The Context of Bonn

On Monday the interim meetings of the UNFCCC began in Bonn, Germany. The negotiations, which are scheduled to last for the next two weeks, are both a legal and political forerunner to now infamous ‘Copenhagen Meeting’ in December this year.

Legally, the parties to the Framework Convention on Climate Change were slightly caught unawares back in March when it emerged that, under the details of the Kyoto Protocol, any new negotiating texts and amendments must be agreed six months prior to their intended signature and final agreement.  Far from giving a full twelve months of negotiations between Poznan in late 2008 and Copenhagen, then, negotiators now find themselves in something of a scramble to agree to at least a skeleton document by the end of the next week.

Politically, there is such pressure on parties for Copenhagen that there is little scope for delaying agreement, thus making Bonn an unavoidable cram.  While much of this pressure is coming from NGOs and outside observers, a significant portion is also from the parties themselves.  Since the G8 Summit in Hokkaido, Japan, in July 2008, the major developed countries have constantly deflected difficult questions about meeting agreement to Copenhagen.  Indeed, in his press conference at the G20 in April 2009, UK Climate Change Minister Ed Miliband redirected almost all questions to the UNFCCC process.  As a result, then, the importance of Copenhagen has grown significantly, and so, because of the legal issues above, has that of Bonn.

Opening Days

Signs, at present at least, look positive.  The UNFCCC released draft texts in mid-May into which targets, mechanisms, and implementation details can now be slotted.  Moreover, Monday and Tuesday appear to be ‘off to a good start’, according to one UK negotiator speaking with me yesterday.

Of most interest are the two Bali Action Plan working groups–one (the KP) working out what can be taken forward from Kyoto and the second (the LCA) drafting a new text on ‘long-term, cooperative action’.  In practice this division breaks down to a discussion of targets and mechanisms under the KP and discussion of who should take on commitments and ‘new’ issues like adaptation under the LCA.  So far, both groups have hosted their opening sessions in Bonn.

Post-Kyoto Discussions

The LCA–traditionally the more contentious forum–has opened with a frank discussion on the plethora of proposals submitted by parties over the past few months.  The African Group, for example, expressed concern about a number of the more ‘radical’ proposals–especially the suggestion of a more fluid boundary between developed and developing countries in terms of emissions targets.  Indeed, the classic divisions that tend to emerge at UNFCCC meetings, such as the African Group’s position, do not appear to have been put aside completely in the effort to reach a deal.  Indeed, some of the major middle income countries, including China, India, Saudi Arabia, and the Philippines, all expressed concern about the suggestion of developing country targets–an issue for which there are many many options outlined in developed party submissions.

A particular problem here is the structure of the UNFCCC treaty under which the Kyoto Protocol falls.  The treaty document clearly preserves the common but differentiated responsibility and right to develop of developing countries.  While clearly important provisions, these principles hold the UNFCCC in something of a permanent tension between extending global mitigation action as the economic situation in middle income countries changes and abiding by the treaty text.  Indeed, during Tuesday open session of the LCA group, both China and India suggested that possibilities for compulsory developing country action–either with targets or not–were not in line with the Framework Convention itself, and so could not be included.  This continues to grate with the USA’s on-going position (see the Luagr-Biden Resolution) that such countries should take on some commitments.  Japan has also added to the chorus, suggesting that a simply continuation of Kyoto divisions is not acceptable.

Reform and Reuse of Current Kyoto Provisions

Within the KP group of the Bali Action Plan discussion is largely focussed around the level of targets in an amended protocol.  Regardless of who takes these commitments on (something discussed by the LCA, above), the actual numbers are always a point of contention.  As per the usual for an opening meeting, non-Annex I countries were highly critical of ballpark figures for Annex I in 2020; the Assoc. of Small Island States (AOSIS) argued that major Annex I cuts were need immediately, suggesting that the UNFCCC was on the verge of missing the 2 C target.

The Weeks Ahead

It is my expectation that the focus on these two groups will shift as the Bonn talks progress.  While the LCA currently seems to be where most of the action is taking place, it is the KP that brings the fireworks when it comes to agreeing numbers.

What is clear from the opening two days is that party lines remain firmly inscribed in the process.  This gives all the more importance to the various adjunct issues that are also to be finalised during Bonn: REDD+, CDM, No-lose targets (if not in the CDM), technology transfer, and so on.  I think it is likely that these issues will not only grow in importance in their own right but will become the major system of bartering and ‘horse trading’ by which the larger disagreements are overcome.  Thinking back to 1997 and the Kyoto Negotiations, it was the inclusion of the CDM in the closing hours that sealed the deal rather than a substantial shift in existing policy.  Watch these newer issues, then, as they are the currency in which old, stock UNFCCC disputes are traded off.

In Bali last year, the ICC and WBCSD, as representatives of global business at the climate talks, named their one-day side event “Tri Hita Karana”, a proverb taken from a Balinese philosophy which emphasizes that happiness can only be attained if the Creator, people and nature live in harmony with each other. This year, the organizers of the Poznan Business Day resisted the temptation to find an appropriate Polish proverb to characterize the spirit of the event.

The most notable policy development at the Poznan Business Day was the growing enthusiasm around sectoral approaches to mitigation, which according to one observer, dominated the workshop. In contrast to mitigation rules that apply to all companies within a particular jurisdiction, sector-based rules apply to all companies across jurisdictions and would therefore not have differentiated effects on trade-exposed industries based in different countries but operating in the same sector (such as aviation, transport, cement)

Not that a sectoral approach wouldn’t create winners and losers. Consider transport and cement, two of the largest-emitting sectors. The charts below illustrate how emissions in the transport sectors are currently highest in North America, meaning that a sectoral approach to mitigating transport emissions would disproportionately effect that region. However, future growth in other regions would even it out in the long-run.

WBCSD

In contrast, cement production (and associated emissions) is overwhelmingly concentrated in Asia, reflecting the demands of the Chinese construction boom.

USGS

Thus, while sectoral approaches may appeal to companies looking for uniform rules in the sectors in which they operate, the appeal to countries (who sit at the negotiating table) is still mixed. But nevertheless, as WRI identified in a report from last year, they do have their appeal; they could induce more countries to join a global climate deal, they address competitiveness concerns, and they focus policy-makers’ attention on key emission-intensive sectors. However, a multitude of sectoral approaches, rather than an overarching global deal, increases the administrative burden that countries face in monitoring and enforcing emission cuts.

What the debate illuminates is the problem of having national governments (with their national political interests in mind) negotiate a deal that works for companies and investors (with an increasingly global sectoral view). They key is for targets to be nationally-based, because only national governments are fully accountable to the public and have authority to regulate and enforce, and implementation to be tailored to the needs of transnational business to ensure cost-efficiency and the necessary investment volumes

Realtime updates on the final COP/CMP session in Poznan, Poland.  The updates are being provided by Climatico analysts in the COP-14. Click here to refresh the page.  [Note: all times are GMT+1]

02.51: COP-14 is now over!  Conclusions and final decisions will be posted on the Poznan COP-14 page over the next 12 hours.

02.41: China is asking questions about when the elections of members to the CMP took place this evening.

02.39: Some of the problems with improving funding for the Adaptation Fund stemmed from concerns among developed countries about how the funds will be distributed among developing countries.  It is reported that there were division within the EU over this issue.  Other problems were over the actual generation of funding through the CDM levy–a proposal that has been cautioned by developed countries as risking the health of the CDM market.

02.37: COP-16 will be held in the Caribbean or Latin American region with COP-17 being hosted by South Africa.

02.37: Delegates are now thanking Poland and the city of Poznan for hosting COP-14.

02.34: CMP has now resumed with completed elections. 

02:08: The meeting has been suspended for 15 minutes while elections take place for CMP.

01.59: The room is gradually filling up again, although there is lack of NGOs at present.

01.52: India is now speaking.  Suggesting that this COP is one of the saddest they have attended for fourteen year because of the lack of additional funding for adaptation, despite operationalisation of the process.  India is arguing that the 2% levy is not adequate, and simply allows the ‘market to benefit from an unfolding human tragedy’.

01.46: France is now defending some of the Kyoto review processes, which they have themselves been involved in.  Highlighting the difficulty in negotiations.  France is also disappointed that additional finance has not been agreed upon.

01.45: Brazil is also now joining this discussion.  They are talking about the level of adaptation funding as ‘extremely disappointing’, which is a ‘negative signal’.

01.44: Costa Rica talks of a ‘silent and painful adaptation’ during the Kyoto commitment period because of the lack of adaptation finance.

01.41: These three country statements have attracted applause in the hall.

01.38: South Africa is now suggesting that the adaptation fund–even though now passed for operationalisation in 2009–is not going to be adequately funded because the review of the Kyoto Protocol (required under its Article 9) has not done anything to increase the contribution to the fund through the levy on CDM (currently at 2%).

01.34: Columbia is talking about how it is very upset that the second review of the Kyoto Protocol does not do anything to incorporate the difficulties being faced by LDCs in the current commitment period.  Belarus is reaffirming this sentiment, saying it is disappointed by the lack of consideration of developing country needs for adaptation now.

01.33: The COP/CMP closing meeting has now been running for three hours.

01.28: The Chair has now confirmed that the second review of the Kyoto Protocol is complete

01.27: China is now banging on the table, asking for clarification of if the second review of the Kyoto Protocol is complete or not.  China has interrupted the Chairman.

01.23: The second review of the Kyoto Protocol has yet to be reported to the plenary, and China is asking where the review is.  Columbia is also now complaining that the review must be addressed before the CMP can continue.

01.15: Recommendations on capacity building have been passed.  We are trying to get this document to see what is included!

01.09: The Adaptation Fund will now definitely be operationalized in early 2009

01.07: The ASEAN group are meeting at the back of the plenary room in tight negotiations on a topic that is unclear at present.

01.03: The final document of the COP is still under negotiation and so is not yet presented to the plenary.  It is unclear at present what is holding the final document draft in negotiation.

01.00: The draft document on Joint Implementation (JI) has been passed.  The draft includes no major changes to the existing system but encourages more transparent, predictable and efficient verification systems.

00.50: The CCS in CDM postponement has now been passed.  This means that long-term CDM reform has now been postponed until COP-15, as expected.

00.49: The plenary room is around half full

00.48: Venezuela is now complaining that its recommendations on CCS in CDM has not be published, while those of other delegations has been.

00.46: The incorporation of afforestation and reforestation in the CDM has not been agreed; instead assessment reports will be created over 2009 and the issue will be re-negotiated at CMP in Dec 09.

00.43: The adaptation fund to begin monetizing the CERs from the CDM in early 2009.  The existing 2% levy will now be collected and applications for distribution of funds will be accepted shortly after.

00.38: Venezuela is now suggesting a working group to assess the technical and legal aspects surrounding CCS in CDM.

00.35: AWG-KP has not reported to the CMP as negotiations are still ongoing.  We presume that this is in relation to the short term reform of the CDM.  We are awaiting the results of the contact group on CDM reform for the current commitment period.

00.21: reports of the subsidiary bodies are now being made: these bodies deal with the implementation and technical issues in the convention

00.18: There appears to be confusion over the documents under discussion from China

00.12: CCS in CDM has now been tabled pending commissioned assessment studies. This will be taken up again in SBSTA in June 2009.

00.12: Interim targets have not been included in the draft document in the ad hoc working group on the current commitment period.

00.09: closure of the COP has been suspended as negotiations are still taking place on issues surrounding elections.  CMP has been opened in the interim.

00.05: Elections are now taking place for the ad hoc working groups

The period up to 00.00 is shown below:

The COP/CMP has now begun (22.40 Poznan time).

22.42: South Africa has offered and been endorsed by the Secretariat as the host of COP-17 in 2010.  This leaves the location of COP-16 undecided as yet.

22.49: The dates of COP-15 have been moved to the 7-18th of December 2009–a week later than previously advertised.

22.55: Subsidiary Body on Scientific and Technology Advice (including clause on considering indigenous peoples) has been approved by COP-14.

22.57: Presentation of Subsidiary Body on Implementation is now underway.  SBI have reached consensus on most GEF issues, but two issues (including, information to be reported to UNFCCC by non-Annex 1 countries) and have been tabled.  Consensus has been reached on GEF’s role.

23.05: AWG-LCA report now underway.

23:10 Financial Mechanisms of the Convention  - accepted ?

23:14 SBI could not reach agreement on the GEF. Further consultations were undertaken and an agreement has now been reached.

23:24 Ghana would like to propose that the program be renamed the Poznan programme on technology transfer – it was adopted.

23:25 CDM: Further meeting at 23:30 announced – further negotions continue

23:26 Capacity building decision adopted

23:27 Agenda item 5a, implementation on Buenos Aires work on Adaptation and response measures. Agreed to continue deliberations on this crucial issue at the SBSTA’s 13th session.

23:29 Matters relating to least developed countries – draft on further guidance for the operation of the least developed country adopted. Any progress which can be made on this agenda is to be commended.

23:30 Other matters to the COP by the Subsidiary bodies – SBSTA recommends decisions to be adopted, entitled consideration of activities implemented jointly under the pilot phase was adopted.

23:31 Information on voluntary quantitive commitments for Khazakstan for the period 2008-2012 requiring them to maintain emissions to 1992 levels- draft conclusions adopted

23:33 Administrative, financial and institutional matters – draft decision adopted.

23:34 Adoption of the report on the 14th COP – Section on agendas will be completed on verification on all other details. Will complete all other decisions as adopted. Advance on decisions adopted today will be posted on UNFCCC website on completion of conference. Any errors should be brought to attention of secretariat.

India: reached 11a. Item 10 other matters- Consultations are still ongoing. Informal roundtable, shared vision – issue – indian delegation do not accept conclusions in the document. Suprised at lack of reference to common but differentiated responsibilities or equity – the cardinal principle. To ensure consistency para 8 shaould have expressed readiness of parties reflected yesterday to contribute to global effort in accordance with common but differentiated responsibilities. Reference in doc distorts

deal at cop15 that can be ratified by all” – assumes new treaty or porotocol, but Bali action quotes an “agreed action plan”

23:40 Yvo prepared a rev 1 of this summary – para 4 – common but diff resp

Doc: rev1 – participants at round table reflect their resounding commitment to a agreement to be ratified after cop15.

23:42 China – concerned about para 13 which mentions an outcome to be ratified by all – such a phrase is pre-judging the outcome of cop15 – serious reservations on this point. China felt issues at the round table were not adequately represented in chair’s summary. Didn’t want to go into detail at such a late our, but wnated their reservations to go on record.

23:48 Venezuela voiced same concern. Felt summary did not reflect discussions by delegations. After Bali meeting, Venezuela said that a shared vision and LCA was based exclusively on norms and principles established in the convention, and emphasis was to be placed on compliance of the historic creators of climate change – want points to be recorded.

23:49 Saudia Arabia – share concerns highlighted by India, Chia and Venezuela.

23:51 China: Not going to negotiate the summary – just have our point on record.

23:54 Pakistan share same concerns. Any revision does not change the status of chairman’s summary – its his view. We have made our views on this clear already.

23:55 India

23:56 – Columbia added that summary didn’t reflect essential elements from yesterday’s meeting, but deep grounds for dissatisfaction for mechanisms used here. We must change methodologies to reflect concerns of some delegations and address climate change.

23:58 Bolivia agreed that some crucial elemnnts voiced by non-Annex 1 parties were not voiced. Furture commitments should be done under methodologies of the convention. Also contains many generalisations about some crucial issues raised.

This conference took 3.5 hours and 17 speakers

00:00 Phillipines also shared concerns on equity in accordance with common but differentiated responsibilities. Asked for the Chair to confirm that the document to be prepared for next year will not be incorporated in documents next year.

00:02 Saudia Arabia Chair’s summary is only a reflection of the Chairman’s views, but not an official document. Stressed the point that any revision does not change its legal status as a summary which does not incorporate any consensus on views.

Following El’s blog a few minutes ago, I wanted to give some details and thoughts that are coming in from those around the EU delegation here in Poznan.

Despite predicted NGO criticisms of not going far enough, this package was not easy to achieve, as evidenced by concessions that have been made to industrial communities as well as the central European states that joined the Union in 2004 and 2007.  These concessions relax the proposed changes to the European Emissions Trading Scheme (ETS) that had been proposed, including:

• Electricity companies can continue to pass the costs from the permits system through to their customers.  Yet, they will continue to receive these permits for free, and so will be passing on false costs to consumers, generating large profits for the companies
• Industry operating in Central and Eastern Europe will not now have to buy emissions permits from 2013.  Instead they will only have to buy 30%, rising to 100% by 2020.
  

  Source: chinadialogue @ flickr

There is also some speculation that heavy industry in Western Europe will also have some exemptions.

While these concessions are indeed a step down from the original plan, passing what is still an ambitious package during the financial crisis is indicative of the EU–and French Presidency’s–determination to deal with climate change and, in doing so, lead on it.

In comparison to the deal being negotiated in Poznan, the EU certainly does have some characteristics in its favour in terms of its leadership.  Policy in the EU, for example, is not only legally binding but also well enforced by the ECJ and Commission; violation of environmental targets has incurred severe fines as well as legal challenges in the past.  In contrast, a major flaw in the UNFCCC process has been its lack of enforcement, leading to accusations of hollow targets.

The EU package is also significant in a wider, global sense.  As I reported yesterday the UN climate change negotiations are a good example of game theory in practice, where a number of parties are required to make early moves in order to incentivise the move for other parties.  This EU package goes some way to addressing the need for this early move in the context of the COP-14 to COP-15 process.  Firm, enforcable targets gives other parties a good assurance that the EU is now committed to this emissions pathway, and so potentially makes the move to global mitigation of climate change more attractive by making the optimal equilibrium of reduced climate change a possibility.

We shall wait to see here in Poznan whether the EU deal has such an impact, although it is widely expected now that tonight’s (said with extreme caution) statement will focus on mechanisms not targets.

Discussions that had been continuing on the incorporation of Carbon Capture and Storage (CCS) into the Clean Development Mechanism (CDM) have now halted.

In an open meeting of the negotiations–itself following several rounds of negotiations–no consensus between the negotiating parties could be found.  Three main camps emerged on potential use of CCS

• Full incorporation with CCS functioning like existing off-setting projects
• No CCS at all
• Use of some pilot projects, but only with assigned companies

The rationale is that CCS could be a major form of reducing emissions globally, but that the cost of doing so would be extremely high.  As an off-setting mechanism, though, CCS does not fit neatly in the CDM’s sustainable development goals; it is not clear, for example, exactly how CCS is development or what economic service it provides for developing countries.

Further, there is the complication of how the long-term aspects of CCS projects could be incorporated in to the CDM process.  At present, CDM projects are registered, implemented and completed: the technology or installed facility performs as installed, and that’s it.  For CCS, this could not be the case.  The capture technology is highly technical and would require ongoing operations from the operating company.  Further, CCS is not a permanent project; each project would have a finite life span, with different technical processes occurring at different stages.  Essentially, these issues ask the question: how can the long term nature of CCS fit into CDM?

Even if these issues could be overcome, there remains a raft of questions about actual operationalisation.  Not least: would CDM companies be prepared to take on such high investment and high risk projects?  The initial investment would be hundreds of millions of dollars.

When looked at through this lens–which is precisely the lens that the negotiating parties were discussing–CCS and CDM are not easily compatible projects.  Not for now at least.  The issue has been tabled until the SBSTA and SBI meetings in Bonn in June next year.

Day 9 has started with a bump after two days of no formal negotiations.  There are number of key items to report:

Canada, Japan, Australia on 25-40% 2020 Target: Canadian media have begun to report that leaked documents from AWG-LCA show that there is growing divisions over the interim targets that the Bali Roadmap Group had been drafting in preparation for the high-level segment of COP-14 this week.  The draft document shows that countries have expressed formal problems (indicated on the document by a ‘hook’) with the language of the interim targets and that the EU delegation has confirmed that Canada, Japan, Australia and possibly Russia are trying to alter the current language that commits parties to the interim target.  

The EU delegation (in the form of the French presidency) are, not surprisingly, annoyed.  Delegates around the centre here are suggesting that the EU will begin applying pressure–whatever that actually means (‘corridor speak’ is always rather ambiguous).

Finance: In the daily UNFCCC statement Yvo de Boer has intimated that the operationalisation of the Adaptation Fund is now in discussion, although whether it will be agreed upon–specifically in terms of how to fund it–is still not clear.  What Mr de Boer did say was that attempts to exclude the World Bank from the adaptation transfer system was like ‘cutting off you nose to spite your face’.

Targets: In addition to the issues regarding interim targets above, it looking increasingly unlikely that there will be agreement on long term targets by the end of COP14.

Deforestation: Discussions are continuing but at a slow rate.  There are still major divisions about the fundamental structure of this project, from what will be protected to who will pay.  It is looking very unlikely that there will be major progress on this by the end of the week.

CDM: there are major discussions about the CDM.  In fact, such discussions have taken up a large proportion of the negotiating time in Poznan.  Inclusion of CCS and nuclear in CDM is now on the table, according to Yvo de Boer.

A key conclusion that is now beginning to emerge is that COP14 is going to be largely a talking shop and foundation-building exercise.  This is not a surprise.  However, today Yvo de Boer has begun using language that frames COP15 in Copenhagen not the as conclusion of negotiations for the second commitment period but as another step along the road.  ’If the fundamentals are in place by the end of 2009 then we can work out the details after’.  

This is similar to the process used after the creation of the Kyoto Protocol, where the CDM was added in at the last minute in 1997 and then subsequently developed between 1997 and 2001.  Such a detail-forming process would not necessarily be bad in terms of the treaty mechanisms that would result; after all the second commitment period begins in 2012.  However, a half-baked Copenhagen Protocol would look less progressive in public, activist, and business eyes.  There has been much discussion, for example, at Poznan about how business needs certainty for post-2012 investments in CDM projects.

What we are seeing here is the UNFCC trying to re-frame the context of Poznan and also now Copenhagen. The implications of this on the COP process is not clear yet, but it is clear that parties are preferring a longer-term view over a focus on the immediate.

More information to follow after today’s plenary sessions.

Floods in Bangladesh (credit: dfid.gov.uk)

Some commentators think that one of the few things we me see progress on at Poznan is the “Adaptation Fund” (AF). Unlike the LDCF (see my previous post), it was established to finance concrete adaptation projects and programmes in developing countries. It is operated by the Adaptation Fund Board, but the GEF runs the secretariat and the World Bank is the trustee.

Current arrangements suggest it will mainly be financed with a share of proceeds from CDM project activities (2% of CERs). This means its replenishment is heavily dependent on the success of the CDM.

The UNFCCC reckons that this process could yield anything between $250 million and $3 billion a year by 2030. However, this is a fraction of most assessments of developing countries needs for adaptation financing. Oxfam, for example, has estimated this to be $50 billion a year by 2015, and the UN has estimated $86 billion. WWF estimates that there is less than $1 billion currently earmarked for adaptation. Whichever way you look at it, there is a big financing gap.

Therefore, the AF clearly needs sources of financing above and beyond the CDM. One source is pledges from rich countries, but so far these have amounted to less than $300 million. Aid agencies and many developing countries have been making the case for more serious pledges by rich countries, given their historical contribution to carbon emissions. For example, China and India have suggested the rich countries commit to donating a percentage of GDP for mitigation and adaptation in developing countries. Whatever the figure agreed on, this is a sensible and equitable suggestion.

To make up some more of the shortfall, Oxfam has suggested that instead of 2% of CERs going to the AF, this figure should rather be 7.5%. Furthermore, as Simon noted the other day, Yvo de Boer has suggested another source of financing for the AF could be Joint Implementation (JI) projects, potentially adding an extra billion dollars or so by 2020.

Sorting out the AF is a matter of urgency. The chair of its board announced yesterday
that the AF is even short of the cash needed to just keep it running. There are many suggestions on the table for financing adaptation, and a key outcome of Poznan should be some clarity on which ones are likely to be taken up in a post-Kyoto deal. This is crucial as it will allow more research to flesh out proposals before Copenhagen next year.