funds available until 2012; $14 million disbursed).

For the recipients of the funds, the idea that financing could come from the public sector has been particularly appealing due to their predictability. However, developed countries have stressed that the public sector cannot provide the necessary resources, and that the private sector should be involved. Two key issues remain that of improved accessibility and additionality of financing over development grants to prevent competition from financing that targets poverty reduction.

For the negotiators, one of the key issues to advance financing mechanisms will be the prioritisation of resources for the most vulnerable countries, including the least developed countries (LDCs), the Small Island Developing States (SIDS) and the African countries that are most affected by floods, droughts and tropical storms. For negotiating Parties, it will be important to categorise developing countries based on vulnerabilities—indeed, the Adaptation Fund (www.adaptation-fund.org) requires submissions to include a detailed climate analysis to assess the state of vulnerability of the country.

The failure of achieving consensus in Copenhagen has led to a general sense of disappointment and relatively low expectations for the following negotiations. The greatest challenge in Cancun will be to re-establish the trust between Parties. However, with Mexico being one of the promoters of the Green Fund in Copenhagen, it is expected that significant advancements in the availability and access to adaptation financing will be achieved in Cancun.

UK’s Energy Minister, Chris Hulme, joins Ministers from over 190 countries today in Cancun, one of Mexico’s liveliest City’s to discuss ways to minimise climate change.

In efforts to prevent global warming of up to 2 degrees Celsius, Chris Hulme and his ministerial counterparts from around the world will put forward new ideas, policies and funding to achieve these goals.

Although the talks in Cancun will demonstrate a move forwards in agreeing that this is a global problem and action is required from all member states, it is unclear at this time as to what each country will bring to the talks.

A legally binding deal, a mitigation funding package and a clear and fair policy to allocating finance is perhaps what most of us sitting on the outskirts of the talks would expect to achieve.  But sceptics of how much progress can be achieved in Cancun may be settled with progress towards achieving such targets. 

Last year, the UK government under leadership of Gordon Brown pledged £1.5 billion to help countries adapt to Climate Change, use clean technology and protect forests.  This funding was requested to be new monies (90%), and not from existing commitments from the ODA Overseas Development Aid committed funds.

The UK has recently moved from a labour government to a Conservative – Liberal coalition government, of which the new ‘Green Deal’ and its financing for the UK to achieve its Climate change goals still remains relatively unclear.  It is therefore difficult to ascertain the UK’s stance in the talks in Cancun and how much finance as a country, the UK can ‘afford’ to allocate to global mitigation packages.

In terms of setting expectations from the UK camp of the Cancun talks, it will be interesting to watch out the following during the talks:

• If the financial commitments from Chris Hulme, new UK Energy representative exceed the former government commitment of £1.5 billion in December 2009; and that any new financial commitments are from new and not existing commitments (such as from the ODA).
• If the current EU bailout packages (under negotiation) for Ireland and possibly Portugal will affect EU country financial commitments to the global mitigation fund
• If a mechanism for issuing global climate mitigation funding is allocated on a fair and robust system (not just based on GDP i.e. a countries wealth) and that a strategy is agreed in terms of how the funding will be best used for maximum gain.

What we do know is that EU financial tensions are mounting, as the Finance Minister for the Republic of Ireland is currently agreeing the terms of an EU bailout package worth approximately £85 billion.  Ireland is not alone.  With mounting pressures facing the Portuguese government to accept a bailout package due to the poor performance of the Euro and subsequent stock markets during the past two months, how can the EU afford to fund a new Climate fund?

The UK’s Chancellor of the Exchequer, George Osbourne, led the announcement of the Comprehensive Spending Review last week, introducing what’s expected to be one of the most challenging economic periods in the history of the UK. Whilst spending cuts were inevitable from any Government, Ed Milliband, Leader of the Opposition, claims that the Coalition’s Government’s ‘slash and burn’ approach will hit those on the lowest incomes hardest, and risk the prospect of a double-dip recession in the UK.

With significant cuts announced across the board, the prospects for proactively transitioning towards a low carbon economy seem lost in the ashes, along with the Coalition’s claims to be the “greenest Government ever”. The Department for Environment, Food and Rural Affairs was the hardest hit Government department, an will be expected to reduce resource spending by 29% (including funding for biodiversity protection and climate change adaptation) and capital spending by 34%. Rises in public transport fees are also expected, but the Department of Transport has deferred these until next year. On the other hand, the Department for International Development (DfID) will see a 50% increase by 2015, making the UK the first major nation to spend 0.7% of GDP on international aid, as recommended by the UN – a controversial move in light of the major cuts in jobs and services across the UK.

The Department of Energy & Climate Change (DECC) suffered a number of changes, including:

1. Most controversial, was the Government’s U-turn on the Carbon Reduction Commitment energy efficiency scheme (CRC). The CRC requires small and medium emitters to buy permits to cover their energy emissions, with proceeds handed back to those who cut the most carbon, and penalising those who cut the least. However, the Comprehensive Spending Review shocked participants by announcing that all revenue raised from the emissions trading scheme (£1bn/year), which began earlier this year, will be used to support the public finances, instead of being recycled back to participants.

Steve Radley, director of policy at manufacturer’s group EEF, said: “If the private sector is going to play a greater role in increasing investment and growth it needs clarity. By changing the rules six months after the game has started and landing business with an unsignalled £1bn tax rise, the government has sent an unwelcome signal.”

Business and investment communities have been rallying Government for clarity on carbon policy, and this last minute ‘change of the rules’ is not expected to instill any confidence in the UK renewables market. Many participants also felt that the Government’s decision has punished the preparedness of hundreds of participants, which had already signed up to a number of initiatives, including the Carbon Trust Standard certification and others. Whilst the reputational advantages of performing well in the CRC are still expected to incentivise emissions reduction, the decoupling of the financial gain from recycled revenues has completely altered the investment equation. The pay back period and economics of existing investments will no-doubt be delayed, or even eliminated.

Climate Minister Greg Barker, said the decision had not been taken lightly, but was as a result of the “catastrophic” deficit inherited from the Labour government.

The Government now expects to raise around £3.5B (US$5.5B) over the next four fiscal years from the scheme in a move that means the CRC will effectively act as a carbon tax mechanism. Participants must reevaluate their financial budgets, to collectively raise to £1m each year to meet the Treasury’s estimation of £1bn/year (an implied price of £15/tonne of carbon).

Whilst these changes will simplify the incredibly complex scheme, designed to cut carbon, it has left participants, including the NHS and other businesses facing additional budget cuts, reeling with the potential implications. Whilst it is good news for the environment, it calls into question the equity of taxing small to medium GHG emitters, as the largest emitters, such as power stations, evade their carbon costs through the weak carbon price signals set by the EU ETS. The cap in the EU ETS remains ineffectually low as a result of the recession, and participants frequently make large windfall profits from the sell their share of surplus emissions allowances on the carbon market, over-allocated to them by the European Commission. Furthermore, weak political commitment for emissions reduction in the EU ensures that the carbon price remains low.

2. Osbourne announced a meagre £1bn for the proposed Green Investment Bank, which is expected to offer funding for investment in low carbon projects and industry development. Ongoing debate suggest that the bank will need a minimum of between £2-6bn to yield the investment power appropriate for the development of new energy infrastructure, to support the achievement of the UK’s CO2 targets.

Chris Huhne, Climate Secretary, has suggested that further funds may come in the form of the potential sale of the Government’s one-third stake in Urenco, the company, which makes enriched uranium for nuclear power. The previous Government’s attempt to sell its stake in Urenco as blocked by shareholders, raising questions over how long fundraising from the sale of assets could potentially take.

The final design of the ‘bank is still unclear, and there is much speculation about whether it will be a ‘real’ bank – independent and able to raise bonds etc – or simply a Government funding pot.

3. The Government’s commitment to the programme for the commercialisation of Carbon Capture & Storage has been reduced from the construction of four demonstration plants, to just a single one. However, the announcements confirmed that there is “up to” £1bn of public funds on the table for the first. DECC will have a challenge on its hands in restoring confidence as uncertainty around the policy environment and economics of the CCS projects has led to the withdrawal of all but one of the companies bidding for the Government funds, with E.ON pulling out last week.

Building and running four till 2015 would have cost about £10bn but the government still has the power – voted in with cross-party agreement – to charge a levy on consumer power bills to pay for the CCS demonstration. Watch this space.

4. DECC’s central budget is cut by 20%, though capital expenditure will increase by 28% by 2014-15 – most likely on nuclear decommissioning, carbon capture and storage and the renewable heat incentive for green home heating.

The state of the deficit has delivered a huge blow to the economics of the UK’s ambitions to transition to a low carbon economy. The introduction of a ‘carbon tax’ in the guise of the CRC, will mark a challenging time for the economy, as they struggle to internalise the carbon costs of their operations. The fact that revenues raised will not even feed into the Green Investment Bank signifies a significant lost opportunity, threatening risks to the economic sustainability of the UK economy.

Authors: Sabrina Chesterman & Nyla Sarwar.

As the climate talks gain pace in Bonn, progress is being made on a new text, designed to resurrect chances of a global agreement in Cancun in December. Many, including outgoing UNFCCC Executive Secretary, Yvo de Boer, are still hesitant about Cancun being able to achieve a deal, which was originally supposed to have been reached at Copenhagen last December. One of the Mexican negotiators, Luis Alfonso de Albo, has used the coverage at Bonn to try and instill confidence in what may be achieved there, stating a climate deal is still ‘positive’.

The Bonn meetings have brought together key negotiating groups, including;

(I)              AWG-KP – to focus on further commitments by Annex I parties, based on text prepared by the Chair

(II)            AWG-LCA – to focus on preparation of an outcome to be presented to at COP 16, based on a new text by the Chair

(III)           Subsidiary Body for Implementation (SBI) – which will consider issues including national communications and reporting, the financial mechanism and capacity building.

(IV)          Subsidiary Body for Scientific and Technological Advice (SBSTA) – which will consider methodological issues, technology transfer and the Nairobi Work Programme on impacts, vulnerability and adaptation to climate change.

The Bonn discussions have entered their second week with many fundamental questions still remaining regarding the legality of the proposed agreement, emission levels and temperature goals.  The big white elephant in Hotel Maritim where the discussions are being held, lingering from Copenhagen, centres on the scale of commitments by developed and developing countries. The new text aims to ameliorate the huge bridge that exist between these groups and integrate the Copenhagen Accord with the 2009 versions of the AWG-LCA and AWG-KP texts.

In regards to finance, the new text states that that all finance will be new, additional, adequate and predictable. Whilst developed countries have committed to a goal of mobilising USD$100bn/pa by 2020, there is still uncertainty about which countries will contribute towards this and how much. Discussions regarding the generation of private funds have seen suggestions of a potential international cap-and-trade system with auctioned permits. There have also been references to the creation of a Finance Board within the UNFCCC to manage the operators of the agency’s financial mechanisms (i.e the GEF and the Climate Fund), including the Copenhagen Green Climate Fund (CGCF). Disillusionment regarding funding is also created due to the texts reference to the Copenhagen Adaptation Framework (CAF), implemented through international collaboration. The CAF aims to undertake 11 activities (e.g. planning, vulnerability assessments, strengthening institutional capacities, building resilience, disaster risk reduction etc.) all of which require extensive funding.  Worryingly the text remains sparse on new market mechanisms, likely to be critical to galvanise funding, especially from private and public sector partnerships.  In addition, as the EU Commissioner for Climate Change, Connie Hedegaard, made clear last week discussing the monetary agreements in lieu of the destabilised Euro does not come at an easy time, especially with money having to be drawn from the public purse.  Therefore funding remains a sensitive yet pivotal topic, especially if alliances are to be bridged between different negotiating groups.

Some aspects of the text being prepared at Bonn remain unchanged from the text prepared at Copenhagen. An example includes the issues surrounding REDD and REDD+, which was hailed as one of Copenhagen’s successes. In addition, the text regarding technology transfer remains unchanged from last year, and this section is considered to deliver a major outcome. The text suggests that establishment of a Climate Technology Centre and Network – the mechanism to support and organise the transfer of technology, encourage collaborative innovation, and skills development for developing countries. It is expected to be funded by the overarching funding mechanism and could begin as early as January 2011. Leading on from technology transfer, discussions so far at Bonn regarding capacity building have been largely inconclusive with additional brackets added to the text, and wide disagreement concerning its funding, delivery mechanism and reporting. With key uncertainties remaining, negotiators at Bonn have a lot of talking to do this week if success is to be achieved in any of these areas and a clear path to Cancun is to be laid.

As the 32^nd session of the UNFCCC Convention subsidiary body gets underway at the Hotel Maritim in Bonn, many will be hoping the talks can deliver some measure of mediation between parties and begin carving a real path towards Cancun. Outgoing Executive Secretary of the UNFCCC, Yvo de Boer, had urged all Parties to ‘overcome differences and work for greater clarity on what can be agreed to by all Parties for Cancun in December.’  The UN’s top climate change official, who will be replaced by Christiana Figueres from Costa Rica after the Bonn meeting, has promoted negotiators to gain finality on the architecture that will launch inclusive and effective global climate action. In an attempt to prevent deadlock in the talks, as witnessed at Copenhagen, do Boer has focused specifically on the need to conclude on “mitigation targets and action, a package on adaptation, a new technology mechanism, financial arrangements, ways to deal with deforestation and a capacity building framework”.

Making allies rather than enemies will be crucial if the talks at Bonn are to proceed. A strong coalition is the Alliance of Small Island States (AOSIS), supported by more than 100 Parties, has already asserted it will not shift from its position centred on mitigating global temperatures to a 1.5 degree rise above pre-industrial levels to stabilise atmospheric greenhouse gas concentrations below 350ppm. Grenada, on behalf of AOSIS, has already affirmed that this goal must be reflected in the draft negotiating text. These small island states, some of the most vulnerable to continued climatic change and associated implications such as sea level rise, have been resolute in their demands that pledges of 2°C will not be sufficient.

It is expected the US will be an important voice with their negotiating team having already flagged to the Ad Hoc Working Group on Long Term Co-operative Action (AWG-LCA), one of the two subsidiary bodies of the UNFCCC, that it does not recognise the current text proposed as a basis for negotiations. Although the Copenhagen Accord was not formally adopted by the Conference of the Parties, 120 of the 194 UNFCCC parties have signed the Accord, consequently countries like the US are pushing for the Accord to progress under the Convention. The official position of the Secretariat coming into the Bonn meeting was the fact the Accord can be used as part of the negotiation process. This has come under fire from India and China, countries pivotal to the negotiations, citing that the talks should be based on the existing UN tracks namely the Kyoto Protocol and Long Term Cooperative Action (LCA). The task at Bonn is to try and find a medium between these and come up with a new draft that adequately integrates the Accord as well as the existing tracks.

Financing mechanism will also be high on the agenda, with the 26 developed countries that drew up the Copenhagen Accord pushing for the establishment of a Green Climate Change Fund. The Fund, proposed as one financial entity of the Convention supports projects and policies relating to mitigation for example REDD plus as well as adaptation projects through support, capacity building and technology transfer. A priority for the Bonn talks will be to shape how the US$30 billion pledged by industrialised countries at Copenhagen can be utilised in the near term (up until 2010) to kick-start climate action in developing countries. Issues of contention include the governance and leadership of the Fund, currently suggested to be under a board nominated by the Conference of the Parties, however many developing countries are hesitant with this notion. It is essential this promise of funding is met, and a clear road ahead until 2012 is made to regain some trust between the developed and developing nation negotiation blocks. It is essential a transparent and agreed upon methodology is employed to prioritise the most vulnerable countries and appropriately apportion financing through the Fund in this manner.

The UN climate change body has come up with a new draft which has elements of the Copenhagen Accord as alternative options for the nations to agree.  The Chair of the LCA group will be hoping to bridge these contrasting views, especially mediating talks between the small island states, China and India and the developed nation block. An indicative roadmap has already been proposed to guide the road to Cancun in December, however major speed bumps include issues related to mitigation, finance, measurement, reporting and verification. The greatest block is the global temperature targets and according emission limits, and negotiators at Bonn will have to grapple between either committing to deep cuts in the near term or setting up a longer term more ambitious global reduction plan.

Top priority on the agenda is the preparation of an outcome from the Bonn talks which can be to be presented to the Conference of the Parties in Cancun for adoption to enable the full, effective and sustained implementation of the Convention. In addition developing countries will be focusing on the need for cooperative action now, up to and beyond 2012, especially with regards to clarity on the future of the Kyoto Protocol. The crux is again likely to occur with the US wanting a legally binding agreement for all relevant parties, especially China, the greatest emitter of CO₂ with the developing countries likely to reiterate their stance on historical responsibility.

The two week Bonn session represents a significant portion of the remaining negotiating time before Cancun and therefore priority needs to be on finalising the architecture around the fast-track funding and ensuring funds can be efficiently and equitably distributed as laid on in the Accord. In addition do Boer needs to try and align political leadership and iron out political instabilities to try and ensure Figueres can captain and floating ship to Cancun. Almost all the Parties agree there is an urgent need to conclude a legally binding agreement, therefore the Bonn talks need to ensure a comprehensive implementation package is making its way to the table.

Climatico analysts will be following the progression of the meeting through daily updates as well as a concluding analysis.

Author: Sabrina Chesterman

Hillary Clinton announces US support for a large Climate Change Fund (Image by: Andy Revkin)

As the high level plenary rolls on, countries are disaggregated in their commitments, divided in their sovereign requirements and the bottom line remains, the COP still is no closer to a firm climate agreement.

An agreement needs to be founded in confidence and credibility, a momentous task considering over 100 different states need to be aligned.  Developing countries are fiercely protecting their national sovereignty, developed nations cannot agree on exact funding packages, tensions heighten and frustrations build as each world leader steps to the stage to present their national case and advocate for a solution to climate change, which all agree must be done at Copenhagen.

Gordon Brown called it the task of statesmanship for politics to overcome the obstacles. As the hours tick away, and statesman, presidents and prime minister advocate for an equitable outcome, do we start losing hope that endless talks and speeches prepared and written, perhaps weeks before Copenhagen and tweaked before delivery is not the most constructive use of time? One hopes as statesmen advocate their key messages on the plenary stage, senior negotiators are putting the texts into a workable and politically acceptable agreement behind closes doors.

In the continual roll call of world leaders at the high level plenary, a few developing countries have established their arguments with eloquence and established a useful commentary.  It is clear there is a mutual understanding of the common but differentiated responsibility with regards to existing emissions. Some leaders have not distinguished along the Annex I (developed) and Annex II (developing) country basis, as is done under the Kyoto Protocol.  Instead, as Hilary Clinton referred to, ‘major economies’ need to commit to funding and emissions cuts to their greatest extent.

As contract groups convene behind closed doors, developing countries remain firm in the support for Kyoto. As Yvo de Boer, Executive Secretary of the UNFCCC, rightly pointed out in his press conference, why wouldn’t developing countries advocate for a continuation of Kyoto, it’s the only framework that currently exists which compels developed countries who have ratified the protocol, to make emissions cuts?

Hilary Clinton affirmed the United States was prepared to join others to help raise 100 billion dollars a year by 2020. However, the reluctance of China to make firm statements this afternoon has made the chances of a unanimous pact appear unlikely. President of Guyana, Bharrat Jagdeo, highlighted the fundamental need for China to engage in final decisions. He used their example of innovation, in allowing millions of Chinese people to shift from a poverty status. Jagdeo challenged China as an indispensible actor to make sure Copenhagen doesn’t become the gravest failure of democratic statesmanship.

The week has been hampered by discussions focusing on procedure rather than substance and leaders know decisions made in the next 24 hours will mean they will be blessed or blamed for generations to come.