US on the wrong track

Posted December 11, 2009

Long, long meeting this afternoon (Dec. 10) on sectoral language for agriculture. First of all, there is confusion as to what the text will end up being—part of a comprehensive Copenhagen agreement? A separate COP decision? Something else still? Everything seems pretty much up in the air on this topic as different countries hold very different views on this matter.

And then there is the U.S. position. Arguing that the language on agriculture needs to be short and very specific, and that it should avoid any mention of food security, or of linkages between mitigation and adaptation. Hard to believe. How does the U.S. government expect this to be acceptable to developing countries where agriculture is a source of livelihoods for large shares of their populations? And, more broadly, to all stakeholders involved in discussions about agriculture, food and climate change? It has become widely accepted that Copenhagen needs to open a space to deal with agriculture and food security concerns associated with climate change—the U.S. cannot be serious!

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Attention to agriculture in Copenhagen

Posted December 10, 2009

I have finally set foot into Bella Center, where the UN Climate Conference (COP15) is taking place. I arrived here yesterday (Dec. 9). After a long queue to get a badge, I left my luggage and clothes in the huge cloakroom, walked through the endless exhibition hall and ended up bumping into two colleagues—pretty unlikely given how crowded the place is!

Everything here is quite overwhelming! The crowd, the venue, the number of official meetings and side-events...

And on agriculture? Well, since I've arrived 24 hours ago, I have already seen three different versions of the text on sectoral approaches and sector-specific actions in agriculture, and there are a lot of brackets still left—so many more versions of the text can be expected in the next few days. Contentious issues include:

  • the consideration of food security in addressing agriculture's role in climate change mitigation,
  • the role of trade and performance standards,
  • the potential for increased efficiency and productivity of agriculture to help address agriculture's role in climate change mitigation.

One issue that does not seem to be discussed by official negotiators, but that I feel is problematic, is the  involvement of non-governmental stakeholders in the upcoming work program on agriculture. Currently, the text opens the door only to submissions by Parties of their views on the content and scope of the work programme. IATP feels the process should be open to observer organizations too.

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Climate vs the speculators

Posted December 9, 2009

In both U.S. climate legislation and within the global climate talks there are serious proposals to create a new carbon emissions derivatives market with big Wall Street speculators looking to cash in.

A new issue brief by IATP's Steve Suppan finds that the same regulatory loopholes that led to excessive speculation on commodity futures markets in 2007 and 2008—leading to big spikes in food and energy prices and riots in over 30 countries around the world—are also in place within proposals for a new carbon market. A poorly regulated carbon derivatives market could induce huge volatility within agriculture futures prices—ultimately affecting farmers and food security. Additionally, volatile carbon prices driven by speculators could delay investments in greenhouse gas–reducing technologies.

Watch the short video interview with Steve below to see how he breaks down the risks of proposed carbon derivatives markets.

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Climate inequity

Posted December 9, 2009

When negotiators arrive in Copenhagen this week, they will quickly become immersed in jargon and highly technical drafts of text. But they shouldn't lose sight of an important fact: climate change occurs in a world of extreme social and economic inequality.

That is the message of a new briefing paper by IATP's Shalini Gupta and Dr. Cecilia Martinez. The paper looks at the disproportionate role wealthy nations have had in contributing to global greenhouse gas (GHG) emissions, contrasted with the role of poorer nations and people. It also looks at who has benefited the most from GHG-intensive development patterns and who is most affected by climate change. The paper links the eradication of the Indigenous commons in the U.S. and the capture of agriculture by agribusiness to the same market-based philosophy underlying the industrial world's approach to climate change.

You can watch a short video with author Shalini Gupta below.

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Agriculture change

Posted December 8, 2009

At the climate negotiations in Copenhagen there will be a lot of talk about supporting more "climate-friendly" agriculture systems and there will be a lot of debate about exactly what type of agriculture is better for the environment. Some agribusiness companies like Monsanto are aggressively pushing genetically engineered crops as part of the climate solution. IATP's Jim Kleinschmit, however, makes the case in a new issue brief that we need to shift research and investment away from genetically engineered crops and input intensive agriculture practices toward low-input, resilient agriculture systems that increase carbon sequestration in the soil and lessen our output of greenhouse gases. Agriculture systems that are both adaptive and mitigative should be given the highest priority. Such a transition would redirect government investment from proprietary genetically engineered seed and crop technologies towards enhancing traditional plant breeding and perennial systems; and shift away from large-scale confined animal feeding operations toward greater integration of livestock production with low-input cropping systems.

You can read the full issue brief and watch a short interview with Jim below.

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How U.S. climate policy treats agriculture

Posted December 8, 2009

We can expect that the U.S. government's position on agriculture at the global climate talks in Copenhagen will reflect how agriculture has been treated in climate bills being written by Congress. Thus far, Congress has seized upon agriculture and forestry-related sequestration as a key tool to reduce the country's overall greenhouse gas emissions. Thus far, legislative proposals have set no caps for agriculture emissions.

IATP's Julia Olmstead writes in a new issue brief that instead of considering agriculture in its entirety—such as what practices might be good not only for the climate, but also for farmers, consumers, the soil, air and water—U.S. climate policy reduces agriculture to a carbon storage coffer, enabling other sectors to avoid real emission reductions. The paper critiques U.S. policy proposals regarding agriculture offsets and argues for a different approach that recognizes the multifunctionality of agriculture. Such an approach would provide predictable and sufficient payments to farmers for climate-friendly practices; ensure flexibility for farmers as climate science evolves; hold agriculture accountable while accounting for scale and types of operation; and strengthen rural resilience.

You watch a video interview below with author Julia Olmstead. Julia will be in Copenhagen to report on the global climate talks.

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Will Obama be the closer in Copenhagen?

Posted December 7, 2009

Is President Barack Obama's decision to appear on the last day of climate negotiations in Copenhagen a game-changer? There certainly have been a lot of games played with expectations of the Copenhagen meeting over the past year. At the beginning of 2009, expectations were high that this would be the most important global climate meeting since Kyoto—where countries would finally agree to make substantial reductions in greenhouse gas emissions. But after talks at the October preparatory meeting in Bangkok stalled, U.S. lead negotiator John Pershing lamented that the U.S. was hamstrung in making stronger GHG-reduction commitments by Congress—which has yet to pass climate legislation. 

Obama's announcement that he'll arrive on the last day—re-enacting former Vice President Al Gore's last minute deal-making at the Kyoto talks in 1997—seems to raise the stakes for the Copenhagen meeting. But how much? Proposed GHG reductions announced by India and China seemed to have influenced Obama's decision. But Congress's inaction on climate will still limit what Obama can commit to in terms of concrete GHG-reduction targets.

So, what type of progress could be made within a non-binding political declaration without a Congressional bill? Some of the more structural issues related to a climate deal could be discussed, including aid to developing countries, who want a new global fund to help with climate-related disasters and to transition toward a low carbon economy to be managed by the United Nations, rather than the World Bank as the U.S. proposed last week. Linked to this discussion is the role of purchasing of offset credits in developing countries (often related to forest preservation) to help developed countries like the U.S. meet their GHG-reduction targets. Part of this debate could include the establishment of a secondary carbon derivatives market, see our concerns. Progress on agriculture could also be made (see our agriculture benchmarks). 

The trouble with last minute—often behind-closed-doors—deals is that they often fail in the follow-through (see Kyoto, and the WTO's never-ending Doha Round). We'll know a lot more about whether Obama's announcement has changed the game next week when negotiations begin their two-week journey.

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Sustainable ag central to climate solution

Posted December 4, 2009

Next week government representatives from around the world—including President Obama—will gather in Copenhagen to talk about how to address climate change. The focus will be on how to reduce greenhouse gas emissions and deal with the effects of climate change. Earlier this year, agriculture became a larger part of the global climate talks.

“We cannot truly address climate change without getting it right on agriculture,” Jim Harkness, IATP's president, said in a press release. “Agriculture is a contributor to climate change, but just as importantly it profoundly affects land use around the world, and has the potential to be part of the solution. Smart climate policy for agriculture can help address hunger, support rural livelihoods, improve water quality and biodiversity, and strengthen our energy security.”

As a lead up to the Copenhagen meeting, IATP has produced a series of issue briefs covering different aspects of agriculture, climate and public policy. Each is available on our new climate page—as well as video interviews with authors, and other resources for agriculture and climate. Here's a quick review of the  issue papers:

• Agriculture and Climate—The Critical Connection, by Jim Kleinschmit, gives an overview of the science of agriculture and climate change.
• Putting Agriculture on the Global Climate Agenda, by Anne Laure Constantin, sets benchmarks for including agriculture within global climate negotiations.
• U.S. Climate Policy and Agriculture, by Julia Olmstead, reviews how agriculture is considered in U.S. legislation and makes recommendations for a better approach.
• Speculating on Carbon: The Next Toxic Asset, by Steve Suppan, analyzes how Wall Street speculators could influence agriculture and climate goals.
• Eye of the Storm: Integrated Solutions to the Climate, Agriculture and Water Crises, by Shiney Varghese, explains water’s role in the climate and agriculture crises.
• Climate Inequity, by Shalini Gupta and Dr. Cecilia Martinez, traces the historical inequities that have contributed to climate change, and proposes a more equitable climate policy.

IATP will be sending a big team to Copenhagen and blogging, videotaping and tweeting about these issues there. You can follow all the action at our climate page.

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Looking for integrated solutions to climate at UN talks

Posted November 11, 2009

From November 2–6 last week, negotiators met in Barcelona as a lead up to UN climate talks in Copenhagen in December. However, hardly any progress was made on the two issues that continue to be central to the deadlock: firm emission reduction targets for developed countries and financing that would allow developing countries to limit their emissions growth and adapt to the climate change impacts that are already inevitable.

Sometimes I wonder whether this is a blessing in disguise. Why? Because negotiators seem unable to grapple with how climate change intersects with other critical challenges related to agriculture and water.

In the case of agriculture, its contribution to climate change is significant but its potential for mitigation is high. It is not only a source of livelihood for close to half the world's population but provides food for all of us. Despite these characteristics, agriculture has only recently entered climate negotiations.

Water is another missing element of the negotiations. The climate impact on agricultural production will primarily be mediated through water (and humidity related changes in the presence of pests and pathogens). In Barcelona, UN-Water (composed of 26 UN organizations) released a statement urging climate negotiators to recognize the pivotal role of water in adapting to climate change in order to increase resilience and achieve sustainable development, stating: “Water is the primary medium through which climate change influences the Earth's ecosystems and therefore people’s livelihoods and well-being. [...] The sense of urgency for climate change adaptation and the recognition of the centrality of water therein, have not yet permeated the political world [...]." It added: "Innovative technologies and integrated solutions are needed at the appropriate scales, for adaptation as well as mitigation."

Three days later, in New York, a special event was held as part of the 64th Session of the UN General Assembly’s Second Committee (Economic and Financial), titled “Enhancing Governance on Water" during which experts discussed some of the key issues on the global water agenda, including strengthening the response to climate change through smart water management and reducing the impacts of water-related disasters. The UNGA event emphasized that water issues must be addressed in a holistic manner to address the climate crisis.

Earlier this year, IATP issued a report prior to the World Water Forum titled, Integrated Solutions to Water, Agriculture and Climate Crises. I hope UNFCCC negotiators heed these growing calls for integrated solutions to these global challenges.

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Betting on climate change: the carbon derivatives market

Posted November 6, 2009

This week in Barcelona negotiators are making one more attempt to resolve some of many differences for a new agreement to implement the United Nations Framework Convention on Climate Change (UNFCC). There are three UNFCC “flexibility mechanisms” intended to enable countries to meet their Greenhouse Gas (GHG) reduction commitments. One mechanism is the buying and selling of “carbon allowances,” i.e., permits to pollute, and “carbon offset credits,” largely based on agricultural or forestry projects to reduce or avoid GHG emissions. Industrialized countries claim that Article 17 of the Kyoto Protocol authorizes them to extend the primary carbon trading market into the world of financial derivatives.

As part of IATP’s preparations for the UNFCC summit, December 6–18 in Copenhagen, Denmark, as a member of the Commodity Markets Oversight Coalition (CMOC), we helped to draft and signed an October 30 letter to Senators John Kerry and Barbara Boxer. The CMOC does not take a position on the overall Senate energy and climate change bill. Instead the letter outlines dangers that the carbon derivatives market poses to the realization of U.S. GHG reduction goals. The letter notes that Congress has yet to agree to fundamental reforms to the financial and commodity derivatives markets in which carbon derivatives would be traded. Indeed, there is strong opposition to most of these reforms from the financial services industry, which has created new loopholes in draft legislation that could induce extreme price volatility in derivatives markets, including that for carbon. Volatile and confusing carbon price signals would delay and inhibit investments in GHG reduction technology. Such investment delay would be a global warming accelerant.

To reduce the likelihood of extreme carbon price volatility, the CMOC letter calls for mandatory exchange trading—in other words, no more trading in the shadow banking markets. This demand is strongly opposed by the Coalition of Derivatives End Users, who claimed in an October 2 letter, that being forced to post the margin requirements to trade on exchanges would harm their economic interests. Most of the signatories to the letter—which originated when the U.S. Chamber of Commerce, acting on behalf of the taxpayer, bailed out  “too big to fail” banks—will be trading carbon derivatives.

The CMOC letter also calls for banning commodity index funds and exchange-traded funds from trading carbon derivatives. In a November 2008 paper, IATP showed how the bundling of agricultural futures contracts into index funds was partly responsible for the extreme price volatility in agricultural futures contracts. The role of index funds in driving price volatility was confirmed in a June 24 U.S. Senate investigation of excessive speculation in wheat contracts. This price volatility made the use of futures contracts by both U.S. farmers and developing country importers too expensive and unpredictable. The price increases contributed to food riots in more than 30 countries, according to the United Nations Food and Agriculture Organization (FAO).

Finally, the CMOC letter called on Congress to commission studies on the effects of a carbon derivatives market on agricultural, energy and other non-agricultural futures contracts. The Commodity Futures Trading Commission (CFTC) estimates that by 2017, the carbon derivatives market will trade $2 trillion in contracts. In 2008, the estimated value of all CFTC regulated contracts was $4–5 trillion dollars. No climate change bill should be passed before Congress has had time to review studies on carbon derivatives price volatility and the effect of carbon derivatives on other futures contracts, including contracts where carbon is bought to offset financial risks in the deregulated world of “mixed swaps” (i.e., with both security and commodity features).

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