What Was Once Unthinkable is Now Unstoppable
By Christopher Campbell-Duruflé, Dec. 15, 2015
There was electricity in the air when the COP21 President took everyone by surprise and declared the adoption of the Paris Agreement late on Saturday night in Le Bourget. All who were present rose up as one and screamed their joy, hope and relief. A full plenary with over 100 interventions, with each country requesting addition or suppression of language in different articles, would have been more transparent, inclusive, and democratic — attributes for which French Foreign Minister Laurent Fabius had ironically been praised throughout the two preceding weeks. This time, however, clearly fearing the collapse of the hard-built consensus surrounding his last draft, President Fabius literally hammered the adoption of the treaty before any state delegate had the time to request the floor. Shocking to those attached to procedural fairness, the manoeuvre received overwhelming support during the long celebratory plenary that followed.
To many observers, the last session of COP21 was excessively self-congratulatory. The current level of nationally determined greenhouse gas (GHG) reduction contributions (NDCs) is thought to lead us towards global temperature increases of 3 degrees Celsius above pre-industrial levels, which would likely have dire consequences: an increase in sea level by several meters and the displacement of millions, drop in food production due to droughts and wildfires, and armed conflicts because of increase pressure on resources. Furthermore, temperature increases of such a scale would lead to the release of considerable additional quantities of GHG currently captured in permafrost and polar ice caps.
Nonetheless, the spirits were high in Le Bourget on Saturday night. UN Secretary-General Ban Ki-moon observed that a movement once unthinkable is now unstoppable. He further indicated that markets now have a clear signal to unleash the full force of human ingenuity towards reaching the 1.5 degrees Celsius temperature increase ceiling. In the name of the powerful G77+China group (134 countries), South Africa’s Edna Molewa announced support for the text, noting that the acceptance of climate change-related legal obligations by developing countries constituted a major leap forward for them and recording the importance of developed countries paving the way forward. US Secretary of State John Kerry affirmed that this Agreement charts a new and sustainable path for the planet, sends a critical message to the global marketplace, and represents a victory for multilateralism. Indian Minister Prakash Javadekar stated that a new chapter of hope had been written for millions of persons, with the treaty acknowledging the importance of sustainable lifestyles and of protecting those countries most vulnerable to climate change. He closed by also stressing the right of developing countries to continue growing and lamented the lack of recognition of developed countries’ historical responsibilities for climate change in the Agreement. French President François Hollande affirmed that whereas the French Revolution had affirmed human rights, the new Agreement signals a climate revolution and entrenches the rights of humanity as a whole.
The Paris Agreement also contains grounds for concern, which were expressed by several states and the spokespersons for some of the officially accredited constituent groups, including youth, women, trade unions, and Indigenous peoples. These concerns include the aspirational formulation of the 1.5 C temperature increase target in article 2(a), the unclear long term goal of reaching a “balance” between carbon emission and natural removal (instead of decarbonisation or carbon neutrality) in article 4, the lack of clear timetable for emissions peaking “as soon as possible” and emission balance “in the second half of this century” despite the scientific evidence, the lack of mention of the 100 billion yearly target for the financial mechanism established at article 9 (only appearing in the adoption decision, para. 115), and the lack of inclusion of human rights in the operative part of the treaty (only mentioned in the Preamble). Many also criticised the exclusion from article 8, dealing with loss and damage, of any basis for historical liability or compensation, which appears in the adoption decision (at para. 52) and was certainly a condition for certain states’ support to the Agreement. The most vocal interventions raising those issues came from Nicaragua, Ecuador (in the name of the Community of Latin American and Caribbean States), the Philippines, Bolivia, and Papua New Guinea.
A key provision of the Paris Agreement is article 13, which establishes a transparency framework for action to mitigate climate change. Far from creating an International Court on the Environment to hold accountable those responsible for climate change, as recommended by the International Bar Association, the effectiveness of this framework will depend on the ability of states to exert pressure on each other to act more sustainably. Among other things, the parties to the Paris Agreement will be required to present 1) a periodic national inventory of their GHG emissions, 2) nationally determined commitments to be increased every five years, and 3) progress reports on the implementation of their commitments. The transparency framework will provide technical expert reviews of states’ reports, in light of the steps taken by other states and of the overall carbon neutrality objective, as well as a forum for multilateral consideration of the progress achieved (or lack thereof). This transparency-based approach contains no guarantee that high per-capita GHG emission populations will assume their share of responsibility, and no mechanism for international sanctions against states in case of poor performance. However, based on the experience of the Universal Periodic Review of compliance with human rights instruments and that of other specialized treaty bodies, processes of international disclosure and peer-review have a strong capacity to enable, influence, and constrain the actions of states and their populations because they affect their reputation.
As Maldives’s delegate Abdullahi Majeed affirmed in name of the Alliance of Small Island States (AOSIS), history will judge our generation not for having adopted the Paris Agreement, but by how we implement it. This will depend on whether states, individuals, local governments, business, and civil society organisations embrace the spirit of the climate revolution declared on December 12, 2015 and reflect ambitious nationally determined commitments in their daily activities.
A Salute to a COP Pioneer
By David Runnalls, Dec. 14, 2015
It has occurred to me that the climate talks provide a fitting memorial to Maurice Strong, the extraordinary Canadian who died on the eve of the Paris Conference. Maurice was the Head of the first intergovernmental environment conference in Paris in 1972.
He and I sat down before the Rio Earth Summit, which he ran 20 years after Stockholm, and we reviewed what was new on the agenda. I immediately said “ozone depletion,” and he agreed. The ozone hole was only discovered in the mid 1970s. I then said “climate change,” and he reminded me of a remarkable book that he had commissioned for Stockholm. TheStudy of Man’s Impact on Climate was the result of research by MIT scientists, led by Carroll Wilson. It set out the case for climate change action in some detail. It played a small role in the Stockholm discussions, but Maurice made sure that it was put on the agenda. Something in that study worried him.
Five years before the Rio Summit, the Brundtland Commission published its ground breaking report. Climate change was one of its chief concerns. Maurice and the report’s author, Jim MacNeill, had quite rightly inserted it in the section of energy policy. Brundtland and Maurice both felt that climate change, while a serious environmental problem, was largely a function of dysfunctional energy policies.
When Strong became the Head of the Rio Summit, he knew that he had to change the channel. By then, the UN had organized a whole series of these two week conferences on subjects as diverse as population growth, water and sanitation, and urbanization. Maurice decided to jazz up Rio by calling for a summit of world leaders. In those days, summits were reserved for the Soviet Union and the United States. So this format might attract more attention, especially because so many independent countries had just emerged from the collapse of the former Soviet empire.
While the “grip and grin” part of the summit would serve PR purposes, Maurice was determined to go further and have something concrete for the leaders to do. At that time, two conventions were under negotiation. It was decided to accelerate their preparations in order to have them opened for signature in Rio.
So the negotiations proceeded with breakneck speed and both were signed by a large number of world leaders when they appeared in Rio. Thus started the UNFCCC. The only blot on that landscape was the refusal of the United States to sign the biodiversity convention because the Bush Administration had given into the biotech lobby in Washington.
Maurice spent the last few years of his life in China, living in downtown Beijing, despite a heart and lung condition that the city’s fetid air did nothing to improve. He went there because, for many years, he had believed that China would lead the world economically. While in Beijing, he established a number of business ventures. One of them was designed to create a carbon market in China. While the Chinese leadership always makes its own decisions, one can discern that Maurice’s faith in markets and his close connections with the leadership played at least some role in the decision to move to a national cap and trade system in 2020.
Above all, Maurice believed fervently in the UN as an institution and the necessity for global problems to be solved at a global level. Those who saw him at the end said that he was keenly interested in the possibilities for success in Paris.
He would have been pleased.
The Road from Paris COP21: An epic journey begins
By Oonagh Fitzgerald, Dec. 13, 2015
The Paris Agreement on Climate Change is the culmination of the year in which the global community seems to have come of age and recognized its interconnectedness, and the importance of linking development, human rights and sustainability. The Addis Ababa Action Plan, the Sustainable Development Goals and the new Paris Agreement, all concluded this year, embrace principles of solidarity, equity and sustainability and reframe intractably complex issues as matters of common concern for all human kind to resolve together in a spirit of sharing and cooperation.
The Paris Agreement reads more like an epic poem than a legally binding instrument, but nonetheless it creates a legal structure through which the global community will manage the transition to a carbon neutral economy in the second half of this century. It maps out this journey with a preamble that speaks of human rights, indigenous rights, migrants, gender equality, intergenerational equity, Mother earth and climate justice.
Its key operational provisions include those:
- Setting global targets:
- Of temperature rise of well below 2 degrees Celsius from pre-industrial levels, and to pursue efforts to limit the temperature increase to 1.5 degrees above pre-industrial levels
- Increasing the ability to adapt to the adverse impacts of climate change and foster climate resilience and low greenhouse gas emissions development
- Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development
- Requiring Parties to submit nationally determined commitments, detailing how they will reduce greenhouse gas emissions domestically and by assisting developed countries in mitigation and adaptation, and providing that commitments renewed at least every 5 years must be progressively more ambitious;
- Requiring developed countries to provide financing to assist developed countries with mitigation and adaptation;
- Ensuring that adaptation action is country-driven, gender-responsive, participatory and fully transparent approach, taking into consideration vulnerable groups, communities and ecosystems, and guided by the best available science and, as appropriate, traditional knowledge, knowledge of indigenous peoples and local knowledge systems;
- Strengthening cooperative action on technology development and transfer through the Technology Mechanism;
- Recognizing the importance of averting, minimizing and addressing loss and damage, and confirming the Warsaw International Mechanism’s role on this issue;
- Promoting capacity building in developing countries to mitigate and adapt to climate change;
- Promoting cooperation in public education and public engagement on climate change and public access to information to help enhance action;
- Providing a transparency mechanism to facilitate implementation and compliance whereby these commitments must be accurately and consistently described and progress reported, which mechanism is flexible, facilitative, non-intrusive, non-punitive manner, respectful of national sovereignty, and avoids placing undue burden;
- Requiring under the transparency mechanism that each Party provide information related to climate change impacts and adaptation, and developed country Parties to provide information on financial, technology transfer and capacity-building support provided to developing country Parties, participating in facilitative, multilateral consideration of progress with respect to efforts;
- Including a compliance mechanism to review commitments and performance and hold states to account, through criticism rather than formal sanction (it is not entirely clear whether there are two mechanisms: one for transparency and one for implementation and compliance);
- The Conference of the Parties conducting periodic stock-taking starting in 2023 and occurring every 5 years thereafter to consider progress against long-term goals (the “global stocktake”), conducted in a comprehensive and facilitative manner, considering mitigation, adaptation and the means of implementation and support, and in the light of equity and the best available science.
At the international level there is still a lot to accomplish. The Agreement has been approved by the Conference of the Parties at COP21, but now States have to decide whether they will sign and ratify it, when it is open for signature (April 22, 2016). It comes into force when at least 55 Parties accounting in total for at least an estimated 55 percent of the total global greenhouse gas emissions have deposited their instruments of ratification, acceptance, approval or accession. There are a number of international mechanisms that will need to be implemented in order to oversee key aspects of the Agreement on transparency, implementation and compliance, mitigation of greenhouse gas emissions and support for sustainable development. Existing international mechanisms for finance, technology, and loss and damage need strengthening. The Draft Decision accompanying the Agreement includes many additional details related to its implementation.
In Canada this means a massive analysis needs to be done at the federal, provincial and territorial level to determine how best to implement the Agreement. Because it is drafted in general principles it may be relatively easy for the federal government to conclude it is in a position to sign and ratify. The real task will be in figuring out exactly how Canada can effectively contribute to reducing global greenhouse gas emissions and addressing climate change.
This requires a comprehensive review of national, provincial and territorial laws and policies to see what can be used and what needs to change. This likely will include putting a price on carbon through carbon taxes and/or cap and trade schemes, incentives for development and commercialization of green technology, programs to encourage conservation and transition to clean energy sources, programs to enhance carbon sinks and forest rehabilitation, and collaboration with developing countries to aid in mitigation and adaptation and related capacity building.
This analysis would contribute to developing a comprehensive Canadian Climate Change strategy. Canada’s indigenous peoples and all Canadians need to participate in this exercise as well as municipalities, universities, colleges and schools, people who work in farming, fishing, mining and extraction, and all other Canadian businesses. The Agreement calls for a complete transformation of the global economy, and Canadians need to think deeply about what they can do to survive and prosper in this emerging green economy.
Much has been said about the Paris Agreement being legally enforceable but disclosure and peer pressure appear to be the main means of enforcement. At the international level the main mechanism is the submitting and reporting on nationally determined commitments transparently, consistently and comparably in individual country reviews and collectively in periodic global stock-taking. There remains the possibility of international claims for severe climate change loss and damage caused by major emitter nations. Domestically there could be a variety of enforcement mechanisms under statutes and through claims brought under principles of tort law and constitutional and human rights law.
It was a day of celebration in Paris, the shadow of terrorism extinguished by the sunlight of France’s glorious success and an international community already embarking on this epic journey of solidarity, equity and sustainability.
The End of the Beginning
By David Runnalls, Dec. 12, 2015
Before the Paris climate talks, I wrote a brief note for CIGI quoting Churchill’s famous phrase about a decisive battle not being the end, nor even the beginning of the end. It was, rather, the end of the beginning.
As he brought his gavel down, Laurent Fabius signalled that we are indeed at the end of the beginning of the global economic and political battle against climate change. Despite the fact that the cowards from Islamic State had brought Paris to its knees barely a month ago, the Presidency of the COP showed that brilliant French diplomacy can still make the multilateral system work. After the bumbling ineptitude of the Danes in 2009, one had wondered whether there was any hope that 196 countries could do anything. Paris provided an emphatic yes.
This is clearly the best agreement that one could expect from such a sprawling process. It has the long term goal of carbon neutrality after the middle of the century. And it calls for not just the 2 degrees Celsius temperature increase from Copenhagen, but stretches to the improbable target of 1.5 degrees. It does require countries to set targets — and sets out a methodology to hold then to account for their emissions. It requires governments to turn up every five years with a revised target. And it finally gives some pride of place to the need to help poorer countries adapt to the changes that are inevitable.
But this was the easy part. All of the INDC’s (national commitments) submitted so far add up to a temperature increase of 2.7 percent, which could be catastrophic for the planet. No country vowed to increase its commitment in Paris. We have a long way to go. And no one has farther to go then Canada.
The Canadian delegation turned up more than 300 people strong. Their main goal was to demonstrate that “Canada is back” to the era of Pearsonian multilateralism. The new Minister turned her ceaseless enthusiasm and love of selfies on the doubters. They ran a remarkably open and transparent process for those Canadians who were not members of the delegation. And they splashed a lot of money around. But in advocating a target of 1.5 degrees, they have set themselves a very difficult task when it comes to setting a new national target. It seems inevitable that they will have to build it around the new Alberta climate policy. And that will make the burden on the rest of the country pretty formidable.
But now is not the time to carp. It is to celebrate the fact that the international community has made the first step in the most important journey of our century.
The Calm before (or after?) the Storm
By David Runnalls, Dec. 11, 2015
While there are informal talks still going on and the whole thing could collapse like a house of cards, there is a pretty complete, literate version of the final document that has been circulated by the French Presidency.
It has few brackets in it, which means that the French have been quietly speaking with all of the groupings about their removal, or that they have finally put down a démarche. Agree with this or object at your peril. The latter is very likely, but I still think that we are in good shape.
Whatever one thinks about France’s decline as a country and economy, the skills of French diplomats have certainly not eroded one bit. Laurent Fabius, the French foreign minister, has personally taken charge of the negotiations and even seasoned diplomats speak of his performance with admiration.
No matter what comes out of COP21, I am still taken with the fact that the big cities, some of the provinces and states, and the private sector, are way ahead of the governments on climate change.
The latest sector to emerge is the financial community. Earlier in the week, Mark Carney, chair of the Financial Stability Board (the mysterious committee still dealing with financial system reform) asked former New York Mayor Michael Bloomberg to chair a committee that will recommend ways to make companies’s carbon exposure more transparent. They will report to the G20 on ways to make all aspects of financial markets more transparent about their carbon exposure.
Yesterday, I sat in two meetings convened by the Secretary-General of the OECD — the Mother Church of economic probity. They were essentially concerned with carbon exposure. A prominent pension fund manager and a prominent insurance executive both explained that they were making maximum effort to reduce their carbon exposure. The reason? They were both concerned about the world they were leaving their children. The real reason is that portfolios heavily laden with carbon are bad risks for the retired and about to be retired. Long-term, carbon will be dead or close to it, so they are lousy holdings for an insurance company.
The meeting went on to talk about how to determine the carbon risks of the investment advisors who invested the pension funds money. How to change listing requirements for stock exchanges so that companies had to measure and report on their carbon liabilities. Participants even suggested changing the way in which the rating agencies, like Standard & Poor’s, measure the viability and prospects of companies and countries. In other words, they had accepted that low carbon investments offer less risk and the prospects for better returns are higher than more traditional investment portfolios.
Finally, the Secretary-General of the OECD observed that at the last major COP, in Copenhagen, such discussions were limited to one or two side events. His staff had given up trying to track the number of such events in Paris.
No matter what the parties agree in the next day or two, this fundamental shift in the attitudes of the investment community might be the most noteworthy fact of COP21.
Who Will Pay?
By James A. Haley, Dec. 11, 2015
As might have been expected before the talks began, reports on the eve of the expected conclusion of the Paris climate change negotiations suggest that the talks have become bogged down over who will pay the costs of adaptation. (See The New York Times, here.) Advanced countries want the rising middle-income countries, China and India particularly, to share more of the burden. Poor and emerging nations, which will likely incur the greatest costs of climate change, should do more to address the problem they argue.
Needless to say, these countries are balking at the prospect. They justifiably argue that the advanced rich economies got that way (i.e., rich) because their economic development over the past century has been fueled on carbon. Asking middle-income countries to pay for adaptation on an equal basis with the advanced rich countries, they contend, fails a basic equity test. While the marginal social cost of the CO2 emissions they create in their quest for riches may be high, their ability to pay is less that of rich countries.
Many years ago, well before the global financial crisis, a former IMF colleague, Peter Heller, and I shared a table at a G20 dinner hosted by the IMF in the Fund’s headquarters in Washington. At the time, he was (presciently) writing a book on the fiscal implications of the aging baby boom generation and the looming costs of climate change. His book is entitled,Who Will Pay? and in it Heller pleads for forward-looking policies, as he puts it: “to prepare responsibly for an uncertain future.”
The point here is that, if the science is right, there will be substantial costs from climate change to be borne. But these potential costs will not be shared equally — some countries are more susceptible to, say, rising sea levels than others. And, because these costs reflect negative externalities, there is an incentive to free ride — think of climate change as a public “bad” for which the private negative harm done to one doesn’t reduce the private harm inflicted on another. Climate change is a threat.
The challenge for any society is to mobilize resources to combat external threats. History and experience teaches that successful societies are marked by the ability to respond effectively to such challenges. The thing is, achieving the needed degree of coordination requires institutions (which Brad DeLong of Berkley refers to as the “secret sauce” of growth) to assuage the free-rider problem. In third century BCE China, the Emperor and an efficient administration made possible the Great Wall. In 1940, it was the leadership of Winston Churchill and Westminster Parliamentary democracy, which facilitated the smooth transfer of power, that mobilized the British people to resist Nazi aggression. These threats were clearly identifiable, however.
The threat from climate change is less tangible. Moreover, if the past is any guide, future generations will be wealthier than the current generation, so inter-generational equity considerations might suggest that the unborn should pay the costs. But as Heller’s book strives to make clear, the future is uncertain, and the further out into the future we look, the greater the uncertainty. What if the costs are greater than currently anticipated? And what if the costs are incurred sooner so that unborn generations are bequeathed less capital?
It is possible that, in those circumstances, the implied tax increases are so great that individuals’ incentives to invest in human and physical capital are distorted. Apart from the hypothetical lump-sum taxes of Welfare Economics, all taxes entail distortions. Lacking the capital to generate the wealth needed for future adaptation, societies settle into a long process of slow, secular immiserization.
Those less affected by climate change and with the resources to do so may opt to build physical and virtual walls to prevent the Hobbesian world outside their borders from spilling over. While such a response to this dystopic vision seems far-fetched, previews of it are clearly visible in the U.S. Republican primaries. As the outside world becomes nastier, more brutish and shorter, the costs of maintaining these walls will increase. Even those countries who believe they are immune to such spillovers will face higher costs–think of the costs to public infrastructure (bridges, sewer systems, etc.) designed to once in century standards when the reality suddenly changes to once a decade.
The simple fact is that the bill for climate change adaptation will have to be paid. The question for the international community is how to mobilize the resources. The COP negotiations represent the international community’s attempt to build the institutions needed to respond effectively to the threat posed by climate change. As the debate over who will pay for adaptation reveals, it will be a messy, protracted process. Time will tell what the agreement looks like. But, whatever the outcome, Paris will not be the last such time the question “who will pay?” is raised.
Paris Agreement: Preamble, Cooperation, Loss and Damage, and Forests
By Christopher Campbell-Duruflé, Dec. 10, 2015
The French presidency of COP21 released Wednesday afternoon a new draft of the Paris Agreement, based on the input of the different facilitating ministers mandated to synthesize the concerns of their counterparts and bring down the December 5 text from 20 to 14 pages. Canadian Minister Catherine McKenna, for instance, was in charge of improving the text on cooperative approaches to climate change mitigation under article 3. This new version was discussed at length on the same evening as a plenary meeting of the Paris Committee of environment ministers, which this author had a chance to witness.
From the outset, COP21 President Laurent Fabius warned that further political compromise was needed to reach agreements on the difficult issues of differentiation, finance and ambition. Two of the most remarked upon interventions came from the G77+China, and from the Like Minded Developing Countries (LMDCs), and received many endorsements thereafter. Speaking in the name of the first group, South African Minister Edna Molewa announced that the new text constituted an appropriate basis for further negotiations. However, she expressed concern that the evolution of the agreement suggested its delinking from the UNFCCC treaty and a dilution of its principles, including that of Common but Differentiated Responsibilities and Respective Capabilities (CBDR). In particular, she opined that developing nations did not see strong legal guarantees that they would receive the finance, clean technology transfer, and capacity building necessary to support their adaptation and mitigation efforts, especially post-2020. Malaysian delegate Gurdial Singh Nijar, in the name of the LMDCs, made a similar argument. He warned that the general objective of the agreement should be the pursuit of climate justice, as affirmed by many heads of state on November 30, 2015, and that removing mentions of CBDR from the agreement would lead to the failure of negotiations.
On a brighter note, there seems to be an increasingly broad consensus that the overall purpose of the agreement should be to keep the global temperature increase below 1.5 degrees Celsius above pre-industrial levels, rather than 2 degrees Celsius. Many states intervened in favour of article 2, option 3, including South Sudan and Bolivia whose representatives reminded the plenary that loss of biodiversity, food insecurity and other climate change consequences were already hitting the world’s poorest hard after an increase of only 0.8 degrees Celsius. The protection of forests was also an issue successfully advocated by many interveners Wednesday night, including by the representative from Panama in the name of the Coalition for Rainforest Nations and the Caribbean Community and Common Market (CARICOM). These countries argued for concluding 10 years of negotiations on the REDD+ mechanism (Reducing Emissions from Deforestation and Forest Degradation) and fully embedding it in article 3bis of the Paris Agreement. As a result, the French presidency announced the creation of an additional consultation group on this issue.
Another issue at the heart of the intervention of many parties was reparation for climate-induced loss and damage. Negotiating groups including the G77+China, the Alliance of Small Island States (AOSIS), CARICOM, and the Independent Alliance of Latin America and the Caribbean (AILAC) all supported the inclusion of a new article on the topic, in order to strengthen and institutionalize the Warsaw International Mechanism for Loss and Damage (established at COP19) beyond what is currently contained in article 5. On the contrary, Canada and the United States have opposed further negotiation to include a mechanism on reparation for loss and damage in the Paris Agreement, which has led to strong criticism by civil society organizations and their winning of the Fossil of the Day Award on December 9. This issue will definitely remain on the agenda until the end of the negotiations.
Lastly, on the occasion of Human Rights Day, it should be observed that much of the human rights language in the agreement remains in brackets. An important call for rectification was issued Tuesday in a joint statement by Amnesty International and Greenpeace, calling for “an explicit reference to human rights in Article 2.” With the explicit exception of Tanzania, many delegations favoured including human rights language in the operative parts of the Paris Agreement, including references to gender equality, intergenerational equity and Indigenous Peoples’ rights. At the close of the Paris Committee plenary late on Wednesday night, the French presidency announced that further consultations would be held on the themes of the preamble, cooperation, loss and damage, and forests. All are crucial aspects of the new and possibly penultimate text that should be presented to the plenary Thursday evening by the team working night and day to advance the Paris process.
The Tipping Point?
By David Runnalls, Dec. 8, 2015
Every once in a while, I think that we are getting somewhere. On a day when that hideous gasbag Trump trumpets that Muslims should not be permitted to enter the United States, I sat in a room full of innovative Americans to talk about carbon pricing.
Every sane person and every fan of Canada’s ecofiscal commission knows that we are not really going to succeed in dealing with climate change until carbon is priced properly. We are finally acting on that, with carbon taxes in British Columbia and Alberta (and lots of other good things as well in that province), and with cap and trade systems in Quebec, Ontario (soon) and Manitoba (a little later).
Arnold Schwarzenegger’s California led the way and the Canadian cap and trade systems are close to that of California. Now President Obama has moved the ball much further down the field with the Clean Power Plan. Under this plan, states are obligated to regulate coal fired power plants much more rigorously and it makes it virtually impossible to construct a new one. The states are given a good deal of latitude to decide how to control this pollution.
Many of them are predictably trying to challenge the constitutionality of the law in court, but most observers think that they will lose. The Supreme Court has already ruled that the EPA has the power to regulate greenhouse gases.
So what happens next? Well most of the states have chosen to team up with some of their neighbours to develop a cap and trade scheme. Even those well known bastions of socialism like Alabama, Mississippi, Georgia and Arkansas have teamed up with Duke University to design a cap and trade scheme. The good news for Ontario is that while it designs its scheme the Governors of the adjoining states are doing the same thing, thus at least partly blunting opposition from those who fear competitiveness issues.
These schemes may not all come to pass. They will not all have the same coverage, nor will they measure the same things. But inevitably the difficulty of operating under multiple sets of rules is likely to drive the private sector to argue for a more compatible set of rules.
Several of the more active participants were Mexican academics and a representative from the Mexican Government. They are very interested in the potential for cooperation with their new carbon scheme.
Canada’s Minister of Foreign Affairs Stephane Dion and Minister of Natural Resources Jim Carr have the creation of a North American Clean Energy and Environment agreement in their mandate letters. Maybe that is not so far fetched after all?
Paris Agreement – To bind and how to bind, that is the question …
By Oonagh Fitzgerald, Dec. 7, 2015
In the lead up to and during the opening day speeches of 150 heads of state at COP21 in Paris, there were appeals for urgent and decisive action to combat climate change and exhortations for states to achieve a strong and legally binding agreement.
At the same time there was a cross current of discussion about how a binding agreement with binding targets would never be accepted by key states, especially the US and China. In an announcement, possibly aimed at lowering the temperature on Canadians’ bubbling expectations while lending support to a US President beset by Republican opposition, Canadian Minister of the Environment and Climate Change Catherine McKenna is reported to have said, “Everyone wants to see the United States be part of this treaty. There are political realities in the United States … they cannot have legally binding targets. We don’t expect that the targets will be internationally legally binding.”
So what is really going on? Is international law being made in those makeshift negotiating rooms of the “blue zone” or is it being avoided? The Paris Draft Agreement released on December 5, with the approval of 195 participating states, makes plain that the challenge for negotiators is to bind all parties in an agreement that is gentle enough for the major states, includes enough sweeteners for developing states, and is strong enough to engender significant climate action by all. It may surprise no one that despite international law’s theory of sovereign equality of all nations, when it comes to reaching a negotiated agreement about climate change commitments, some are definitely “more equal” than others. US academic Dan Bodansky explains that, regardless of the aspirations of other nations, the sweet spot for a successful Paris climate agreement will be one that the US President can ratify without having to seek congressional approval.
There are several ways for the US to enter into international agreements, the most well-known being to use Article II of the US Constitution, which requires the President to obtain the advice and consent of two-thirds of the Senate. No one expects that to be feasible because of the climate change denying positions of Republicans. It appears this is not the only way for the US to join a treaty, however. US practice has developed, explains Bodansky, such that most international treaties are made through other means, such as congressional-executive agreements where approval is given by both houses of Congress (again likely not feasible for a strong climate change treaty), and presidential-executive agreements, where it is solely the President who approves the treaty.
It is this latter avenue that offers the potential for the US to sign a Paris climate agreement with legal force, without having to submit it to Senate or Congress for approval. According to Bodansky, in certain limited circumstances, such as if the treaty was procedurally oriented without precise legally binding emissions limits or financial commitments, the US President “would be on relatively firm legal ground” to exercise executive authority to accept the agreement. Because of the uncertainty about the extent of this authority, the President’s decision will be based on his informed assessment of the political acceptability of that course of action. US negotiators, supported by those who want to conclude a binding and universal treaty, are trying to corral this uncertainty by designing a treaty that sets a framework for climate action through nationally determined commitments, capacity building, burden sharing, cooperation and financial incentives, technology transfer, and periodic review to nudge states closer to the global goal of keeping temperature rise below 2 degrees Celsius.
Realpolitik dictates that the Paris Agreement should be more procedural than substantive, with the substantive details to be worked out nationally through voluntary commitments, such as those already made by the US, China and India, and progressive action by all nations to attain and exceed their commitments.
Developing countries quite reasonably insist that, in order to earn their assent to a relatively soft agreement, global equity issues must be addressed with cash, technology transfer and capacity building. Sweeteners that spread the opportunity for development of a global green economy by investing in clean energy sources in the developing world help to address climate change equity issues and will contribute significantly to attaining the Sustainable Development Goals. These goals have become a kind of binding agent in the negotiations and have given new life to the word Solidarité, as developed countries pledge financial and technical assistance to developing countries as part of their climate commitments, and multilateral development banks leverage private sector financing to multiply their capacity to invest in building low carbon economies.
Prime Minister Trudeau’s announcement, on the eve of the COP21, of $2.65 Billion to assist in capacity building in the developing world is a case in point. Negotiators in Paris are working to bind all nations together in multiple legal and voluntary ways to create the global solidarity required to address the crisis of climate change.
They Are Halfway There
By David Runnalls, Dec. 7, 2015
The Paris Conference began with a document put together by the two co-chairs, from the United States and Algeria. It contained the seeds of an agreement, but was accompanied by the brackets and annexes that had been added by countries at the last negotiating sessions before the COP. You have to remember that paranoia reigns supreme at these sort of talks. Smaller countries and the European Union are haunted by memories of Rio, where President Obama and the leaders of China, India, Brazil, South Africa and one or two other large developing countries pulled a fast one on the world when they sat in a little open plan office in Copenhagen and cooked up an outcome that the rest of the world did not have a chance to vote on. To be fair, the whole conference had ground to a halt and was in danger of total failure and the last minute conflab probably saved the climate negotiation process; but it was neither fair nor transparent.
Transparency has become a major concern of many, especially those small, island countries who will be the first victims of climate change. They are afraid that they will be ignored when the final gavel comes down. The EU fears a G-2 of China and the United States, and many in the Group of 77 developing countries (which has way more than 77 members) are worried that they could be tricked by China, India, Brazil, Mexico and some of the more prosperous developing countries whose interests are almost closer to those of the OECD members than to their fellow G-77 members.
The text, which the negotiating committee handed over to the COP President, France’s Foreign Minister Laurent Fabius, looks really messy. There are 939 pieces of bracketed text that need to be resolved. The chief block, as usual, is over the meaning of the phrase “Common but Differentiated Responsibilities.” This old chestnut dates from the Rio Earth Summit of 1992. It essentially means that every country has some responsibility for this mess, but that the lion’s share lies with the rich countries, who are responsible for most of the greenhouse gases (GHG). And it was also interpreted for many years as placing no obligations on developing countries to reduce their GHG emissions. This was one of the great political flaws of the Kyoto Protocol. CNDR has also been interpreted crudely as we will help, but you have to pay.
These distinctions between rich and poor have eroded over the years and the seriousness with which many developing countries have prepared their intended nationally determined contributions indicates that the Third World is well aware of the threats which they face from climate change. But they still expect funding to help them transition away from high carbon development.
The funding issue was papered over in Copenhagen by a rich country pledge to provide $100 billions per year in funding by 2020. Where this was going to come from was always vague, but it was clear to Hilary Clinton, who proposed it, that most of it would come from private investors. The more radical developing countries insist that this should all come from governments. With the current state of OECD member treasuries, that has even less of a chance than the proverbial snowball in you know where. So Paris is dead on arrival unless the rich countries can convincingly come up with the money.
There are plenty of other disagreements that remain in the text and many of them will not be easy to resolve. But this week has done two positive things. The first is that the negotiations have been very open. Even though the text is still messy in places, now the countries own it themselves. They can no longer blame the co-chairs or some secretariat villains. Secondly, the real eloquence of many of the heads of state during the first days, combined with the highly skilled diplomacy of the French means that most of the delegations are in a positive mood. And one does not hear (not yet, anyway) talk of failure in the corridors. So far, this is not Copenhagen redux.
COP21 at Midpoint
By Christopher Campbell-Duruflé, Dec. 7, 2015
Saturday’s publication by the Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP) of a new version of the draft Paris Agreement presents a good occasion to reflect on the progress accomplished since the beginning of COP21 last Monday. Having observed different work sessions, I draw attention to some of the most contentious issues that will likely be key for the coming days of negotiation. While the rumour has it that the COP21 site in Le Bourget is rented until Sunday night and that this provides delegates some additional time past the Friday night official deadline, it is clear that every hour counts to reach an effective and fair climate agreement.
One of the biggest issues for ADP working groups remains that of differentiation of greenhouse gas (GHG) emission reduction targets between developed and developing countries. While speeches by heads of states on November 30 conveyed a strong message of unity in the face of the global climate challenge, many official declarations showed resistance to the idea according to which each country should do what it can to curtail GHG emissions. China and the coalitions of the Like Minded Developing Countries (LMDC) or of the Arab Group, for instance, argued that it would be unfair for them to enter a process whereby they are periodically called to increase their GHG reduction targets, since they are not historically responsible for climate change and since the yearly 100 billion target for the Green Climate Fund has not yet been reached. In response, the United States and the European Union tried to reassure them that they recognized the principle of differentiated responsibilities for climate change. It remains to be seen if this will be sufficient to convince all parties to support the process of universal, incremental, and differentiated efforts proposed at article 2bis.
Another directly related issue is that of the overall purpose of the agreement, to be spelled out in article 2. Whereas the UNFCCC treaty signed in 1992 saw parties commit to the general objective of “preventing dangerous anthropogenic interference with the climate system,” the 2009 Copenhagen Accord, based on the scientific work of the International Panel on Climate Change (IPCC), established the necessity of limiting temperature increases below 2 degrees Celsius to achieve this objective. Recent scientific developments suggest that this threshold may in fact be situated at 1.5 decrees. This issue was hotly debated this week, including after a vibrant plea by Saint Lucia, and bracketed text in article 2 of the new draft Paris Agreement shows that this will be a crucial point for the coming week.
The mention of human rights in the draft Paris Agreement is also an important issue, which Canada announced in its December 3 press conference in Le Bourget that it would continue championing. While the mention of human rights in the preamble of the draft is not bracketed, these symbols of disagreement appear at operative articles 2 and 4, respectively stating the general objective of the treaty and requiring states to take the necessary adaptation measures. Based on the recent Key Messages on Human Rights and Climate Change in the lead up to the COP21 published by the UN High Commissioner for Human Rights, one could have thought this issue less controversial; it remains on the negotiation agenda for this week.
Lastly, an interesting debate surrounded the role of non-party stakeholders, such as corporations, NGOs, and sub-national entities, in the implementation of the Paris Agreement. The text to this effect appears at article 122 and following of the draft resolution that will hopefully adopt the Paris Agreement. Different interveners, including the Arab Group and Venezuela, opposed these provisions on the basis that they could implicitly recognize that non-state actors possess a form of jurisdiction or right to take actions that could run against national policies. This was met with resistance by the co-chairs of the session, Daniel Reifsnyder and Ahmed Djoghlaf, on the grounds that action by non-state actor was called for in the Lima COP20 Call for Climate Action and at the heart of the vision for COP21 set forward by the French Presidency.
These four issues required a lot of the precious attention from state delegations last week and generated at times some visible exasperation. But “il est trop tard pour être pessimiste,” reminds us the French artist Yann Arthus-Bertrand. Let us hope that they do not side-track the work of parties during the short sprint that separates us from the end of COP21.
COP21 Exposition of an Impressionist Draft Paris Agreement
By Oonagh Fitzgerald, Dec. 5, 2015
If you have ever stepped too close to Monet’s studies of Water lilies or Seurat’s studies for A Sunday on La Grande Jatte you will recognize that same dizzying confusion when you attempt to read the draft ADP texts released in the last two days (three versions released on December 4, followed by a December 5 Draft Paris Agreement approved by the negotiators for the 195 State parties minutes before the Saturday noon deadline).
Viewed close up, the Monet and Seurat paintings are a confusion of dots and splashes of colour; pull back far enough and they appear in all their glory, revealed as though through morning mists or a summery haze. The latest Draft Paris Agreement, amounting to 21 pages and 26 articles, with a 21 page Draft Decision attached, has so many bracketed phrases and options that it is virtually unreadable up-close. While stepping back from the detail is not the usual way to read a legal text, it does at least give a generally positive impression.
The preamble makes emphatic reference to “the importance of promoting, protecting and respecting all human rights” and specifically mentions indigenous peoples, migrants and “intergenerational equity” among other vulnerable groups. Glimpsed among the confusion of brackets are options for a purpose clause, one being: “To hold the increase in the global average temperature [below 1.5 °C] [or] [well below 2 °C] above pre-industrial levels by ensuring deep reductions in global greenhouse gas [net] emissions.” One purpose appears to be fully agreed: “To pursue a transformation towards sustainable development that fosters climate resilient and low greenhouse gas emission societies and economies, and that does not threaten food production and distribution.” Another interpretative clause specifically referring to human rights is completely bracketed: “[This Agreement shall be implemented on the basis of equity and science, and in accordance with the principle of equity and common but differentiated responsibilities and respective capabilities, in the light of different national circumstances, and on the basis of respect for human rights and the promotion of gender equality [and the right of peoples under occupation].]” Long-term global goal options are all bracketed but one under consideration is “[achieving zero global GHG emissions by 2060-2080].” There are various options for a mechanism to support “integrated and “holistic” approaches to implementing the Sustainable Development Goals, suggesting that the UN’s adoption of the goals has spurred a better understanding of how to attack climate change.
Like the person who was called “Prince,” the concept of intended nationally determined contribution (INDC)nationally determined mitigation contributions or commitments (NMDC) that lies at the heart of the Draft Paris Agreement now goes by a symbol ### as the negotiators work out suitable language. Nonetheless, the concept is there, being roughly sketched through multiple options: each country is to make commitments but the details as to how this applies to developing countries and what ### ought to include are all bracketed. It does include being transparent and scientific about measuring performance in implementation, increasing ambition over time, no back-sliding except in extreme circumstances, periodic review of performance and regular global stock-taking. There is much variation in language about the consequences of failure including one option to establish an international tribunal of climate justice.
There are various options regarding cooperation between developed and developing countries to increase capacity. There are 22 sub-clauses on finance, almost all of which are bracketed with multiple options, the cleanest clause reading in part: “The provision of financial resources [should][shall] aim to achieve a balance between adaptation and mitigation, taking into account country-driven strategies, and the priorities and needs of developing country Parties, especially those that are particularly vulnerable to the adverse effects of climate change…”. It seems uncontroversial that “Parties share a long-term vision on the importance of fully realizing technology development and transfer in order to improve resilience to climate change and to reduce GHG emissions” although much of the details that follow are all bracketed. The draft provides for the establishment of the “CMA” meaning the Conference of the Parties serving as the meeting of the Parties to this Agreement. The Decision Document is long and detailed, suggesting an ongoing tug of war about what should and should not be in the Agreement itself. For example, references to the Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts are bracketed in both places.
Establishment art critics at first dismissed the impressionists for their unfinished works,missing the point of their fuzzy and evocative images. At the end of the first week of COP21, the UNFCCC Secretariat posted a cheerily impressionist Draft Agreement. The immediate reaction is muted relief and frustration at the slow progress. An international agreement is not an impressionist painting; one has to get close and check the details to understand its meaning. The recent drafts indicate there has been some progress; what is needed in the next few days of COP21 is a finished agreement so the world can get on with the daunting task of implementation.
What’s really at stake in Paris?
By David Runnalls, Dec. 4, 2015
What’s really at stake in Paris can neatly be summed up in one sentence: how can we provide a decent standard of living for 9 billion people by 2050, while reducing our greenhouse gases (GHGs) by at least seventy-five percent?
Paris will chew off only one piece of this, but it is the major piece. It really comes down to money. Most of the transition to a low carbon economy will have to come from the developing world, where the vast majority of population growth will occur. And the costs can be mind boggling. Let’s take urbanization. The Commission on the Economy and Climate Change, chaired by former Mexican President Felipe Calderón, estimates that the world will need to spend about $89 trillion on urban infrastructure in the decade after 2020. Most of this will be locally financed. The Commission goes on to argue that an additional $4 trillion would be needed to make this infrastructure low carbon. They also feel that most of this can be recouped through the lower operating costs of renewable energy.
The financing discussion here in Paris is focussed on a small subset of these kind of numbers. At the ill fated Copenhagen summit, then Secretary of State Hillary Clinton promised a fund of $100 billion annually for essentially low carbon development. It was clear as mud at the time how this funding would be produced, but there was an understanding that most of it would come from the private sector. The time of reckoning has now arrived. This Conference will not succeed without assurances that funding will exist. Many developing countries are arguing that this money should come from rich countries’ treasuries. This is a non starter. The US contribution alone would come to $20 billion per year. Getting that from a Republican congress in an election year has about the same chance as the survival of the proverbial snowball from hell.
So a compromise will be reached, with governments producing a sizable sum and much of the difference being made up by the multilateral development banks, such as the World Bank, acting as levers for larger amounts of private cash.
But what about these larger sums talked about earlier? There are plenty of ideas drifting about. One is to do away with the vast sums that governments spend to subsidize the energy industry. If you add in the costs of the damage caused by burning fossil fuels, the IMF reckons that the annual cost to the world economy is an astonishing $6.2 trillions per year. This is not a number calculated by Greenpeace or the Sierra Club. This comes from the Mother Church of economic orthodoxy.
Governments buy a lot of stuff. Some spend up to 25 percent of their gross national product buying goods and services. Green procurement programs can be directed to providing markets for clean tech products.
But none of this will be enough in the end. Climate change is now a big ticket economic issue. None other than the heads of the IMF, World Bank and OECD have described climate change as the biggest economic change facing the world today.
The world’s finance ministers and central bankers are still grappling with the reform of the international financial system to make it more robust and able to withstand the shocks of 2008 and beyond. What is really needed is an integration of the world’s financial reform discussion and climate talks. We need to create a financial system that discourages investment in high carbon fuels. Mark Carney, governor of the Bank of England, has led the discussion on the risks inherent in potential “stranded assets,” and the G20 is starting to take notice.
Andrew Sheng, the influential former Hong Kong Monetary Authority and advisor to the Government of China, goes further in a CIGI paper that calls on Central Bankers to invest at least some of the trillions of dollars in government paper gained through quantitative easing, to be invested in socially responsible ways, such as low carbon energy.
And finally, the United Nations Environment Program has published the results of its inquiry into the design of a sustainable financial system.
These are but a few first steps on the road to a more sustainable future.
How the SDGs provide our best hope for ambitious and effective climate action
By Oonagh Fitzgerald, Dec. 3, 2015
The Sustainable Development Goals (SDGs)* provide useful guidance for shaping law, policy and practice for implementation of effective and ambitious climate change action. Specifically, they exhort nations to share innovation and prosperity, promote global cooperation and solidarity and address equality and climate justice. CIGI and the Inter-American Development Bank (IDB) cosponsored a COP21 official side event on The new role of climate finance, policy & law, exploring this integrated and transformative approach.
IDB President Luis Alberto Moreno talked of the importance of integrating the SDGs into financing decisions to assist recipient countries to develop and implement their Intended Nationally Determined Commitments (INDCs) on climate change. Juan Orlando Hernández, President of the Republic of Honduras, described the extreme risk that his country faces from climate change and some of the measures being undertaken, with the assistance of the IDB, to prevent deforestation. Peruvian Minister of the Environment and COP20 Chair Manuel Pulgar-Vidal noted with optimism that there is an increase in global investment in green technology and innovation, and that multilateral development banks (MDBs) and national governments were finding ways to leverage private investment to accelerate the transition to a low-carbon economy. David Runnalls, CIGI Distinguished Fellow, said that the COP21 agreement should include at least US $300 Billion of financing and that would require MDBs to attract more investment of private funds. Bianca Jagger, CIGI Senior Fellow and President of the Bianca Jagger Human Rights Foundation, was encouraged by the fact that over 180 nations had submitted their INDCs but decried the fact that their total ambition was inadequate to prevent temperatures rising well above two degrees Celsius. She urged the COP to keep temperatures below a 1.5 degree Celsius increase and to involve indigenous people in decision-making by MDBs. Albert Daley, Head of the Climate Change Division at the Ministry of Water, Land, Environment and Climate Change of Jamaica, described Jamaica’s efforts, supported by the IDB, to manage the effects of climate change on their principal industry of tourism.
The discussion demonstrated the complexity of climate change adaptation and mitigation issues and how, guided by the SDGs, they require integrated and transformative action by MDBs, national governments, the private sector and civil society organizations in order to succeed.
SDGs 4–10 speak to the need to both help and empower all people to share in the opportunities of sustainable development, innovation and prosperity. Public international law, national law, private law and voluntary approaches could be used to encourage developed countries, MDBs and clean technology innovators to cooperate in sharing knowledge, know-how and equipment with, and providing financing to, developing countries. For the transition to a low carbon economy international, transnational and domestic legal and voluntary mechanisms could be leveraged to reduce greenhouse gas emissions, create incentives for clean energy innovation and enforce corporate disclosure of climate change-related risks.
SDGs 11–17 envision a new global partnership of cooperation and solidarity to address the shared challenge of protecting our environment. This suggests that MDBs should leverage the INDCs of developed countries to support investment in climate change mitigation and adaptation in the developing world. Encouraging developed countries to include as part of their INDCs transfers of public and private funds, technology and know-how to developing countries would establish clean energy sources, protect endangered forests and wetlands, and support other features of the new green economy. International trade and intellectual property law, domestic law and policy, bilateral and voluntary arrangements and private law could all be leveraged to build this global partnership.
SDGs 1–5 focus on basic human rights issues, whereas SDG 16 acknowledges human rights are meaningless unless citizens can participate in decisions affecting them and enforce their rights through accessible systems of justice. Thus when MDBs evaluate national climate change strategies for financial support they should ensure that every stage of design, implementation and accountability complies with and integrates human rights considerations, especially those of indigenous peoples, as they are significantly impacted by climate change.
The SDGs and outcomes of COP21 create exciting opportunities for MDBs, national governments, the private sector and civil society to work together in implementing climate change commitments. The IDB, national government and civil society voices on this panel demonstrated that integrating finance, policy and law to share innovation and prosperity, promote global cooperation and solidarity and address equality and climate justice, as guided by the SDGs, provides our best hope for engendering effective and ambitious climate change action.
* The full list of SDGs can be found here.
An update on Canada at COP21
By David Runnalls, Dec. 2, 2015
Paris is now returning to some sense of normalcy after the departure of heads of state and government. The first day of COP21 was dominated by a suffocating police presence around the conference site, including major hotels where leaders were staying. Last night, downtown streets were full of pedestrians and Christmas shoppers; outdoor terraces of bistros and bars were crammed with diners, most of whom were freezing to death as they evaded the ban on indoor smoking.
As Canada’s Prime Minister Justin Trudeau stated at the conference, the principal purpose of the Canadian delegation here is to “change the channel” from Canada as the skunk at the climate change garden party to the old Canada of Pearsonian multilateralism. And that seems to have worked. The delegation itself, a mammoth grouping of more than 300 people, is much more representative. Mr. Trudeau’s speech was very effective. Environment and Climate Change Minister Catherine McKenna has been seen all over the place. Yesterday, she briefed the 100 or so representatives from Canadian non-governmental organizations.
Canada is now in the process of further announcing what it will do with its increased financial contribution. The Harper Government had already announced that Canada would contribute its fair share to the Green Climate Fund. Yesterday Minister McKenna indicated that Canada would be making several announcements at COP, detailing how at least some of the additional money would be spent.
This offers Canada’s new federal government a chance to signal its intentions on development assistance. The “easy” way to disperse this money is to give it to existing multilateral institutions, like the World Bank, to spend. That is what the previous government did. It will go down well with the other participants in the COP.
But Canada’s own aid problem has been cut to the bone by the previous government. Canada has plenty of competent people who could implement climate friendly projects in developing countries, and it could well receive credits for some of these projects, which it will need if it is to reach the 2020 target of a 20 percent reduction in greenhouse gas reductions. Much of this money can and should be programmed by the former Canadian International Development Agency.
Canada also has a hidden gem. The International Development Research Centre (IDRC) has been using other governments’ money (principally the British) to fund research in developing countries on the transition to a low carbon economy. It is an enormous asset to Canada. Just ask any delegate from a developing country at this conference what she or he knows about Canada. And the answer is likely to contain a reference to IDRC. It surely could handle a good chunk of the extra $2.65 announced by Mr. Trudeau in Malta.
The climate movement must find the courage to kill some of its many darlings
By Kevin Carmichael, Dec. 1, 2015
I think the followers of the UN’s Twitter account were supposed to be impressed. The institution last week sent around a video that described the Paris climate jamboree —otherwise known as the 21st Conference of the Parties, or COP 21 — in terms of some really big numbers: 45,000 attendees, officials from 196 countries, 166 proposals to reduce greenhouse gas emissions, etc. And they say the G20 is too big to get anything done! Actually, the G20 is too big to get much of anything done, which is why the UN’s COP 21 headcount should generate a healthy amount of skepticism about the world’s ability to keep the planet’s temperature from rising more than 2 degrees Celsius from pre-Industrial levels.
After years of watching electoral politics in the United States, Canada and Australia block any significant progress on climate change, it is rather shocking to see so many apparently green leaders gathered in one place. And it is awe-inspiring to witness tens of thousands of people descend on Paris to fight for the planet. Impressive announcements will be made. An agreement most likely will be reached. That’s assured by the advance work of the host government and the fact that US President Barack Obama has nothing at stake in any election that will occur before the end of his presidency. There clearly is momentum for change. There even is money. But is there focus? All those thousands of people in Paris represent dozens of ideas about how to cool the planet. But those ideas aren’t equally efficacious. The battle against carbon will be won by making it more expensive than cleaner alternatives. Anything else is a well-meaning distraction.
Take green bonds, debt that is issued for the sole purpose of financing clean infrastructure. They sound wonderful in theory. India already has used such assets to raise $1-billion (US) for solar, wind and other renewable projects. Yet economist James Haley reckons green bonds only will soak up capital that would have been used to finance clean energy anyway. Projects that generate rates of return comparable to selling oil or coal don’t need special funding drives. Furthermore, investors who are prepared to accept less-than-maximum profit for the good of the planet probably don’t need to be coaxed into doing so — but they surely will grab any carrots governments dangle. “If Green Bonds are merely a fashion statement and are viewed as a substitute for measures to alter the relative return on carbon-based and green projects, through carbon taxes, for example, questions could legitimately be raised whether they are worth the effort,” Haley wrote last week on his blog, The New Age of Uncertainty.
Assaad Razzouk, chief executive of Singapore-based Sindicatum Sustainable Resources, argues that climate activists have a lot to learn from their brothers and sisters in the movement to end HIV/AIDS. The human immunodeficiency virus and acquired immune deficiency syndrome still represent a grave threat to human health, especially in poorer countries. But no longer is the virus the killer it was when it was discovered in the 1980s.
Razzouk argued in a TEDx talk earlier this year that the HIV/AIDS movement was successful because it kept things simple. According to Razzouk, campaigners had one target and one goal. They went after pharmaceutical companies, which were profiting greatly from expensive AIDS medication, and they made achieving universal access to affordable treatment their priority. “The climate movement today, we, are all over the place,” Razzouk said in his April talk at the University of Edinburgh. “We are far too spread out.”
The danger of dozens of good ideas and intentions showed up in Centre for International Governance Innovation Fellow Jason Thistlethwaite’s paper on how financial markets account for climate risks. Thistlethwaite highlighted the carbon-curbing potential of forcing companies to transparently account for their exposure to a warming planet. Doing so would be another way of putting a price on carbon. Insurance firms face higher claims from extreme weather events. Fossil-fuel companies and their shareholders could be sued for billions of dollars in damages to the planet just as tobacco companies were. Private-equity funds and banks could face losses if they are overexposed to coal and oil companies whose current value is tied to reserves that could be stranded by the shift to clean energy. Yet there is no standard for reporting climate liabilities. Instead, there are competing voluntary reporting schemes, both private and public, that have done little, if anything, to dissuade oil-and-gas companies from prospecting.
Thistlethwaite said international financial regulators should give market forces a chance to make life more expensive for carbon emitters by standardizing the reporting of climate liabilities. Mark Carney, the governor of the Bank of England and head of the Financial Stability Board, agrees with him. It’s a start. Meanwhile, Razzouk will be attempting to make the battle against climate change more like the fight against AIDS. He says 90 oil, gas, coal, and cement companies are responsible for two thirds of greenhouse gasses in the atmosphere. Like Carney and Thistlethwaite, Razzouk wants those companies’ cost of capital to reflect the damage they are doing to the planet. The crux of his TEDx talk was to spark a campaign to lobby pension funds to demand larger risk premiums from carbon companies. “Price them out,” he said. “Make their cost of money higher.”
Simple. But there is nothing simple about the climate strategy that seems to be emerging at COP21. I was reminded recently that William Faulkner advised writers to “learn to kill their little darlings.” I dutifully went through this post and did away with needless prose before sending it to Waterloo for publication. It’s now the climate movement’s turn for some self-editing. It has many darlings, but there is only one that counts.
Let us not forget the WTO
By Maria Panezi, Nov. 30, 2015
To tackle climate change and Greenhouse Gas emissions is no easy task. In a recent article, Don Pittis discusses the possibility of carbon taxes and suggests they would not work. Pittis’s article neglects consideration of the World Trade Organization (WTO), which stands at the centre of the international trade regime and has enormous impact on global trade.
There is no “level playing field” in the WTO regime, by definition. Each country makes different concessions and these become “multilateralized.” This means that what you promise as a tariff cut to one of the WTO member states is a promise you make to all. As a result, the WTO regime is a huge nexus of different commitments.
While there are concerns that the WTO is not designed specifically to protect the environment, the WTO does not prohibit environmentally friendly legislation; it just mandates that such laws must be applied the same way across the board, for national products and imported products. In other words, the WTO does not allow environmental rules to mask protectionist policies that distort trade. If the legislation is applied without discriminating between products with the same carbon footprints, there will not be a problem with respect to WTO law. So trade can be green. Even if environmental legislation results in some sort of discrimination, the cardinal WTO Agreement, the GATT, allows exceptions for national policy reasons, such as the protection of the environment and natural resources. The WTO states in its website that:
WTO members may adopt policy measures that are inconsistent with GATT disciplines, but necessary to protect human, animal or plant life or health (paragraph (b)), or relating to the conservation of exhaustible natural resources (paragraph (g))
The necessary trade agreements are already there. COP21 can raise awareness of the fact that countries can not only impose carbon taxes in their domestic markets — entirely legally and without violating their international obligations — but even further, they can impose border tax adjustments (BTAs) for their imports as well. Yes, there may be complications in the calculation of carbon emissions, but as long as countries make considerable efforts to measure and tax without discrimination, the tax (and border adjustment) will most likely survive scrutiny before the WTO courts, the Panels and Appellate Body.
The lack of a level playing field does not mean those jurisdictions that take a stand to lower carbon emissions have lost the game. Coupling carbon taxes and BTAs is not a sufficient plan to reverse global warming, as it only focuses on pricing emissions, not limiting them. It is, however, a step in the right direction. One positive effect that tax schemes may have is the incentive to pollute less or adopt green technologies in order to maintain and increase competitiveness of products in national and global markets. Another positive outcome is that BTAs produce fairer outcomes by taxing all products with equal carbon footprint and produce greener domestic markets. Achieving a UNFCCC COP21 agreement in the next few days is crucial. WTO countries can complement that new global agreement by using trade laws and taxing imports and exports with high carbon emissions and thereby encourage a global transition to a green economy. Even with an uneven playing field, this game is definitely not lost.