Dispatches from Cancun
- Saturday, December 4: The Clean Development Mechanism: forward movement?
- Friday, December 3: Not waiting: Developing country market mechanisms
- Thursday, December 2: Impressions of a COP First-Timer
- Wednesday, December 1: A Decentralized Regime for Climate Change
- Tuesday, November 30, 2010: From Copenhagen to Cancun: Small Steps to an International Agreement?
Day 5: Saturday, December 4, 2010: The Clean Development Mechanism: forward movement?
I’ve spent most of the last few days at the Moon Palace, and I agree with Kiri’s description – a mammoth resort with thousands of harassed looking country delegates. I can also confirm that at least one harassed looking law student has been milling about as well, often busy working but also occasionally pausing to muse about the complexities and idiosyncracies of the surrounding process.
Several times I’ve stopped and paused to think, “So this is what global democracy looks like.” Of course, one could endlessly debate the meaning of an abstract idea ‘global democracy,’ and the UNFCCC certainly falls short of any ideal of that idea. However, after sitting on buses next to a delegate from Namibia, a soil scientist from Canada, a UN officer from Indonesia, and hearing bold statements from delegates of not only powerhouse states like Brazil and China, but also smaller countries like Papua New Guinea, Costa Rica, and Jordan, it’s clear that this is a process in which every country has a voice.
My focus has been a bit narrower than Bryce or Kiri’s. Rather than thinking about the overall future of the climate regime, I’ve primarily been following developments related to just one feature of UNFCCC activity - the governance of the clean development mechanism (CDM). A little background: the CDM was created as part of the Kyoto Protocol. In short, it allows investors to receive tradable credits for greenhouse gas mitigation projects in developing countries, that can be used parties with binding emissions reductions commitments under the Protocol to meet their targets. The CDM facilitates this goal by setting up a regulator, the Executive Board, that approves carbon credits for real and additional emissions reductions in developing countries, which can then be counted by Annex-I countries toward their emissions targets.
There are many controversies surrounding the CDM, but I have focused primarily on issues related to the governance of the CDM. The CDM credit approval process is managed by a panel of ten individuals, the Executive Board, who are chosen by the parties to the Kyoto Protocol, or CMP for short. The text of the Kyoto Protocol explicitly states that the Executive Board is subject to the guidance of the CMP. In a broad sense, the relationship between the CMP and the Executive Board is somewhat similar the relationship between the US Congress and an administrative agency, such as the EPA or SEC. At each COP, the CMP issues guidance to the Executive Board, much like Congress will occasionally pass new laws concerning the EPA or SEC.
However, there are some important differences that raise serious questions about the extent to which the Executive Board is actually accountable to the CMP. The first is that some members of the Executive Board are also official country negotiators (and all countries have something like veto power, though each veto entails considerable political costs), which creates a substantial problem, because these EB-member/negotiators have a strong incentive to oppose anything that limits their power. To give you a sense of the negotiation dynamics this creates, here’s a thought experiment. Imagine that Congress would like to reform the way the EPA is governed. Now imagine that the administrator of the EPA has effective veto power over any Congressional action. It could make it difficult for Congress to reform the EPA, wouldn’t it? Some have called for the CMP to request that Executive Board members not serve as country negotiators, but so far there has been no sign that this will change anytime soon.
The second major difference is that there is no appeals process by which EPA revisions can be reviewed. In the US, if the EPA violates a Congressional mandate (or its own regulations), anyone with standing can sue them in federal court and seek a remedy. If the Executive Board doesn’t comply with the CMP guidance (or its own regulations), no such luck – the best one can do is complain to party negotiators and hope to generate enough political pressure to result in some informal fix. At Copenhagen, the CMP requested the EB to establish an appeals process, in the hopes that this would strengthen the accountability of the EB to CMP and encourage the EB provide more consistent and well-reasoned decisions.
Unfortunately, the EB did not come through on this account. The Executive Board did prepare a proposal for an appeals process, but it left out perhaps the most important part – how the members of appeals panels would be chosen. Without a concrete proposal in hand, it will be difficult for the CMP to reach agreement on this contentious and difficult issue during the short time available to it in Cancun. As a result, it appears as though a final decision on this issue may be delayed another year, although the EB will certainly take some heat for the delay.
However, the CDM isn’t in quite as bad shape as all this might suggest. It has undertaken a number of governance reforms this past year, leading to more transparent and efficient decision-making. It has processed countless projects and provided the right financial incentives for investors to invest in billions of dollars worth of emissions reduction mitigation projects in developing countries. And it continues to plod forward on reaching internationally acceptable standards for new ways of counting emissions reductions.
More broadly, it has improved our knowledge and understanding of GHG mitigation measures (and here my project links back up to Bryce and Kiri’s). The incentives it provides have generated a substantial push – not only amongst private investors, but also among international organizations and research institutions – to develop the knowledge base necessary to meaningfully monitor the effectiveness of many mitigation measures, as well as to develop new mitigation measures. This expertise yields benefits other than investments in CDM projects. This knowledge can also be harnessed by MDBs and bilateral aid agencies to help ensure far more effective distribution of climate finance than would be possible without it – another example of the complex interactions of climate change institutions. So long as an international offset scheme survives, its impact will be felt far beyond the carbon markets.
-posted by John Wunderlin ('10)
Day 4: Friday, December 3, 2010: Not waiting: Developing country market mechanisms
A number of developing countries are starting to consider using market mechanisms like carbon caps to reduce their greenhouse gas emissions. This is good news at a conference that doesn’t appear to be headed towards a comprehensive and legally binding emission reduction treaty.
But a substantial number of these nations will require assistance to strengthen their institutional capacity to handle the large amounts of money that will flow into their coffers as a result of these policies. Some organizations, like the World Bank, are getting ready to help out.
At a side event here in Cancun, the UNFCCC Executive Secretary Christiana Figueres noted that when countries realized that economic development justified climate policies more nations were willing to engage in carbon reduction—even in the absence of an international binding agreement.
In Latin America, countries like Chile and Colombia, have already envisioned voluntary emission trading policies. India plans to put in place a trading system for industrial energy efficiency. And China’s head negotiator Su Wei acknowledged in a recent interview at the National Journal that the country would eventually invoke something like cap-and-trade, although he did not specify a timeline.
But these kinds of initiatives require significant capacity in order to operate effectively. Implementing market mechanisms is not an easy thing for developing nations to take on. It requires specific expertise , and costs money. Most developing countries lack the institutional ability to design, manage and enforce the operation of market instruments.
Recognizing this, the World Bank will launch their “Partnership for Market Readiness” this coming Wednesday in Cancun. The program will assist developing countries create cap-and-trade programs through technical capacity building to both create and then manage the systems. The fund, endowed with over $100 million, will help countries to structure things like emission allowances, enforcement, establishing a baseline, among other things.
The question now is whether the negotiations taking place inside the Moon Palace in Cancun will adequately account for these steps to be taken by some developing countries. Will support for these kinds of initiatives be provided?. An agreement over these issues will require a large amount of specification on how funding for capacity transfer will operate—and it’s not clear that these details will be hammered out before delegates leave next week.
-posted by Gonzalo Moyano (LL.M ’09), Fellow, Climate Finance Project and Institute for Policy Integrity
Day 3: Thursday, December 2: Impressions of a COP First-Timer
I am happy to write my very first blog post (ever!), flush from an encounter with a climate change celebrity. As I made my way to the quiet sanctuary of the “Bloggers Loft” in Cancunmesse, I walked past none other than Christiana Figueres, Executive Secretary of the United Nations Framework Convention on Climate Change. While she may be small (and I can say that as a woman who only just scrapes over the 5 foot threshold myself), she presented as a formidable figure as she power-walked to her next engagement, giving an interview to a throng of journalists as she went.
This is my first COP, but I am told that the contrasts with COP15 in Copenhagen last year go well beyond the delightful sunny weather that we are currently enjoying. So far, we have spent most of our time at Cancunmesse, where the mood is relatively quiet and subdued. Perhaps because the actual negotiations are taking place a few miles down the road, or because the expectations of any significant outcome are much lower this year, but there are not the large impassioned crowds, protests and mayhem that I expected after reading about the experience of the NYU delegation last year.
Things are much more lively at the Moon Palace, the absolutely mammoth resort where the actual negotiations are taking place. The place is a hive of activity, with thousands of harassed looking country delegates milling around the grounds of the hotel, snatching all available opportunities for meetings and discussions. Unfortunately, while the plenary sessions are open to the public and are broadcast live, the really interesting negotiations are taking place in the informal drafting groups behind closed doors. It is hard to get a sense of what is happening, and whether any real progress is being made. Perhaps the “buzz” around Cancun will become more pronounced next week, as the parties move into the business-end of the Conference. For now, all of us outside rely on our contacts inside, as well as the excellent Earth Negotiations Bulletins produced by the IISD. From what we hear, there are a number of confusing signals coming out of the drafting groups at present and no one is sure how this COP will play out. We may have a better idea after the drafting groups convene on Saturday for a “stock-take” of progress so far.
As Bryce blogged yesterday, we held a joint side event with Dartmouth College on “Institutions and Governance Mechanisms for Climate Change.” We had been allocated one of the largest rooms in Cancunmesse but (to everyone’s relief) it seems that plenty share our interest in these issues, and the attendance was fantastic. As part of our very impressive panel, Bryce talked about the core institutional functions that will need to be carried out in the future regime for climate finance, and some of the institutional design considerations that need to be taken into account. We have spent quite some time working on this as a framework for future research on climate finance institutions, so it was encouraging that no-one seemed to violently disagree with what we have come up with so far.
The side events have been a great opportunity to gauge the wide range of views that exist about climate change, particularly in our field of focus, climate finance. On Tuesday evening I attended Friends of the Earth’s session on climate finance, where the speakers were firmly of the view that all climate finance must come from public sources flowing through a new institutional funding institution, and that any reliance on private funds and corporations was misguided. The following night, I heard from the other side of the fence, at a round-table discussion about engaging the private sector. The panel, consisting of representatives from industry, the International Chamber of Commerce, the Inter-American Development Bank, and others, were generally of the view that the majority of climate finance (perhaps as high as 80%) will come from the private sector, and thus appropriate regulatory conditions are needed to mobilize these amounts. I heard a lot of really interesting ideas about how to raise additional funds, address market failures and promote greater investment in a low-carbon future.
I have also been getting a better understanding of how climate change action is playing out on the ground. It is great to realize that all those terms that we tend to throw around casually in our academic discussions, “mitigation”, “adaptation”, “capacity building”, “technology transfer”, are already playing out in a multitude of activities occurring all over the world. At an event run by the UNDP and UNEP, I learned about various capacity building projects, including a UN Habitat program to help cities in the Philippines adapt to climate change; training programs in Peru to support the use of the CDM; a joint project between FAO and the Government of Tanzania for forest monitoring and reporting, particularly in preparation for REDD+; and a UNITAR/ENDA partnership aimed at supporting climate change adaptation in Africa. Today, I attended a seminar on technology transfer run by the GEF, where we heard about solar-thermal energy investments in Egypt, a sub-surface irrigation technology pilot project in Jordan, and the campaign for more sustainable transport options in Mexico.
So, while I can’t give you the detailed inside word on negotiations, I can say that I am hearing from an impressive group of individuals and organizations who, through a vast array of activities, are committed to addressing climate change. With some suggesting that the UNFCCC process currently hangs in the balance, it is reassuring to see this momentum towards addressing climate change that hopefully will continue, irrespective of the outcome of COP16.
-posted by Kiri Mattes (LL.M.’10), Fellow, Global Climate Finance Project
Day 2: Wednesday, December 1: A Decentralized Regime for Climate Change
Last year at Copenhagen, one evening when the crowds outside the conference were particularly large, myself and other accredited NYU participants were escorted through a crowd of the non-accredited by Danish police. Last night, on our accredited participant bus ride home from the Cancunmesse (the location of the civil society events), we had a police escort for part of the way. The life of an international environmental law fellow has never been more glamorous.
When I wrote yesterday about it being too early to tell whether Cancun was going to be a success or failure, I might have spoken too soon. In its opening plenary statement, Japan threw a small monkey wrench into the whole process when it said that it refused either to extend the first commitment period of the Kyoto Protocol or sign a second. In the first Kyoto Protocol commitment period from 2008-2012, Annex 1 (mainly OECD) had limits on their emissions (in Annex B). Because the US didn’t ratify Kyoto and because China isn’t an Annex 1 country, an extension would mean that the two largest emitters would be left out.
Why don’t countries just create a new treaty, something that is not an extension of Kyoto? Developing countries have been very resistant to this because Kyoto had a number of legally binding commitments from developed countries, outside of just emissions reductions. Last year at Copenhagen, when developing countries thought that developed countries were trying to gut the Protocol a large group of them walked out. Japan’s refusal to continue Kyoto, and some other countries’ rumblings about not going to COP17 unless a binding treaty is signed at Cancun may just be negotiating positions, but if they hold, the odds of success here are significantly diminished.
So what happens if the entire UNFCCC process grinds to a halt? Well, the EU has already said that its emissions trading system will continue and that it will still have emissions reductions targets. The World Bank and other multilateral development banks (MDB) will likely continue to make climate-related investments. Global corporations will continue to disclose to shareholders their carbon footprints and climate exposure. In short, portions of a decentralized climate finance system will continue.
For the past year, the Global Climate Finance Project here at NYU Law has been looking at the necessary institutional components for a decentralized climate finance regime. We believe (as do many others) that there will be no single global institution to raise, disburse, track and monitor the large flows of climate finance. Rather, there will be a regime complex of public and private institutions and governance norms that will oversee particular elements of this institutional regime.
At our official side event today—Institutions and Governance Mechanisms for Climate Finance—we had a panel discussion with Dr. RK Pachauri, chairman of the Intergovernmental Panel on Climate Change; Professor Anant Sundaram, Tuck Business School at Dartmouth College; Zoe Tcholak-Antitch, vice president of the Carbon Disclosure Project; Clifford Polycarp, senior associate at the World Resources Institute; and I about this decentralized regime. We talked about the necessary institutional functions, what current public and private institutions were performing some of these functions, and how future institutions might evolve and be structured. A fellow fellow, Kiri Mattes (who will be blogging tomorrow) took video of the session and it may appear soon on the internet.
In the coming weeks, the Project will be releasing a paper on climate finance, and the institutional arrangements for this. All of our current publications can be downloaded at www.climatefinance.org.
-posted by Bryce Rudyk (LL.M. '08), Coordinator and Fellow, Global Climate Finance Project
Day 1: Tuesday, November 30, 2010: From Copenhagen to Cancun: Small Steps to an International Agreement?
On the second day of the Cancun Conference of the Parties (COP) of the U.N. Framework Convention on Climate Change (UNFCCC), things are still under construction at the convention center where all of the non-negotiation activity is taking place. Now in its 16th iteration, the COP has become a bit of a traveling climate roadshow with thousands of people annually flying around the world for two weeks of negotiation, meetings, side events, and this year: sun and sand.
After the crowding of last year’s Copenhagen conference, the organizers have decided to have separate venues for the negotiations and the civil society events. While everyone is allowed to move between the two venues, in the opening days it appears that there is a functional separation between the two. In the Cancunmesse where the civil society events are taking place, there is still construction happening on various countries’ exhibits. Over at the Moon Palace (a couples retreat the rest of the year), the ambient sounds are all of delegates talking.
Yesterday, at the COP opening plenary, a group of new civil society organizations were admitted as official observers to the UNFCCC process. New York University was among that group. While faculty, staff and students from NYU have participated in UNFCCC negotiations before it has always been as delegates of other observers or member states. In our first outing as official observers, NYU Law has a number of fellows and students that will be participating in the COP.
Tomorrow, I will write about what we are doing at the COP, but today I want to try to answer the question I've been most frequently asked in the past few weeks: What is going to happen in Cancun?
Unlike the stratospheric expectations in the lead up to Copenhagen, expectations for Cancun are considerably muted. These low expectations have resulted in (or are a result of) two possible outcomes—neither of which is a binding and comprehensive international treaty to follow the Kyoto Protocol. Some have said that Cancun might be the one of the last UNFCCC COPs; nothing substantial will be agreed here and the entire process will die in the lead up to the next conference in Durban, South Africa in December 2011 or right after. Others believe that a series of small, but important decisions around more money for emissions mitigation and adaption, monitoring financial flows and emissions reductions, preventing forest degradation and establishing a global green fund will be achieved.
Christiana Figueres, the former Costa Rican diplomat who became executive secretary of the UNFCCC earlier this year believes that stepwise agreements are the way forward: “We’re not going to solve the whole problem this year…Multilateral negotiations such as this one…involve the transformation of economic patterns and the economic structure we have lived with for decades.”
So, if a comprehensive international agreement is off the table, then here are some issues that might reasonably be decided at Cancun:
1) Global Green Fund – As a part of the Copenhagen Accord (a non-binding, political document that the last COP took note of), it was agreed that a Copenhagen Green Fund would be established that would channel a significant portion of public climate-related finance from developed to developing countries. Over the past year, there have been significant negotiations about the governance structure and sources of the potential fund. Look out for a COP decision either to establish the Fund outright, or to establish an expert working group to make recommendations on the structure of the fund.
2) Reporting Requirements – Central to the mistrust between developed and developing countries is that no one trusts that other parties are taking actions, either to reduce emissions or fund emissions reductions. In the Copenhagen Accord, it was agreed that developed countries would report on their climate finance flows, that developing countries would report on their mitigation actions that were supported by international funds through a formal monitoring, reporting, verification (MRV) process and on domestically supported actions through the National Communication process. What was not agreed was the structure of any of these reporting requirements. Look out for a COP decision at least on the structure of the National Communications reporting, and potentially the developed country financial flow reporting.
3) Addressing Forest Degradation – For a little more than a year, the parties have been close to agreeing on a way to calculate emissions reductions from forestry and land use (REDD+). This is important because with that calculation, these relatively inexpensive emissions reductions can be used in emissions trading markets. Look for a potential framework on how to incorporate REDD+ into emissions markets.
Even if agreements on all these issues are concluded at Cancun, we will still be far from achieving the level of international agreement required to solve the climate change issue. However, they will be minor international agreements that can be built on over the coming year. In some cases, like the establishment of a Green Fund, they may be significant catalysts to increased finance for climate, notwithstanding the lack of an international treaty.
It’s much to early to determine whether Cancun will be a success, but it’s also much to early to label it a failure.
-posted by Bryce Rudyk (LL.M. '08), Coordinator and Fellow, Global Climate Finance Project