This post first appeared on East Asia Forum.

The negotiators at Cancún are currently trying to negotiate a ‘balanced package’ – also known as a ‘six-pack’ – that combines progress on mitigation, transparency (measurement, reporting and verification – or MRV), adaptation, finance, technology, and REDD+ (reducing emissions from deforestation and forest degradation). The Mexicans are extremely determined to get some sort of outcome from the conference – both for the climate and for multilateral negotiations. They so far seem to have been quite confident in the way that they have facilitated the negotiations, and there seems to be much more trust in the Mexicans from Parties than there was for the Danes last year.

What is uncertain is how ‘good’ the decisions will be – in terms of criteria such as ambition (including capacity to ramp up ambition later), efficiency and equity; how detailed the decisions would be; and whether there is sufficient consensus to get a package of decisions at all. Different Parties are interested in progress on different elements of the six-pack, so the total level of progress will be determined by whatever element has the least progress. For example, the United States requires progress on mitigation and transparency in order to support progress on adaptation, finance, technology and REDD+.

There are two tracks to the negotiations: one track is focused on further commitments under the Kyoto Protocol for ‘Annex I parties’ (which consists of developing countries, but does not include many countries that could be considered ‘developed’ such as Qatar, Saudi Arabia, and Singapore); the other track is focused on implementing the Bali Action Plan – that covers the six-pack described above. Developing countries (including China) have stated that for an agreement, they require progress on a second commitment period of the Kyoto Protocol. There could be progress on ‘technical’ aspects of the Kyoto Protocol – such as new gases, surplus emission allocations, and accounting for forest management. But Japan has now stated clearly what many have already known – that they do not intend to inscribe their target into the second commitment period. If this issue is not resolved, it could cause a potential deal to unravel.

Below is a summary of where things are at in the six-pack:

  • On mitigation, key questions are how to anchor pledges that were part of the Copenhagen accord, and what could be done later to increase ambition. Points of contention include how developed country commitments relate to the Kyoto Protocol and the nature of developing country commitments. China has said that it would submit its emission reductions as a binding UN resolution – but this is conditional on progress on a second commitment period to the Kyoto Protocol. Todd Stern has described China’s announcement as nothing new.
  • There is some information on transparency in the negotiating text, but the United States want more detail. The Indian Environment Minister Jayram Ramesh has put forward a proposal, but it is uncertain how much support there is for it from major developing countries.
  • On adaptation, there is relatively clean text. But some countries (including Saudi Arabia) want adaptation to be linked to ‘response measures’, which essentially means that as well as assisting countries with adapting to the effects of climate change, oil exporting countries would somehow be compensated for lost fossil fuel revenue.
  • On finance, a major point of debate has been the establishment of a fund, that was called for as part of the Copenhagen Accord. Some countries wanted it established at Cancún, but others argue that time will be needed to set it up and that it should instead be set up in the period between Cancún and the negotiations next year in Durban, South Africa. Areas of discussion include the transitional committee to set it up, the operating entity of the fund, and its relationship to the World Bank. Australia’s Minister Combet has been involved with consultations on finance.
  • On technology, there is clean text, but the United States is likely to block progress if they do not see progress on other issues.
  • The text on REDD+ is largely complete, with most of the remaining areas of disagreement (mainly on the role of market mechanisms) expressed as clear options.

The Mexican Foreign minister, Patricia Espinosa, stated on Wednesday December 8 that an ambitious and broad package of decisions is within reach but we no not have it in our grasp. We are now in the final stage of negotiations, where the final political issues need to be resolved, and negotiators may not get much sleep. If nearly 200 countries can come up with an ambitious and broad package of decisions, it will be a major success in diplomacy that could rejuvenate the UN process.

The second day of negotiations consisted of ‘informal’ negotiations (where countries actually negotiate, but observers are not allowed); and plenaries of the subsidiary bodies: the Subsidiary Body on Implementation (SBI) and the Subsidiary Body on Scientific and Technical Advice (SBSTA). SBSTA covered a variety of issues, ranging from the new space-based Global Climate Observation System to whether Carbon Capture and Storage should be included in the Clean Development Mechanism (an issue that seems to attract strong passions, which I find somewhat curious, because I doubt that CCS would ever be cheap enough to generate CDM credits). Video of these plenaries should soon be online here.

An issue in SBSTA that attracted strong disagreement today was the what to do about emissions from international shipping and aviation. At the moment, emissions from these industries don’t come under any jurisdiction, so the question is what to do about it. In particular, whether this should be addressed through the UNFCCC, or the International Civil Aviation Organisation (ICAO) and International Maritime Organisation (IMO). This issue is significant not only because of their emissions (about 420 Mt/yr for aviation and 870 Mt/yr for maritime emissions) but also because significant amounts of international finance could be raised from getting these industries to pay for their emissions. The UN Advisory Group on Finance suggest that somewhere between $3 billion and $25 billion could be raised per year by 2020, and this could be used for adaptation and mitigation in developing countries.

While the ICAO and IMO are doing something to reduce emissions for these sectors, it is unclear whether they will do enough. It is also less clear whether they would be willing to provide finance for mitigation and adaptation in developing countries. The ICAO stated in the ICAO/IMO submissions to SBSTA that:

The international aviation sector should not be singled out as a source of revenues for all other sectors. This is likely to result in a shortage of resources to facilitate mitigation activities by the international aviation sector itself, and in a disproportionate contribution of resources from this sector as compared to other economic sectors.

This comment, by bringing up the possibility of “a shortage of resources” for the aviation sector, totally ignores the ability of these industries to pass on costs. If the aviation sector had to pay $20 per tonne CO2, then people like me might have to pay $100 more for a flight between Australia and Cancun. This is small compared to the cost of the flight, so the airlines would be able to pass costs onto consumers and the effect on the income of the aviation industry would be small.

The dodgy economics from the ICAO comment is similar to the sort of thing that would be expected from an industry group representing Australian polluters, one would expect more reasoned analysis from an international organisation. This hardly inspires confidence in the ICAO to play its fair part in paying the costs that its emissions in others.

But there was considerable support in SBSTA for ICAO and IMO to address emissions in these sectors, rather than the UNFCCC. Many developing countries would benefit from finance if there was a strong UNFCCC regime regulating these industries. But many of the countries who supported emissions to be addressed by ICAO/IMO were developing countries. Countries that supported emissions being addressed by that ICAO and IMO rather than the UNFCCC included Panama, Singapore, Cuba (representing Argentina, Brazil, China, Saudi Arabia and India), Ukraine, the Bahamas (who said that the IMO should be the only forum for these issues), South Africa (who raised concerns about maritime emissions being used as a funding source) and others. The EU highlighted the urgent need to address emissions from transport, and that this should take place in the AWG-LCA. The US pointed out that ICAO/IMO do not hame “common but differentiated responsibilities” in their mandates.

There could be huge potential for international transport to finance mitigation and adaptation in developing countries, but this will be extremely difficult, especially after these events. Using maritime emissions for finance will be particularly difficult.

There were three things that resulted from the talks in Copenhagen:

  • A 13 paragraph ‘political accord‘ was agreed by most of the parties, but could only be ‘noted’ by the COP because there was not consensus.
  • The negotiations on extending the Kyoto Protocol had unresolved issues, and the next meeting in Mexico will return to this. The key text that resulted from the Kyoto side of the negotiations is here.
  • The negotiations on long-term cooperative action also had unresolved issues, which the Mexico meeting will have to resolve. The key text that resulted from the long-term cooperative action (LCA) side of the negotiations is here.

What did not result from Copenhagen was a framework for developing a fair, ambitious and legally binding agreement. What was positive about the accord was a commitment on finance from developing countries, which would add up to $100 billion per year by 2020, but whether actual commitments will add up to this number is still unresolved.

While the the Kyoto and LCA negotiations did not result in a successful conclusion, the draft texts are now considerably shorter, and the unresolved issues are more obvious. Whether there is a successful outcome to the negotiations at a later date depends crucially on how these issues get resolved.

Some undecided issues related to the Kyoto Protocol include how land use, land use change, and forestry is accounted for; carry-over of permits from the first commitment period (hot air); the scale of the Annex I (developed country) commitments; and how these commitments are represented in a table, and the issue of base years and reference years (a less important issue, but the one that takes up most of the negotiators time). The most important unresolved issues for the LCA track are the precise nature of developing and developed country mitigation commitments and actions, and whether anything from the text will facilitate a legally binding agreement.