This post also appears on East Asia Forum.

The UNFCCC COP16 climate conference has been a success. There has been agreement on a series of decisions that are known as the Cancún Agreements. On the morning of the final day, there were tense moments, and it but unclear whether there would be much progress at all. But after the draft texts were circulated, the Mexican Foreign Minister, Patricia Espinosa, convened an ‘informal plenary’ where she said that in these texts, every Party had been listened to, and after two hours for people to examine the texts, the plenary will reconvene. There was then sustained applause and a standing ovation. From that moment on, there was a great sense of hope that there would be a positive outcome.

Video Courtesy of Phil Ireland

The main decision results from the work of the Ad-hoc Working Group on Long-term Cooperative Action. It is very comprehensive – covers the ‘six-pack’ that negotiators were hoping for – and includes:

  • A shared vision that recognises that deep cuts are required; calls for urgent action to meet a goal of keeping temperature increases below 2 degrees; a review to look into whether that goal should be 1.5 degrees; and realises that addressing climate change requires a paradigm shift towards building a low-carbon society.
  • Mitigation commitments from developed countries and actions from developing countries that will be combined in a separate document – a  bit like the annex to the Copenhagen accord. Like the Copenhagen Accord, this could include countries that are responsible for something like 80 percent of greenhouse gas emissions – while without even including the US, the Kyoto Protocol covers less than 30 percent of emissions. There are measures to enhance the transparency these actions and commitments. The agreement also urges developed countries to increase the ambition of their targets to a level consistent with what has been recommended by the Fourth assessment report of the IPCC.
  • There are provisions for finance and a Green Climate Fund; adaptation; REDD+; opportunities for using markets; technology; consequences of response measures; capacity-building; and working towards legally binding protocols.

What is remarkable is that this is an agreement between nearly 200 countries. The only country that opposed consensus was Bolivia (which lead to an interesting closing plenary). Because so much effort over the past few years has been invested in these negotiations, and because of the detailed consensus achieved, there is a huge amount of ‘buy-in’ for the Cancún Agreements. What has been achieved is a good outcome for addressing climate change, and a good outcome for multilateral diplomacy.

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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.

Last year before the negotiations at Copenhagen, five countries (Australia, Costa-Rica, Japan, Tuvalu, and the United States) submitted proposals for protocols under the convention – in other words, new proposals for a legally binding climate treaty. This is important because there had not yet been discussion since Bali on what legal form the final outcome could take. In the meeting, Tuvalu proposed that a “contact group” (the UN name for a working group) be established to discuss these proposals. But a new protocol was opposed by India, China, Saudi Arabia, South Africa and others. Furthermore, the formation of a contact group was opposed by Saudi Arabia, India, Venezuela, Algeria, Kuwait, Oman, Nigeria, Ecuador, and China. This ruled out any chance of a legally binding treaty at Copenhagen, disappointed many representatives of civil society, it seemed at the time that the prospects for a strong legally binding outcome in the near-future were grim.

This year, on Wednesday Dec 1, the Conference of Parties again considered these five proposals, and a sixth proposal from Grenada on behalf of the Alliance of Small Island States. Grenada called for a contact group to be established. Grenada noted that we have not yet had a discussion on legal form; and that this could provide certainty to governments, markets, and the private sector. Costa-Rica and Tuvalu also discussed their proposals and called for a contact group.

But India opposed a “formal group”, saying that in the “current context”, we should be “investing our time in deliverables of Cancún”; that “too much is on our plate”; we “need to address Kyoto instead” (perhaps a reference to Japan stating that it will not inscribe its 2020 target into the Kyoto Protocol); we should “focus on the two texts from Tianjin”; the “Article 17 proposals should be allowed to rest”; “forms should follow substance” and “let us consider substance first”.

China, which strongly opposed a contact group at Copenhagen, offered a nuanced response. They thanked Grenada and AOSIS for their proposal; they said they support the “proposal that legal form be discussed” and that the “final outcome should be a legally binding outcome”; but they “hope to have more time on other issues” and ask “is it possible that we avoid discussion separately? Maybe chair can conduct informal consultations, or maybe allow AWG-LCA consider this issue?”; and happy to “leave to the wisdom of the President” (the ‘President’ refers to the Mexican Foreign Minister who chairs the meeting). So China raised some concerns, but strongly hinted that they would not block consensus.

Saudi Arabia said that they support India and China, had concerns about the future of the Kyoto Protocol (probably also relates to Japan’s statement, even though Saudi Arabia is a far worse polluter than Japan, and has no commitments under the Kyoto Protocol), and that it would be better to focus on the negotiations still taking place.

Some countries who had opposed a contact group last year supported one this year, including South Africa and Venezuela. The 2011 negotiations will happen in South Africa, and they stated that the lack of discussion on legal form has been a barrier.

The call for a contact group was also supported by Guatemala, Cuba, the Maldives, the Democratic Republic of Congo, Nauru, Cook Islands, the EU, the Dominican Republic, Australia, Vanuatu, the Marshall Islands, St Lucia, Guyana, and some observer organisations.

The Mexican Foreign Minister (the ‘President’) resolved to set up a contact group, stating (and I paraphrase somewhat):

We have had a very important exchange on a question that is of transcendental importance for many delegations. We have heard many opinions. A clear testimony to diversity of points of view and complexity. We must recognize that in the exercise of sovereign governments and they are insisting that proposals discussed. Proposals refer to subjects being dealt with in negotiations in LCA and KP. And we still don’t have clarity on how negotiations will conclude. Indispensible that negotiations will proceed quickly and make progress and consolidate decisions. I propose we establish discussion in the form of a contact group that will have as its exclusive aim to provide this space to allow exchange of proposals including Grenada, Costa Rica, Tuvalu. But I think delegations have clearly expressed that proposals relate to subsequent work. If there is agreement to establish this dialogue, and better understand opinions that differ, I don’t want that to be detriment to discussions of two working groups. I repeat this dialogue should not lead to a negative effect that would reduce urgency that we apply to negotiations.

It is worth keeping the role of a “legally binding” agreement in perspective – the point of an agreement is to provide confidence that commitments will be kept. Making it legally binding could perhaps help with that – but what will make a real difference is domestic legislation that will send a signal to the world that a commitment will be met. The only sort of domestic legislation (apart from perhaps shutting down steel production and imposing blackouts) that can achieve this is some sort of carbon price. Australia – for example – is highly unlikely to increase its 2020 emission reductions target beyond 5 percent until there is a carbon price.

The fact that countries changed their position to a cooperative one on this issue, and were willing to compromise, is a positive sign for the negotiations. Compared to Copenhagen (so far) there seems to be less uncompromising positions, there hasn’t been any walkouts, there seems to be more confidence in the country hosting the negotiations, and less late nights. All of this could change, but there is reason for cautious optimism.

The next UN climate conference, the 16th Conference of Parties to the UNFCCC, will commence on November 29 in Cancun, Mexico. ClimateDilemma will be attending these talks, will blog about what is going on, and also provide more up-to-minute updates via Twitter.

The stage was set at some negotiations earlier this year in Tianjin, China. It is unlikely that there will be anything like a comprehensive legally binding climate protocol emerge from Cancun, so the focus instead is on a “balanced set of decisions” on issues such as finance, adaptation, reducing emissions from deforestation and forest degradation in developing countries, technology, and possibly measurement, reporting and verification (transparency). The key stumbling block is agreement between the US and China on these issues. These difficulties were illustrated when in response to a speech by US Special Envoy on Climate Change Todd Stern, Chinese negotiator Su Wei referred to the US as what has been translated as a “pig preening itself in a mirror“.

As has been pointed out by Angel Hsu from Yale, this reference is to the character Zhu Ba Jie, from the Chinese novel Journey to the West. A well known television adaptation in some western countries is the show Monkey, a dubbed version of a Japanese television series. This will be particularly well known to Australians who grew up in the 1980’s (such as myself), when the show was very popular. In Monkey, Zhu Ba Jie is known as “Pigsy”.

Pigsy

Pigsy, portayed by Toshiyuki Nishida, from the opening credits for "Monkey"

Todd Stern’s speech made a number of salient points about the negotiations, but downplayed the problem of lack of US domestic progress. Lack of domestic progress is a major issue – the World Resources Institute has done a study investigating how much state-based approaches and regulation could reduce emissions without national legislation, and their most ambitious scenario has emissions lowered by 12 percent, which falls short of the 17 percent commitment. Stern also summarised the US negotiating position which is to not support action on “financing, technology, adaptation and forests” unless there is progress on mitigation and transparency.

Todd Stern made several comments that relate to China:

  • He stated that “you cannot build a system premised on the notion that China should be treated the same as Chad” and made some comments on China’s emission statistics;
  • He pointed out the “political reality” that it would be impossible to get support from US congress for an agreement that required action from the US but not from China and emerging markets;
  • He stated that in Tianjin, “Chinese negotiators have acted almost as though the Accord never happened, insisting on legally binding commitments for developed countries and purely voluntary actions for even the emerging markets”. He also stated that Chinese negotiators have merely listed their targets as a “fyi”, with “no political commitment to implement them”.

Stern’s statement that China should not be treated the same as Chad does bring up an important point about the way developed and developing countries are divided up in the Kyoto Protocol. The developed countries are specified as “Annex I Parties” which includes relatively poor countries such as Turkey, but does not include very rich countries including Qatar and the United Arab Emirates. It also does a mediocre job of distinguishing between different levels of per-capita emissions – Australia and the US have far higher per-capita emissions than France, and the highest per-capita emitter, Qatar, is not an Annex I country. The Kyoto Protocol has no mechanism non-Annex I countries to automatically become Annex I countries.

But the key issue is not so much whether emission reduction commitments are legally binding, it is whether countries will meet those commitments. Stern points this out in his speech, and so it is curious that Stern attaches so much attention to the legal status of China’s commitments. China is quick to point out that their targets are not legally binding, and stated in their Copenhagen Accord submission that “please note that the above-mentioned autonomous domestic mitigation actions are voluntary in nature”. China is perhaps more likely to meet its target than the US, and China has been implementing measures such as blackouts and slashing steel production in order to meet its domestic energy intensity target. So Stern’s statement that “Chinese negotiators have acted as though the Accord never happened” is not very fair. The other key issue is the ambition of the commitments themselves – an international agreement must be designed in such a way that the ambition of commitments can be readily ramped up – Kyoto has failed to do this, with countries preferring to take on weak targets and sell “hot air” (when countries – such as Russia – get allocated emission targets that are greater than business as usual emissions).

The largest barrier is Congress, in particular the US Senate. Ratifying a treaty requires 67 out of 100 votes, and even getting the Senate to vote on legislation requires 60. The US failed to pass climate legislation last year because it couldn’t get 60 votes in the Senate. If any institution was to resemble Pigsy, it would be the US Senate. But there have been failure at the White House as well: it made major strategic blunders when climate legislation was before the Senate; and failed spectacularly when it comes to framing and messaging, including on climate change. Congress is difficult because the Republicans are taking an extremist denialist position, but this could be politically damaging to the Republicans and untenable if the White House and/or the Democrats put pressure on the Republicans over climate change and framed the issue to be one of Republican obstruction, instead of one of “Democrats seeking bipartisanship”.

Issues with Congress and the strategic US-China relationship mean that there is little prospect for a fair legally binding and ambitious ‘top-down’ agreement in the near future, and that probably means the next decade. Since Copenhagen, the challenge is to ramp up emission reductions in a ‘bottom-up’ world, and turn political commitments into political action. We know from implementation theory and literature on private provision of public goods that if countries can commit to increase their reductions if others do the same, then a situation that is previously a “prisoner’s dilemma” becomes transformed into a situation where there is likely to be a cooperative outcome. Furthermore, if there is an expectation that there will be a legally binding agreement in the future that is fair, high per-capita emitters will have a strong incentive now to start reducing their emissions.

Progress in Cancún on transparency, financing, technology, adaptation and forests could ultimately facilitate cooperation on mitigation. One reason for optimism is that developing countries including India have made concrete proposals on measurement, reporting and verification (i.e. transparency), so the key reason for obstruction from the US may be resolved. But anything can happen in these negotiations, so only time will tell.

Developed countries who have commitments under the Kyoto Protocol are negotiating loopholes for themselves that could lead to almost 400 Mt of extra emissions each year. After giving some background, I will describe the status of the negotiations, describe the loopholes, and quantify them. This will help us to see who the worst offenders are.

Emissions associated with land use are classified under the Kyoto Protocol as LULUCF – Land Use, Land Use Change, and Forestry. This includes deforestation – which is when you log a forest and replace it with some other form of land use such as grassland; but does not include forest degradation – which is what occurs when you log a forest and allow a forest to grow back. Because unlogged forests can store large amounts of carbon, emissions associated with forest degradation can be quite significant, but not accounted for. This can lead to perverse outcomes, for example it is possible to log old growth forests, use the wood to generate electricity, and not account for any of the emissions.

As a way of addressing this, the Kyoto negotiations have been looking at how to have countries include forest management in their accounts – this would include emissions from forest logging. Forests naturally absorb carbon dioxide, so when including forest management, reference levels (baselines) need to be negotiated so that countries don’t get credited for the removals that naturally occur anyway. Late in 2009, just before the Copenhagen negotiations started, countries submitted their preferred reference levels, as well as estimates of emissions in 1990, projections for the first commitment period (2008-2012) and projections for the second commitment period.

Each country proposed a reference level for itself, the numbers are given below (click on the image to enlarge it):

Forest Management Reference Levels

The problem with this approach is that each country has an incentive to choose a reference level that is generous to it. This is what has happened. Some countries who chose particularly generous reference levels for themselves include Russia, which chose a range between 0 and -177.8 Mt CO2-e of emissions, so that it gets credited if its forests are more of a sink than -177.8 Mt, but is only debited if its forests become net emitters and is projected to have emissions of -274 Mt in the first commitment period; New Zealand, who chose a reference level based on its forecast for 2013-2020, which is 19.4 Mt higher than its forecast for the first commitment period (over 23% of New Zealand’s 2005 emissions); and Japan, which chose a reference level of 0. These numbers all add up to 213-391 Mt CO2-e of excess allowances per year for Annex I countries compared to their projected forest management emissions for the first commitment period (depending on which number is used for Russia).

There was some extensive discussions on this issue at the Bonn climate negotiations on June 7, 2010, in the contact group on Further Commitments for Annex 1 Parties under the Kyoto Protocol. These negotiations were not broadcast, but some of what happened was broadcast on twitter (look up the #COP16 or #UNFCCC hashtag). I don’t know which countries did or did not have a constructive role in these negotiations, but would be very interested in finding out. The LULUCF negotiating text is here.

UNFCCC climate change negotiations have resumed in Bonn. Between April 9 – April 11, meetings are occurring for both the ad-hoc working group for long-term cooperative action under the convention (AWG-LCA), and the ad-hoc working group on further commitments under the Kyoto Protocol (AWG-KP). These working groups have been tasked with completing the Bali action plan by the COP 16 meeting in Cancun, Mexico. Some of the Bonn meetings are webcast here. According to the UNFCCC website:

The first sessions of the AWG-KP and AWG-LCA in 2010 will focus on the organization of work of both working groups this year, including the need for additional meeting time, with a view to reaching a successful conclusion of their work at COP 16 /CMP 6 in Cancun.

Several issues have played a significant role so far:

  • There is a proposal that the Secretariat draft a new next that would draw on both the LCA text from last year, and the Copenhagen Accord. The other option would be to continue negotiating on the old text. If there was a new text, it would be released before some negotiations in June. At the time of writing, it seems like a new text is being opposed by Bolivia, Venezuela, Egypt and Saudi Arabia.
  • Countries are staking out (and to a certain extent re-iterating) the positions. Some non-Annex I parties have emphasised the importance of the Kyoto Protocol, and that Annex I parties to the Kyoto Protocol should have stronger commitments, and that loopholes involving permit carryover and LULUCF accounting should be addressed.
  • Russia stated that negotiations should be more efficient; countries should not use up time by repeating their positions; and negotiations should not take place at night, so that negotiators could get some sleep (this particular point received applause).
  • An issue for discussion is the number of meetings, some suggestions for two additional meetings.
  • The US stated made a statement that included the following points: Copenhagen was a remarkable breakthrough because: an agreement to limit temperature rises to 2 degrees; a framework where countries can list their actions or targets; a framework for transparancy; finance commitments; technology; adaptation; and REDD. But there was not much progress in the formal negotiations on the ‘crunch issues’, over 100 pages of brackets. But heads of state achieved things that the formal process could not. The accord should materially influence negotiations. Support chairs proposal to draft new text.
  • Ghana stated that Annex I parties should fund the extra meetings and fund the participation of two participants from each non Annex I party.
  • In order to simplify the negotiations, and make them more inclusive, the chairs of each working group have proposed to create a single contact group corresponding to each working group.
  • Papua New Guinea has called for ministers to meet in order to provide political direction, and when progress is made, then negotiators should meet and integrate progress into the negotiating text.
  • Other negotiators, including the Phillipines, have said that the process should be ‘party driven’ in order to avoid the ‘mistakes of Copenhagen’.

The difficulties with finding cooperation on climate change were illustrated at Copenhagen, which resulted in a political ‘accord’, but where there remained too much disagreement to arrive at a binding international treaty. There has been an ongoing political debate about the role of the United Nations, and whether more could be achieved in negotiations involving smaller groups of countries. The Copenhagen negotiations may have made the latter more likely. The lead US climate change negotiator, Todd Stern, stated:

You can’t negotiate in a group of 192 countries. It’s ridiculous to think that you could.

but that

It is certainly premature to write off the UNFCCC. There is a credibility that is provided by the full group. So on the one hand, I don’t think you can negotiate in that grouping, but on the other hand, it’s good for there to be a larger grouping that the smaller representative group can come back to.

Some of the rules [of the UNFCCC] can be difficult. If you’ve got 185 countries wanting to do something and a handful that don’t want to, that blocks everything.

Nicholas Stern has offered a different perspective, stating that “The fact of Copenhagen and the setting of the deadline two years previously at Bali did concentrate minds, and it did lead… to quite specific plans from countries that hadn’t set them out before”, and that it was vital to stick with the UN process, whatever its frustrations. Stern also stated that the “disappointing” outcome of December’s climate summit was largely down to “arrogance” on the part of rich countries.

Other perspectives in this debate have been offered by Jonathan Pershing, Robert Stavins, and Andrew Light. Gro Harlem Bruntland, the UN special envoy on climate change, has said that there is likely to be a two-track process, with negotiations both within, and outside the UN.

I have written more on the role of different countries at Copenhagen (including ‘rich’ countries) here. A major deadlock in the negotiations is due to developing countries being unhappy with Canada, Japan and Russia not being willing to be part of a second commitment period to the Kyoto Protocol. Another problem is that Saudi Arabia and other OPEC members (many of these countries could be considered to be ‘rich’, even though they are not Annex I countries) are blocking discussion of new legally binding protocols under the UNFCCC, sometimes using lack of progress under Kyoto as an excuse.

Game theory can provide useful insights when considering debates such as these. In fact, there has been a parallel debate in the game theory literature on whether cooperation is more likely to arise from a `grand coalition’ of all countries, or from smaller coalitions. The debate has been surveyed by Chander and Tulkens. An important contribution is from Finus and Rundshagen, who consider different ways to model coalition formation as a non-cooperative process.

In some ways the Annex I parties to the Kyoto protocol behave like a coalition — members behave more cooperatively with respect to each other than they do towards non-members. The set of Annex I Parties to the Kyoto Protocol is similar to the ‘open membership’ coalitions described by Finus and Rundshagen. Other countries are free to join the Annex I Parties, but generally they don’t want to. Many Annex I countries instead want to leave.

The European Union is closer to a ‘classical’ coalition. They choose their emissions in a cooperative manner, negotiate collectively in the UNFCCC, and participate in an emissions trading scheme together. Membership is not open, and decided collectively, in a manner similar to the ‘exclusive membership games’ described by Finus and Rundshagen. Processes where countries link their emission trading schemes may also work in a similar way to an exclusive membership game. In the cases studied by Finus and Rundshagen, although open membership coalitions are easier to join, the equilibria for exclusive membership coalitions involve larger coalitions and a more cooperative outcome.

A possible implication of this is that a process where a small amount of ‘major emitters’ negotiate a coalition, which others are then free to join, is likely to be less successful than a process that tries to find the largest possible group of countries who are willing to cooperate with each other. Carbon market linkage may also facilitate cooperation.