Bipolar on Climate Change at COP24

Choose one word to describe the results of COP24 and the state of climate change today. Bipolar … dramatically bipolar. We find ourselves torn between despair and hope, between optimiScreen Shot 2018-12-17 at 2.08.08 PMsm and realism, between real progress and a Paris rulebook with no rules. Though Polish officials declared success, really the Paris rulebook that came from COP24 is an agreement to disagree and try again later.

The good news is that after weeks of marathon, overnight negotiating sessions the parties came to a 133 page agreement reflecting years of work since the Paris Agreement. What the agreement does do is affirm the Paris Agreement and allow parties to move forward. What it purports to do, but really does not do, is establish the framework, the rulebook as it is called. Yes, there is progress in the agreement, but to call it the rulebook it was supposed to be – that just stretches too far.

The World Resources Institute identified four key elements needed for a Paris Agreement rulebook: 1) common timeframes; 2) reporting and accounting methodologies; 3) transitioning to the new transparency framework; and 4) effective peer review processes. Screen Shot 2018-12-17 at 2.26.14 PMOn common timeframes the agreement states that they agree there should be common time frames, they should discuss it in June 2019, and then approved by the COP with even a reference to what year it should be approved by deleted from the final text.   The development of a registry that would hold all the NDCs is critical to transparency and access by the public which helps hold Parties accountable. Here again the agreement agrees to have the UNFCCC work on a prototype, but it is subject to confirmation at the COP in November 2019 – another indicator that there were a couple of issues, particularly regarding a search function, that the parties could not agree on. Parties could not agree on the features each NDC should have and pushed consideration of further guidance out until 2024. The Parties did agree (per the Paris Agreement) that they would submit the NDCs based on common information in Annex I and be held accountable via common information in Annex II. However, they could not agree on how “target” should be defined and so the final text simply states – “general description of the target.” Still these Annex’s do call for the information required to at least have a skeleton framework for transparency.

The real big failure at COP24 was a complete breakdown on Article 6. All of the work on cooperative approaches and Internationally Transferred Mitigation Outcomes, (see my earlier blog posts here and here) the work that enables the investment by developed countries into developing countries that is needed to accelerate progress, all of these sections were tabled until next year. They will use the progress in negotiations as a starting point, but without some agreement we cannot begin to create global markets that investors will trust enough to invest in.

Screen Shot 2018-12-17 at 2.22.10 PMFundamentally, they agreed – thus moving the Paris Agreement forward – to disagree – thus hampering acceleration and progress. As the Assistant Secretary General Elliot Harris quoted Vermont’s Bill McKibben: “If we don’t win very quickly in climate change, then we will never win. … Winning slowly is the same as losing.”

Despair and Hope: Throughout the week there was an endless stream of somber information regarding the reality we are facing.   The new UN Emissions Gap Report indicates the gap between what is being done and what is needed has grown significantly while countries fail to perform to their commitments. Screen Shot 2018-12-17 at 2.19.57 PMFrom estimates that climate change will drive 140 million people to move within a little over 50 years as projected in the World Bank Group Report to entire countries and cultures being obliterated in the Marshall Islands. From the Unites States government report of a 10% impact on the economy double that of the recent great recession that will exacerbate environmental, social and economic inequalities – to the sad reality that we most likely cannot save our coral reefs and arctic ice is disintegrating at a faster pace that scientists had ever predicted.     AND YET, we must have hope to move forward – we cannot be crippled by despair. Climate change action is also predicted to yield direct economic gains of $26 trillion according to the New Climate Economy Report.Screen Shot 2018-12-17 at 2.17.19 PM

Frankly that is the world we face now. One where we must simultaneously face the extreme consequences of our apparent failure while maintaining hope that if EVERY ONE OF US does our part we might, just might, avoid catastrophic failure.

“Once you choose hope, anything is possible.” Everyday we will face and experience despair, and every day we must be bipolar and choose hope.


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.)

 


Pricing carbon: Is this the year?

At the close of COP21, French President Francois Hollande promised to build on the Paris Agreement by advocating for a global carbon tax.

ICAPPutting a price on carbon has been done at regional, national, and subnational levels thus far. Some jurisdictions have used the cap and trade approach while others have levied a carbon tax.

Today the International Carbon Action Partnership (ICAP) issued a report predicting that 16% of global GHGs will be covered by carbon markets by 2017, up from 9% in 2016. The report underscores that emissions trading schemes (ETS) are currently found on 4 continents, 35 countries, 13 provinces and states, and 7 cities.  Analyzing the coming growth, it points to pledges in the 185 INDCs filed pre-COP21 that indicated intent by almost half of these countries to use market mechanisms to mitigate GHG emissions.  ICAP specifically highlights China’s announcement in 2015 to expand its province-level pilot markets to a national market in 2017: once operational, the Chinese ETS will bypass the EU’s market as the largest in the world. The ICAP report also looks carefully at new efforts in North America, Latin America and the Caribbean, and greater Asia Pacific region.

On the carbon tax front, Canadian province British Columbia has applied a carbon tax to fossil fuel consumption in the province since 2008.  Currently, voters in Washington State are considering a ballot measure that would make it the first U.S. state to do the same. Over 350,000 Washington residents signed on to the initiative, which (similar to BC) would be a “revenue neutral” tax that would result in other state taxes being lowered.  South Africa is in the process of revising a carbon tax bill proposed last November, which is likely to be implemented in January 2017.

UPDATE:  On March 3, all ten Canadian province premiers will meet with Prime Minster Justin Trudeau to discuss a national carbon tax. Alberta Premier Rachel Notley supports a carbon tax while her peers from Manitoba and Saskatchewan oppose it.  Interestingly, the Ontario and Quebec premiers also oppose a national carbon tax, presumably due to their existing regional carbon pricing schemes.  A collection of energy sector business leaders, banks, unions, think tanks, and environmental groups have weighed in to support it.

 


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.

 

 


Carbon Tax – More of the Same or Energy Miracle?

Carbon Tax #2As we get closer to Paris, powerful voices are lining up to support a carbon tax. When you look closer, you see that the voices have different motives and divergent goals. In June 2015, six of the world’s largest oil companies sent a letter to the UNFCCC asking for a global carbon tax to be part of the new climate agreement. This month, in an Atlantic Monthly article, Bill Gates, argues we need a carbon tax to drive a low-carbon future.

Both parties call for a carbon tax but their preferred outcomes couldn’t be more different. They both see a world that needs more energy not less. But the source of that energy divides them. And their use of the carbon tax and the carbon tax revenues reveals the split.

The oil companies acknowledge that we need faster action to cut emissions. They call on the UNFCCC to “introduce carbon pricing systems where they do not yet exist at the national or regional levels” and to “create an international framework that could eventually connect national systems.” The companies say that they want a levelized international playing field where the same rules apply to all participants. What they don’t want is an energy revolution. What they do want is to retain the existing hierarchy. For them, a global carbon tax equals business certainty and economic stability. Everyone who can pay the price can continue to do business and their business model depends on exploiting the fossil fuel reserves they control. That is why their proposal avoids discussing how to spend the revenues.

Bill Gates doesn’t see the same profitable future for fossil fuel companies. He wants an energy miracle built on new energy technologies and he wants a carbon tax to fund that miracle. He argues that current proposed market solutions will struggle to achieve a 30% emissions reduction by 2030 and they will fail to produce an 80% emissions reduction by 2050.

Gates identifies a lack of research spending as the culprit. The U.S. government funds health research at approximately $30 billion per year while federal energy research only gets $6 billion dollars per year. Gates wants carbon tax revenues to fund massive investments in energy research and development (R&D).

Taxes require collection and spending. While both proposals discuss collecting the carbon tax, only Gates talks about where to spend the money. Feeding a starving energy R&D sector could kick start an energy miracle. A carbon tax that maintains the status quo will lock us into a fossil fueled future. As Paris gets closer, there will be more calls for carbon taxes. Will tax proponents want more of the same or will they want a new energy future? The answer lays in the how they spend the revenues.

 


I will, if you will

IMG_0876 A comment in this week’s Nature concludes that the current route to Paris is too self-centered and not cooperative enough. Its authors, researchers from the Universities of Cambridge, Maryland, and Cologne, advise UNFCCC Parties to focus on the common commitment to a global price of carbon.

Professor David MacKay of the University of Cambridge told the BBC that “the science of cooperation predicts that if all you are doing is naming individual contributions — offers that aren’t coupled to each other — then you’ll end up with a relatively poor outcome. If you make a treaty that is based on reciprocity, so ‘I will, if you will’ and ‘I won’t, if you won’t’, then you can end up in a very different position. If people make a common commitment that they will match what others do, then it becomes in your self interest to advocate a high level of action because it will apply not only to you but also to others.”

To achieve this international climate change mitigation cooperation, these researchers recommend that each UNFCCC Party commits to imposing charges on carbon emissions from fossil-fuel use sufficient to match an agreed global price. Each country could do so by its individual choice of tax or a cap-and-trade policies. The global price could be set by voting, thereby producing “a coalition of the willing.”

Bob Ward from the Grantham Research Institute on Climate Change and the Environment (the current home base for Sir Nicholas Stern, author of the well known Stern Review in 2007) finds the study’s conclusion “too pessimistic.” He told the BBC that “the authors are right that a global price on carbon is necessary, although it would be, on its own, insufficient to generate the pace and scale of action required.”

IMG_0874As we’ve chronicled this fall, UNFCCC Parties have been submitting their INDCs or intended nationally determined contributions to the Secretariat since March, 2015. INDCs are part of an overall “pledge and review” strategy put in place post Copenhagen (COP15) to entice all UNFCCC Parties to sign on to a new international climate change agreements that will follow the end of the Kyoto Protocol’s second commitment period. An October 1 deadline — set so that a technical report can be prepared and distributed three weeks before the COP21 negotiations begin — prompted all major GHG emitting countries and more than a hundred others to publicly announce their individual pledges on the UNFCCC portal. Recent calculations by several non-governmental organizations, like Climate Action Tracker, World Resources Institute, and Climate Interactive, show that these self-defined (and interested) declarations will not keep atmospheric warming below the UNFCCC’s current 2C goal.

The Nature comment ends on this note. “After decades of failure, a fresh approach is needed — one that is guided by the science of cooperation. A common price commitment would harness self-interest by aligning it with the common good. Nothing could be more fundamental.”