Archive for the ‘Copenhagen’ Category

More steps towards Paris

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At the end of last week (May 15th) Canada submitted its Intended Nationally Determined Contribution (INDC) to the UNFCCC, becoming the 37th state to do so (including 28 countries within the EU). The three key points of the Canadian INDC submission are:

  • An emissions reduction pledge of 30% below 2005 levels by 2030 (the US has pledged a target of 26-28% below 2005 levels by 2025);
  • The reduction will be economy-wide and will cover all GHGs recognized under the UNFCCC;
  • Canada “may also use international mechanisms to achieve its target, subject to robust systems that deliver real and verified emissions reductions.”

This means that substantial progress is being made towards a good coverage of INDC submissions by the time of the Paris COP, although many eyes will now be turning to the emerging economies (e.g. China, India, Brazil, South Africa, Chile, Saudi Arabia etc.) for the real signal with regards tackling global emissions. Mexico has made a good start in that regard.

In just two weeks the national negotiators will meet again, this time in Bonn, to continue their deliberations in the lead up to COP21. But is the process in good shape?

Compared to this time in 2009 with the Copenhagen COP looming, I think it is in better shape. Although there are many details to be agreed, the negotiators at least know what it is they are trying to agree on; a relatively lean framework within which can sit the collection of INDCs from all countries for scrutiny and review. It has taken many years to get to this point and the process is far from complete, but the task at hand is now clear even though many will argue that it won’t be sufficient to deliver the goal to limit warming of the climate system to less than 2°C. At least there is thematic consensus which I don’t think existed in May 2009; was it to be top down or bottom up, what would happen to the Kyoto Protocol, should there be a global goal on temperature rise? These and many other questions were still in play.

Looking back on some of my first year of blog posts which were written in 2009, it was all very different.

  • Many eyes were on the deliberations of the US House of Representatives and the Waxman-Markey cap-and-trade Bill, with every expectation that the USA would take the lead on establishing a carbon price. Today, those eyes are on the world’s largest emitter, China, as it proceeds with its carbon pricing provincial trials and expansion to a nationwide system.
  • It wasn’t until the June 2009 UNFCCC meeting that the team from the Oxford University Department of Physics first presented their new thinking on a global carbon emissions limit of 1 trillion tonnes over the industrial era; now negotiators are actually considering the concept of net-zero emissions and therefore an end date to the ongoing accumulation of carbon dioxide in the atmosphere.
  • The British government produced a first of its kind report on the idea of global carbon trading. In some respects not much has changed, but the discussion has matured and the likes of the World Bank are now taking this concept forward. A linked market even exists between California and Quebec.
  • In July 2009 I came across the first electric vehicle charging stations in London and met a person who was taking delivery of the seventh Tesla in the UK. In 2014 there were 15,000 EV and PHEV newly registered and right now on AutoTrader there are 10 used Tesla cars for sale!!
  • The UNFCCC negotiations were operating on two tracks, the Kyoto Protocol (KP) and Long term Cooperative Action (LCA), with no real sign of them coming together.
  • There was little consensus on climate finance; today the Green Climate Fund has been established and there is an active process underway to start disseminating the initial developed country funding.
  • There was little sign of targets and goal setting from the major developing countries; today China has indicated a plateau in emissions by around 2030 and other countries are following their lead.

In hindsight it isn’t surprising that all of these issues were not resolved by the following December. The goals for Paris may not be as lofty as those for Copenhagen, but at least from the perspective of a mid-year review they appear more achievable. It’s been a few months since I have added a piece to my “Paris Puzzle”, but it is perhaps timely to do this now.

Jigsaw May 2015

Baselines, metrics and business as usual

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The submission of Intended Nationally Determined Contributions (INDCs) to the UNFCCC started in earnest to meet the March 31st agreed date, although many more are still to come. Mexico was the only non-Annex I country (under the Convention) to submit by this date, although the Gabon submission appeared the following day.

A feature of the Mexico submission is the reference to Business as Usual (BAU) as a metric against which to measure progress. Although Mexico is clear on its commendable absolute long term objective, i.e. “. . . . consistent with Mexico´s pathway to reduce 50% of emissions by the year 2050, with respect to the year 2000”, its shorter term progress will be guided by reference to a “Business As Usual scenario of emission projections based on economic growth in the absence of climate change policies, starting from 2013”. The reference to Business As Usual is a factor that we will likely see in many of the upcoming INDC submissions. BAU was also a feature of many Copenhagen pledges, but in several instances the BAU pathway was hard to discern, which made the pledge difficult to understand and rather opaque in terms of actual numbers and therefore effort. This time around numbers will have to be very clear and part of the scrutiny and review process that negotiators are working towards will need to address the credibility and transparency of the BAU reference. In the case of Mexico, the BAU is well documented.

But even when the numbers are published, a BAU reference can make pledges and actions taken appear far more ambitious than may be the case. This is particularly so when energy efficiency is claimed as a major contributor to supposed reductions in emissions. Based on an existing relationship between energy and GDP and assuming a given near-term growth in economic output, it is easy to project what BAU emissions might be in 2020 or 2030 and then argue that a focus on energy efficiency can reduce this, effectively claiming an emissions reduction. This reasoning would appear to show that the country in question is making a large contribution to the global effort and that energy efficiency is an important contributing factor to change, yet in reality the original projection represents a situation that may never have occurred. Business-as-usual also requires improvements in energy efficiency to drive growth, which means that the assumed growth may not have occurred, had the efficiency improvements not helped deliver it. If energy efficiency really is a route to lower emissions, then it needs to pass one clear test, i.e. which known fossil fuel resource will be left in the ground (or a proposed extraction project shelved) because of this? Only then are cumulative emissions potentially impacted.

The Mexico INDC also highlighted a propensity to mix together actions on long lived greenhouse gases such as CO2 and short lived pollutants such as black carbon (very short lived) and methane (short to medium life). Mexico is reasonably transparent here as well, although its highest level number aggregates the two, i.e. “Mexico is committed to reduce unconditionally 25% of its Greenhouse Gases and Short Lived Climate Pollutants emissions (below BAU) for the year 2030”. The problem is that although carbon dioxide and black carbon (which is the major focus in Mexico) both contribute to warming of the climate system, they behave very differently in the atmosphere and mitigation leads to different outcomes which are not interchangeable.

Black carbon remains in the atmosphere for only days or weeks, which means it strongly impacts the rate of warming today but has little impact on the global goal to limit overall warming of the climate system to 2°C, unless of course there is still an unacceptable level of black carbon in the atmosphere at a time in the future when warming is approaching its peak. By contrast, carbon dioxide remains for hundreds to thousands of years and largely sets the thermostat of the future climate. Solving the black carbon problem today would deliver tangible near term benefits on a number of fronts, but unless carbon dioxide mitigation also takes place the long term outcome will hardly shift.

Mexico has set the bar quite high with its clear and well-structured contribution, but the metrics and baseline used highlight issues that the UNFCCC may need to deal with over the coming months as it begins to assess the merit of all the national contributions.

Is the UNFCCC ADP on track?

This week (March 10th-14th) in Bonn, parties to the UNFCCC are meeting under the direction of the Fourth Part of the Second Session of the Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP 2.4). In short, this is the process that is trying to deliver a global deal on climate change over the next 20 months when the world comes together at COP 21 in Paris. The last attempt at such a monumental feat ended in tears in Copenhagen in December 2009.

One might imagine that a process with only a few months to reach a solution on a major global commons issue would be deeply imbedded in the economics of Pigouvian pricing, or at least attempting to see how the global economy could be adjusted to account for this particular externality. However, as we know from the Warsaw COP and previous such meetings that this isn’t the case, rather it is an effort just to get nation states to recognize that a common approach is actually needed.

The pathway being plied in Warsaw resulted in the text on “contributions”, which at least attempts to create a common definition and set of validation rules for whatever it is that nation states offer as climate action from within their own economies. More recently the USA set out its views on the nature of “contributions”. This process is at least trying to get everyone in a common club of some description, rather than having several clubs as has been the case since 1992 when the UNFCCC was created. The diplomatic challenge for Paris will be to find the most constraining club which everyone is still willing to be a member of and then close the doors. Once inside, the club rules can be continually renegotiated until some sort of outcome is realized which actually deals with emissions. This ongoing renegotiation will be for the years after Paris, it won’t happen beforehand or even during COP 21.

But ADP 2.4 in Bonn seems to have gone off-piste. Looking through the Overview Schedule, what can be seen is a series of meetings on renewable energy and energy efficiency. While this may be an attempt to highlight particular national actions as a template for others to follow, it is nevertheless symptomatic of a process that isn’t really dealing with the problem it is mandated to solve; limiting the rise in the level of CO2 in the atmosphere.

At best, the ADP has become a derivative process, or perhaps even a second derivative process. Rather than confronting the issue, it is instead dealing with tangents. Holding sessions on renewable energy is a good example of this behaviour. The climate issue is about the release to atmosphere of fossil carbon and bio-fixed carbon on a cumulative basis over time, with the total amount released being the determining factor in terms of peak warming (i.e. the 2°C goal). The first derivative of this is the rate of release, which is determined by total global energy demand and the carbon intensity of the energy mix. The second derivative is probably best described as the rate of change of the carbon intensity of the global energy mix, although this can be something of a red herring in that the global energy mix can appear to decarbonize even as emissions continue to rise, simply because demand change outpaces intensity change.

Energy efficiency is perhaps yet another derivative away from the problem. It deals with the rate of change of energy use, but this has further underlying components, one being the rate of change of energy use in things such as appliances and the other the rate of change of the appliances themselves. Efficiency isn’t good at dealing with the immediate rate of energy use in that this tends to be dictated by the existing stock of devices and infrastructure, whereas efficiency tackles the change over time for new stock. That new stock then has to both permeate the market and also displace the older stock.

Focussing on renewable energy deployment and efficiency is a useful and cost effective energy strategy for many countries, but as a global strategy for tacking cumulative carbon emissions it falls far short of what is necessary. Yet this is where the UNFCCC ADP 2.4 has landed. It also seems to be difficult to challenge this, as illustrated by one Tweet that emanated from a Bonn meeting room!!

 Twitter: 10/03/2014 16:47

shameful: US sells concept of “clean energy” (including gas, CCS) at renewable workshop. what hypocrisy / hijacking of process. #ADP2014


As the EU Commission gears up to release its 2030 Energy and Climate White Paper in Davos week, there is considerable discussion regarding the emissions reduction target that will be recommended. Historically the EU has been keen on multiple targets, but in recent years this has backfired, with conflicting goals and multiple policy instruments leading to a weak carbon market and a lack of investment in one critical climate technology in particular, carbon capture and storage (CCS).

For the period 2020-2030, it is hoped that the EU will retreat on the number of targets and focus instead on a single greenhouse gas target that then becomes the main driver of change in the energy system. Such an approach could help restore the EU ETS and ultimately deliver the key carbon emissions goal at a lower overall cost, therefore also helping restore some EU positioning in terms of international competitiveness.

Most commentators are expecting the GHG target to be in the range of 35 to 40% from a 1990 baseline (vs. 20% for 2020), but there is very little discussion on how that target might be structured. There are two basic approaches;

  1.  Emissions must meet a particular goal in a given year.
  2. Cumulative emissions over a period of time must be below the baseline year on an average basis.

While a single statement such as “Emissions in 2020 must be 20% below 1990” is often used to cover both these cases, the goals are very different. This is a critical consideration as the EU sets out its position for 2030, but perhaps more importantly as future goals are tabled for the UNFCCC in Q1 2015.

The UNFCCC has, to date, monitored and reported on national objectives through the Kyoto Protocol, which is based on the second approach given above, i.e., cumulative emissions. In the Doha Amendment to the Kyoto Protocol, the EU commitment for the period 2013-2020 is a reduction of 20% below 1990. This is because the Kyoto Protocol is based on allowances (Assigned Amount Units or AAUs) and that these must be surrendered for each tonne emitted over the period. This is also how the atmosphere sees CO2 emissions – cumulatively. Every tonne matters as CO2 accumulates in the atmosphere over time. It doesn’t matter at all what the emissions are in a given year, only that the cumulative amount over time is kept below a certain amount. The EU ETS works in the same way – every tonne counts.

However, as if to confuse, the Doha Amendment also gives the EU Copenhagen pledge of a 20% (or 30% under certain conditions) reduction in greenhouse gas emissions by 2020 as a percentage of the reference year, 1990. In the particular case of the EU, due to the expectation of relatively flat emissions over the period 2013 to 2020, these two goals are very similar, such that the difference issue hasn’t really seen the light of day. Further to this, the Kyoto Protocol allows for carryover of AAUs from 2008-2012 into the 2013-2020 period, so the difference is further dampened. But when it comes to 2030, big differences could show up (see chart below).

 Eu Emissions Goal 2030

 In the case of a 35% target (for example), the brown line shows a pathway to this as a fixed goal in 2030, but equally any pathway would be okay as long as the emissions are 35% below 1990 levels in 2030. But on a cumulative emissions basis, assuming a linear reduction, this is only a 28% reduction for the period 2021 to 2030.

The green line equates to a 35% cumulative emissions reduction for the same period, but in the year 2030 a reduction of about 47% is actually needed to achieve this, a much more ambitious requirement then a simple 2030 goal.

Exactly what the EU says on January 22nd remains to be seen, with considerations such as the high level number itself and domestic vs. international action being the main discussion points. But the big difference might just lie in the eventual wording (“by 2030” or “through to 2030”) and the need to table commitments with the UNFCCC at some point, particularly if the latter still works on a cumulative basis after a global agreement is reached.

Targeting 2°C

There is now something of a religious fervor around the international goal of 2°C, to the extent that it is almost impossible to discuss other trajectories or outcomes. The only contrast that seems possible with 2°C is something that nobody wants, which is the “do nothing” scenario of 4°C or more.

Yet the 2°C pathway is hardly clear cut in itself. A recent series of discussions in a business group I attend has highlighted the range of myth, confusion and misinformation that surrounds the current goal. Given that this is an international goal that most nations subscribe to, exactly where are we headed? The number itself has been around for a while, but it was finally agreed at the Cancun COP16 after first appearing in the text emanating from Copenhagen. The Ad-hoc Working Group on Long Term Cooperative Action agreed the following in Cancun:

Further recognizes that deep cuts in global greenhouse gas emissions are required according to science, and as documented in the Fourth Assessment Report of the Inter- governmental Panel on Climate Change, with a view to reducing global greenhouse gas emissions so as to hold the increase in global average temperature below 2 °C above pre- industrial levels, and that Parties should take urgent action to meet this long-term goal, consistent with science and on the basis of equity; also recognises the need to consider, in the context of the first review, as referred to in paragraph 138 below, strengthening the long-term global goal on the basis of the best available scientific knowledge, including in relation to a global average temperature rise of 1.5 °C;

The text itself lays out an intention, but translating this into something tangible is easier said than done. It also turns out to be quite a divisive process and requires a deep dive into some reasonably complex statistics. This was perhaps best highlighted by the paper Greenhouse-gas emission targets for limiting global warming to 2°C, Malte Meinshausen, Nicolai Meinshausen, William Hare, Sarah C. B. Raper, Katja Frieler, Reto Knutti, David J. Frame & Myles R. Allen, Nature Vol 458 / 30 April 2009 (a copy is currently available here). Meinshausen et. al. showed that the uncertainty of the climate response combined with a variety of emission pathways delivers given probabilities for staying below 2°C, depending on the cumulative emissions over the period 2000-2049, with some indication of eventual outcome also given by emissions in 2020.

Excerpts from the table in the paper, giving probabilities of exceeding 2°C are shown below:

2 degree probabilities


This is all very well, but the next step is the tough one. The call at Cancun was to “hold the increase below 2°C”, but this means different things to different people. At the meeting I attended recently, some interpreted this as meaning a “reasonable probability”, which was then interpreted as 75%. The table above shows that this means a limit on cumulative emissions between 2000-2049 of 1,000 Gt CO2. But with emissions from 2000-2013 already totalling about 470 billion tonnes, that leaves a remaining budget until 2050 of just 530 billion tonnes. That’s about 14 years of full on emissions, or for example, a trajectory that requires an immediate peak in emissions followed by year on year reductions of about 1.2 billion tonnes until emissions are near zero. Delaying the peak until 2020 pushes up the reduction rate to nearly 3 billion tonnes per annum.

By contrast, accepting a 50% probability gives a very different outcome. Emissions can peak in 2020 and a reduction pace of 1 billion tonnes per annum is then required. Alternatively, should emissions plateau in 2020 and start reducing in 2025, the annual effort rises to 1.5 billion tonnes. These are still very challenging numbers, but almost a world apart from the 75% probability case. The 75% case is most likely unachievable given where the world is today.

What was clear from the meeting I attended was that two people who may both talk about 2°C have very different perspectives on likelihood, usually without any thought as to the reduction implications behind their assumption. The EU is at least clearer on this in its main publication on the 2°C Target, where it notes in the key messages, “In order to have a 50% chance of keeping the global mean temperature rise below 2°C relative to pre-industrial levels . . . . .”.

400 ppm and counting

The first full day of 400+ ppm CO2 as recorded at Mauna Loa in Hawaii last week produced an outpouring of sentiment and grief from many, but the news has seemingly passed. Unfortunately, the arrival of such a day had become inevitable. Since the early days of the Keeling Curve at 315 ppm when it became clearly apparent that anthropogenic CO2 emissions were accumulating in the atmosphere, we have counting up the ppm to this day.

Despite an early clear warning to the Johnson Administration at 321 ppm, it wasn’t long before there was a brief worry about global cooling. Then, with atmospheric chemistry growing as a discipline (probably on the back of concerns about a cold war nuclear winter), we were distracted at 332 ppm by the first major anthropogenic global concern, the hole in the ozone layer. But with a treaty negotiated and ratification underway by 349 ppm (only 17 ppm to sort that one out), it didn’t take long for the science community to remember that another big issue was lurking in the shadows.

At 352 ppm and nearly 40 ppm on from the start of the Keeling Curve, James Hansen stated to a US Congressional Committee that;

  • The earth is warmer in 1988 than at any time in the history of instrumental measurements.
  • Global warming is now large enough that we can scribe with a high degree of confidence a cause and effect relationship to the greenhouse affect.
  • Computer simulations indicate that the greenhouse effect is already large enough to begin to effect the probability of extreme events such as summer heat waves.

But it was another 13 ppm before the Kyoto Protocol was adopted by parties to the UNFCCC and 14 ppm more before it was finally ratified. 21 ppm later and it is a shadow of its former self, but at least with the legacy of some beginnings of a global carbon market. However, it is trading close to zero!! In the interim there was a valiant attempt at a new global deal, but even that was 12 ppm ago.

400 ppm and climbing


Our goal to be avoided, 450 ppm, is now feeling a bit close for comfort, given we are already at 400 ppm and 300 ppm was only passed under the previous British monarch.

Not to worry, it should only be another 15 ppm before a new global deal comes into force, although after more than 3ppm of discussion, the negotiations don’t really seem to have started. So we wait again, hopeful that someone has got a plan.

But a lot can happen in 50 ppm if we try hard and we really want something!! After all, the first world wide web page was posted only 43 ppm ago!

Expectations for COP 18 in Doha

This week sees the start of the 18th Conference of the Parties of the UNFCCC, or COP18 for short, in Doha, Qatar. This should be a busy transitional COP, with much on the agenda to resolve and important steps forward being taken toward a long term international agreement. But procedural issues, agenda disagreements and fundamental sticking points could still dominate, leading to a two week impasse. Let’s hope not.

At the core of the process lie three work streams which have evolved over many years.

The oldest of these is the discussion on the Kyoto Protocol (KP), which has now been running in one form or another for most of the twenty year history of the UNFCCC. Discussion on a second commitment period (KP2) over the past years have embodied the toughest issues in the climate negotiations, such as the role of developing countries in reducing emissions, engagement with North America (neither Canada or the United States will participate going forward) and the need to put a robust price on CO2 emissions. I am a big fan of KP, despite its shortcomings. It was designed with carbon pricing as its central theme, allowed countries to trade to find lowest cost abatement pathways and through its architecture encouraged signatories to implement cap-and-trade based policy frameworks within their respective economies. The simple but clever ideas within it have not been matched since in terms of effectiveness and efficiency despite years of negotiations. Given sufficient willingness, there are clearly routes forward by which KP could evolve to become the much sought after “21st Century global agreement”, but instead it is reaching the end of its shelf life. There seems to be no resolution with North America under this banner, developing countries appear reluctant to let it be the approach to govern their much needed actions and even the country of its namesake city is unwilling to sign again on the dotted line. Australia and the EU remain as the KP bedrock, if for no other reason than to rescue the CDM and consummate their carbon market linkage with a common approach to accounting, offsets and single market currency (AAUs and CERs). The parties do need to agree on KP2, despite the lack of critical mass, and then roll forward its inherent carbon market architecture into the new grand design.

Next comes the discussion on long term cooperative action, or LCA, a workstream which appeared in 2007 at the Bali COP and is home to a broad range of developments from the Green Climate Fund (GCF), the Nationally Appropriate Mitigation Action (NAMA), the much discussed New Market Mechanism (NMM) and more recently the Framework for Various Approaches (FVA). It was meant to deliver the grand deal at Copenhagen in 2009 but didn’t and now labours on with many loose ends and partially thought through ideas which have not been implemented or even fully negotiated. Nevertheless it has been a useful testing ground for new thinking, but has not yet delivered any real mitigation action. It needs to stop now, but difficult issues remain such as the funding of the Green Climate Fund and the modalities for actually spending any money that may arrive in its coffers. These spinoffs from the LCA will need to continue under one of the Subsidiary Bodies or within the ADP (see below) discussions, but the parent discussion should be put to rest in Doha.

Now comes “the new hope”, the Durban Platform for Enhanced Action. For some, the parties at COP17 simply kicked the can 9 years down the road knowing that little new progress would be made, but for many this represents a much needed and major reboot of the process after years of making almost no progress at all on the respective roles of developed, emerging and developing economies. As Harvard’s Rob Stavins noted in his blog of January 2012;

Now, the COP-17 decision for “Enhanced Action” completely eliminates the Annex I/non-Annex I (or industrialized/developing country) distinction.  It focuses instead on the (admittedly non-binding) pledge to create a system of greenhouse gas reductions including all Parties (that is, all key countries) by 2015 that will come into force (after ratification) by 2020.  Nowhere in the text of the decision will one find phrases such as “Annex I,” “common but differentiated responsibilities,” or “distributional equity,” which have – in recent years – become code words for targets for the richest countries and a blank check for all others.

We should not over-estimate the importance of a “non-binding agreement to reach a future agreement,” but this is a real departure from the past, and marks a significant advance along the treacherous, uphill path of climate negotiations.

Although there have been some opening salvos fired in the ADP (Ad-Hoc Working Group on the Durban Platform for Enhanced Action) in various inter-sessional meetings this year, the heavy lifting for this work stream needs to start at COP18. In recent months the IEA, the World Bank, PWC and others have all made it abundantly clear that unless some truly meaningful progress is made in the sort term, the 2 deg.C goal will pass us by (it may already have) and that before we know it we will be looking at a 4 deg.C outcome, along with all its consequences. Even the timetable for the ADP, which seeks to reach agreement by 2015 for implementation in 2020 is problematic in terms of the need for immediate action, but it is what it is.

The ADP needs to define a work programme that embraces the five primary strands of action coming out of the KP and LCA, namely;

  • National action defined through specific targets, goals and actions, but aligned with the overarching mitigation objective. This would also include REDD.
  • An underlying carbon market infrastructure as currently embodied by the KP but adapted to the applicable framework for mitigation action. Without an evolving price on carbon in the international energy markets, mitigation action will stall. This work stream should also pick up the NMM discussion.
  • A funding mechanism that can leverage private sector finance for kickstarting technologies and helping less developed economies invest in a low carbon pathway forward. This is the GCF.
  • A continuation of the work of the TEC and CTCN to share knowledge and best practice arising from technology implementation.
  • A robust approach to adaptation.

Recently the World Business Council for Sustainable Development resurfaced work that it undertook back at the start of the LCA, but which is highly relevant to the first of the two prospective work areas above. “Establishing a Global Carbon Market” looks at how the substance of the KP carbon market can be applied much more broadly to an evolving world of various approaches.

The above represents a tall order for two weeks work, but with some 10,000 people in tow there is certainly enough labour at hand to get this heavy lifting done. A refined single track approach will bring much needed focus back to the discussions which then paves the way for at least some hope that the 2015 goal for a new agreement can be met. In summary, the big asks for this COP are:

  1. Agreeing a continuation of the Kyoto Protocol through to 2020 and then politely ushering this Grand Dame of the UNFCCC off the stage with some reverence and applause.
  2. Bringing closure to the LCA work programme and shifting some key components (e.g. GCF, TEC) into the formulation of the ADP.
  3. Establishing a clear work programme for the ADP, which incorporates as a priority, the foundations for a continuing and evolving global carbon market.

Good luck and success to all the delegates.

US emissions continue to fall

If you dig down a few layers through the US State Department website, you will come across a Press Release from February 2010 where the USA pledged to reduce its greenhouse gas emissions.

Press Statement

Todd Stern,  Special Envoy for Climate Change Washington, DC

February 4, 2010

Special Envoy Stern: We are pleased to be among 55 countries – including all of the world’s major economies — that have submitted pledges to limit or reduce their greenhouse gas emissions under the Copenhagen Accord. These countries represent nearly 80% of global emissions. In supporting the Accord, we are taking an important step in the global effort to combat climate change.

In addition to the countries that have submitted targets or actions, a number of others have conveyed their support for the Accord. We urge all countries to join this broad coalition by promptly conveying their support for the Accord to the UNFCCC Secretariat.

The Copenhagen Accord includes important advances on funding, technology, forestry, adaptation and transparency. The United States is committed to working with our partners around the world to make the Accord operational and to continue the effort to build a strong, science-based, global regime to combat the profound threat of climate change.

I have commented on the commitment in previous postings, but just to be reminded of what was said, here is a copy of the letter sent by the US to the UNFCCC. 

Last week the US EIA released the latest greenhouse gas emission figures and they show that the country is well on track to meet this pledge, even though there is no formal program in place to ensure delivery. 

Following the sharp recession led drop, two continuing drivers for the change are the drop in coal emissions as older coal fired power plants close and the fall in automotive emissions due to tougher vehicle efficiency standards and the continuing higher oil price. As expected, natural gas emissions have risen as this fuel replaces coal in power generation, but with less than half the carbon footprint of the coal.

This trend could well continue over the coming years as further coal capacity is closed in response to the combination of EPA air quality regulation, expected greenhouse gas regulation and the growing supply of natural gas. In addition, CAFE standards should ensure further improvements in vehicle efficiency.

My original analysis of this trend produced the following chart. Two years on and we still seem to be at least in the same ballpark.

As the NASA Curiosity rover touched down gently on Mars and began its 2+ year observation and exploration of its surrounding terrain, the NASA Goddard Institute of Space Studies announced the publication of a new paper in the journal Proceedings of the National Academy of Sciences. I reported on a pre-publication release of this paper back in April and was able to reproduce a much simpler version of the analysis using New York Central Park data in a more recent posting. As demonstrated by Curiosity, NASA is a formidable science based organization and one whose findings should not be taken lightly. An early version of the paper appeared back in March, before the extended heat wave experienced in the USA through most of July.

The analysis shows how the distribution of summer temperatures has shifted in recent decades, to the extent that there has been a notable change in the frequency of what were extreme outlying events. This in turn led NASA to assert that “the recent bouts of extremely warm summers, including the intense heat wave afflicting the U.S. Midwest this year, very likely are the consequence of global warming”.


As it turns out, July has been confirmed as the single hottest month ever recorded in the continental United States. The average temperature across the Lower 48 was 77.6 °F, 3.3 degrees above the 20th-century average, the National Oceanic and Atmospheric Administration (NOAA) reported. That edged out the previous high mark, set in 1936, by two-tenths of a degree, NOAA said. In addition, the seven months of 2012 to date are the warmest of any year on record and were drier than average as well, NOAA said. U.S. forecasters started keeping records in 1895.

Some of course will question the validity of the data used by NASA GISS, but just days before their announcement came a second release of findings from the Berkeley Earth Surface Temperature project. They found that the average temperature of the Earth’s land has risen by 1.5 °C over the past 250 years. The Berkeley study noted that the good match between the temperature record and historical carbon dioxide suggests that the most straightforward explanation for this warming is human greenhouse gas emissions. One of their key charts is shown below.


While the analysis from NASA and the data validation from Berkeley will still not satisfy everyone, they will hopefully begin to put to rest the ongoing science controversy that seems to hamper any rational thought about the best approach to actually addressing the issue of rising levels of atmospheric CO2.

Since the creation of the UNFCCC 20 years ago after the first Earth Summit, many have lost hope that a multilateral approach can achieve anything, particularly after the setback of Copenhagen (another attempt plagued by science and temperature controversy just as world leaders gathered) and the eventual failure of that process to agree anything substantive in terms of mitigation efforts for the period 2013-2020. Yet it will ultimately only be such a multilateral approach that can eventually tackle the problem of global emissions – not necessarily to dictate to the world how to do it, but to at least set the direction and timetable for what will ultimately be a bottom up approach. No one country, region or industrial sector can solve this unilaterally. Even if the big three, China, the USA and the major EU economies acted alone (with China reaching a plateau in the short term and then reducing by 50% by 2050 and the US and EU reducing by 80% by 2050), global emissions would plateau at best (see chart below) assuming that the rest of the world emissions grew by no more than 1.5% per annum over the next 40 years (in fact they have been growing at well over 2% p.a. over recent decades). So this issue needs a response from all nations.

As the agreement at COP 17 in Durban “to try once again” gains momentum and turns into a full negotiation process it will be important to lay down foundations that might actually deliver a workable outcome. This is a subject that I hope to revisit in a number of posting between now and the end of the year.

Cancun: Spending the money

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What started in Copenhagen as an aspiration for $30 billion in fast-start financing and up to $100 billion per annum by 2020 in North-South financing flow has been translated into the Cancun agreements as the beginnings of long term arrangements for specific funding purposes. In particular there is the Green Climate Fund in the AWG-LCA text;

 Decides to establish a Green Climate Fund, to be designated as an operating entity of the financial mechanism of the Convention under Article 11, with arrangements to be concluded between the Conference of the Parties and the Green Climate Fund to ensure that it is accountable to and functions under the guidance of the Conference of the Parties, to support projects, programmes, policies and other activities in developing country Parties using thematic funding windows;

Although the Green Climate Fund and the $100 billion per annum are not necessarily the same thing, many commentators quote them in the same breath. In reality, much of the $100 billion per annum will be delivered through the market and not as direct funding. But the Cancun Agreements do create a link at least to some extent in paragraph 100 of the AWG-LCA text, appearing in the Long-Term Finance section of the document;

Decides  that a significant share of new multilateral funding for adaptation should flow through the Green Climate Fund.

Given that this is mentioned just two paragraphs after the $100 billion reference, it at least establishes the notion that many billions of dollars will flow through the Green Climate Fund on an annual basis by 2020. But actually achieving this may be considerably more challenging.

Recent experience in the EU shows that even a highly focused, clearly defined funding mechanism for large scale mitigation takes many years to actually deliver real reductions. In 2007 the EU Council of Ministers agreed to the goal of 10-12 large scale CCS demonstration projects, although offered no insight at the time as to how this might be funded. Even then, with a carbon market in the range € 20-30 it was clear that the carbon price was insufficient to do this. So began the development of what is now the NER-300, a set aside of 300 million allowances in the EU-ETS for award to CCS projects. The mechanism itself was defined progressively throughout 2008 and eventually passed into EU law in December of that year. It then took two years (until December 2010) for the Commission to define the rules of operation of the mechanism to the extent that they could issue a call for projects, which has now been done. The closing date for project sponsors to submit application forms to their Member States is 9th February 2011. The deadline for Member States to complete an eligibility assessment and forward the application with the submission forms to the European Investment Bank is 9 May 2011. EIB will conduct its assessment of projects in 15 months (by October 9, 2012). Finally, the Commission will have to approve and submit projects to Member States. If all goes well, projects will be awarded funding by end 2012/early 2013.

From concept to first award, the above process will have taken 5-6 years and as noted that is for a very specific set of projects on a defined timeline. Concept to mitigation will therefore be at least 8 years.

In the LCA discussion, the Green Climate Fund is in its infancy. There is some description as to the makeup of the Board, the nature and responsibility of the trustee and an invitation to the World Bank to serve in that capacity for the initial years. But that is far from a going concern which is actively distributing significant levels of financing to very large scale projects. The Global Environment Facility (GEF) has been operating for 20 years now, yet large projects take many years to move from proposal to completion. For example, a $300+ million South African public transport project which first entered the GEF pipeline in January 2005 should be completed at the end of this year, a seven year process. Such a project would probably take even longer under the proposed Green Climate Fund because of the likely startup lag as terms of reference are developed, people appointed, rules agreed and implemented and finally projects called for.

This means that major developing countries (e.g. South Africa) could struggle to develop the necessary projects in time for their 2020 pledges to be met. In the case of South Africa, they have offered the following in a letter to the UNFCCC at this time last year:

South Africa reiterates that it will take nationally appropriate mitigation action to enable a 34% deviation below the ‘business as usual’ emissions growth trajectory by 2020, and a 42% deviation below the ‘business as usual’ trajectory by 2025,” said Environmental Affairs DDG Alf Wills in the letter to the UNFCCC. “The extent to which this action will be implemented depends on the provision of financial resources, the transfer of technology, and capacity building support by developed countries,” he added.

While the intention is to provide the necessary funding, the reality of doing so through a Green Climate Fund to facilitate the delivery of the 2020 pledges is very challenging. A stepped up approach under the existing Clean Development Mechanism offers an alternative, but is largely defeated by the lack of potential buyers for the credits that it would generate. There is now little medium term prospect of a market based approach to mitigation in the USA, which removes them as a significant potential buyer (there will of course be California and perhaps some scope for offsets under the EPA). If China or Japan were to step into the arena with new project mechanisms driven by domestic trading systems, a considerable lag would still exist before projects began, simply because of the time it will take to define the domestic systems and create the attached mechanisms. Even if all this happened to come together quickly, there would still be a lag as developing countries identify the necessary mitigation projects.

Dozens of large scale mitigation projects will be needed in South Africa (and similarly for other countries) to meet their 2020 pledge as well as many hundreds of smaller scale initiatives. The current likely timelines for the development of the necessary financing facilities, their start-up and then use give little room for optimism that this will happen in time to create the reductions necessary to meet the pledges. Nonetheless, the fund will no doubt be successful – in the end  – in terms of making available much-needed monies to mitigation projects.