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.


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.