Summary of August 2010 UNFCCC Negotiations and Issue-by-Issue Assessment of Current Progress

Transcription

1 Summary of August 2010 UNFCCC Negotiations and Issue-by-Issue Assessment of Current Progress Governments recently reconvened in Bonn the ongoing negotiations under the UN Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol. This meeting hosted the two negotiating groups under the Bali Road Map, the Ad-hoc Working Groups on the Kyoto Protocol (AWG-KP) and on Long-term Cooperative Action under the Convention (AWG-LCA). This session was the third of four meetings of the AWGs bee COP 16/CMP 6 in Cancun, Mexico in December. Over 1,000 participants came to Bonn, representing governments, intergovernmental and non-governmental organizations, academia, the private sector and the media. General Review The pace of negotiations during the August session was slow. Despite only one more week of negotiating time bee Cancun, parties did not successfully reduce options or reach consensus in the text. The recent announcement by the U.S. Congress that it would not put ward climate legislation this year certainly reduced momentum this session, despite the reaffirmation by the U.S. delegation of their commitment to their 17% 2020 target from Copenhagen. In the AWG-LCA, parties agreed on the organization of work by dividing into smaller discussion groups that focused on specific topics. Four groups were created: Shared Vision, Mitigation, Adaptation, and Finance/Technology/Capacity Building. In each group Parties gave comments on the latest Chair s text, with many sections ballooning in size as new options were added ( example, mitigation grew from 3 pages to 11). Progress was uneven across the groups. Some, such adaptation, were able to dive deeper into issues on a possible Adaptation Committee under the Convention, while others, such as mitigation, only accomplished a single read-through of the text. Finance discussions became stuck on ongoing disagreement about the role of a new Finance Board under the Convention. Across all groups very little progress was made. In the AWG-KP, the Chair introduced a text bringing together the large number of options and proposals amendments and extensions to the Kyoto Protocol. While a step ward, this text contains a very large number of areas of divergence, especially on numbers, new gases, and the rollover of Assigned Amount Units (AAUs) from the first to a second commitment period. There was also very little progress on Annex I targets. One important area of new discussion during the August session was the m of a possible legally binding agreed outcome from the AWGs either in Cancun or subsequent years. A number of options were presented, including 1) a second commitment period the Kyoto Protocol complemented by COP decisions on areas that are not covered within the treaty (technology, adaptation, etc), 2) a new, single legal instrument that would replace the KP to include its provisions and new areas, 3) two legal instruments, which are compatible but contain different issues. Parties laid (usually differing) views on the table during this discussion and will discuss the issue again at the next session.

2 Issue-by-Issue Analysis UNDP has produced a comprehensive analysis of agreement, disagreement and implications development policy each of the main areas of negotiations under the UNFCCC process. This document is updated regularly and contained in Annex I to this general overview. Prospects Cancun With the text so heavily bracketed and little convergence between parties, many now see this negotiating round continuing some years to come. Parties have generally (and often openly) accepted that there will not be a full agreement in Cancun. However, Parties do recognise the need to begin implementation and putting in place at least some interim structures that can later feed into the negotiations. In particular, Parties emphasised in Bonn the importance of showing results on the ground as soon as possible to give momentum and lessons learned to the negotiations process. The second and third years of the $30bn of fast start funding will no doubt play a part in this. As a large implementing partner, UNDP can and will contribute to operationalising support developing countries in the areas covered by the negotiations. Such activities can then potentially feed into the negotiations process later. In collaboration with Parties and other development partners, UNDP is looking at how it can best support the needs of the most vulnerable. New work is beginning on finance tracking, measurement, reporting and verification of mitigation actions in developing countries, development of low-emission, climate-resilient development strategies, international technology capacity building, and various finance mechanisms. In the months to come UNDP will put emphasis on how in concrete terms it can help ward the implementation of the Convention and Bali Road Map. The next iteration of the issue-by-issue analysis will specifically focus on how UNDP can assist in the coming months to put on the ground the necessary mechanisms and capacities to ward implementation. UNDP in Bonn UNDP was active at the Bonn sessions. At the request of Parties during the previous negotiations in June, UNDP (EEG and CDG) presented a side event on indicators capacity building on climate change. The event featured case studies from Egypt and the Philippines governments, as well as from UNDP experts. UNDP was also involved in two side events with partner agencies; the first a UN-REDD programme event on governance REDD and the second a joint UNDP-World Bank event showcasing the climatefinanceoptions.org platm on sources of climate finance. The UNDP delegation was also involved in various meetings around the negotiations looking at how to operationalise various elements of the negotiations this year. This includes the development of a second finance platm with the World Bank tracking climate finance flows. Further Meetings in 2010 September October November December Side meetings of Heads of State and Government at the MDG Review Summit AWG-LCA and AWG-KP Meeting in Tianjin, China Pre-COP Closed Ministerial Meeting convened by Mexico COP16 / CMP6

3 Annex I: Issue-by-Issue Analysis The analysis in Annex I is arranged on an issue-by-issue basis that follows the main themes within the current negotiating text, as defined by the Bali Action Plan: 1. Mitigation in Developing Countries 2. Adaptation 3. Finance 4. Mitigation in Developed Countries 5. Reducing Emissions from Deestation and est Degradation (REDD+) 6. Technology and Transfer 7. Capacity Building 8. Sectoral and Market Mechanisms 9. Agriculture 10. Response Measures The precise order of these issues in the negotiating text including in thcoming versions is uncertain, and as such the arrangement of themes is by no means fixed. However, these ten issues consistently appear in different revisions of the text, and so serve as an appropriate basis this analysis and later updates of it.

4 1. Mitigation in Developing Countries Reducing emissions in developing countries is a politically sensitive issue, as these countries argue that their national mitigation objectives must not be a legal obligation. Instead an alternative system is emerging based on Nationally Appropriate Mitigation Actions (NAMAs) as agreed in the Bali Action Plan in These are either internationally funded or voluntary actions by developing countries based around a national Low Emission, Climate Resilient Strategy (LECRDS). Developing countries will develop low emission development strategies that include NAMAs Developed countries will provide financing, capacity building and technology some NAMAs, although the means decided which is unclear Supported NAMAs will be internationally recorded in a registry, and their implementation monitored, reviewed, and verified (MRV) LDCs and SIDS will be exempt from undertaking unsupported NAMAs If NAMAs are eventually included in carbon market mechanisms, the rules governing participation in these mechanisms shall apply Should unsupported NAMAs be internationally recorded, monitored and verified? Or should they be only subject to international consultation and analysis? How should NAMAs be communicated and recorded through a registry? What is the role National Communications? How should supported and unsupported NAMAs be differentiated in this process? Will developing countries use this registry as a um to ask support NAMAs as well or should this come under the finance mechanism? What m should international verification take? The main sources of global emissions are all key sectors the MDGs (29% electricity and heat; 14% agriculture, 12% land use change and estry) Reducing these emissions requires a transmation of economies. This should be undertaken in the context of national priorities poverty reduction and the MDGs. NAMAs must be developed in a way that effectively capture and follow these priorities. These transmations will require inmed investment choices and national policies and regulatory systems

5 2. Adaptation A central element of addressing climate change is supporting vulnerable countries to adapt to current and predicted climate change that is already unavoidable. This is a major element of the negotiations, as the scale of current provisions (such as the Kyoto Protocol s Adaptation Fund) fall far short of the wide-ranging needs of developing countries. Adaptation should be supported by long-term and predictable finance and focus on the most vulnerable countries The Kyoto Protocol Adaptation Fund has provided a strong model that should continue to be refined and enhanced Adaptation should follow country-driven approach, based on and guided by best available science and traditional knowledge, and using networks of regional and national centres of excellence this The Nairobi Work Programme has shown great potential and provided numerous tools that have helped countries improve their understanding of climate change impacts and decision-making Adaptation should not be overshadowed by mitigation The creation of an Adaptation Committee under the Convention to oversee implementation and even approve projects under an enhanced financial mechanism. How this Committee should link to existing bodies Whether the scope of adaptation should include compensation economic losses from mitigation policies in developed countries 1 Whether a specific mechanism should be created to address loss and damage due to climate change What countries should be included as the most vulnerable Whether the terms of reference the review of the Adaptation Fund should include the interim secretariat and trustee (GEF and World Bank) Without effective adaptation, climate change threatens to undo decades of development. It is theree critical to climate proof development assistance and strengthen the capacity of national institutions to incorporate adaptive capacity and building resilience into development and budget planning in an iterative manner With smart planning, adaptation now offers an opportunity to improve climate resilience through MDG achievement and poverty reduction. 1 See Section 10 below on Impacts of Response Measures

6 3. Finance Public climate finance currently flows through a number of channels, including the Global Environment Facility (GEF), Adaptation Fund and other bilateral and multilateral institutions. The negotiations are discussing how to create a new governance structure and institutional system to manage the additional $100bn per year by 2020 pledged by developed countries in Copenhagen, and how a new system will fit into, but also be new and additional to these existing flows and systems. An important question is also the management and successful implementation of the $30bn Fast Start finance. The creation of a new fund under the UNFCCC the Green Fund as an additional operating entity to the GEF The Green Fund should have a number of windows or thematic facilities targeted to various climate issues (mitigation, adaptation, technology, etc) The Green Fund should exist under the COP and there should be equal and equitable representation of Parties involved in its governance Bilateral financing will continue The GEF will remain an operating entity of the UNFCCC Parties acknowledged the work of the Secretary-General s Advisory Group on Climate Finance as giving important insight into the sources of the funds to be managed under the UNFCCC How to oversee, monitor, match and verify the various financial flows under the Convention and how to approve projects? Whether a Finance Board should be established these tasks or whether existing UNFCCC bodies such as the Subsidiary Body Implementation could fulfil this role Whether these functions should be instead undertaken by the UNFCCC Secretariat and other agencies Which institutions should manage and disburse money from the Green Fund and who should act as trustee? How can national implementing agencies, direct access and existing multilateral agencies work in tandem and on which areas? How should the GEF be restructured in terms of a) governance and b) direct access option to be compatible with the Green Fund? Whether the Kyoto Protocol Adaptation Fund should be incorporated/ transmed into the Green Fund? How to bring coherence and coordination at the national level between GEF, Adaptation Fund, Green Fund, and bilateral financial flows Climate change requires a transmation of economies (both low-carbon and climate resilient) that necessitates significant investment but also policy, regulatory and institutional development to ensure that financing follows and furthers national development priorities If rational and inmed decisions are taken, climate financing can contribute to poverty reduction and MDG achievement. Through planning, institutional strengthening and technical assistance, investments can create long-term sustainability. Governments must be empowered to control and direct financing along the lines identified in LECRDs The emerging fast start finance picture is extremely fragmented; there is a need to combine, sequence and integrate financial flows at the national level through country coordination funds and mechanisms.

7 4. Mitigation in Developed Countries Ambitious mitigation action and financing from developed countries is the cornerstone of international climate change action, as illustrated by the commitment period and set targets GHG reductions within the Kyoto Protocol. However, the Protocol s targets expire in 2012, and, moreover, the USA the world s second largest emitter is not a party to the treaty. The current developed country parties to the Kyoto Protocol have been clear that they do not see a future the Kyoto Protocol without an instrument that includes the USA. How to create a framework that includes the USA and will continue global targets after 2012 is at the centre of the negotiations, with the USA clear that they must see action from major emerging economies and that this has to be in a new instrument rather than the KP. That greater ambition is needed from developed countries and that this must include all developed countries (and so potentially require a new instrument in addition/to replace the Kyoto Protocol) The m of developed country commitments (% reductions, baseline years) The role of the offset mechanisms and Land Use Change and Forestry towards commitments Developed country mitigation must be the driving ce behind a global climate regime, creating a market carbon credits and promoting development of low-carbon technologies. Clear and binding ambition from developed countries is essential to addressing climate change.

8 5. REDD+ Reducing Emissions from Deestation and est Degradation and associated efts to conserve and enhance est carbon stocks and the sustainable management of ests (REDD+) is an endeavour to create an incentive developing ested countries to protect, better manage and wisely use their est resources, thus contributing to the global fight against climate change. It rests on the eft to create financial value the carbon stored in standing ests. In the long terms, payments verified emission reductions and removals, either market or fund-based, provide an incentive REDD+ countries to further invest in low-carbon, climate-resilient development paths. The REDD+ negotiations have advanced significantly outside the mal UNFCCC process, notably through the so-called Interim REDD+ Partnership. The table below takes this process into account. / points further guidance This is one of the most advanced areas of the negotiations at present, with parties agreed on the basic principles of using public finance to build capacity and run pilot projects on REDD+, which can then pave the way Annex I countries and private sector investment and possible issuance of carbon credits Consensus is building towards social and environmental safeguards, particularly relating to indigenous peoples, Parties also agree that the REDD+ regime should include support actively conserving and enhancing est carbon stocks and sustainable management of ests (denoted by the + in REDD+) Methodologies and tools to estimate reference emissions levels (i.e. baselines), based on the SBSTA work. Fifty-eight countries have joined the voluntary Interim REDD+ Partnership with USD4.5bn capacity building of national institutions, readiness activities, and pilot projects this is in addition to a workplan UN-REDD and FCPF to create, on their behalf, a voluntary database to track commitments of REDD financing and actions; a gap analysis and a mechanism sharing lessons learned A small number of disagreements remain in the mal negotiations on REDD+: 1. Whether to use only national emissions baselines or also subnational/project-level emissions baselines 2. The relative role of private sector finance, the timescale its involvement, and specific details of carbon credits that may be issued from REDD+ projects 3. Further guidance has been sought from SBSTA with regard to precise accounting mechanisms that effectively deal with leakage, where reduced emissions in one country/region simply push deestation or degradation activities elsewhere. The critical link between estry and livelihoods makes REDD+ activities a major opportunity to support development and poverty reduction. The financing available REDD+ offers an opportunity those who depend on ests to build more sustainable livelihoods.. For ested developing countries, REDD+ offers the primary opportunity to benefit from climate mitigation financing. But it must entail a shift in countries development pathways away from a reliance on est resources. REDD+ finance must theree catalyse transmations low carbon, climate resilient development strategies.

9 6. Technology and Transfer A cross cutting element in climate change is the need new technologies to help developing countries mitigate and adapt to climate change. The negotiations deal with both the development and transfer of these technologies, and are focussed around the creation of a specific mechanism that will increase support under the Convention. Creation of a new Technology Mechanism under UNFCCC to be comprised of 1) an Executive Committee, 2) a Technology Centre, and 3) a global Technology Network The Executive Committee will likely replace the Expert Group on Technology Transfer and provide oversight and monitoring of transfers. The Centre would likely facilitate knowledge sharing and South-South collaboration in the development of Technology Action Plans, as well as providing operational guidance to the implementing Network and functioning as a matching entity between developing countries and the network The Network is conceived as a collection of private sector organisations, multilaterals, NGOs, academic institutions, and research and development institutions that can provide transfer, development and deployment of technology in developing countries under the auspices of the Executive Committee and Centre How resources should flow from the financial mechanism into the technology mechanism: should resources flow to the Executive Committee allocation, to the Centre matching proposals from countries with implementers in the Network, or should developing countries directly enter into contracts with advice from the Centre? Institutions to be involved in Centre and Network How members of the Network will be selected and their contractual obligations monitored: should there be a m of accreditation to the Network, giving the Executive Committee some oversight on contract fulfilment? Intellectual Property Rights remain an area of large disagreement, with developing country parties keen to build IPR sharing provisions into the mechanism while some developed countries refuse such a proposal Technology transfer is an essential to ensuring that mitigation of GHG emissions in developing countries also contributes to their economic development by installing new technological capacity In addition, these technology choices must move away from simple clean economic expansion to growth that has a clear poverty dividend. Developing countries have stated that agencies working on technology transfer and deployment should be south-based and neutral brokers.

10 7. Capacity Building Capacity building is a cross cutting issue that is essential to ensuring effective mitigation and adaptation. Within the negotiations, there is a disagreement among parties over whether there should be a specific fund on capacity building within the Green Fund or instead whether this issue should be mainstreamed in all other areas. It is critical that capacity building is effectively represented in a post-2012 climate regime and that sufficient funding is allocated to this area. Capacity building is a necessary element to any climate change agreement Capacity building must be supported with technical and financial assistance Identifying what additional capacity building is needed, other than standard international cooperation. This includes sub-national actions and those that empower national stakeholders more directly through financing On financing capacity building, there are proposals on the table specific capacity building funds in the windows of the Green Fund although the details of implementation are very unclear. Whether reporting on capacity building should be conducted through permance indicators, or simply through national communications. There is also disagreement on whether reporting should include the scale and effectiveness of developed country contributions. Whether to create a capacity building body under the convention. One option is to create a Technical Panel to organise, monitor and report on capacity building activities, including assessing developed country actions to support this area. A second weaker option here is to simply mainstream capacity building into existing actions. It is clear that an immense gap exists between the ambitions being discussed in the negotiating text and the actual capacity of countries to implement and access resources to finance actions to fight climate change and promote development. Capacity development is theree critical to ensure that developing countries especially the most vulnerable are equipped to deal with climate change by making inmed investment and technological decisions. A strong global regime is needed to define guidelines, best practice, and indicators to ensure effective capacity development.

11 8. Sectoral and Market Mechanisms A substantial amount of climate finance will come from the private sector and global carbon market. A number of mechanisms this carbon market are under discussion in the negotiations. These include existing mechanisms under the Kyoto Protocol (Clean Mechanism, JI and Emissions Trading) but also possible new mechanisms through which developed countries buy carbon credits from GHG reduction projects in developing countries. These projects may exist on an individual, NAMA or sectoral scale. For the past two years there has been discussion under many negotiating groups of how to enhance and improve market mechanisms under the Convention, with a general acceptance that they add to global emission reductions Current market mechanisms exist under the Kyoto Protocol. There is general acceptance that these could be transferred to a new instrument under the Convention; however, developing countries are clear this will only follow once that new instrument provides strong emission reduction pledges from developed countries This mainly technical area has been slowed down by a focus on other crunch issues in the negotiations ALBA 2 countries are also extremely cautious of the inclusion of market mechanisms to replace potential public finance, including est and land issues Engaging the private sector is essential to transming economies in developing countries at the scale required to address climate change. Without private finance, there will be insufficient finance the actions required to address climate in a pro-poor manner Market mechanisms also have a significant development dividend because they provide private finance, technology transfer, and promote national development. 2 Including Venezuela, Bolivia, Ecuador, Nicaragua, and Antigua and Barbuda

12 9. Agriculture 14% of global GHG emissions come from the agricultural sector a sector that is also essential livelihoods and food security. To date the UNFCCC negotiations have not officially considered this sector; now, however, a work plan is emerging driven by the associated productive discussions on reducing emissions from deestation and degradation (REDD). This recognises the significant role that agriculture mitigation actions could play in reducing global GHG emissions (as suggested by marginal cost abatement curve below of the costs of different actions). This issue has increased in profile significantly over the past two years and there is wide recognition of a need a workplan to understand what actions need to be taken to mitigate GHGs in the agricultural sector The scope and outcomes of the work plan, and the eventual REDD-style regime that may emerge from this new process The food security and livelihoods implications of mitigating GHG emissions in this sector are significant. Often production is related to indigenous practices and traditions. However, carbon finance offers and opportunity to bring alternative sources of income to the 1.2bn people dependent on agriculture day-to-day living. While this text has no major operational impact on agriculture at this stage, it does set a major workplace in motion the COP to begin to consider this area in the years to come. It is key that another major area of development has been recognised within the UNFCCC process.

13 10. Impacts of Response Measures This issue is of particular importance to OPEC countries and SIDS. Response measures are concerned with the economic impacts in developing countries of mitigation actions in developed countries, especially on fossil fuel demand. OPEC countries argue that global GHG emission reduction will lead to a drop in demand fossil fuels, and so a decline in OPEC GDP, which they demand compensation. SIDS, in contrast, argue fiercely that this compensation takes financial resources away from adaptation to actual climate impacts, and so often oppose progress on this issue. Despite remaining one of the most politicised areas of the negotiations, the Copenhagen Accord s inclusion of response measures has given some general acceptance among parties that this is an area that must be dealt with To consider actions to address the impacts of the implementation of response measures on OPEC developing countries The creation of a um/centre to assess loss and damage from mitigation actions in developed countries and how this centre should be funded The division of response measures from adaptation to climate change, and how the two are separated in terms of funding from the Green Fund The implications development vary significantly by country grouping on this question. For OPEC countries, economic impacts are potentially significant national GDP and exports; SIDS the redirection of adaptation resources reduces their progression to climate-resilient societies