This policy brief provides a detailed critique of Australia s proposal, outlining some potential strengths and possible risks. 2

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1 APPRAISAL OF AUSTRALIA S SCHEDULES MODEL FOR THE POST-2012 CLIMATE Behind the headlines about emission targets and finance for developing countries, a profound discussion on the legal form of the post-2012 climate change agreement is occurring. At the Copenhagen climate summit this issue may emerge as a major point of conflict between nations as it cuts to the heart of what countries will be legally bound to do under any future agreement. Within the climate change negotiations two very different legal pathways are emerging. The first builds on the Kyoto Protocol and expands internationally agreed commitments to include the USA and other major emitters, including China. This outcome would promote internationally consistent standards and rules for measuring, reporting and verifying national actions, and also establish international mechanisms to drive public and private sector investments in climate change solutions, particularly in developing countries. 1 The second pathway scraps internationally agreed commitments and standards altogether, putting the emphasis primarily on domestic law. This would lead to a patchwork of loosely connected national or regional systems, each with its own set of rules. Australia has been particularly active in these discussions and has proposed a model for a legally binding treaty. The central feature of Australia s model is the proposal that the post-2012 agreement include a binding national schedule for each member country. Each country s schedule would contain a specific set of binding and non-binding commitments and actions to reduce emissions. The key strength of the schedules approach is that it allows countries to register different types of commitments and actions as part of a legally binding international agreement. In accordance with the principle of common but differentiated responsibilities, such commitments would range from economy-wide targets for developed nations to less stringent commitments for developing countries. Critics of the Australian proposal claim that it would undermine the overall strength of the international climate change regime and potentially pave the way for a weak pledge and review style of agreement. This policy brief provides a detailed critique of Australia s proposal, outlining some potential strengths and possible risks. 2 SUMMARY AND RECOMMENDATIONS The legal form of the post-2012 international climate change regime is a critical issue that needs to be resolved as it will determine whether we have a truly effective system to coordinate global efforts to avoid dangerous climate change. Australia s proposal that each country adopt a national schedule, outlining national mitigation commitments, offers one potential way forward. This proposal has a number of important strengths as well as some potential weaknesses. The key strength of Australia s model is that it would provide a legally binding agreement with specific mitigation commitments and actions for all key emitters. This could provide a much stronger foundation for an effective global response to climate change. The principal gap in Australia s proposal is that it does not include a clear pathway, process and timeline for finalising national schedules. Without this roadmap, it is unclear how the schedules will help to accelerate (or at least not delay) the negotiations. The Australian Page 1 of 15

2 Government is also yet to outline mechanisms to encourage and enforce compliance with commitments made by countries in their schedules. Four recommendations arise from this analysis: > A pathway and timeline for finalising new treaty and schedules: Australia supports finalisation of a new legally binding outcome in Without a decision on a clear and agreed timeline, there is a risk that the finalisation of a new treaty and schedules will lead to delays in global efforts to tackle climate change. Australia should put forward a clear pathway and process for how the schedules will be developed and negotiated, as well as a timeline for completing this process. > Compliance model: A strong and well designed compliance regime should complement the schedules model. Australia should put forward a viable compliance model that balances incentives and sanctions with the need to ensure a broad coverage of parties and a high level of ambition. > Clarify position on the Kyoto Protocol provisions: To build trust between countries, Australia should articulate a clearer vision for how the two negotiating tracks would be unified, including how the Kyoto Protocol provisions would be incorporated into any new treaty(s). BACKGROUND ON THE NEGOTIATIONS The current round of international climate change negotiations was launched in December 2005 during the Montreal climate summit, when countries formally agreed to begin talks on new commitments for developed countries 3 under the Kyoto Protocol beyond 2012 (when the Protocol s first commitment period ends). 4 This negotiating track is focused primarily on emission reduction targets for developed countries that have ratified the Kyoto Protocol, and does not consider mitigation commitments for the United States and developing country major emitters, such as China. In 2007, during the Bali summit, countries launched a second negotiating track to reach agreement on a broader range of issues that are crucial to the long-term goal of the United Nations Framework Convention on Climate Change (UNFCCC). 5 Amongst other things, this includes stronger mitigation commitments and actions from all countries (developed and developing), financial assistance for developing countries and improved cooperation on technology. While there is a certain degree of clarity about what is to be considered in these two negotiating tracks targets, finance, technology, etc. there is much less certainty about what the tangible outcome(s) will be. Technically, the negotiations kicked off in Montreal should produce an amended Kyoto Protocol, while the second track launched in Bali has a more ambiguous mandate to reach an agreed outcome. 6 So far the negotiations have produced two draft negotiating texts one for each track of the negotiations based on formal submissions received from countries. The first contains proposed amendments to the Kyoto Protocol, while the second contains elements that could make up a new treaty or other form of international agreement. However, this does not necessarily mean that the negotiations will lead to this outcome (an amended Kyoto Protocol and a new treaty covering the elements agreed to in Bali). Moreover, if the final outcome is a treaty, or set of treaties, the structure could be very different to the Kyoto Protocol and UNFCCC. OPTIONS FOR REGISTERING NATIONAL COMMITMENTS To avoid dangerous climate change it is critical that the post-2012 agreement includes stronger commitments from all major emitters, including both developed and developing countries. A key challenge for negotiators, therefore, is to design an agreement that can accommodate a range of national commitments, while respecting the need to fairly differentiate between the nature and strength of these commitments. Page 2 of 15

3 There is still no consensus on how national mitigation efforts for developed and developing countries should be registered and whether these commitments should be legally binding. A number of countries have put forward proposals. This includes Australia which has proposed that all countries adopt a binding national schedule outlining the steps it will take to reduce emissions. Central to the current negotiations is an acceptance that countries have common but differentiated responsibilities and capabilities when it comes to tackling climate change. 7 This means that while all countries have a responsibility to reduce emissions, some are expected to do more. This is partly because they have contributed more to the build up of greenhouse gases in the atmosphere, and partly because they have greater financial and technological capacity to implement mitigation strategies. It is not that countries are not taking action to reduce emissions and drive the transition to clean energy economies. The issue is how these actions are captured in an international agreement. As the US Government s chief climate diplomat, Todd Stern, recently explained, if you can t get those actions translated into an international agreement, you don t have an international agreement. 8 The need to differentiate between national commitments was addressed in the Kyoto Protocol by including an annex listing economy-wide targets for certain developed countries. Developing countries, on the other hand, while bound by the general obligation under the UNFCCC to mitigate climate change, have not been assigned a specific, binding, target for emissions. A key limitation of this approach is that it reinforces a sharp distinction between a limited group of wealthy countries and a much larger group of countries broadly defined as developing. There is no clear process for increasing the number of countries with quantifiable obligations. A second key limitation of the Kyoto Protocol is that it only allows for economy-wide emission reduction targets to be registered. These targets capture the aggregate result that a country is expected to deliver, but nothing more. If a country is willing to register other forms of commitments (such as a renewable energy target) instead of, or in addition to, an economywide emissions target, this cannot be accommodated under the current regime. This is critically important in the case of developing countries, which have agreed to consider taking on nationally appropriate mitigation actions 9 as part of the post-2012 regime, but are not expected to adopt binding economy-wide emission reduction targets at this point. The ability to document additional forms of commitment is also seen to be important for some developed countries, as a way of comparing the levels of ambition between countries. A number of countries have submitted proposals for registering national mitigation commitments under the international agreement (see Annex 1). In summary, four broad options have been proposed: > National schedules: Australia has proposed that all commitments and actions be documented in national schedules, which would form part of a legally binding international treaty (discussed further below). The content of these schedules would be negotiated and agreed by all parties prior to the treaty being concluded. After this they can be updated without renegotiating the entire treaty. > Appendix to international agreement: The US has proposed that countries mitigation actions be documented in a single appendix to a new international agreement. The actions listed for developed countries in this appendix would be in conformity with domestic law. > International registry: Several countries including South Korea, South Africa and Tuvalu have proposed that developing countries commitments and actions could be documented in a single international registry. A key difference between the registry model and the schedules approach is that actions listed in a registry would not be binding under international law. In addition, actions would be added to a registry over time, rather than being finalised prior to a new agreement being reached. Both of these factors may limit the chances of the registry approach overcoming the trust deficit between developed and developing countries, and may not result in a more ambitious international regime. Page 3 of 15

4 > Low-carbon development plans: Several countries including the EU have proposed that all countries prepare low-carbon development plans, which would outline the policies and measures that a country will undertake to reduce emissions over the coming decades. LEGAL STATUS Multilateral negotiations can result in a range of different agreements, which vary in their status under international law. Table 1 provides a brief summary of the differences between four types of international agreements. These agreements can also lead to binding obligations under domestic law, but this varies from country to country and from one treaty to the next. Whether or not national commitments under the post-2012 agreement should be binding is a central question in the current negotiations and remains a point of difference. The registry models proposed by different countries approach this question differently. South Africa and Tuvalu envision legally binding commitments for developed countries to be enshrined in a treaty and non-binding actions for developing countries to be documented in a non-binding registry. South Korea s proposal would use COP and CMP decisions to agree on national commitments to be documented in a registry (also not binding under international law). The US has proposed that countries actions be listed in a single appendix to an implementing agreement. While these actions would be binding under international law, the US has emphasised that developed country actions would be in conformity with domestic law. While it is not entirely clear what this means, it may be an indication that the US would not agree to any actions that are stronger than what is already supported by domestic laws. It may also be interpreted as an unwillingness on behalf of the US for its domestic mitigation efforts to be governed by internationally agreed rules, unless these are consistent with domestic rules (e.g. international emissions accounting rules). While the US has only used this language in reference to developed country actions, it can be assumed that it would also apply to developing countries. This is opposite to the traditional approach to international law making, where countries agree to new international obligations, which are then implemented through domestic laws and policies. 10 Australia has proposed that all countries adopt a national schedule outlining their commitments and actions, which would form an integral part of a legally binding treaty. The implication of this is that countries would be obliged to fulfil the commitments and actions outlined in their schedule and would be subject to any compliance provisions contained in the supporting treaty. The key distinction of the Australian compared to the US proposal is that the content of schedules would not be limited to actions that are in already in conformity with domestic laws. In fact, Australia views the schedules model as a way to build trust between countries to allow them to go beyond existing domestic commitments. The Australian model would also ensure such commitments are governed by agreed international rules, rather than each individual country deciding on its own rules (e.g. emissions accounting rules). Page 4 of 15

5 Type of Agreement Treaty / Protocol / Convention Implementing Agreement Decision of a Conference Political declaration / Communiqué / resolution Table 1: Four key types of international agreements Description Agreement between two or more sovereign nations Examples: The UNFCCC and the Kyoto Protocol Agreement between two or more sovereign nations, elaborating on pre-existing commitments made under an international treaty Examples: Implementing agreements under the Law of the Sea 11 A formal decision adopted by the negotiating parties in accordance with the previously determined decision making procedures, with the goal of furthering the implementation of existing treaty provisions. Example: the 2002 Decision of the Conference of the Parties to the UNFCCC establishing the agreed reporting format for national emission inventories. 12 A joint statement from some or all of the participants in the negotiations, describing the agreed outcomes and the next steps. Example: Communiqués from the G20 or G8 Status under international law Binding under international law. May or may not be binding under domestic law, depending on the country s legal system and/or steps taken to integrate international commitments through domestic legislation. Implementing agreements can have the same legal status as a treaty, representing a legally binding agreement between two sovereign nations. In certain countries (e.g. the US), implementing agreements may trigger different ratification procedures to those required for a completely new treaty. It is generally agreed that decisions are not normally binding under international law. However, decisions often have a certain legal character in the sense that they influence state behaviour and often reflect agreed rules (e.g. COP decisions establishing the rules greenhouse gas accounting under the UNFCCC). Decisions may also influence or reaffirm customary international law. These are explicitly non-binding agreements but can (in some instances) serve an important purpose in clarifying areas of agreement between countries and adding momentum to more formal negotiations. In Copenhagen countries must make a decision to build on the key features of the Kyoto Protocol and finalise a new legally binding outcome that unifies the regime in enough time to ensure entry into force before the end of Kyoto s first commitment period in ASSESSMENT CRITERIA FOR LEGAL FORM The legal form of the post-2012 climate agreement needs to be judged against a number of different criteria. Most importantly, this includes: > Legally binding: The legal form will determine whether or not we have measurable, reportable and verifiable commitments that are binding under international law. 13 To a certain extent the significance of this depends on whether compliance/enforcement measures are in place and on the strength of this regime. This assumes that countries are more likely to abide by international agreements when there is some form of punishment for non-compliance. While this may be the case, a binding agreement with a weak compliance regime will still influence state behaviour, and will do so much more than an agreement that is non-binding. Page 5 of 15

6 > Ambition: The structure of the agreement will influence the level of ambition and buy-in from countries. 14 If the agreement that emerges from this round of negotiations contains stronger individual commitments from a broader range of countries this will, at least in part, reflect a greater level of comfort in the legal form of the agreement. The agreement will also require provisions to prevent back-sliding on national commitments. > Urgency: It is crucial that negotiations over legal form do not lead to delays in global and national efforts to tackle climate change. Any proposal on legal form will be judged, in part, against its ability to facilitate the conclusion of negotiations in the shortest possible timeframe and entry into force of the agreement before the end of Kyoto s first commitment period in > Broad coverage: An effective post-2012 agreement must include measurable, reportable and verifiable commitments from a much broader set of countries and provide incentives for participation. While there will need to be differentiation between countries with developed countries taking on stronger commitments all major emitters must be included and the architecture needs to ensure countries have incentives to participate and comply with the agreement. > Long-term flexibility: In the longer-term, the agreement needs to provide an effective framework for strengthening national efforts over time and in line with emerging science. For this to occur, the agreement will need to be flexible enough to allow commitments to be strengthened without having to re-negotiate its basic form. 15 It will also require a review of the adequacy of collective and individual commitments to be completed no later than 2015 in light of the findings of the fifth assessment of the Intergovernmental Panel on Climate Change and new commitment periods within the new agreement lasting no more than five years. > Fairness: The agreement must be fair, reflecting an appropriate balance of countries historical, present and future contribution to global emissions, and capacity to take action. This means the agreement must allow for a broad range of measurable, verifiable and reportable commitments. > International trust and transparency: Another key test for the post-2012 legal form will be whether or not it helps to build trust between countries. This will depend on a number of features, including the level of transparency around national effort and mechanisms for international verification. 16 > International carbon markets: The form of the post-2012 agreement could have important implications for the international carbon market, which is currently dependent on internationally agreed rules and mechanisms being in place. AUSTRALIA S POSITION The central feature of Australia s proposal for the post-2012 legal form is the national schedule. In essence, this would involve each country adopting a national schedule, outlining the commitments and actions that it agrees to implement as part of the international agreement. Table 2 summarises some of the key features of the schedule concept. Australia has made it clear that it is open to proposals to integrate the schedules model with alternative approaches. To this end, the Australian Government has illustrated how its schedules model could link to an international registry of developing country actions and low carbon development strategies. In summary, according to the Government, a registry could be used as a mechanism to register developing country actions to enable them to be linked with financial support, while a low-carbon development strategy would outline the strategic context for commitments and actions listed in a country s national schedule. It is important to note that under Australia s proposal, a developed country schedule must include an economy-wide emissions reduction target, as is the case with the Kyoto Protocol. Page 6 of 15

7 Feature Legal status Coverage Types of commitments and actions Process of negotiation Updating schedules Table 2: Key features of national schedules Explanation Schedules would be legally binding, but could also include non-legally binding actions that a country wants to register. Developed countries: Mandatory Advanced developing countries: Mandatory Least developed countries: Optional Required by all countries: A national emissions pathway to 2050 (nonbinding) Required for developed countries: Economy-wide target for the second commitment period Required for advanced developing countries: Nationally appropriate mitigation commitments and/or actions aimed at achieving substantial deviation from baselines Least developed countries: At the country s discretion. Optional for all countries: > quantified emission limitation or reduction commitments in economywide or sectoral terms > quantified emission limitation or reduction actions on an economywide or sectoral basis > emissions intensity commitments or actions > clean energy commitments or actions > energy efficiency commitments or actions > emissions thresholds aimed at protecting and enhancing sinks and reservoirs [for example national forest emissions levels] > other actions aimed at achieving quantified emission limitation or reduction outcomes Australia has proposed that schedules be negotiated through a requestoffer approach. This would involve countries submitting a draft schedule, which other countries can review. Countries can then negotiate directly, or collectively, to reach agreement. The schedule will include both commitments and actions. Commitments can be amended once every two years, but only if the amendment strengthens the schedule s overall mitigation outcome. Other countries would be allowed to object to any amendment on the grounds that it does not enhance the mitigation outcome. Actions can also be amended, provided the overall mitigation outcome is maintained or enhanced [emphasis added]. STRENGTHS AND RISKS OF AUSTRALIA S MODEL Australia s proposal for the legal form of the post-2012 climate agreement has a number of important strengths, but also comes with some risks. Table 3 provides an appraisal of the key strengths and weaknesses of the Australian model, measured against the indicators described above. In sum, the key strength of Australia s proposal is that is provides a framework to secure specific, measurable, reportable and verifiable commitments from all countries, while respecting the need for differentiation according to each country s respective contribution to historic emissions and capacity to implement the required actions. This has the potential to deliver a legally binding agreement with broad coverage. Critically, the proposal also provides the Page 7 of 15

8 vehicle for future rounds of reductions being implemented without having to renegotiate the entire system each time. Indeed a schedules approach, if carefully designed, would allow efforts to be ratcheted up more quickly, as countries can increase, but not decrease, their commitments at any time. The schedules proposal also has the potential to drive greater levels of ambition in the shortterm. For developed countries this would occur because under the schedules approach major developing countries would also be obliged to take on commitments and actions. This is a clear condition for developed countries to move to the more ambitious end of their current pledges. A significant gap in the Australian model is that it does not include a clear pathway, process and timeline for finalising national schedules. Without this roadmap, it is unclear how the schedules will help to accelerate (or at least not delay) the negotiations. While Australia has yet to clearly articulate a process for developing national schedules, it is likely that it would first involve countries submitting a draft schedule, followed by a system of negotiation before the schedules are agreed upon and become binding. This in part differentiates this proposal from pledge and review type models as other countries can assess whether the individual and collective efforts add up to an agreed overall level of ambition. Most major developed and developing countries have identified, or are in the advanced stages of identifying, the types of actions they can take to reduce emissions. Assuming countries are willing to accept the schedules model, these actions could fairly easily be translated into a draft national schedule. As has been witnessed in trade negotiations, the second stage of the process negotiating the final schedule contents will inevitably take time. Australia could minimise the risk of delay by outlining a clear pathway, process and timeline for finalising national schedules. To allow time for ratification and to ensure national commitments are locked in before the end of the Kyoto Protocol s first commitment period, this process should be complete by no later than mid There is a risk that the schedules approach may devolve into a process of pledge and review. This would see countries making international pledges which would be subject to some form of international review, but which would not necessarily be internationally binding. This outcome is unlikely to lead to greater levels of international trust, and hence will not deliver the level of collective and individual ambition that is needed to avoid dangerous climate change. The pledge and review approach is not the stated intention of Australia s proposal. In fact, the Australian Government has emphasised that the schedules model would lead to binding international commitments, and is also intended to unlock greater levels of international ambition. However, some countries, including the US, appear to favour a pledge and review approach. This may translate into pressure on Australia to adapt the schedules approach. This risk of a pledge and review system is not unique to the schedules approach. This is a broad risk that stems from the re-emergence of the USA into the international climate change debate and a strong reluctance from major developing countries to put their domestic actions into international law. Given the current status of the negotiations, a schedules approach may in fact be one of the few viable alternatives to a pledge and review system. Weighing up the potential strengths with possible risks should also be done in light of the alternative proposals that have been put forward. While it is beyond the scope of this policy brief to assess each of these proposals in detail, one important observation can be made. Whereas Australia is proposing that national schedules would form an integral and legally binding part of the post-2012 agreement, this is not the case for the other proposals. Ensuring that national commitments are legally binding should be a key goal for the negotiations. This creates a better chance that commitments will actually be followed, leading to greater levels of trust within the negotiations and helping to drive up ambition. Page 8 of 15

9 Indicator Verdict Justification Legally binding National Ambition Table 3: Strengths and risks of Australia s proposals Australia has proposed that national schedules would include commitments and actions from all countries 17 that are binding under international law.? Whether or not the schedules approach would lead to greater levels of national ambition than would otherwise emerge is very difficult to assess. The fact that all countries developed and developing would adopt a legally binding schedule should build greater levels of comfort amongst developed countries, which may translate into a willingness to adopt stronger targets. Indeed, if developed countries can point to specific, measurable, reportable and verifiable commitments from developing countries, this should help to allay some of their concerns about carbon leakage. Some have raised concerns that a schedules model would lead to race to the bottom, whereby countries nominate the weakest possible commitments in their schedules. This view can be challenged on two grounds. Firstly, Australia has proposed that schedules would be negotiated, which means countries will be able to seek to drive up the level of ambition in each other s schedule. A country s schedule will only be approved if it meets the expectations of other parties. Secondly, there is nothing currently stopping a race to the bottom. In fact, some would say that the current dynamic in the negotiations is inherently unambitious. The schedules model seeks to break this dynamic. While the schedules proposal has the potential to raise the level of ambition of national commitments, this will not be realised for developing countries until a mechanism has been put in place to deliver large-scale finance to support their mitigation efforts. Until the question of finance has been resolved, developing countries are unlikely to commit to more ambitious actions. The provision of financial support will also be important to overcome concerns that the schedules approach would erode the distinction between developed and developing countries. Urgency? There is a risk that Australia s model will result in delays in the negotiations, potentially slowing global and national efforts to tackle climate change. This is because the process of negotiating national schedules will take time, as countries seek to extract specific commitments from each other. This has been seen in international trade negotiations. A clear pathway and timeline for negotiation and adoption of schedules (not later than mid-2010) would address this concern. As with ambition, this risk may be exacerbated in the absence of quantified pledges for financial and technology support. Broad Coverage Long-term flexibility The schedules would allow quantifiable commitments and/or actions to be registered by all countries. This would reflect a global spectrum of effort, with developed countries taking on the strongest commitments and developing countries taking on less-stringent commitments and/or actions. Australia has proposed that schedules would be strengthened for subsequent commitment periods (presumably through negotiation), but has also included provisions for schedules to be strengthened within commitment periods. This second point is particularly important, because in theory it would allow countries to take on stronger commitments in response to emerging science and technological breakthroughs. Importantly, Australia s schedule proposal also includes provisions to prevent countries from weakening the level of ambition in their schedule. Fairness? Australia has made is clear that while all countries would be expected to adopt a national schedule, there would be significant differentiation between countries commitments and actions. However, this will ultimately be determined by the types of measurable, reportable and verifiable commitments and actions negotiated for countries of comparable economic development and their evolving historic responsibilities. Page 9 of 15

10 International trust and transparency International carbon markets? Ultimately an effective and sustainable international agreement on climate change will rely on greater levels of trust than currently exist. Trust will only emerge over time as countries observe each other acting in accordance with their international obligations. While the schedules may contribute to greater levels of trust between countries, this cannot be assured. Trust will also depend on developed countries fulfilling commitments in other areas, including, most importantly, the provision of finance to support mitigation and adaptation in developing countries, and to support technology transfer. However, as noted above, if developed countries can point to specific, measurable, reportable and verifiable commitments from developing countries, this should help to allay some of their concerns about competitiveness and carbon leakage.? The possibility that the Australian model could delay negotiations may create uncertainty within the market. Indeed, failure to conclude negotiations within the necessary timeframe may mean that the appropriate rules are not in place by The post-2012 climate change agreement needs to include common international accounting rules to ensure an efficient and effective carbon market. Australia could demonstrate how its model would contribute to this goal. GREY AREAS IN AUSTRALIA S PROPOSAL This policy brief has focused primarily on Australia s proposal as a means of registering national mitigation commitments. However, it would be wrong to ignore two key issues closely linked to Australia s proposal, and which are particularly controversial within the negotiations. The first is the issue of compliance and the second is the issue of whether the current negotiations should converge into a single new treaty. Compliance An agreement on punitive compliance regime is unlikely in the short-term as the USA, China and India are unlikely to accept this situation. This would reduce the scope and participation in the scheme. A compliance regime with agreement around international accounting and measurable, reportable and verifiable commitments would likely enable broader participation and provide a stronger foundation for a durable climate regime. Australia has yet to describe the compliance provisions that would apply to the commitments made in national schedules. 18 Obviously the challenge is to develop provisions that are strong enough to ensure countries fulfil their obligations, but do not deter countries from signing up to ambitious commitments. This is not an easy balance to strike, but Australia needs to put forward some options if it is to build more support for the schedules model. Specifically, Australia needs to demonstrate a viable compliance model that does not constitute a weakening of the provisions already in place under the Kyoto Protocol. This does not necessarily mean that all features of the current compliance regime should remain in place, or apply to all countries equally. However, any new compliance regime must be equally strong, or more effective than what is currently in place. A Single New Treaty? A decision that will need to be addressed in the negotiations is the number of agreements the negotiations should produce. As explained above the negotiations are currently occurring in two distinct tracks, suggesting that the negotiations may lead a two treaty outcome an amended Kyoto Protocol with targets for existing Kyoto Protocol developed country parties, and a new Page 10 of 15

11 agreement capturing commitments for other countries, including the US. Alternatively, the negotiations may be rolled together to produce a single new treaty. Overall, a world where we have a regime that is fractured between two negotiating tracks and where the US does not have international emission targets is politically unsustainable and environmentally and economically inefficient. Legal unity could be achieved in a number of ways including the conclusion of a single treaty to bring the US and Kyoto countries together in a single agreement, a single treaty comprising multiple tracks or a series of linked treaties. 19 Several countries, including Australia, the EU and Japan, have expressed a preference for a single treaty outcome. Other countries, including South Africa and Tuvalu, have proposed a two treaty outcome. A single treaty outcome is likely to provide a more coherent and consistent legal framework, and potentially avoid future difficulties or disagreements over interpretation of obligations. However, the prospect of a single new treaty raises questions about what happens to the Kyoto Protocol and all of its associated decisions, including the Marrakech Accords and those adopted since. Technically, the entire Kyoto Protocol regime, including all the decisions, could be directly incorporated into a new treaty. However, there is a risk that countries will seek to re-negotiate some or all of these provisions before adopting them under the new treaty. This is not an unreasonable concern given that the US has consistently expressed such strong opposition to the Kyoto Protocol. Not surprisingly, given the difficult negotiations endured over the last 12 years since the Kyoto Protocol was adopted, this prospect is of major concern to some countries. If Australia intends to pursue its preference for a single new treaty, it will need to be clearer on what features of the Kyoto Protocol it supports unchanged and what features it would seek to amend or exclude in a new treaty. Until this is resolved it will be difficult to win the trust of other countries which remain wary of any attempts to wind back the current framework. It should be noted that Australia has also proposed an amendment to the Kyoto Protocol that would mean that, in the event of a two-track outcome, any new commitments negotiated under the Kyoto Protocol would only enter into force once certain thresholds of coverage had been met. In effect this would make the commitments made under an amended Kyoto Protocol conditional on the second treaty coming into force, and being ratified by all major emitters. 20 Theoretically, this sort of provision should allow Kyoto Protocol parties to sign up to stronger targets for the second commitment period, knowing that they will only apply if and when the commitments made under the second track also come into force. Under a two-track scenario, this sort of provision would allow the amendments to the Kyoto Protocol to be finalised without the second track being fully resolved. Then, at least, one stream of the negotiations would be finalised, which may limit some of second guessing about developed country commitments under the second track. This type of provision may also help to minimise delays with ratification, as countries should be able to proceed to ratification of the amended Kyoto Protocol, knowing that their targets won't apply until the second track comes into force. CONCLUSION & RECOMMENDATIONS The current round of climate negotiations provides an opportunity to establish a stronger, more inclusive and more durable international framework to tackle climate change over the coming decades. Ultimately, the strength and urgency of the national commitments contained in this agreement will be the key measure of success. However, this will depend on having the right legal architecture in place to facilitate greater levels of collective and individual ambition. A well designed agreement will build trust between countries and provide an effective and equitable framework for sharing the global mitigation effort over the coming decades. This will help secure more ambitious commitments from individual countries, which can be strengthened over time. On the other hand, a poorly designed agreement will lead to further deadlock or evasion of responsibility and will not deliver the level buy-in or ambition that is required. Page 11 of 15

12 On face value the schedules approach proposed by Australia seems like a potentially positive way forward. The schedules approach could provide a flexible and iterative means of expressing climate action. However, the credibility of this approach will depend on its ability to strengthen global action and not lead to a system where countries only register existing national commitments. As we have seen in the past, countries will take any opportunity to weaken their own commitments and the schedules approach must not allow that to happen. The Copenhagen round of negotiations must lay the foundations of a robust, trusted and independent process for coordinating national efforts and driving clean energy investments. Without a unified, robust, flexible and transparent legal architecture, trust between nations will be reduced, the agreement will not be durable and we will not avoid dangerous climate change. Ultimately, a key test of the schedules approach is whether it delivers what it is intended to deliver binding, flexible and ambitious global agreement. If the schedules devolve into little more than a template for registering voluntary pledges it would not have taken the global regime backwards. The analysis presented in this policy brief provides the basis for some specific recommendations to the Australian Government: > A pathway and timeline for finalising new treaty and schedules: Australia supports finalisation of a new legally binding outcome in Without a decision on a clear and agreed timeline, there is a risk that the finalisation of a new treaty and schedules will lead to delays in global efforts to tackle climate change. Australia should put forward a clear pathway and process for how the new treaty and schedules will be developed and negotiated, as well as a timeline for completing this process. This process should be complete by mid-2010 at the latest. > Compliance model: A strong and well designed compliance regime should complement the schedules model. Australia should put forward a viable compliance model that balances incentives and sanctions with the need to ensure a broad coverage of parties and a high level of ambition. > Clarify position on the Kyoto Protocol provisions: To build trust between countries, Australia should articulate a clearer vision for how the two negotiating tracks would be unified, including how the Kyoto Protocol provisions would be incorporated into any new treaty(s). Page 12 of 15

13 Appendix: Current Proposals on Legal Form for the Post-2012 Climate Regime Australia EU Japan South Africa South Korea Tuvalu USA Australia has expressed a preference for single treaty, or two treaties (Kyoto + one) that are linked. The key innovation proposed by Australia is the use of schedules used to document commitments and actions for all countries. These schedules would be appended to the treaty (or treaties) and would form an integral part of the architecture. The EU has proposed the following criteria for the post-2012 regime: legally binding; built on existing architecture; and comprehensive. The EU has also expressed a preference for a single treaty outcome. The EU has proposed that developing countries prepare low carbon development strategies, outlining nationally appropriate mitigation actions. These NAMAs would be documented in a registry. Japan has proposed a single treaty outcome, building on elements of the Kyoto Protocol, but extended to include commitments for all major economies. A binding target for developed countries would be documented in a similar style to the Kyoto Protocol and annexed to the final agreement. Developing country actions would be documented in a separate annex to the agreement, but with significant differentiation depending on their contribution to global emissions and their capacity to implement abatement measures. South Africa has also proposed a two-track outcome, including an amended Kyoto Protocol and a legally binding instrument on long-term cooperative action, with legal linkage between the two: The amended Kyoto Protocol would maintain the same basic structure as the existing protocol, with amendments primarily to Annex B to document the targets for the second commitment period. South Africa also supports the establishment of an indicative register of nationally appropriate mitigation actions for developing countries. This would be maintained by the Secretariat, but it is unclear from the South African proposal whether the registry would be established under the new treaty, or through a COP decision. South Korea has proposed the use of COP and CMP decisions, rather than new legally binding treaties. This would include a CMP decision containing targets for developed countries and a COP decision establishing a registry of voluntary, nationally appropriate mitigation actions for developing countries. Tuvalu has proposed that the negotiations produce three treaties an amended Kyoto Protocol, a new Copenhagen Protocol and an agreement related to immunities. The first two of these are relevant to this policy brief: The amended Kyoto Protocol would maintain the same basic structure as the existing protocol, but would allow Non-Annex I parties to also take on a quantified emission limitation or reduction commitment for the second commitment period. The Copenhagen Protocol would maintain a similar structure to the UNFCCC and Kyoto Protocol, but would also establish an International Register of nationally appropriate mitigation actions, to be maintained by the secretariat. This register would not form part of the treaty, with its modalities to be determined by a COP decision. Developed countries not captured by the Kyoto Protocol would be required to take on economy-wide targets under this new agreement. The US proposes two outcomes from negotiations a COP decision detailing the shared vision for global action, and an Implementing Agreement documenting the actions by all countries. It is assumed that the Implementing Agreement would be in the form of a treaty and national commitments would be documented in a registry, which would be appended to the Agreement. Developed country actions would be in conformity with domestic law, while developing countries would need to take on actions that are consistent with the global goal. The agreement would also include a requirement that countries subject domestic actions to measurement, reporting and verification. NGO Treaty A number of international NGOs have developed text for the post-2012 climate regime, which consists of three outcomes: an amendment to the Kyoto Protocol, a new Copenhagen Protocol and a set of COP and CMP decisions. Would include an Action and Support Registry to document developing country commitments. Page 13 of 15

14 ENDNOTES 1 See Climate Institute (), The Copenhagen Outcome: Building Blocks for Success,. 2 This analysis is not restricted to a discussion about what will be agreed in Copenhagen. While the Copenhagen summit does present a crucial opportunity for the international community to lock in a strong outcome, it is possible (although not ideal) that the final legal form of the post climate regime may be determined at a later date. 3 Technically this only includes countries listed in Annex I to the UNFCCC, which are also Parties to the Kyoto Protocol. 4 During the Montreal summit, the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (CMP) decided to establish the Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol (AWG-KP) (see: Consideration of commitments for subsequent periods for Parties included in Annex I to the Convention under Article 3, paragraph 9, of the Kyoto Protocol, Decision 1/CMP.1, Conference of the Parties Serving as the Meeting of the Parties to the Kyoto Protocol, 1 st Sess, UN Doc FCCC/KP/CMP/2005/8/Add.1 (2005)). It is important to note that the Montreal summit also saw the establishment of the Dialogue on long-term cooperative action to address climate change by enhancing implementation of the Convention, which was a pre-cursor to formal negotiations initiated in Bali (see Dialogue on long-term cooperative action to address climate change by enhancing implementation of the Convention, Decision 1/CP.11, Conference of the Parties, 11 th Sess, UN Doc FCCC/CP/2005/5/Add.1. (2005)). 5 Bali Action Plan, Decision 1/CP.13, Conference of the Parties, 13 th Sess, UN Doc FCCC/CP/2007/6/Add.1 (2007) 6 Contrary to some reports, the Bali summit did not agree to begin negotiations on a new treaty. The term agreed outcome has not been defined, with some countries advocating for a new treaty and others arguing for something less. 7 This principle was enshrined in the UN Framework Convention on Climate Change [Art. 3.1] and was also reiterated again in the Kyoto Protocol and the Bali Action Plan) 8 The World is Watching, U.S. climate envoy tells Congress, E&E, 5 November. 9 Bali Action Plan, op cit. It is important to note that this commitment was made with the proviso that such actions would be supported and enabled by technology, financing and capacitybuilding. 10 New international obligations do not always require new domestic laws or policies. Some international law provisions are fulfilled entirely at the international level and do not necessarily require an amendment of existing domestic laws or the introduction of new laws. In Australia it is also the case that international legal obligations are not generally enforceable through domestic courts. 11 Examples: Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 Relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks and Agreement relating to the Implementation of Part XI [deep sea mining] of the United Nations Convention on the Law of the Sea of 10 December Guidelines for the preparation of national communications by Parties included in Annex I to the Convention, part I: UNFCCC reporting guidelines on annual inventories, Decision 18/CP.8, Conference of the Parties, 8 th Session, UN Doc FCCC/CP/2002/7/Add The advantage of a binding agreement is that participants would expect other parties to cooperate, and therefore cooperate themselves. Conversely, countries may also agree to weaker binding targets than they would under a non-binding regime where they have the option of opting out if political and/or economic costs become prohibitive. 14 This will be an important factor influencing the dynamics amongst developed countries, as well as the dynamics between developed and developing countries. If the agreement is structured in a way that it includes measurable, reportable and verifiable commitments from Page 14 of 15