Voluntary Cooperation (ITMOs) the Unknown Monster

An important item under negotiation at COP24 is the concept of voluntary cooperation in mitigation. Screen Shot 2018-12-12 at 3.08.55 AMThis item is of huge importance as developing countries need funding and financing to engage in low-carbon development and adaptation but they don’t have mandatory mitigation targets. Developed countries are the ones with the economic resources but they also need ways to meet their mitigation targets. This is where the cooperation comes in: a developed country finances a project in a developing country and gets credit for some of the mitigation toward meeting their Nationally Determined Contributions (NDCs).   These are called Internationally Transferred Mitigation Outcomes or ITMOs. But what are the rules around when and how these transfers can occur and how they are accounted for? Transparency, accurate accounting and avoiding fraud are essential to creating a system of integrity. (See my previous blog on blockchain for part of the potential solution.)

Article 6.2 of the Paris Agreement is intended to provide some direction but it does so by leaving discretion to the Parties by saying that the framework should be consistent with guidance adopted by the COP. It does however specify that the framework needs to provide guidance to ensure that double counting is avoided. Michael Mehling of MIT released a report recently as part of the Harvard Project on Climate AgreementsGoverning Cooperative Approaches under the Paris Agreement. A concern identified by Michael Mehling is that this system could create a perverse incentive for developing countries to have low NDCs so that they can sell their ITMOs. Screen Shot 2018-12-12 at 3.09.35 AMBecause NDCs are by definition nationally determined this cannot be addressed directly. However, the report stresses that the parties should be careful not to over-regulate with restrictions as it may limit participation and increase transaction costs. Mehling stated that lacking ambition in NDCs cannot be compensated for with restrictions on the cooperative approach. “Whatever its final shape, the governance framework for Article 6.2 should avoid being too weak or too restrictive, as either outcome would diminish the very benefits that prompted introduction of compliance flexibility in the first place.” (Mehling from Summary Doc.)

The advantage to voluntary cooperation through ITMOs is that it effectively creates a market mechanism, it provides ways to achieve mitigation at a lower cost and should facilitate an overall increase in ambition. However, Juan Pedro Sira, a negotiator on this issue at COP24, said that when the concept was developed in Paris they didn’t know the kind of monster they were creating.

The key is that simple rules are created that are transparent and robust in terms of environmental integrity by addressing ambition, agility, and transparency.   This will help create predictability benefitting developing countries that want to create projects ready for this process and private investors that want to invest. The sense is that this issue is very complicated but extremely important to the success of increasing ambition sufficient to avoid our pending disaster.


Using Blockchain to Avoid Double Counting While Empowering Everyone to be Part of the Solution

Today’s side event at COP24 for Blockchain Technology for Enhanced Climate Action emphasized the importance of distributed ledger technology (DLT) to accelerate mitigation solutions for climate change and empower non-country parties to work together. The event featured the Climate Chain Coalition Screen Shot 2018-12-11 at 1.12.56 AMfounded just one year ago but already bringing together 140 organizations with a mission to mobilize climate finance and enhance monitoring, reporting and verification of climate goals.

Blockchain technology is a form of Distributed Ledger Technology (DLT). (For a good explanation of this technology see this World Bank Group 2017 report.)Screen Shot 2018-12-11 at 1.22.55 AM It functions as a decentralized database that can securely store data and digital assets, like environmental credits or certificates. Transparency is increased because the data recorded on the blockchain is a permanent ledger that cannot be modified. Trust between parties is increased because the data is not stored in a centralized location but rather through peer-to-peer transactions. Transaction costs are reduced enabling much smaller transactions that are accessible to more individuals.

A new report issued this week by the Climate Ledger Initiative (a collaboration of several think tanks aiming to accelerate climate action) Navigating Blockchain and Climate Action identified three main areas where blockchain has the most potential to accelerate climate action: 1) next generation registries and tracking systems; 2) digitizing measuring, reporting and verification; and 3) creating decentralized access to clean energy and finance.

The UNFCC has identified blockchain technology as a disruptive technology that has the potential to solve the solution to the main challenge of “how do you attribute the climate contribution while avoiding double counting.” Under the Paris Agreement (PA), a country steps up by submitting their commitment to mitigation measures as their Nationally Determined Contributions (NDCs). Theoretically, the development and continued revision of these NDCs will govern the Parties and their climate commitments under the Paris Agreement. But the Paris Agreement also encourages developed countries to finance projects in developing countries. Screen Shot 2018-12-10 at 5.41.57 PMWho gets the credit toward the NDC – the country financing the project or the country implementing the project? How do we ensure that one country (or entity) doesn’t take credit at one stage of a project and another take credit at a different stage? The security and transparency of blockchain may be the solution. (However, keep a healthy dose of skepticism, said CEO of Goldstandard, Marion Verles, because many times technology solutions are being proposed that don’t actually solve the real world problem.)

Climate change is the seminal issue of our generation and requires all hands on deck. As Massamba Thioye of the UNFCCC said today, “We need to mobilize ALL stakeholders, suppliers, financiers, consumers, citizens, policy makers so that they make the right investment.” The challenge being faced is how do we all work on the solution and create market incentives. Ms. Verles identified the importance of DLT technology in the supply chain to help corporations get the critical data they need to make decisions on the impact that a good has on the planet (carbon impact, water impact, etc).

See GLOCHA - the Global Citizen Empowerment System

See GLOCHA – the Global Citizen Empowerment System for Full Poster

This information can move to the end consumer. If you knew, and could compare, the carbon impact of items you were purchasing, would you pay a little more to make a cleaner purchase? The bottom line is that blockchain has the potential to add a value stream to products that represents the intentional choices of individuals, companies, and countries to work toward a cleaner, safer planet.

(Note bitcoin uses blockchain technology in a very energy intensive manner that is not healthy for our planet – see fellow VLS student Ben Canellys blog here.)

 


The Sustainable Development Mechanism AKA The New Carbon Market Mechanism

 

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Photo Source: IBNLive

The Sustainable Development Mechanism is a new mitigation mechanism established in Art. 3 ter of the draft Paris Agreement. The purpose of this mechanism is to “promote the mitigation of greenhouse gas emissions [in developing country Parties] while fostering sustainable development….” In order to achieve its goals, the mechanism provides incentives for successfully mitigating GHG emissions. Under this mechanism, Parties that contribute to the reduction of GHG emissions in a host country Party can benefit from their mitigation activities by using the resulting emission reductions to fulfill their own mitigation ambition requirements.

Overall, the structure of the Sustainable Development Mechanism closely resembles the Clean Development Mechanism, which is the carbon market mechanism in the Kyoto Protocol. Carbon markets and offsets were created under Art. 6 of the Kyoto Protocol, which states that “…any Party included in Annex I may transfer to, or acquire from, any other such Party emission reduction units resulting from projects aimed at reducing anthropogenic emissions by sources or enhancing anthropogenic removals by sinks of greenhouse gases in any sector of the economy….” Additionally, the Clean Development Mechanism was established under Art. 12 of the Kyoto Protocol, which provides a process for handling all of the carbon credits created under Art. 6.

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Photo Source: YaleNews

Ultimately, the major difference between the new Sustainable Development Mechanism from the Clean Development Mechanism is that carbon markets will no longer be limited to developed country Parties. Instead, all Parties will be able to participate in this mechanism. Expanding the scope of a carbon market mechanism to allow all types of Parties to participate in transferring mitigation GHG reductions is unprecedented. We don’t know how all Parties will use this mechanism or how successfully it will address sustainable development issues. Therefore, a  s a successful Paris Outcome appears to be on the horizon, this new carbon market mechanism is one more aspect of the Agreement that will be worth watching develop.

 

 


Financial services promote a greener world

According to Michel Sapin, the French Minster of Finance, the financial sector is in the midst of a transition. Investors, insurers, and banks are at the center of the climate change activity. In a recent presentation at COP21 Sapin noted, “Climate change has immense opportunities. The future is low emissions.”

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Principles for Responsible Investment, an investor initiative in partnership with UNEP  and the UN Global Compact, corroborates Sapin and notes that investors must address the climate issue in their investment strategy.The organization promotes investor focus in sustainability as a fiduciary duty to shareholders.

In looking at investment data, it appears that many investors have embraced and take the duty seriously. From the organization’s report on trends in the private sector:

  • Private sector commitment to green investing is growing.
  • New green bond market exists and it is valued from 50 to 70 billion dollars.
  • Carbon price is a reality; presently more that 450 companies have set internal carbon prices.
  • Investor behavior is changing; portfolio decarbonization strategy is an accessible example.
  • Insurance scaling up both through both issuance and through investment portfolios. Insurers are shifting to low carbon investments

255_m20120816-17262-mmtb4u Looking ahead, to promote investor enthusiasm and enable stronger growth, regulatory authorities need to provide clear guidelines and frameworks. Prices need to be established for carbon and we need to stop subsidizing fossil fuels. Presently several carbon prices exist on global level but trading activity could be more efficient if there was an established market and a transparent carbon price. With carbon and greenhouse gas prices topics of discussion at COP 21, perhaps the UN agreement will assist in establishing a global market.

 

 


Past as Prologue? Joint Implementation and the Future for Flexibility Mechanisms

TradingA recent report by the Stockholm Environmental Institute (SEI) raises some serious questions about the integrity of the Joint Implementation (JI) program, one of the Kyoto Protocol’s main flexibility mechanisms. Since flexibility mechanisms are a core part of Geneva Negotiating Text, this report raises the question of how the UNFCCC will learn from its past mistakes as it enters into the new, post-2020 agreement.

JI is one of three flexibility mechanisms created under the Kyoto Protocol (KP) to assist Annex I Parties in meeting their emission reduction targets. JI allows Annex I countries to meet their targets by purchasing emission reduction units (ERUs) countries.  The JI program design is a creature of the changing political landscape of Europe in the early 1990s. Most JI projects transferred ERUs from Economies in Transition (EIT) countries to other Annex 1 countries in Europe. EITs were the Russian Federation and the former Soviet bloc countries emerging from communism in the early 1990s.

The KP built special exemptions into the JI program to help EITs in their transition to a market-based economic system. Decades of central planning left the EITs with inefficient and outdated manufacturing and energy production facilities that could not compete in the EU marketplace. To give the EITs an advantage, the KP let them set their emission baselines at or before 1990 levels. Since their pre-1990 emissions were significantly higher than their post-1990 emissions, the EITs immediately had a surplus of ERUs to sell into the JI market. As of March 2015, almost 872 million ERUs have been transferred through the JI program with four countries – Ukraine, Russia, Poland, and Germany – accounting for 94% of ERUs issued.

The SEI report indicates “significant environmental integrity concerns” for 80% of the ERUs from Ukraine and Russia. What are these concerns?  The main concern is the faulty determination of a JI project’s “newness” of emission reductions.  One of JI’s key requirements is additionality, which means that the emissions reduction would not have occurred without the project. The SEI report revealed that additionality claims were not plausible for 43% of the projects and 73% of the ERUs. For example, seventy-eight projects received credits for preventing the spontaneous combustion of coal waste piles, projects that cannot plausibly produce additional emissions reductions. The report estimates that unqualified JI projects resulted in an extra 600 million t CO2e of global GHG emissions from 2008-12, the first commitment period of the Protocol. How did this happen?  One main reason given was that host countries established their own lenient rules, without international oversight, for approving projects and ERUs.

This happened because KP rules allow JI projects to be approved under two very different tracks. Track 1 allows host countries approve and issue ERUs and determine if the reductions meet the additionality requirement. Track 2 gives the Joint Implementation Supervisory Committee, an UNFCCC body, the power to review projects and requests for ERU issuance and to certify JI auditors. 97% of the ERUs have been issued under Track 1, demonstrating the JI program design incentivizes countries to self-approve non-additional reductions.

Flexibility mechanisms are going to be a crucial element in getting Parties to agree to a post-2020 agreement in Paris, but they need to change how they measure and verify reductions. The SEI report lists a number of options to improve reporting and measurement practices including improving the program’s transparency by making all documentation publicly available, implementing an internationally accepted verification methodology, and banning the practice of retroactively crediting projects. These recommendations need to be implemented in the post-2020 agreement. The past doesn’t need to be the prologue for Paris and beyond.


A Woman Saving the Planet

c_figueres_v3_400x400This week’s New Yorker leads off with a “Reporter at Large” article by science writer Elizabeth Kolbert (The Sixth Extinction), The Weight of the World: Can one woman get the U.N. to save the planet?  While ostensibly about UNFCCC Executive Secretary Christiana Figueres – answering the subtitled question, “can [she] persuade humanity to save itself?” –  it is just as much about whether the UNFCCC can do its job of preventing “dangerous anthropogenic interference with the climate system” (laid out in the treaty’s Article 2 Objective).

Kolbert has nailed the nature of Figueres’s job: It “may possess the very highest ratio of responsibility (preventing global collapse) to authority (practically none).”  And for those who see her working the UNFCCC meetings, Kolbert’s interview quotes ring true: “I have not met a single human being who’s motivated by bad news – not a single human being.”  Hence Figueres’s contention that “all the nations of the world are now working in good faith to try to reach a climate agreement.”  Even Saudi Arabia, which prefers using “low emissions” rather than “decarbonization,” and South Korea, whose recent INDC filing was, um, underwhelming, at best.

Kolbert has also juxtaposed the international climate change negotiations and macro level emissions data with clear-eyed accuracy.  CO2 in the atmosphere has grown from 350ppm in 1992, when the UNFCCC was opened for signature, to 400ppm in 2015 – despite the Kyoto Protocol’s GHG emissions reduction targets. This is in part fueled by the countries not bound by the Protocol:  the US, which refused to ratify it even though it is the world’s largest cumulative emitter, and China, which had no mitigation obligations under the Protocol in 1997 (and still doesn’t) but now ties the EU on per capita emissions.  The EU surpassed its 2012 reduction targets, with some countries showing what the “conscious uncoupling” of economic growth and CO2 emissions can look like (e.g. Sweden, which has a carbon tax and where the economy grew 55% during the last 25 years, reduced its emissions by 23%). Nonetheless, given the impact of cumulative emissions, only decisive action to peak CO2 soon can keep atmospheric warming below the goal of 2C.

Cue COP21 in Paris and the INDC pledges currently being made.  I cannot agree with Kolbert’s description of the Kyoto Protocol as surviving US non-ratification “in a zombielike state.” The institutional apparatus that the EU enabled the UNFCCC to develop – market mechanisms like emissions reductions trading and energy efficiency and renewable energy investments via the Clean Development Mechanism – helped build models for low carbon development in both developing and developed countries.  China has learned from this experience when lowering its emissions. In addition, the continued engagement in the UNFCCC and Kyoto Protocol has fostered bilateral negotiations between the US and China, India, and Brazil.  The new “bottom up” approach of requiring all countries to make “intended nationally determined contributions” (INDCs) builds on these ideas, institutions, and relationships developed during the last 20 years of international climate negotiations.  While this process component is easy to overlook, it’s more sharp-eyed and active than any zombie I know.

 

 


China: Cause for Despair? Or Cause for Hope?

China FlagAs the nations of the world wrapped up last week’s ADP negotiations on the key elements of the 2015 Paris agreement, many observers remained focused on China.  Simply put, the actions that China takes (or doesn’t take) in the next decade or so could very well determine whether humanity can successfully avoid a full-blown climate catastrophe.  Even though China is still considered a developing country under the UNFCCC, the world, and China’s position in it, has changed dramatically in the more than two decades since that treaty was negotiated.  China has been the world’s single largest source of greenhouse gas emissions since 2006, it consumes nearly as much coal as the rest of the world combined, and its energy demand is expected to double by 2030.  According to an excellent recent Rolling Stone article on US-China climate discussions, China now emits 10 billion tons of carbon dioxide into the atmosphere every year, which is expected to increase to over 15 billion tons by 2030.  The article quotes Kevin Anderson, deputy director of the Tyndall Centre for Climate Change Research, expressing his opinion that if this increase happens, the world’s chances of avoiding catastrophic climate disturbance are “virtually zero.”

As such, some may become discouraged by China’s insistence that “developed” countries bear responsibility for mitigating climate change based on their historical emissions.  For example, with regard to ADP workstream 2, the ENB’s summary of ADP2-6 noted that a Conference Room Paper submitted by China on behalf of the LMDC’s called for “unconditional commitments by Annex I parties to reduce emissions by 40% below 1990 levels by 2020.” With regard to workstream 1, the closing statement submitted by the G77+China expressed concern that the ADP Co-Chairs’ draft text on information on INDC’s in the context of the 2015 agreement lacks “central elements” such as the principles of equity and common but differentiated responsibilities and respective capabilities.  In short, China has shown resistance to international pressure to commit to curbing its greenhouse gas emissions based on its belief that the current climate crisis is largely the industrialized West’s fault.  Its position: Developing nations such as China should not have to bear the burden of solving a problem they didn’t create.  While there is a lot of truth to this argument, it seems to fall short of the reality of the climate challenges the world faces today and into the future.

Nevertheless, China’s recent actions indicate that China’s leaders take the threats associated with climate change seriously and are doing something about it.  For one thing, China’s leaders fully recognize that the environmental degradation caused by its breakneck economic growth over the last several decades, most of which was supported by the burning of coal, is not sustainable.  This heavy reliance on coal has resulted in untold amounts of damage to the country’s air, surface and groundwater, and soils.  Public health has taken a heavy hit as well – a report published last year found that outdoor air pollution contributed to 1.2 million premature deaths in China in 2010.  Accordingly, earlier this year Premier Li Keqiang announced a “war on pollution.”  Among other things, this war will consist of shutting down outdated small coal-fired power plants and industrial plants, reforms in energy pricing to boost renewables, and increases in government spending on measures to address water and soil degradation.  China is outperforming the United Stateswind_power_464 on renewable energy, which now makes up about 20% of China’s energy mix.  China produces more wind and solar power than any other country on the planet, and in 2013 over 50% of new generation was renewable.  There are also indications that China’s coal use may peak as early as this year.

China is also a step ahead of the United States with regards to regulating carbon emissions.  It has introduced pilot cap-and-trade programs in five cities and two provinces that are designed to be replicated and implemented at the national level sometime between 2016 and 2020.  According to a recent study by Resources for the Future, these pilot programs increase the coverage of global emissions by carbon markets from less than 8% to more than 11%.  While the study notes that the pilot cap-and-trade programs are not perfect and could use some improvements, they nevertheless indicate that addressing climate change is in fact high on China’s list of priorities.

China is therefore, somewhat paradoxically, the source of both hope and despair when it comes to confronting the challenges presented by climate change.  It will certainly be very interesting to see how this paradox plays out in the upcoming climate negotiations on Lima and in Paris.


The road from Bonn to Lima (by way of Copenhagen this week)

Looking back on last week’s ADP2-6 special session, it would be easy to echo the notes of pessimism that pervaded Saturday’s press reports.  RTCC (Responding to Climate Change) commented after last Thursday’s stocktaking session that “much work remains” in the session’s last two daysIMG_4368 and noted the frustrated ADP Co-Chairs “offering government negotiators a stern reality check.”   Artur Runge-Metzger acknowledged that the “ambition to finalize the two decisions is no longer possible in Bonn” because State Parties had “not touched on many important things.”  Kishan Kumarsingh put it more bluntly, calling on delegates to “look yourselves in the eye; ask yourself if we are on track.”

adp in bonnSaturday’s Business Insider opened with these words:  “Concern was high at a perceived lack of urgency as UN climate negotiations shuffled towards a close in Bonn on Saturday with just 14 months left to finalise a new, global pact. The six-day meeting of senior officials in the former West German capital was meant to lay the groundwork for the annual round of ministerial-level UN talks in Lima in December. In turn, the Lima forum must pave the way to a historic pact which nations have agreed must be signed in Paris next year, to curb planet-altering climate change. But some negotiators and observers expressed concern that the Bonn talks focused too much on restating well-known country positions on how responsibility for climate action must be shared.”  BI quotes David Waskow of the World Resources Institute (WRI) saying that while the ADP2-6 talks had been constructive, “there is nervousness that the pace is somewhat slow” and  Alden Meyer of the Union of Concerned Scientists (UCS) echoing this concern more pithily: “People are starting to panic a little.”

EU dealEven some good news from individual countries – foreshadowing their INDCs or intended nationally determined commitments/contributions, the content of which was under negotiation all week in Bonn – did not appear to hearten negotiators.  For example, the AFP (L’Agence France-Presse) announced on Thursday that “a European deal on curbing carbon emissions yielded a rare concrete input Friday to UN climate talks, but did little to ease frustration among negotiators demanding progress on a global pact in Bonn.”  The EU-28’s agreement to cut GHG emissions by at least 40% by 2030 over 1990 levels (building on the EU’s current projected 20% decrease from 1990 to 2020), along with 27% renewable energy and energy efficiency targets, was hailed in Brussels but downplayed by some developing country negotiators in Bonn.

Claudia Salerno of Venezuela talking with a U.S. counterpart in a COP19 ADP huddle.Claudia Salerno, Venezuela’s lead negotiator at the ADP (pictured at right facing the camera), spoke on behalf of the Like-Minded Developing Countries (LMDCs) negotiation bloc when she called the EU goals “too little and too late.”    Likewise Sweden’s pledge of $550 million to the Green Climate Fund barely took the edge off developing countries concern about the slow progress of all developed countries in meeting their COP15 pledge of mobilizing $100 billion per year of climate finance by 2020.  Even though the Swedish government’s press release announced that it is “now choosing to take greater responsibility for Sweden’s climate impact and is making a commitment ahead of Paris 2015 by increasing Green Climate Fund (GCF) financing by approximately USD 550 million (SEK 4 billion) and allocating an additional SEK 500 million to international climate action,” Bloomberg News led its Friday report on ADP2-6 with  “a dispute about how to link greenhouse-gas emissions cuts to a promise from the wealthiest nations for $100 billion a year in climate aid emerged as a major stumbling block at UN talks on global warming.”  As UCS’s Meyer observed, “there has to be some collective signal from the developed countries that the direction of climate finance will be upwards and not fall off a cliff. You need more clarity on post-2020 finance if you want to get an agreement in Paris.”

Finally, a Greenpeace report  noted by the GCCA (Global Call for Climate Action) last week that China — now the world’s largest GHG emitter — had decreased its coal usage this year gained little traction in the Bonn talks.  Because China burns almost china factorshalf of the coal used worldwide each year, the fact that it decreased its coal consumption by about 2% while also growing its economy 7.4% and increasing its energy consumption by 4% indicates that the country is on track to meet the mitigation goals it announced at last month’s UN Climate Summit.  This change looks to have resulted from a combination of several “bottom up” initiatives within China, including its National Energy Agency’s proposals to limit coal consumption growth to 2% (by more than doubling wind power capacity and increasing solar capacity fivefold between 2013 and 2020) and regional pledges in 12 of China’s 44 provinces (representing 44% of national coal usage) to limit their coal consumption and the launch of 8 regional carbon markets that prepares China to meet its national emissions trading scheme targeted for 2016.

At the ADP’s closing plenary, State Party delegates spoke out about the road from Bonn to Lima, ignoring the Co-Chairs’ request to end ADP2-6 without individual country interventions.  A general theme was G77 birthdaysounded by Bolivia speaking on behalf of the G77+China that was echoed by most parties: feeling the political pressure from civil society and wanting to avoid a “take it or leave it” situation in COP20’s final moments, the G77 urged the co-chairs to reorient the ADP’s work in Lima by starting with a clear working text and formal groups that focus negotiation on all core elements of agreement.  Ecuador, representing the LMDCs, drew a very clear picture of what it wanted to avoid:  “We represent sovereign states.  We expect to negotiate with dignity,” not in huddles resulting from a mismanaged process.  South Africa, concluding that “the latest version does not reflect the bridges that we’ve built,” additionally called for appointing facilitators to lead these focused groups and working specifically from an updated and reorganized version of the current non-paper.  While directing her remarks to the Co-Chairs, the SA lead ADP negotiator reminded everyone in the room – State Party delegates, UNFCCC staff, civil society organizations –  that “time is not on our side.” Picking up on this last point, the Swiss ADP lead negotiator, speaking for the EIG (Environmental Integrity Group, the only UNFCCC negotiating bloc to include both developing and developed country members), redirected negotiators’ frustration from the ADP leadership to its membership:  “Slow motion this week due to speed limits imposed by parties on themselves, not by co-chairs.”  He observed that the week’s focused work on mitigation commitments had been productive, permitting the parties to delve into more detail and nuance, and commended the Co-Chairs for “creating this space.”

Next stop on the road to Lima is this week’s 40th session of the Intergovernmental Panel on Climate Change (IPCC-40), which began meeting this morning at the Tivoli Conference Center in Copenhagen, AR5Denmark.  Its goal: to consider and finalize the IPCC’s Synthesis Report (SYR), which integrates and synthesizes the findings from the three Working Group (WG) reports already published. Taken together, the three WG reports and the SYR will make up the IPCC’s Fifth Assessment Report (AR5) that the 196 UNFCCC parties will rely on in Lima. From today until the final gavel on Friday, the IPCC will approve, line by line, the SYR’s Summary for Policymakers (SPM) and adopt the draft SYR – no mean feat, given that more than 800 authors and review editors from 85 countries have had a hand in preparing AR5 during the past six years.  Maybe the IPCC’s process could suggest some conflict resolution techniques for the UNFCCC parties?


Germany, Exhibit A of the EU Emissions Debate

Although Germany is popularly viewed as an international leader in the clean energy field, its 2013 performance in producing electricity german renewablestells a different story.   Electricity output from brown coal plants rose .8% in 2013, to 162 billion kilowatt hours, according to the German Institute for Economic Research.   This was the highest level since reunification, when Germany produced almost 171 billion kilowatt hours of power from coal, many in old eastern German plants.  Consequently, Germany’s CO2 emissions will have risen in 2013, even though electricity from renewables is now 25% of the energy portfolio.  (In 2014 alone, surcharges on electricity bills will generate €23.5 billion worth of subsidies for wind and solar power projects.)

This paradox is explained by two main reasons.  First, the low price of CO2 emissions permits in the EU trading scheme has not produced german coal firedsufficient incentives to switch sources.   Second (and related to the first), new brown coal plants came on line in 2012 with a generating capacity more than twice that of the plants being shut down that year.  Build it and they will use.   In addition, electricity production from gas-fired plants fell by almost 15% (due in part to them being more expensive to run), resulting in coal plants mostly replacing the capacity lost when Germany shut down eight nuclear plants in 2011.

This increase in coal-generated power, and the larger context of higher priced gas-generated power, has led to Germany exporting more electricity than it imports.  The Berlin-based think tank Agora Energiewende observed that German coal-fired plants “are crowding out gas plants not just in Germany but also abroad — especially in the Netherlands.”

Gerald Neubauer of Greenpeace declared that “the coal boom now endangers Germany’s credibility on climate protection and the energy revolution,” and requires the Social Democrats to adopt a more critical stance.  This internal political debate will likely be felt in the upcoming EU elections as well.  And in the EU’s position at future UNFCCC negotiations when offering nationally determined commitments.


EU Debating Internally Its Carbon Emission Pledges

This article in Bloomberg News explores the divide among EU member countries when setting the bloc’s overall commitments under the second commitment period of the Kyoto Protocol, as well as those it will agree to in the KP’s successor agreement due to be signed in Paris in 2015.  A draft plan due to be released tomorrow by the European Commission (EC) seeks to commit the EU’s 28 member countries to reducing carbon emissions by 35 – 40% by 2030.  (Currently the EU has pledged a 21% cut by 2020 over 2005 levels.)

Polish coal fired utilityThis plan’s ambitions pose internal political challenges.  Retail power prices have spiked 65% from 2004 to 2011,while natural gas prices have risen by 42%.  In comparison, inflation has been 18% during that same time period.  Some EU members, like Germany, France, Italy, and the U.K., support the 40% target while countries like Poland, which derives almost all of its electricity from coal, opposes it.  Likewise, there is disagreement on how to balance the policy goals of overall reduction targets with renewable energy targets.  Four years ago, when making the 2020 pledge, the EU also aimed to have 20% of energy consumption by 2020 come from renewables. Germany, France, Ireland, Denmark, and Belgium continue to support having a separate renewables target, while the U.K. opposes it.  Internal politics is key to the EU’s next climate policy steps:  the European Parliament is due for elections in May and the EC, in October.

In the larger picture also looms external political concerns.  “What we must do is to keep climate policy, but we have to put at the same level cost competitiveness for energy and security of supply,” said the president of BusinessEurope, a Brussels-based group that represents companies from 35 European countries. “If we go for 40 percent unilaterally this would be absolutely against industrial competitiveness of Europe. The goal has to be realistic.”danish wind turbine

Reconciling the internal and external political concerns is not only key to the EU setting its internal climate policy, but also critical for the UNFCCC negotiations: the EU has the biggest emissions trading system (covering some 12,000 utilities and manufacturers) and the most advanced limits on carbon emissions (covering industrial sectors outside the ETS).  Consequently it is a leader both in setting ambition and devising the mechanisms for achieving sustainable development for developed countries.


Getting Day 2 Off to a Good Start

This morning, COP19 began with a webcast press briefing on emissions trading.  Dirk Forrister, Presidentghgmarket2013-coverthumb and CEO of the International Emissions Trading Association (and former US delegation member who has been active since COP1), gave an overview on the growth of market mechanisms and emission trading as private enterprises respond to national incentives set by state parties with Kyoto Protocol targets to meet.  Forrister and his colleague, Jeff Swartz, used this session to announce the 2013 Greenhouse Gas Market Report.  The Q&A was wide ranging, and Forrister did a masterful job replying directly and precisely, thereby breaking down – and teaching – a complex subject.