Wednesday, November 30, 2005

What is the Future of Action on Climate Change?

This article is looking at how we achieve the dramatic emissions reductions required globally to limit the worst of climate change. For more information on why this action is required, have a look at this introduction to climate change. Sufficed to say, all seven reports I used to research this article are agreed on the reality of climate change and are focused at creating broadly acceptable policies and agreements to address this problem.
The international Climate Change Taskforce makes its call to action as follows:

The cost of failing to mobilise in the face of this threat is likely to be extremely high. The economic costs alone would be very large: as extreme weather events such as droughts and floods become more destructive and frequent; communities, cities, and island nations are damaged and inundated as sea level rises; and agricultural output is disrupted. The social and human costs are likely to be even greater encompassing mass loss of life, the spread or exacerbation of diseases, dislocation of populations, geopolitical instability and a pronounced decrease in the quality of life. Impacts on ecosystems and biodiversity are also likely to be devastating. Preventing dangerous climate change, therefore, must be seen as a precondition for prosperity and a public good, like national security and public health.
With Russian ratification of the Kyoto Protocol during 2005 attention has quickly shifted to what happens next. The Kyoto commitment period ends in 2012 and no clear plan for what follows currently exists. In this article however I am not purely looking a what happens after Kyoto in terms of an international framework, rather I am looking at the spectrum of future international measures which may be used for climate change mitigation.

Any descendant of Kyoto is likely to draw from key features of the UNFCCC, but will also have to make significant improvements. The key issues to be addressed are:

  • the need to bring developing countries into the system
  • the need to engage with the united states
  • the need to deal with both historical responsibility and adaption
  • the need to achieve far greater global emissions reductions.

Several models have been proposed to deal with these issues, and these will now be summarised. Firstly, what has become known as “Kyoto +”. There are a range of frameworks that fall under this banner, they share several common characteristics; there will be no global emissions target set by the framework, any cuts that do occur will do so on the basis of political wrangling as to what level is acceptable- i.e emissions targets will emerge from the bottom up -with nos basis in science. There will be attempts to include non-Annex 1 countries in the agreement and flexibility mechanisms will be promoted. The problem with this system is that its environmental credibility is in tatters, during the first commitment period it proved difficult to get 37 wealthy countries to agree to a 5% reduction in emissions, what are the chances that we can include every country in the world and get a net reduction of >60%? One point raised repeatedly in the literature is the need for a framework that dosen't start with a quota of political will and uses it up, but which actually builds commitment and encourages bold steps to curb emissions. The educational value of fitting policies to defined targets is enormous. Kyoto + , i therefore suggest, is likely to be inadequate, what is needed is a framework that once set up catalyses action and has atleast a chance of encouraging the dramatic emmisions cuts required. This cannot be acived under Kyoto + where 'horse trading' will allways lead to countries fighting it out to reduce emmisions by the minimum possible amount.

Another model which was proposed by the Brazilian government involves historical emissions, the idea being that a global emissions quota is provided to each country, with those having least historical responsibility having the highest future quota. Apart from the political problems with this, and the impossibility of the countries of the ‘North’ signing up to such an agreement, it also fails to address the environmental issue sufficiently. The proposal is based on a, quite understandable principle of equity, however, if developing countries where allowed to emit a move towards per capita historical emissions, we would find that severe climate change had occurred, and to no ones benefit. Climate policy must look at equity and justice but also the environmental outcome, on a finite planet. Having said this, there is a real need for engagement with the developing nations of the world. This engagement can only be a success by tackling issues that most directly effect these nations, adaption and sustainable development may turn out to be key In this regard. One possible source of money for an adaption or development fund would be admitted liability of developed nations, or litigation against both nations and companies for the effects of there pollution.

A somewhat more environmentally acceptable approach to framing cooperation on climate change is the tryptych approach, as developed for the EU by the university of Utrecht. This worked relatively well within the EU to distribute its entire goal as set by Kyoto. On a global scale however there are problems with this approach. Although it uses a system to allocate emissions, hence removing the problems of horse trading as in Kyoto + , and this would encourage participation from the developing world, it does however take dollars into account too strongly and therefore “writes in” current injustices. What I mean my this is that there is to much reliance on the statues quo and to much emphasis of the importance of this. To preempt my later conclusions slightly-I believe that if a country is in a position where emissions reductions are difficult to achieve then that country should have to buy these emissions reductions from other countries in the world, the market will keep these prices low and the higher the global price goes, the more ‘affordable’ domestic reductions will be. The most important message from this whole approach is the importance of agreements concerning the transfer of technologies and knowledge, as the developed nations are already committed to under the UNFCCC, but which they have failed to deliver.

The penultimate system I will look at is the Multi-Sector Convergence (MSC) approach, developed by Cisero and focused on the principles of equity and “common but differentiated responsibilities”. An interesting approach, it involves analysis of various sectors on a national level to decide upon the emissions cuts required for a given nation, clearly an emissions target is required to aim at, and this is a significant strength of the system. Again, like tryptich, however, it allows for special exemptions, the sort of exemptions that a very large number of countries are likely to try and exploit, and possibly one or more key countries. Amongst the interesting elements to MSC is the inclusion of senatorial CDM, where whole sectors can be aggregated and accredited rather than just individual projects. The MSC includes the final framework, Contraction and Convergence, implicitly, but problematically doesn't state that the emissions target that it is going to be aimed at will be science based, as is the case with CC as expounded by the Global Commons Institute.

The final system I looked at, and the one which I support, is known as contraction and convergence. Although this may be thought of as more of a principle than a framework, and more of an inevitability that a principle, it is a vital principle that should logically lead to an equitable framework. The contraction element reffers to global contraction of emissions as defined by the science and to avoid dangerous climate change, a goal enshrined in the UNFCCC. The convergence entails a reigning in of emissions by the developed nations, to allow some growth in the carbon intensity of developing nations. Convergence towards equal per capita emissions allocations. In Contraction and Convergence as already mentioned, the ‘horse trading’ is limited to after a global cap has been assigned. Every country will then negotiate the path to convergence, as certain developing countries will have surplus quota of emissions, this provides a usefull fund for adaption, as well as encouraging the adoption of low carbon technologies, this is likely to gain theire support. Such a framework will not be easy to implement but, agreeing upon a framework that doesn't achieve its goal, just because it is easy to commit to is the ultimate bureaucracy. As the Institute of Public Policy Research (IPPR) point out:

“Bold leadership must change the bounds of what is considered realistic”

After the current Kyoto implementation period I therefore support Contraction and Convergence as the global framework for action. To this framework, there are however numerous other measures which must be incorporated, to make the mandatory targets reachable. These measures include, emissions trading schemes, a leadership group of countries, targets on policy and measure, action by financial institutions, groups to encourage co-operation in the business community and in the energy sector. These other measures have to well coordinated, and executed with equity and the mantra of “common but differentiated responsibilities” in mind. I will now go on to describe in some more detail the parts of the current Kyoto system that have been a success and the schemes currently under way that deserve to play a more central and prominent role in climate policy.

Probably the greatest single development within the Kyoto framework has been the EU ETS. The first stage of this scheme has been characterised by poor commitment levels and wrangling, particularly by certain industries who have been arguing over baseline years. However further commitment periods look likely to be far more rigorous and even under the current scheme a significant cost of carbon has been created as surging petroleum prices have encouraged coal, demand for carbon permits has increased, the market price has therefore risen and encouraged investment in clean technologies. With a slightly higher price of carbon key technologies such as CCS are likely to be encouraged, this of course is contingent on significantly lower carbon quotas fro the whole system in the next commitment period. Perhaps even more so that the cost advantages of an ETS engagement with the USA and Australia is widely expected to come via a coalescence of ETS’s. This is strategically vital and aslong as the ETS’s work within a framework of contraction and convergence, with environmentally sound emissions quotas, tis seems to be a hugely promising progression. ETS’s also offer the potential for the inclusion of aviation, which, due its high carbon intensity could significantly increase the cost of carbon, and in the process would pump vast amounts of revenue into the system, catalyzing a wide range of technologies. Aviation is currently un unaccountable for it emissions and any move away from this is highly significant, the proviso being that all forcings must be considered, not just the effects of Carbon Dioxide. The Australia institute have this to say about emissions trading schemes:

“In the US the most promising domestic approach is a national cap and trade scheme along the lines of the McCain-Lieberman Bill. The US and Australian ETS would harmonise with the EU ETS with a view to trading …immediately after the first commitment period”

Although at the federal level the united states seems hell bent on protecting the vested interests of a few wealthy oil magnates, things are all together different on the state by state level, and it is widely anticipated that some varient of the McCain-Lieberman Bill will be passed within the next 3-5 years.

When climate change is discussed in the media agreements are largely broken down into two categories, mandatory emissions caps, and technological solutions.Technological progress will be a significant part of reducing global emissions but to say it could be an alternative to emissions caps is to underestimate the severity of the situation we are in. Politicians are used to working incrementally, we have not time for this, we need a radical shift in how we view the world. The atmosphere is a finite resource, earth is full of finite resources, however much the economists dislike the idea. Technological progress falls into a bracket of action, namely targets on policies and measures, which are politically vital for progress towards achieving emissions reductions. Examples of targets include: sectorial efficiency targets such as an average fuel efficiency of 45mpg for cars; or total efficiency of power plants, such as new power stations utilizing 65% of the total energy in the fuel, achievable only with the use of combined heat and power, encouraging small scale community heating projects. Targets for policies and measures are a crucial part of an international system, and just as in the EU which has a common climate policy along with the EU ETS they are important in encouraging investment in new technologies, and rapidly bringing marginal technologies into the market place and thereby reducing there cost. The Kyoto protocol is based on a principle of “common but differentiated” responsibility for action, and developed nations are therefore committed to funding developing nations to take advantage of new technologies.

There is also the matter of litigation by developing nations suffering the damage due to climate change as a result of emissions from developed nations. There needs to be a system for addressing this, an adaption fund and a fund to support the adoption of policies and measures would are both crucial for involvement of developing nations, proceeds from litigation could feed into such a fund. At a meeting entitled the GW8 that was held in Edinburgh during July of this year I asked Marry Robertson, former head of UN Commission on Human rights about this very issue and she responded that it is something worth a lot more attention than it is currently getting and that it has the potential to be very significant. More recently the IPPR have pointed out that:

“There is increased climate change litigation in the domestic courts and sooner rather than later industrialized countries and or corporations will be found liable through ad hoc court decisions. This is not a way to promote predictable and sensible policy development in the long term”

The reason for the predictable success of litigation in the future is that there is an increasingly good understanding of climate science, and in particular a UK government funded project known as MATCH has been attempting to quantify damage caused so far and link emissions levels with resultant damage.

“By the end of 2005, a robust scientific methodology will exist as a result of work funded by the UK government under the modeling and assessment of contributions to Climate change initiative (MATCH)”

Moving on to look at the leadership role that key countries have to play in reducing global GHG emissions the first point that we should bear in mind is that 25 countries are responsible for 83% of current global emissions and the vast majority of future emissions. Agreement amongst these countries is going to be a crucial part of real progress on climate change it is important that as much discussion as possible goes on between these countries outside of the UNFCCC in a neutral forum, broad consensus on the dangers of climate change and a future emissions reduction goal is required before serious negotiations can begin. 25 countries is not an impossibly large number to engage with, even agreement between the G8 + China and India would be hugely important. There is a real need to bridge the divide between the north (USA+Europe) and the south (China+India). This divide consists largely on the matter of commitment and the mirror of this commitment, funding. There are several ways into this issue, contraction and convergence puts down an equitable framework and article 4 of the UNFCCC points to the other part of the solution, adaption funds. It is perhaps here that the Kyoto framework has failed most conspicuously. Several organizations where set up to deal with the issues of adaption and development, these are; the Global Environment Fund (GEF), the Adaption Fund, and the Special Climate Change Fund. In 2001 a “political declaration” was made at COP 7 to provide $450M, a year, primarily for adaption, to date only $20M has been provided. If developing countries are to commit, they have got to be confident developed countries will stand by there commitments!

“Supporting adaption is a policy necessity. Agreement on stronger mitigation efforts-particularly with some form of developing country commitment-will likely be achieved only if it also delivers more on adaption”

The PEWsPocantico dialogue on climate change, emphasises the issue of engagement with developing nations. And the role of sustainable development, which is more or less synonymous with adaption.

“Strengthening the international effort-and in particular-deepening the engagement of developing countries-requires new approaches to better integrate climate and development concerns”

Once we have an equitable framework and the necessary policies to engage the developing world and therefore ensure US participation there are a whole other range of schemes which have to be looked at to engage with business. Examples of schemes include REEEP, the climate group and the carbon disclosure project. Financial institutions such as the World Bank, export credit agencies, and the OECD also have a role to play in ensuring developments are assessed for there impacts on climate change.

The renewable energy and efficiency project (REEEP) is responsible for systematically looking at countries energy sectors and enabling investment in renewable energies. REEEP has three areas of work:

  • 1. Policy and Regulation (Through SERN)
  • 2. Catalysing new funds
  • 3. Awareness raising, constituency building and better communication between steak holders.

The Climate Group is fulfilling a key role in the business communities fight against climate change, it is highlighting measures which various companies have taken, describing the benefits and promoting more such initiatives. Clearly the best way for industry to become involved in climate change mitigation is through commercial self interest and when companies achieve financial savings through such measures it is important this is publicized so the whole of the business community is on the look out for such savings, particularly when these savings come from innovative technology or ideas.

The carbon disclosure project is another scheme with a crucial role in raising awareness amongst businesses about the importance of there carbon emissions. The carbon disclosure project seeks reports from large listed companies about there carbon emissions and how they plan to reduce either their emissions or their emissions per unit production. The fact that considering climate change has recently become a fidicundary responsibility is another warning shot to industry. Do your part to prevent global warming or you may be found negligent for needlessly damaging the environment.

The final means of tackling climate change that I am going to address is work to encourage financial institutions to take climate change seriously. During the period 1995-1998 $244 billion was invested in the energy sector, 2/3 in developing nations, by contrast $9 billion was invested in renewables. The proportion of investment in renewables is growing, particularly as a result of the rise of economically viable wind power, investments by the big financial institutions are however still strongly focused on fossil fuels, 94% of world bank investment is currently in the fossil fuel industries.

The world bank recently carried out an extractive industries review, it came to the conclusion that:

“the world bank should phase out investments in oil production by 2008 and devote its scarce resources to investment in renewable energy resource development, emissions-reducing projects and clean energy technologies”

An admirable sentiment, however watch the words closely! They latter go on to commit to a 20% increase in renewable enery annually, why 20% when things are already so unbalanced, why not 100%?

It will take dramatic steps to rebalance the world banks portfolio. It turns out that, in staggeringly brazen manner, they have based this 20% annual increase on 2005, a year where global renewables investments where increasing dramatically but during which the world bank invested around half what is usually does in renewables. They are therfoe commiting to less that business as usuall! This contradiction with the direct quote I provided earlier can be perhaps understood by considering what they mean by emissions-reducing projects, it seems likely that they have switched from coal to oil and gas, probably for market reasons. The world bank have to be presurised to look seriously at there extractive industries review, and see past there own calculated words to the message, which is accurate, its time to phae out investment in fossil fuels and focus on renewables.

Export credit agencies have a similar role to play, they should be encouraged to take a look at the policies of the European development bank which is commited to looking at the energy intensity of any projects it funds and financing efficiency improvements.

There are also numerous trade agreements and distortions to global energy markets brought about through a history of fossil fuel subsidies. To insure the spead of renewables, the first thing that should be looked at it the investment conditions, and the financial terms availale, subsidies are important, but particularly with wind power, renewables will increasingly win on their own merits where Coal/Gas powerstations are not themselves hugely subsidsed. Advanteges afforded to traditional fossil fuel industries are diverse, a typical example is the finance agreements available within the OECD, where nuclear and coal plant receive favourable pyback periods of 12-15 years whereas renewables find much more stringent conditions. In this example perhaps a collectons of renewables projects could be considered for financing as a unit rather than a single project, or perhaps small projects should not be sided against.

To conclude: I concur with the International Taskforce on Climate Change; “Preventing dangerous climate change must be seen as a public good, like national security and public health”, and the challenge of climate change must be supported with resources commensurate to its significance and attacked with a vigour reflecting the situations urgency, climate change is our problem, we face this challenge today!

Reccomendations for future international action on climate change:

  1. Contraction and Convergence should be adopted as the overarching framework for emissions reductions.
  2. A target should be agreed upon for stabilizing carbon dioxide in the atmosphere, a very strong message will be taught in developing measures for any sensible target.
  3. The actual target agreed upon must result in 2 degrees or less of climate change for most current models.
  4. Negotiations of emissions cuts by given time horizons should be calculated within the framework of contraction and convergence.
  5. Historical responsibility should be used as a funding mechanism for adaption and sustainable development, not as an excuse for inaction by developing nations.
  6. Policies and Measures should be agreed on a sectorial basis and in a first step such agreements would be a good way to engage the developing world.
  7. Technology, knowledge and skill have to be transferred from developed to developing countries in order to encourage clean develoment.
  8. Emissions trading schmes should be set up in Australia and the USA, these schmes should either be fungible with the EU ETS or a methodology for linking these schmes should be designed.
  9. Buisnesses should be encouraged to act on climate change through demonstration projects, as highlighted by the climate group, along with a higher price of carbon.
  10. REEEP and similar projects must be encouraged and funded by the developed nations in order to capacity build for renwables and remove trade barriers.
  11. The World Bank and export credit agencies should be encouraged to take climate change seriously, and carry out energy audits of there projects.
  12. Climate change policy must become an integral part of trade and international business considerations, the impacts of globalisation have to be taken seriously, we have a finite planet.
  13. If the US fails to adopt a serious emissions cap and trade scheme the EU should look to place an eco-tax on imports to compensate for the unfair advantage gained by US industry this money should be hypothecated for climate change mitigation measures.

  14. This is my 12th major article for Climate Change Action, for the other major articles scroll down the page unitll you get to "Cut the crap wheres the real content? my main articles" Enjoy countless hours of my work for free! Not bad from your side of things anyway, certainly not if you have a climate change project to do or just want to learn more on the subject without reading hundreds of reports.

The reports used to compose this report can be found here.And here is the rest of it.An important update is available here.

Climate Change Action

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