REPORT ON THE U.N. CLIMATE CHANGE CONFERENCE IN DURBAN, SOUTH AFRICA 1. OVERVIEW

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1 REPORT ON THE U.N. CLIMATE CHANGE CONFERENCE IN DURBAN, SOUTH AFRICA 1. OVERVIEW The international climate negotiations in Durban, South Africa, concluded with new momentum toward a comprehensive agreement on climate change. It is a remarkable turnaround from two years ago in Copenhagen, where negotiations fell far short of expectations and raised questions over whether a multilateral process could address climate change. Now the race is on, once again, for a new treaty. The process launched in Durban seeks to yield a legal instrument applying to all countries by the end of 2015, to enter into force in As part of this process, major economies such as China, India, Brazil, and South Africa are expected to undertake emission mitigation commitments in the post-2020 period, along with developed countries. In the meantime, a second commitment period under the Kyoto Protocol will commence in 2013, with its duration and other details, including mitigation targets, to be decided in the coming year. This preserves existing carbon market infrastructure, such as the Clean Development Mechanism (CDM). However, the second commitment period is not expected to spark a meaningful increase in demand for carbon credits, as it likely will apply only to the European Union, Norway, Switzerland, New Zealand, and potentially Australia. Canada, Japan, and Russia are not expected to take part, nor will the United States, who never ratified it. The seminal question is how serious this new, three-year negotiating process will be, particularly given that the last push for a climate treaty ended in chaos in Copenhagen in However, there are several differences in the process leading up to Copenhagen and the process just launched in Durban. First, major emitting developing countries, such as Brazil, South Africa, India, China, and others, are expected to take on emission reduction commitments as part of any long-term deal. This both reflects and prefigures a gradual re-ordering of the world, recognizing the rising economic and political power of the so-called BASIC countries and their increasingly significant greenhouse gas emission profiles. This also is essential for the participation of developed countries, including in particular the United States and Canada, who would not be expected to join any agreement that limits their emissions without comparable (though not necessarily identical) limits on emerging economies. Second, the negotiations will occur in a single track, to be known as the Ad Hoc Working Group on the Durban Platform for Enhanced Action. In the run up to Copenhagen, negotiations were conducted along two separate tracks, one focusing on future commitments for developed countries under the Kyoto Protocol and another focusing on a broader agreement covering all other countries. Although not without merit, the two-track process added to rather than reduced the complexity of the negotiations, particularly with respect to the perpetually controversial need to ensure balance among the outcomes of each track. The new, single track will commence in Page 1 of 5

2 the first half of 2012, with the old two-track process winding down and terminating by the end of next year. Third, new institutions have been established and are in the process of being implemented that will have a significant impact on the credibility of the international process and the willingness of governments to accept future limitations on emissions. Heading into Copenhagen, these institutions, for finance, technology, adaptation, new market mechanisms, forestry, and other climate-related instrumentalities, were words on a page. Heading toward 2015, these institutions have been negotiated and are already being implemented. In effect, major pillars of a future agreement already are in place. These institutions are the legacy of the last two climate conferences, having been outlined in the Copenhagen Accord in 2009 and set into motion by the Cancun Agreements in They owe their existence to the 2020 mitigation pledges made by more than 80 countries in the Copenhagen Accord. In aggregate these pledges, which comprise both developed and developing countries and virtually all major emitters, fell short of the recommendations of the Intergovernmental Panel on Climate Change (IPCC). But they created demand for financial and technical resources both to help developing countries meet their pledges and to fill the gap between the aggregated pledges and the IPCC recommendations. Negotiators took a step forward in implementing these institutions in Durban e.g., formally establishing the Green Climate Fund, commencing work under the Technology Mechanism, outlining tasks for the Adaptation Committee, and creating, without any specificity, a new market mechanism, to be elaborated upon in the coming year. These institutions are most prominently expected to channel resources to developing countries, which are needed to provide the technical capacity to achieve future emission reductions and the political will to agree to them. But more importantly, the criteria, expert advisory panels, and other infrastructure these institutions create have the potential to add a layer of objectivity to international climate governance. Rather than simply relying on highly politicized negotiations for direction, which often proves futile, these institutions could play a critical role in establishing a more rational framework for prioritizing action. The further implementation of these institutions over the next two years will be essential to the success of the negotiations over a new treaty by the end of Failure to implement them will undermine the credibility of donor countries and all but eliminate the incentive for developing countries to make emissions reduction commitments as part of a post-2020 agreement. Finally, there is potential for a far greater role for the private sector. The aforementioned institutions will rely significantly on public funds, largely from developed countries. However, given the global scale and diversity of issues involved in climate mitigation and adaptation activities, public funding alone is insufficient. Emerging economies such as China, Mexico, and South Korea, among others, have signaled a willingness to contribute money to the Green Climate Fund, among other institutional efforts to address climate change. But a truly global and ultimately effective response will depend on designing these institutions to leverage private capital. Many governments are increasingly aware, and increasingly receptive, to business- Page 2 of 5

3 oriented views and expertise that would allow them to craft institutions and other international infrastructure capable of creating wealth rather than merely redistributing resources. From a risk management standpoint, this is a positive development for the business community. Although there are always risks from a bad treaty, there also are risks from no treaty at all. The IPCC report on disaster risk management released in November and the upcoming 5th Assessment Report expected to be released in 2013 increasingly link weatherrelated losses to climate change and, by extension, emitters of greenhouse gases. Irrespective of the actual scientific bases of these claims, certain governments and activist groups are weaponizing climate liability for political purposes and seek to use the international process to advance national economic interests and/or activist agendas. The lack of a competent multilateral regime only fuels these efforts, which can include litigation, trade restrictions, retributive regulations, and even asset seizures all politically expedient, but woefully inefficient diversions of capital in terms of managing risk. As this next treaty-making process starts up, the need for private capital is making this process less about climate change and far more about economic development, which in turn makes it more receptive to business-oriented views to pricing carbon and promoting growth. This must be balanced with achieving environmental objectives, but broadly speaking, such objectives need not be framed solely in terms of reducing emissions. Rather, a multilateral regime that drives technology innovation, liberates financial flows to emerging markets, enhances resiliency against natural catastrophes, and otherwise promotes economic development/poverty alleviation is arguably the only viable path toward a future climate treaty. 2. IMPLICATIONS FOR THE WASTE MANAGEMENT & RECYCLING SECTOR The Durban outcomes are strongly positive for the waste management and recycling sector in terms of gaining greater recognition as a mitigation strategy, attracting new streams of public and private financial assistance, and supporting domestic regulatory reform efforts. At Durban, the International Solid Waste Association (ISWA) delegation met with high level officials from, among other countries, Denmark, Argentina, Brazil, South Africa, USA, Mexico, Canada, Sierra Leone, UNEP, WBC, ICLEI, G 77 and China, the EU Commission and the UNFCCC GS. ISWA also participated in the Climate Consensus Workshops Executive Lounge and received positive recognition and interest from the Netherlands State Secretary for Infrastructure and Environment, who is keen to expand the role of business in the negotiations, including through developing public-private partnerships and other activities. Going forward, most governments will recognize that the chances of negotiating a new climate treaty by the end of 2015 depend on the successful implementation of the new international institutions for finance, technology, adaptation, and new market mechanisms over the next two years. In other words, governments must build capacity for taking on ambitious emission reduction commitments and must build confidence that such commitments are achievable before a new treaty can be negotiated and agreed. The next several years are thus a critical period for action. Page 3 of 5

4 In large part, this depends on identifying and funding proven and effective mitigation strategies that can quickly and cost-effectively achieve climate-related goals, while also delivering other important co-benefits, such as supporting economic development and leveraging private investment. Waste management and recycling, more so than many other mitigation strategies, can meet this need. As a result, in terms of defining a pathway for success, it critical to engage with developed and developing country governments and pursue waste-related projects in developing countries (and developed countries, where applicable). Every developing country has created or needs help in creating national-level strategies to combat climate change, often referred to as Nationally Appropriate Mitigation Actions (NAMAs). Every developed country has multiple programs and initiatives intended to offer financial and technical assistance to developing countries. Given the strong climate benefits the waste sector can deliver, ISWA can credibly argue that the chances of success in 2015 can be enhanced by maximizing the mitigation potential of waste management and recycling today. Accordingly, every developing country should have a waste-related NAMA, and every developed country should have a waste-themed funding program. And over the next three years, ISWA should argue that the more the waste sector is converted into a net reducer of greenhouse gas emissions, the better the chances will be that an agreement will be struck in 2015 that accelerates and expands support for waste management and recycling. In terms of textual references to the waste sector in negotiating texts, the waste sector was identified in the final text of the main negotiating track, known as the Ad Hoc Working Group on Long Term Cooperative Action (AWG-LCA). This text referenced the waste sector in one of the annexes describing how developed countries should report progress in the achievement of mitigation targets. In effect, the text directed developing country Parties, to the extent appropriate, to organize the reporting of mitigation actions by sector and by gas. Waste was identified as one of the sectors (along with energy, industrial processes and product use, agriculture, and land use). This is important in terms of drawing attention to the waste sector and in encouraging developed country Parties to account for waste (and sectors more generally) as they report mitigation activity and, importantly, financial assistance to developing countries. 3. POTENTIAL ACTION ITEMS FOR ISWA FOR 2012 Going forward, there are several targets for the potential inclusion of waste in key aspects of the negotiating framework: The Durban Platform for Enhanced Action will take comments by 28 February 2012 regarding how to increase the level of ambition in mitigation pledges. ISWA could consider submitting a letter describing how the waste sector can cost-effectively reduce emissions and make it possible for countries to be more ambitious in their mitigation targets. The Board of the Green Climate Fund is likely to seek input from observers and stakeholders on a wide variety of issues, and ISWA could deliver its message to the Board once the opportunity presents itself. In particular, ISWA should track Page 4 of 5

5 the Board nomination process and see how many national member countries gain seats on the Board. Additionally, because ISWA contains both public and private members, the waste sector should be able to avail itself of both the thematic windows for national-level financial assistance and the private sector window for direct private investment. Although the waste sector is not alone in being able to approach the GCF through both public and private entities, it is likely to be one of the very few, if not the only, sector where such dual publicprivate interactions with the GCF could be coordinated through a single trade association, i.e., ISWA. The open-ended new market mechanism that was defined in Durban could potentially be harnessed by the waste sector, given its strong track record in CDM. Comments are due by 5 March 2012, and a brief letter from ISWA may be worth considering. The AWG-LCA is expected to convene workshops on mitigation strategies over the course of Although these seem likely to be focused on government participation, one or more of ISWA s national members might be approached to make a useful case study in these workshops for the benefits of waste as a mitigation strategy. (The national member likely would have to engage with the country s climate negotiating team in order to do this, and likely will need to be supported by ISWA.) The mitigation planning registry the Secretariat will create over the course of 2012 provides an opportunity for waste-related projects to be listed and publicized. The ability of the Technology Executive Committee (TEC) to convene expert working groups presents an interesting opportunity for the waste sector to pursue the sectoral technical options assessment panel concept discussed previously, as a way to showcase the waste sector s mitigation potential and be reflected in the TEC s recommendations to the Parties. In these and potentially other opportunities, ISWA s engagement with the international climate negotiations can mutually support and reinforce its simultaneous pursuit of national-level project development. Taken together, this inside-outside approach will position the waste sector to gain recognition, be eligible for new financial flows, and enhance its domestic regulatory reform and capacity building efforts all in pursuit of maximizing the climate benefits of waste management as a critical ingredient to a post-2020 climate treaty. S.J.S. Page 5 of 5