Posted December 7, 2011 by Dr. Steve Suppan
IATP’s Steve Suppan is blogging from the UN climate talks in Durban, South Africa.
The high-level session on Wednesday changes the scenery of what one observer called the negotiations pantomime. Many of the more than a thousand observer organizations (NGOs, farmers, private sector, etc.) in Durban have worked in alliances to boil down their policy briefs into a page or less of suggested negotiating text bullet points. Security guards permitting, we try to hand these lobbying documents to the delegates as they enter rooms to negotiate texts to hand over to their bosses. The Heads of State and other higher-level officials will make political decisions about the texts thus far negotiated.
In a theatrical pantomime, gestures, not words, convey the story. In a negotiations pantomime, positions taken on the dozens of agenda items before the negotiators become the gestures. Some of the gestures mean what they mime, some are empty placeholders that may or may not be given concrete meaning by the political decision-makers in the negotiations endgame.
IATP has worked to cover three agenda topics: agriculture, "new market mechanisms" for reducing greenhouse gases ("mitigation"), and the Green Climate Fund (GCF) to finance developing country projects to adapt to and mitigate climate change. This blog will reflect on the GCF and new market mechanisms’ pantomimes.
A few words about the negotiations process. There are at least four levels of negotiations: 1.) formal plenaries for opening and closing statements, elections of officers, approval of agendas and other Conference of the Parties (COP) business; 2.) informals (nongovernmental observers allowed), where positions are stated but texts are not negotiated; 3.) informal formals (government delegates only to negotiate texts); 4.) Green Room (some governments invited on non-transparent basis to negotiate the final COP decisions: named for the notorious World Trade Organization negotiating process).
The last UNFCCC COP meeting in Cancún established the GCF, and was part of a Green Room deal. As mentioned in our first Durban blog, the U.S. and some other developed country Parties to the U.N. Framework Convention on Climate Change (UNFCCC) oppose giving the COP oversight of the GCF Board. Furthermore, developed countries will not capitalize the GCF unless there is a private sector facility through which private firms can execute projects in developing countries with public funds in the GCF, but without oversight by the Designated National Authorities (the national governments where the projects actually take place). These authorities are supposed to approve and review the performance of all projects in the national plans on adaptation and mitigation that are to be reported by all parties to the COP annually.
Diplomatic protocol forbids a frank discussion, at least in sessions open to observers, about why developed countries want a UNFCCC financial mechanism that the COP does not control and that allows the private sector climate change investments to circumvent governmental authority. However, at least a partial explanation for the developed country distrust of the COP and governmental authority can be gathered from outside the negotiations.
At a U.N. Environmental Program side event on private sector views on the GCF, one private sector representative (a former British official) said that corporations viewed “policy risk” as a major investment risk. They would not invest in long-term infrastructure to reduce greenhouse gases unless their “policy risks” were reduced by loan guarantees and guarantees of regulatory certainty. (According to an October report of the Climate Policy Initiative, there is no private sector investment in adaptation. Failure to adapt to climate change is very costly to corporate operations and the countries from which corporations source raw materials, but adaptation projects do not generate profits.)
The shortcomings of the Global Environmental Facility (GEF) provide some insight into potential problems with the GCF. In the informals, several developing countries complained about being able to access finance from the GEF, which finances climate change projects and is outside COP authority. The GEF is housed in the World Bank, which is the interim trustee for the GCF. The United States has proposed that the bank provide the executive staff for the GCF, a proposal, which if adopted by the COP in a Green Room take-it-or-leave-it decision, would put the World Bank as trustee in charge of reviewing the performance of the bank staff, a basic fiduciary conflict of interest. A “firewall” will be proposed between the World Bank as trustee and as GCF executive branch, but such firewalls have traditionally been breached.
To somebody reading the headlines about the crashing price of carbon emissions credits under the EU Emissions Trading Scheme, the COP debate about “market mechanisms,” i.e., variants on carbon credit trading, must seem very strange. How can a $7 per metric ton carbon price induce any major polluter to invest in low-carbon technology to comply with a cap on its carbon emissions? The debate about “new market mechanisms,” e.g., emissions offset credits based on agricultural soil carbon sequestration, criticized by IATP and other NGOs must seem even stranger. Proposals at the International Emissions Trading Association (IETA) to create offset credits from biodiversity, as measured by carbon, in the canopies of tropical jungles, must seem, and is, otherworldly.
Again, some background is helpful to understand the pantomime. The United States does not wish to agree to any legally binding commitments to reduce greenhouse gases under the UNFCCC Kyoto Protocol agreed in 1992. However, as a condition of considering the possibility of joining the Kyoto Protocol, Vice President Al Gore insisted that “market mechanisms” be included to allow “flexibilities” for the developed countries to meet reduction commitments. The U.S. Senate did not, of course, ratify the Kyoto Protocol. The U.S. government has proposed to replace the protocol with a voluntary “pledge and review” "commitment" to reduce GHGs. Now the U.S. and other development countries are seeking ways to save “market mechanisms” and indeed introduce “new market mechanisms” while killing the Kyoto Protocol.
Developing countries are nearly unanimous in their determination to save the Kyoto Protocol and its legally binding commitments. However, as developed country emitters fail to reduce proportionally in response to the ever more dire forecasts of climate science and the International Panel on Climate Change (IPCC), the need for adaptation, particularly for the most climate-vulnerable countries, becomes ever more urgent.
According to a Climate Policy Initiative report, just five percent of 97 USD billion in 2009-10 climate finance flow went to projects to adapt to climate change. Despite impassioned pleas by developing country delegates for money to adapt, the big money goes to mitigation. For the private sector, the source of at least $74 billion USD of those climate finance flows, mostly in market rate loans for mitigation projects, adaptation is not profitable. For bilateral government donors and multilateral Public Private Partnership projects, their distrust of developing country governments, plus the desire to pressure developing countries into surrendering the Kyoto Protocol and assenting to “pledge and review” dictates that adaptation be scarcely financed.
Such negotiating and finance tactics are at the core of the brutal Durban pantomime. However, as climate change becomes more severe and unpredictable, it is certain that the effects of climate change on all COP members will not be pantomimed. The protests, particularly of Canadian youth against their government’s determination to increase its GHG production by mining the tar sands of Alberta, and of peasant farmers showing how to adapt through agroecology, have provided some relief from an otherwise tragic Durban COP.