In general, the Bangkok Climate Talks has been considered as less than successful (some say it was a failure but, probably due to my already low expectations knowing how the negotiation process works in previous sessions, I wouldn’t say so). In climate negotiation, the rule is “almost fail,” instead of a straightforward success. A number of strategic sessions needed to be extended. Kyoto (COP3) “almost failed” with an extension of more than 20 hours. Even so, Kyoto succeeded only to agree on the targets and the political headings with the remaining technical and implementing agreements agreed upon in Marakesh (COP4). The Hague (COP6) “failed” with an extension (COP6 “bis”) four months later for two weeks in Bonn. Bali “almost failed” with an extension of a couple of days, with weak agreements on the nationally appropriate mitigation actions (for developing countries) or commitments (for industrialized countries) that are measurable, reportable, and verifiable (MRV). With this history, it may not be prudent to expect Copenhagen (COP15) that at least an order of magnitude more complex to be a straightforward “success.”
Indeed, expectations on Copenhagen have been lowered. Given where we are now and where we need to be at Copenhagen, there are two scenarios. First, we will need to let Copenhagen fail, and will have it extended (the Copenhagen “bis”) in the first semester of 2010 (the “The Hague Scenario”). Second, we will expect Copenhagen to only agree on the political headings of the agreement, leaving the technical detail to be agreed upon by COP16 in December 2010 (The Kyoto-Marrakech Scenario). Rumor has it that even the government of Denmark has prepared to host and finance the second part of the Copenhagen session (COP15 “bis”).
Bangkok is a part of a series of negotiating sessions otherwise known as “The Bali Roadmap.” After Bangkok, there will be one negotiating session in Barcelona, one “pre-COP” session in Copenhagen, before COP15 in December.
The first week of the Bangkok session was spent for “readings” sessions for the Co-Chairs of the contact groups to prepare negotiating texts. The negotiating texts were issued on Monday in the second week. On the second week, the sessions were focused on following up on the process from the first week, tightening it, to be continued at the resumed session in Barcelona, Spain, November 2 – 6. The Talk failed to agree on key issues. It was roughly negative on the issue of the Kyoto Protocol amendment (to allow for the continuation to the second commitment period beyond 2012). Large gap was also apparent on the issues of shared vision (on the long-term reduction of emissions) and on mitigation. The following is a more detailed discussion on key issues.
General Issues
Shared Vision. The Ad-Hoc Working Group on Long-Term Cooperative Actions (AWG-LCA) dealt with the general issues of “post 2012.” Among the key issues were the “shared vision,” mitigation (including reduction of emissions from deforestation and degradation of forests, REDD), adaptation, finance, and technology transfer.The issue of “shared vision” mostly refers to long-term emission reduction “goals.” There was no agreement on the level of reduction needed, especially for mid-term period to 2020. The negotiation was difficult on determining whether the content of the shared vision was declarational or operational.
Individual announcements have been made, however, such as Norway’s announcement of a reduction of 40 percent by 2020 from 1990 levels, and Japan’s adjusted target of 25 percent reduction. At the G20 meeting in the US, the Indonesian President SB Yudhoyono stated its target to reduce emissions by 16 percent from business as usual, or 41 percent if and when there is additional financial support, mostly from reduction of emissions from forestry sector (expectedly through REDD).
Mitigation. This issue was discussed under the AWG-LCA. The widest gap on mitigation is on the interpretation of the nationally-appropriate mitigation actions (NAMAs, for developing countries) or commitments (NAMACs, for developed countries) as they relate to measurement, reporting, and verification (MRV) embodied in the Bali Action Plan (BAP). The debate was triggered by the emergence of the concept of “single integrated instrument” stated by the European Union (EU), supported by other developed country Parties including the US who called it an “implementing agreement.”The idea of a “single legal instrument,” was an attempt to merge the principles embodied in the Kyoto Protocol and in the BAP, under the pretext that the main principles of the Kyoto Protocol have already been taken into account under the BAP, therefore the discussion on the amendment of the Protocol is no longer relevant. But, as viewed by many developing country Parties, the clear differentiation of responsibilities between developing and developed countries is blurred, especially when all mitigation actions by both developed and developing countries need to be MRVed. Many developing country Parties are of the opinion that MRVed mitigation actions are only applicable to developed country Parties.The discussion was made even more complex with Australia proposing “national schedules” for mitigation action plans of developed and developing countries. Moreover, the US introduced the term “shared responsibilities” in place of “common but differentiated responsibilities,” taking away the principles of differentiation between developed and developing countries. The Australian proposal was straightforwardly rejected by developing countries.
Targets and numbers. The discussion on “numbers” happened under the Ad-Hoc Working Group on the Implementation of the Kyoto Protocol (AWG-KP), and had not progressed significantly. There remained strong debates on how to determine emission reduction targets, either bottom-up approach that takes into account national circumstances (developed countries), or top-down approach through certain criteria (developing countries). On reference and base year, most countries preferred 1990 as the reference year. Canada and Australia were of different opinion. The possibility for the quantified emissions reduction targets based on country submissions was discussed at the last session of the contact group. Norway expressed the commitment of its new government to reduce emissions up to 40 percent by 1990 by 2020. This statement was responded to positively from many countries. With a new government, Japan has also expresses its revised target to 25 percent by 2020.
On other issues, one of the key issues was the future of CDM. All countries expressed their concerns as to whether future carbon market will use the existing CDM mechanism or other, new, mechanism. There was a strong atmosphere of pressure that CDM as we know it needed major reform, although the concept of carbon market remained largely welcomed and supported.
REDD. This issue was discussed under AWG-LCA. Many developing countries requested clarification on the scope and objective, while most developed countries had already been quite comfortable with the existing negotiating text. On the means of implementation, developing countries preferred to start with public funding that in stages will evolve into private and market-based mechanism. Developed countries appeared to want to jump straight into market. Indonesia and Southeast-Asian countries supported a hybrid approach with staged steps into market mechanism.
Most Parties in general agreed on the importance of a “safeguard” for the implementation of REDD. But some of them appeared to be rather sensitive. Developed countries expected some prescriptive assurance for good governance in the implementation of REDD, but developing countries are reluctant because it touched upon sovereignty. Also, some countries expect the inclusion of one of the principles under UN Declaration on Rights of Indigenous Peoples (UNDRIP), the “free prior informed consent,” and acknowledgement of the indigenous peoples’ rights and territory in the text. Some developing countries, especially those from Africa, strongly rejected this proposal. Moreover, some countries suggested the inclusion of “safeguard against conversion of natural forest to plantation,” but some forested developing countries with functional forest categorization like Indonesia will face some difficulties if this is adopted.
LULUCF. The issue of LULUCF was discussed under the AWG-KP. The most prominent issue is the definition of “natural disturbances” to forests, which is the proposal from Canada, EU, and New Zealand. Natural disturbances are divided into “major” and “exceptional.” Another problem was the definition of “harvested wood products” and how it relates to LUCF.EU raised the issue of the credibility of data for the purpose of calculating emissions. New Zealand highlighted the importance of credible carbon accounting system for forests with the focus on production forests. Moreover, there was also a need to calculate carbon content of different kinds of hardwood products. Developing countries could accept the proposal from New Zealand because it can increase the transparency and acceleration of emission reduction in the LULUCF sector.
On the calculation of emissions in the LULUCF sector, it was accepted the only ones that can be counted and accounted for are only those defined as “forest management.” In general, it can be concluded that the mechanism is difficult and it will also difficult to get the real aggregate number even from the developed countries because they will come up with different bases for calculating.
On peatland / wetland, developing countries agreed that anything on it had to be bracketed to be discussed in the plenary. On the issue of “harvested wood product,” developing countries agreed not to discuss further and not to include it in the agreement. Meanwhile, some latin American countries demanded REDD-plus to be included among the eligible LULUCF activities when it would not be discussed under AWG-LCA. For the time being, this suggestion is within bracket.
Adaptation. The issue of Adaptation was discussed under the AWG-LCA. Everyone agreed on the importance of adaptation in developing countries and that this requires financing, technology, and capacity building, that are country-driven, participatory, and integrated. National focal points are needed to facilitate coordination at the global level.
Some issues around adaptation remained highly debated. Developed countries’ attempted to reinterpret the principle of “common but differentiated responsibilities” as “shared responsibilities.” Many developing countries viewed that this reinterpretation could dilute the polluter pays principle. Additionally, the interpretation of the scope of “particularly vulnerable developing countries” was also different, as to whether this covers only some or all developing countries. Moreover, the issue of “response measures” (translated as compensation to fossil-fuel-export dependent countries for reduced demand due to emission reduction commitments) remained conflictuous between OPEC members and the rest of the developing countries, especially the members of the AOSIS. Finally, while Indonesia and other developing countries liked the idea for insurance policy for vulnerable developing countries (“risk reduction and management”), developed countries were against this, citing the benefit of a more holistic assessment, and of merging this issue with the issue of financial architecture (see below).
Similar with other developing countries, Indonesia suggested the change of MRV for adaptation in developing countries into “assessing deliveries,” citing the argument that MRV is only applicable to the implementation of mitigation actions or commitments, although developed countries appeared to insist of “performance-based” approach includes adaptation instead of only mitigation (because they were expected to provide the financial support for adaptation and hence would like to be convinced that the support is effective).
Additionally, developing countries suggested that the National Action Program for Adaptation (NAPA) and the Nairobi Work Program on Adaptation to be implemented through an International Adaptation Center, but developed countries were against this idea, citing that exchange and sharing of information is more important. This was thought to have been due to the budgetary implications of the establishment of the said Center. The US reminded everybody of the high requirements for the establishment of new mechanism and suggested for the establishment of climate technology hub for training and development of core group of experts to implement adaptation programs in developing countries.
Finance. The issue of institutional arrangement was the focus of the second week of the negotiating session. New interesting proposals emerged from the US, Mexico, and Australia. There remained different points of view, however, among developing countries as well as between developing and developed countries with regards to the elements of governance, the institutional form, basic principles, and compliance mechanism. Developing countries were of the opinion that these new proposals were against the Bali Action Plan and the Convention, and strongly underlined the “commitment” and “goodwill” from the developing countries to discuss the issue of finance, and demand the same from the developed countries. The developing countries underlined their choice of a mechanism that is “one single fund with multiple windows” with “balance and equal participation.” In relation with the source of funds, developing countries rejected the notion of “all countries contribution,” citing that financial support was the commitment of the developed countries that even at present had not been fully implemented.
(Transfer of) Technology and Capacity Building. Countries underlined the need to focus on institutional arrangement, where G77 and China suggested a technology transfer institution focusing on action and implementation supported by finance. Some proposals emerge from India, Canada, Japan, and Australia. There has to be explicit in the text which elements require financing. Colombia underlines the importance of taking into account local and traditional knowledge. All countries are urged to provide clean example of adaptation technologies. Monitoring and review for capacity building needs to be carried out using clear and detailed performance indicators.
Issues Related to the Future of Carbon Market
At present, under the Kyoto Protocol, carbon market is catered through emissions trading (ET, Article 17), joint implementation (JI, Art. 6), and clean development mechanism (CDM, Art. 12), with regional markets such as European Union Emissions Trading Scheme (EU-ETS) is referred to in Article 4. There has been a strong opinion that the scope of the carbon market needs to be expanded beyond these mechanisms, whereas the existing mechanisms need to be reformed. There are concerns as to whether the CDM as we know it will survive beyond 2012.In the negotiation process, the future of carbon markets is discussed from two angles: On the one hand focussing on mechanism reform (mostly of the CDM, to a lesser extent related to JI), and on the other increasing the contribution of funding from carbon market related activities that can be used to finance increased mitigation and adaptation efforts in developing countries.
Proposals for mechanism reform are contained in the chair’s “Non-paper on other issues” of AWG-KP (FCCC/KP/AWG/2009/10/Add.3/Rev.1). Many of the proposals seek to improve the workings of the cdm, make it more or less stringent, increase or decrease its coverage and promote an equitable distribution.
Among the issues under discussion on reform has been the question of the inclusion or exclusion of Carbon Capture and Storage in geological formations (CCS), nuclear energy, new HFC 22 industrial plants, and large hydropower. Another topic has been the simplification of CDM project development and scaling up of activities in the framework of standardized baselines, sectoral crediting and programmatic CDM. Furthermore, there has been a discussion to promote or discriminate against certain technologies and/or regions through the introduction of multiplication and discount factors of emission reductions, the requirement of local sustainability co-benefits and the use of positive lists of technologies, deemed automatically additional. Additionally, there has been a debate on how projects that started out under the CDM should continue if the host country graduates to Annex I status or something similar. Finally, creditable NAMAs as an extension to the project-by-project approach of the CDM have also been discussed.
Under carbon markets as a source of (public) funding, the issues under discussion have revolved around generating income from carbon market related activities, i.e. levies on domestic emission trading schemes, levies on bunker fuels for maritime and air transport, income generated from auctioning of carbon rights (AAUs or domestic permits) and extending the share of proceeds which is currently only levied on CDM transactions to other mechanisms.
Finally, there has also been attempts to open up new carbon markets through new modalities, including the use of REDD credits as offset and the formation of creditable NAMAs. There remained quite a debate on whether REDD credits can be used to offset emissions in developed countries. The “con” voice cites the fact that REDD is meant to “reduce” emissions, not to offset. Moreover, adding enormous amount of REDD credits into current carbon market may crowd out the market with “cheap” credits. As such, the reduction credits should not be tradable. The “pro” voice, on the other hand, cites the fact that the financial resources required to implement REDD is so big that fund-based mechanism simply cannot handle (or that we have no experience of handling). The only mechanism that can handle such an amount is market mechanism. The predicament is that the REDD market will be a concoction of funds, domestic actions (by developing countries through NAMAs), and market. Some will be creditable for offset and some will not.
NAMAs are actions by developing countries to contribute to the global reduction of emissions. In the current discussion under the negotiation, NAMAs can either be unilateral actions, domestic actions with financial support from developed countries, or “creditable” as domestic actions to generate carbon credits akin to the CDM or ET. There has been a debate on how politically feasible creditable NAMAs is for developing countries as it has been seen as a move closer to “voluntary commitments” by developing countries for targets. But it appeared that sectoral or programmatic CDM may bridge the transition from project-based CDM to creditable NAMAs. It appeared that understanding on creditable NAMAs was not universal among developing country negotiators and mandate for the negotiators to negotiate on this issue is not strong from their domestic constituencies, except for a number of countries (interestingly, Indonesia has gotten quite a strong mandate and thus sets it quite apart from most developing countries). The predicament is that there will be a while until agreement on this issue can be reached.
