Archive for the ‘Qatar’ Category

Albert Einstein once said that “The definition of insanity is doing the same thing over and over again and expecting different results”. So it was that I spent the last few days in Doha, perhaps anticipating that something might just be different this time around – after all there were things to be done and a whole new agreement to be crafted by 2015.

Finally late on Saturday, COP18 came to an end. Two weeks of discussion and negotiation had barely moved the needle, so the challenge to bring the conference to a useful conclusion and at least move the agenda forward somewhat fell on the Qatari President of the COP, H.E. Abdullah Bin Hamad Al-Attiyah – which is what he did, despite the objections of some parties. At the end of it all, UNFCCC Christiana Figueres tweeted;

“Read how COP18 has opened a gateway to greater ambition and action on climate change . . . .

Some may see this as a rather optimistic perspective on a COP that may well be remembered more for the excellent facilities provided by the Government of Qatar, rather than anything tangible that the countries were able to agree to actually reduce emissions. The outcome could be described at best as administrative. The three objectives I discussed at the beginning of the conference were delivered to some extent, although the Durban Platform did not progress as much as might have been expected, given the tight delivery timetable it has.

  1. The highlight was the agreement on a second commitment period for the Kyoto Protocol, which will now run through to 2020. Most commentators made much of the fact that the agreement only included Europe and Australia, but this is a rather unfair representation of the conclusion. True, the coverage is not what it was for the 2008-2012 period, but looking at it from the reverse perspective, only Canada, Russia, Japan and New Zealand have dropped out. All of the other former Soviet states have remained, as have Switzerland and Norway. Of course the developing countries have remained, but still without commitments other than to make use of the Clean Development Mechanism. The AAU issues were largely put to rest and at least for the time being the agreement leaves the world with the internal workings of a carbon market, but not much else.
  2. The LCA discussion proved to be the most fractious, perhaps because it is home to the financial flows that are now beginning to percolate through the UNFCCC. This shouldn’t be confused with the carbon market financial flows of the Kyoto Protocol and the future New Market Mechanism, but the much anticipated flow of public funds from developed to developing countries. The job of the COP was to bring the LCA to a close, which in turn would make way for a more focussed discussion on the 2015 Durban Platform agreement. But money got in the way. Many parties claimed that the work of the LCA was incomplete, largely because of the fact that the money is hardly flowing and the Green Climate Fund remains uncapitalised. The US argued that this is because the modalities of the fund have not been agreed and complained that where money had been made available, such as through the Fast Start Mechanism, no appreciation was shown on the part of the recipients. In the end, the LCA did close, but mainly through an administrative sleight of hand which relocated most of its activities to various technical groups under the Convention.
  3. Finally, there was the ADP (Durban Platform). The delegates spent two weeks discussing this under two work streams, one which is looking at increasing the level of ambition up to 2020 and a second which is looking more holistically at the structure of an overarching framework. At this late stage, increased ambition through to 2020 seems like a rather pointless discussion. The energy mix for the 2020s is rapidly being cast in stone all over the world, to the extent that only relatively minor changes could now be made. This isn’t to say that we should give up, but we should at least recognise that major initiatives starting today will only bear fruit in the 2020s and 2030s, but not before then. Even a modest energy efficiency initiative could still take a decade to fully play out, given the time for political agreement, national ratification and finally implementation. Gripped by the urgency of the issue, the parties managed to agree the meeting schedule for the period between now and 2015, but failed to take matters further. That amounts to a year lost since Durban, with almost nothing to show in terms of progress. Unfortunately, even the world’s glaciers would consider the pace to be slow.

Perhaps there was a gateway opened to ambition and action, but nobody has passed through it, or seem likely to in the near future. The level of ambition also remains far short of a 2 deg.C trajectory. By contrast, the side event programme was full of national delegates, some who had come from the negotiation meetings, talking about their national programmes. Not surprisingly, the Chinese “carbon market” presentations were packed.

Now comes the sting in the tail – “loss and damage”. I suspect that this is a subject that has had the lid kept on it for some time, but it is in the open now, probably because of the claimed dissatisfaction with the level of funding and financing flowing from developed countries. The final version of the text raises the worrying prospect of the development of a mechanism to address the impacts of climate change. The following two clauses are pretty clear on the issue:

8. Requests developed country Parties to provide developing country Parties with finance, technology and capacity-building, in accordance with decision 1/CP.16 and other relevant decisions of the Conference of the Parties;

9. Decides to establish, at its nineteenth session, institutional arrangements, such as an international mechanism, including functions and modalities, elaborated in accordance with the role of the Convention as defined in paragraph 5 above, to address loss and damage associated with the impacts of climate change in developing countries that are particularly vulnerable to the adverse effects of climate change;

Subjects like this have the potential to stall the process for years, although some may argue that the current rate of progress is little better than stalled anyway. It will also get to the issue of apportioning blame, since this is the flip side of “loss of damage”. If there is blame to share, then the only pragmatic way to do it will be on the basis of cumulative emissions, since this is the root cause of the climate issue. Unfortunately nature doesn’t know anything about emissions per $ of GDP, it just sees accumulation. Given current development rates and the size of some national populations, the cumulative national emissions league table is rapidly changing. By 2020, many of the leading nations “to blame” for the state of the climate (at least on the basis of cumulative emissions) will be today’s “developing countries” (some further thoughts on this to follow in a future post).

The parties will convene in Warsaw next year, somewhere in Latin America the year after and possibly in France in 2015 – all that seemed to be agreed without too much fuss. There will be various inter-sessional meetings in the meantime, but if a deal is really going to be agreed by 2015, something remarkable is going to have to happen. We should reflect on the fact that the noisy and messy closure of the LCA was the sad end of a process that started in Bali and was supposed to deliver a global deal. It didn’t. Perhaps Einstein was right.

After a week of talks in Doha at COP18, it is difficult to draw a clear conclusion about how the conference might conclude. Certainly there is discussion along the lines I discussed last week, but progress is slow and many of the historical divisions have resurfaced, despite the apparent progress made in Durban last year with the agreement for dialogue on the basis of all nations making commitments to act. I suspect that like many of these conferences, the last moments of the second week will see a rapid push for concluding text. Time will tell.

A key agenda item for this COP is the real start of discussions within the ADP, where the bulk of the negotiations towards a 2015 agreement should take place. There really isn’t a great deal of time for this to transpire, with perhaps as few as 100 negotiating days available between now and the end of COP21 in 2015. One hundred days to change the world and the process remains in the earliest of stages of thinking about what it needs to think about. To this end a roundtable was convened on Saturday such that the ADP Chair could seek input from the NGO community. Some industry colleagues approached me and said that the business community had a dozen seats in a lunchtime session with the ADP and as Chair of IETA, I was offered one. Initially this sounded like quite an opportunity, until we got into the room and realized that this was a single two hour session with all of the NGO community, not just those from business (otherwise known as BINGOs). Seated in a huge square in an enormous room in the cavernous QNCC (Qatar National Convention Centre) were the YOUNGOs, BINGOs, TUNGOS, INGOs, RENGOs, ENGOs, CINGOs, WGNGOs, FANGOs and RINGOs (young people, businesses, indigenous people, religions, environmentalists, cities, women & gender, farmers and researchers). Still, everybody was succinct and to the point and the business representatives were able to make three key points;

  1. It’s about putting a robust price on carbon. Don’t expect voluntary action to be effective (in response to a presentation by Ecofys, see below). Many businesses support putting a price on carbon, just look at the recently released Carbon Price Communiqué.
  2. A carbon price can deliver scale – just look at the large impact from the relatively small CDM. One billion CERs, ~$10-15 billion in carbon finance, about $100 billion in project investment.
  3. The interaction of business with the ADP is critical to a successful outcome and needs to continue.

I delivered the first point – see below (thanks to ENB for the photo), between colleagues Jonathan Grant of PWC and Thierry Berthoud of WBCSD.

The session had started with a series of presentations from invited external presenters. Abyd Karmali of Bank of America / Merrill Lynch delivered a powerful presentation showing how tailored carbon price based financial mechanisms could deliver further project activity and therefore real reductions in the run-up to 2020. This was in stark contrast to a presentation prepared by Ecofys, which argued for a series of specific activities (wedges) to bridge the gap from where we might be in 2020 in terms of emissions to where we needed to be. This included activities such as company voluntary reductions, the voluntary “greening” of the assets of the 20 largest banks, the expanded use of voluntary offsets by companies and consumers and a global ban of incandescent lamps. These alone are supposed to deliver 5 GT of reductions by 2020.

While I won’t challenge the calculations themselves, the reality of implementing these measures is highly questionable, particularly the voluntary ones. This was the modus operandi of the late 1990s and it simply wasn’t a sustainable path forward. It certainly isn’t today. Even back then, company voluntary reductions were never meant to deliver a globally coherent pathway forward, rather they were to demonstrate to policy makers the types of actions that could be initiated given the right policy signals. In the case of Shell, we even established a modest internal carbon price through a small trading system to do this, again not to deliver major change but to demonstrate the possible. It concerned me that the ADP might take this proposal seriously, enough to overlook the real work that needs to be done to deliver the types of mechanisms discussed by Karmali. Such mechanisms are already being used, albeit on a modest scale, to drive real reductions using CCS in places like Alberta, the UK and the EU.

One of the features of a COP is the side event schedule. These are presentations put on by observer organizations which run in parallel with the main negotiations. They are attended by anyone interested in the subject, including national delegates, other observers and UNFCCC staff.  Today IETA, the Enel Foundation and the Harvard Project on Climate Agreements (Belfer Center for Science and International Affairs) joined forces to put on an afternoon session to discuss “New Market Mechanisms”. So far the attendance at COP18 side events has been a bit desperate, but this one attracted a huge crowd. The room was completely full with attendees standing 5+ deep at the rear.

Rob Stavins from Harvard led off and gave a broad introduction to the work the Center was doing on international market mechanisms and made a number of observations about market design and linkage. This was further supported by a second Harvard presentation by his colleague. Two business presentations followed, one by me on a possible framework which would foster an eventual global carbon market (Establishing a Global Carbon Market) and similarly by a representative from the Italian energy company Enel. The Environment Minister from Costa Rica offered concluding remarks.

The content was solid and interesting, but the highlight was the crowd. Clearly there remains a real and vibrant interest in the use of carbon markets and carbon pricing to drive emission reductions.

So that is a bit about the week that was. The gigantic QNCC felt a bit on the empty side last week, but that is being corrected as Ministers, their support staff and more observers arrive today and tomorrow. We shouldn’t forget that this is still a complex multilateral negotiation, sometimes bedeviled by bureaucracy, mystery and intrigue. This was summed up for me when a colleague commented that he had been in one of the contact group meetings, where “they square-bracketed a semi-colon” (which means that the use of the semi-colon was still being negotiated)!!!

On to week two.

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.

Short and long term strategies

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I have been at the first Doha Carbon and Energy Forum this week, organized by Qatar Petroleum and the Qatar Foundation with support from ExxonMobil. The event focused on steps that could be taken in Qatar and the region to begin to address the issue of carbon emissions. Sessions on carbon capture and storage, energy efficiency and alternative energy each produced a set of proposals to take forward.

There is no doubt that the Gulf region is very aware of the issue of climate change and its implications, particularly the potential economic impact going forward as the world looks to alternative energy sources. In Qatar there is also a feeling of optimism because of the very substantial natural gas reserves there. But there is also a realization that a very well thought through strategic approach will be required to capitalize on the long term value of the resource in an increasingly carbon constrained world.

In the short to medium term natural gas offers a real opportunity for nations to quickly get to grips with emissions targets and begin to see reductions within the economy. This is showing up very clearly in the USA, where rapidly increasing shale-gas production, in combination with tougher emission standards in the coal sector (other than CO2 that is)  is pushing the USA towards its 17% Copenhagen Accord target even without the benefit of federal carbon emissions legislation. A quick “back of the envelope” calculation shows that if the USA replaces 120 GW of coal fired power generating capacity (about a third of the fleet) with natural gas, in combination with the tough new laws on vehicle efficiency, it can, at least on paper, meet its 2020 target. There are a few ifs and buts here of course, with the key ones being as follows;

  • The background to the coal to gas switch is discussed in a previous posting, “A Focus on the USA – Coal and Natural Gas”.
  • On-road vehicle efficiency needs to improve by about 10 mpg at constant miles driven. In 2005 average on-road vehicle efficiency remained around 20 mpg, so that means about 30 mpg by 2020. In theory this is possible given vehicle turnover and the new mileage standards.
  • Other emissions across the economy need to remain the same – e.g. emissions from industry and homes.

The early evidence is that the change is already underway in the power sector, which has seen a sharp drop in CO2 intensity over the last three years.

Such a strategy pays off handsomely in the medium term and offers natural gas the position as a transition fuel to a low carbon economy. But this is not sustainable in the longer term as emission reduction targets become much tougher. This is why the USA, for example, needs emissions legislation now, not so much for the period up to 2020 which is now largely set, but for the energy mix in the decades afterwards which will be set by decisions made in the next 5-10 years.

Similarly, for a country such as Qatar with a large natural gas resource base, carbon constraints around the world offer opportunity now, but will be challenging later on. The forum in Doha recognized this and proposed an increased focus on carbon capture and storage and the role that it could play in allowing natural gas to remain a key part of the global energy mix for much of this century – in other words to be as much a destination fuel as it is a transition fuel. The development of a Gulf region CCS Technology Platform with a focus on CCS+NG demonstration plants was tabled as a potential way forward.