Tag: Kyoto

Coates in Cancún: we have no more time

Oxfam NZ’s Barry Coates continues his series of on the spot reports from Cancún: in this episode, he looks at the way international negotiations work…

Negotiations have picked up pace in Cancún. But it is impossible not to feel frustrated with how long it has taken to get to this point. The problem is not just about the past few days in Cancun. Much of the past three years of negotiations has been wasted since the Ministerial meeting in Bali in 2007 that kicked off these negotiations. Government negotiators stated their positions early on, and then in meeting after meeting over the past three years, repeated these positions. Too much of the time and energy of negotiators has been spent trying to score points off each other.

 

In previous years, the rich nations were very good at doing this and used un-transparent and biased processes to get their own way. This is particularly the case in venues such as the World Trade Organisation. The last time I was in Cancún was for the WTO talks in 2003. After huge protests and the tragic death of a Korean farmer, the talks collapsed in spectacular fashion. The African group walked out of the Cancun WTO negotiations after an unfair negotiations process (eg. a small group of nations were picked to steer the outcome – the “Green Room” named after the office in Geneva where the practice started) and after rich nations tried to force their own issues (notably the deregulation of international business) onto an agenda that was meant to be about development (the ‘Doha Development Agenda’). Since then the WTO talks have limped along, in perpetual deadlock.

There have been some similar tactics tried in past climate change talks, although the common aims in negotiations on climate change are more obvious than on trade (or should be). This was one of the reasons that the Copenhagen talks last year were so ill-tempered and disappointing.

The world has changed and these unfair negotiating tactics are being challenged. Developing countries have gained negotiating skill and economic power. The tectonic plates of global governance have shifted with the rise in economic and political power of the major developing countries. As a result, developing countries will no longer accept the agendas imposed by the rich nations. And they negotiate skilfully and collectively in groups – including the large and powerful BASIC countries (Brazil, South Africa, India and China), Africa and other regional groups, the radical ALBA group (Bolivia, Venezuela, Cuba, Ecuador, Nicaragua and some Caribbean countries), the low income Least Developed Countries and the moral conscience of the negotiations, the Alliance of Small Island States.

So the good news from this re-alignment is that developed nations will not get away lightly with their attempts to renege on their obligations to reduce greenhouse gas emissions. When Japan earlier in the week said they would not agree to a second commitment period of the Kyoto Protocol, the response from negotiators was sharp and strong. Japan was heavily criticised. Civil society groups have also played an important role – Japan’s announcement was met with campaign actions here in Cancún from NGOs in the Global Campaign for Climate Action, and by campaigners in many countries. It appears that Japan has been surprised by the reaction (I don’t know why they didn’t anticipate it). They are still here, and still negotiating and they may be showing more flexibility than their harsh statement implied (“we will never inscribe our target in the Annex B to the Kyoto Protocol under any circumstances and conditions”).

But in other ways this greater balance of power poses challenges to global governance. In climate change negotiations, as in most UN negotiations, there are two main blocs – developed and developing countries – under the rather outdated UN definitions (developing countries include relatively rich nations like South Korea and Singapore). The two blocs can grind each other into stalemate, as they seek to gain advantage, often through unproductive points scoring. Even the most obvious decisions, such as defining a base year for emissions reductions, take years to agree. The answer to the question was always going to be 1990, as it was under the Kyoto Protocol, but Canada and Croatia resisted because it doesn’t suit their pattern of greenhouse gas emissions. Yesterday, after three years, it appeared that this issue had finally been agreed. Glacial progress.

The United Nations is often blamed for these problems, but really the blame lies in the approach of governments. Despite the attempts of the United States and others to find a new place to negotiate, only the UN can generate the full participation and buy-in that is essential for a global agreement.

This means that negotiations are taking years, and we are running out of time. Rising greenhouse gas emissions are causing damage and suffering. The World Meteorological Organisation came out with its most recent data earlier this week. It shows that the past decade has been the hottest ever. Temperatures this month will determine whether 2010 is the hottest year since records began. But millions of people around the world know this already. Farmers know that the seasons are changing, that droughts or intense rainfall are destroying their crops and storms are more frequent and intense. Climate change is deadly serious and extremely urgent, particularly to millions of poor and vulnerable people whose lives and livelihoods are at risk.

The good news from Cancún is that there is a real possibility that there will be some meaningful agreement here.

The good news from Cancún is that, despite the glacial progress over the past three years, Japan’s unhelpful announcement, and a myriad of other obstacles, there is a real possibility that there will be some meaningful agreement here. The Mexican government has been fair and transparent in chairing the negotiations, but they have also been insistent that negotiations will not take place on a line-by-line basis, with arguments over every word. They are steering progress forward through informal meetings, the involvement of Ministers (including New Zealand’s Minister of Climate Change Negotiations, Tim Groser), and strong directions by the chairs of working groups. A lot of the real progress in the negotiations is therefore happening outside the formal process, but it is being managed in an open and transparent way. At last, the negotiations are starting in earnest and compromises are getting made.

The agreement will not include everything we want. But it will include some elements that are important for tackling climate change and helping those at risk. In particular, Cancún might agree the basic structure of a fair Climate Fund. Oxfam has been lobbying negotiators to make sure the structure is equitable and effective in getting funding to those who desperately need it. Some of the other issues will need more work to get to a decision, particularly the level of ambitions on emissions reductions. There has been little progress on that so far, but at least Japan and others are still around the table negotiating. We are pushing hard for a clearly defined process beyond Cancun to raise the level of ambition for emissions reductions.

The 2003 collapse of the WTO trade negotiations was a disappointment for the developing countries that were pushing for fairer trade rules, but it had the silver lining of getting issues like investment out of the trade talks. It also sent a strong message that the rich nations could no longer bully their way to get what they want. But we haven’t got time for a collapse of these climate change negotiations. A collapse would mean even more delay and more suffering. As a T-shirt in Cancun worn by youth delegates here says: “You have been negotiating all my life. You cannot tell me you need more time.”

We need a global agreement – a fair, ambitious and binding agreement. It is clear that an agreement won’t be signed here. But if we get the right result from Cancun, signing the deal in Durban next year becomes a real possibility. We have no more time.

Coates in Cancun: tequila time on hold

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Oxfam NZ’s Barry Coates with climate activists from Japan.

The climate change talks have gotten really busy over the past two days. No midday siesta. No runs along the beach. Definitely no tequila. Only earnest conversations with government officials rushing from meeting to meeting. And lots of confusion.

This is partly because of the complexity of negotiating a huge range of interrelated issues. And these are issues about economics, business and jobs, as well as the climate, polar bears and vulnerable people. The stakes are high.

There are a number of draft documents being discussed in nine parallel sets of negotiations, plus many other informal groupings. Out of all of this is meant to come an agreement acceptable to all 192 countries.

Continue reading “Coates in Cancun: tequila time on hold”

NZ ETS passes the Kyoto bill to our children

This guest post is by Simon Terry, Executive Director of the Sustainability Council and co author with Geoff Bertram of “The Carbon Challenge: New Zealand’s Emissions Trading Scheme” (published by Bridget Williams Books).

New Zealand’s failure to reduce emissions to its Kyoto Protocol target means the taxpayer still faces a $1.1 to $5.7 billion net liability after all the ETS charges have been paid. That is the bottom line after taking account of what the ETS will contribute to paying off the Kyoto bill and Treasury’s advice about how to price what is left.

Years of narrow accounting, which had given the impression that the government was at various times in credit under the Protocol, was finally abandoned in the May Budget – at least in part. It broke with the past by recording key deforestation liabilities on the books, thereby signalling the real cost of New Zealand’s 22% overshoot of its Kyoto target.

This Budget entry officially scotches the myth that the government faces no financial impacts under the Protocol because it can rely on offsetting credits from plantation forests. Those plantation forests are earning credits now, but the credits must be paid back when the trees are harvested in the 2020s. Using these credits to pay the Kyoto bill is the equivalent of putting the cost of these emissions on the plastic for the next generation to pick up.

The Budget’s inclusion of a contingent liability for harvesting forests that are earning credits today is an important step, but it covers only the five years of the ETS to 2012. What the Budget failed to show is that the next period from 2013 to 2020 will be even more costly. New Zealand is actively negotiating a new international commitment that it expects will involve a stricter emissions target, while official projections are for the nation’s emissions to keep rising and carbon prices to also go up.

During that period there will be an even larger volume of forest credits earned by New Zealand and a corresponding contingent liability for their harvesting, which the Budget still does not record. This is despite a Treasury statement a year ago that it “will be necessary to recognise” a contingent liability right out to 2020. While the detail of the international commitment New Zealand will take on remains to be agreed, based on pledges to date and the current ETS settings, there would again be a very significant taxpayer liability after all ETS charges are paid.

The ETS simply fails to collect enough revenue to cover expected international commitments.

The ETS simply fails to collect enough revenue to cover expected international commitments. During the first Kyoto period, after all the exemptions, rebates and compensation payments are allowed for, the Government will receive just 12 million emission units net under the ETS, with each unit accounting for a tonne of greenhouse gas emissions. Compared to the current estimate for the Kyoto liability of 69 megatonnes (Mt), the ETS will reduce this by only a sixth during the Kyoto period.

That means over 80% of the cost of dealing with today’s emissions is to be dumped on a future generation of taxpayers.

You can imagine the reaction if someone proposed that the government take out a loan to cover 80% of everyone’s power bills and that loan was not due for payment until the 2020s. Yet that is the direct equivalent of what is happening under the ETS during its first five year at least. Consumers may not be accustomed to facing a price on carbon, but newness is hardly a moral defence for passing the bill to our children. Unless Parliament votes to withdraw from Kyoto (and only Act supports this), it is basic that today’s polluters pay today’s emissions bill.

The remaining unpaid liability of $1.1 to $5.7 billion is calculated as set out below:

  • The Budget lists, as a contingent liability, the need to cover 86.1 Mt of emissions resulting from harvesting forests that earn credits between 2008 and 2012. On the basis of the low carbon price of $20.29/tonne used in the Budget, it puts the gross liability for this at $1.747 billion.
  • The deficit from the Kyoto agreement however is only 69 Mt and once ETS revenue equal to 12 Mt is accounted for, the shortfall of 57 Mt represents a net Kyoto liability of $1.1 billion. Yet the Treasury warned in July 2009 that carbon prices could go as high as $100/tonne, and so the net liability could be as much as $5.7 billion.
  • During the next period from 2013 to 2020, the Treasury has projected a related contingent liability of roughly another 100 Mt. On that basis, the Budget should also show a further entry for this of about $2 billion at the $20/tonne carbon price.
  • It is possible that certain forests that are earning credits today will never be cut down, but there is no scenario under current government policy in which forest owners do not need to be paid for the newly stored carbon in those forests.

For today’s polluters to fully meet the Kyoto liability, total ETS payments obviously need to rise a great deal. However, households and small businesses are paying their fair share of the Kyoto bill, and it is major industrials and pastoral farmers that receive the heavy discounts at the taxpayers’ expense.

These subsidies and other compensation arrangements dominate the ETS flows such that only one in five of each dollar charged under the ETS becomes available to the Government to pay off the Kyoto liability.

Households already bear half the total costs resulting from the ETS during its first five years (52%), while accounting for just a fifth of all emissions (19%). Together with small-medium industry, commerce and services, and transport operators, they would pay 90% of the costs resulting from the ETS during the first five years while being responsible for 30% of total emissions.

With a tighter international commitment to come and New Zealand’s gross emissions still rising, the scale of the subsidies to major industrials and pastoral farmers is set to deliver increasing fiscal stress that will build up pressures for change in addition to the inequity that will be increasingly observed. Other moves overseas will also tend to put pressure on the ETS, including carbon border taxes.

Fortunately, New Zealand is well endowed with low cost options for reducing its carbon footprint

Fortunately, New Zealand is well endowed with low cost options for reducing its carbon footprint, including agricultural efficiency measures that cut emissions and the planting of permanent forests to newly store carbon. Once the notion that doing nothing will be costless is abandoned, it is surprising how much progress can be made under even modest assumptions. There are a series of options that together could deliver a 40% net reduction on the business-as-usual emissions otherwise expected in 2020 – and at no economic cost if the effective carbon price is assumed to be $30/t or higher.

As it currently stands, the ETS will reduce gross emissions by less than 1% during its first five years – relative to what they would have been anyway. Emission actually keep growing, but at a slower rate. Much the same is true out to 2020 if the ETS settings are not changed. Getting the Kyoto accounts straight is the starting point for a major reworking of carbon pricing policy.

Note: The Budget estimates of contingent liabilities can be viewed at: http://www.treasury.govt.nz/budget/forecasts/befu2010/038.htm The Treasury document drawn on states with respect to the gross liability for both periods: “180 million forestry credits will be used … At a price of $100/unit, this contingent liability could be as much as $18 billion for the period 2008 – 2020”. See: 2020 Emissions Reduction Target: Further Analysis, T2009/1811, 31 July 2009, p.7. While the Treasury amended the government’s online accounts following this July document, it has not registered a contingent liability for harvesting on its own website that tracks the Kyoto “net position”.

Copenhagen: opening thoughts

Delegates at the opening ceremony for COP15 — the 15th Conference of the Parties to the UN Framework Convention on Climate Change in Copenhagen — had to sit through this video, so I think you should too. 😉 It’s a fitting introduction to the next couple of weeks. There are not enough hours in the day for me to be able to cover everything that’s happening, but I hope to be able to provide occasional perspective, and pointers to interesting material.

Some key issues:

  • Can the global community pull together, or is the gap between the positions of the rich world and developing nations too big to bridge?
  • If a global deal can be done, will it be able to deliver emissions reductions on the scale required to avoid damaging change?
  • Will a deal build on Kyoto, or will a new framework emerge?
  • What will all this diplomatic tussling mean for New Zealand’s interests, and what role will Nick Smith, Tim Groser and John Key play?

A lot of the underlying tensions are already emerging, as the leak of a negotiating position document — the “Danish text” agreed by key developed nations (including NZ) is causing outrage in developing countries. The Guardian spells it out:

The UN Copenhagen climate talks are in disarray today after developing countries reacted furiously to leaked documents that show world leaders will next week be asked to sign an agreement that hands more power to rich countries and sidelines the UN’s role in all future climate change negotiations.

The document is also being interpreted by developing countries as setting unequal limits on per capita carbon emissions for developed and developing countries in 2050; meaning that people in rich countries would be permitted to emit nearly twice as much under the proposals.

While the diplomatic games begin, commentators sharpen their pens. Bill McKibben thinks the whole thing will be a disaster:

It’s like nothing we’ve ever faced before — and we’re facing it as if it’s just like everything else. That’s the problem.

To help me keep an eye on all this, I’ll be using a number of resources. Apart from my usual array of RSS and Twitter feeds, I’ll be keeping an eye on the Guardian‘s amazingly diverse coverage (and blogs), the BBC (try the animated 800,000 years of climate history) and the COP15 web site (they provide good news coverage, and if you have the time, they’re providing live feeds to a lot of stuff). Press journalist David Williams is blogging his time at the conference, and the Science Media Centre has a page listing useful resources — aimed at the media, but there’s a lot of good stuff in there for the interested reader.