Down to business in Bonn

Over the next two weeks the national negotiating teams to the UNFCCC will meet in Bonn to continue the discussions on a global agreement and to review a number of technical issues relating to the negotiations.

As the process rolls on, some shape is beginning to emerge with the  structure of the post-Kyoto international agreement for emissions mitigation looking increasingly like “pledge-and-review”. This will see each developed country (or region in the case of the EU) offer a specific reduction target and developing countries, who may also indicate an emissions trajectory, offering a series of national action plans  (NAMA or Nationally Appropriate Mitigation Action) related to energy and emissions management. The agreement will also comprise a number of fit-for-purpose building blocks including a climate fund, a technology mechanism, market based mechanisms and the essential support of measurement, reporting and verification (MRV). These building blocks are particularly targeted at developing countries to assist in the finance of projects and support the underlying technologies involved.

Although much remains to be defined and the transition from a “Kyoto world” to a “pledge world” is still very contentious, this basic structure now seems to be the way forward. In parallel with this process, there is an active business community seeking a say and a role in what could become the major investment of the 21st Century, the reshaping of the global energy system. Yet no formal role exists for business in this process and although many business people will be in Bonn with “observer status”, their impact will likely be minimal at best. These days business turns up largely to try and understand what is actually going on, especially given what is at stake.

The process of setting targets and crafting an agreement for the future is and should be the role of government, but there is nevertheless a valid role for business to play in shaping the energy investment landscape other than just turning up with cranes and accepting factory orders when a project is finally given the go-ahead.

Within the EU a comprehensive policy framework has been required to begin to deliver the necessary emission reductions and there has been considerable business involvement. One particular example stands out which could be the model for business involvement more widely. In support of the EU need to see CCS develop more rapidly (an “EU NAMA” in effect), an advisory body was created to involve business, academia and civil society – the European Technology Platform for Zero Emission Fossil Fuel Power Plants (ZEP). ZEP (of which Shell’s Executive Vice-President for CO2, Graeme Sweeney, is the current Chairman) serves as advisor to the European Commission on the research, demonstration and deployment of CCS. ZEP brought a tight business focus onto this “EU NAMA” and charted a way forward, using the tools available within the EU policy framework (e.g. EU-ETS, EU Strategic Energy Technology Plan, EU Recovery Budget). Although ZEP is formally a technology platform, its mission extends far beyond a focus on the technology itself. As an advisor to the EU, it has been instrumental in the creation of the core elements of the EU CCS programme;

  1. A clear goal to develop some 10 commercial scale CCS projects across the EU as a demonstration of the effectiveness of CCS and the economics of the technology.
  2. A funding mechanism to support the implementation of CCS demonstration programme and bridge the gap between the early cost of CCS and the prevailing carbon economics in the EU.
  3. A legal framework for the geological storage, measurement, reporting and verification of carbon dioxide.
  4. A process for the submission and selection of projects eligible for the funding mechanism. 
  5. A technology research and development programme which supports the longer term deployment of CCS technologies in the EU. This is a sub-set of the EU Strategic Energy Technology Plan (SET Plan).

ZEP is funded jointly by the EU and its members and has a small secretariat to administer its operations and run the communication programme. It holds regular coordination meetings, council meetings and an annual general assembly. A number of technical and policy work stream teams meet as necessary to develop ZEP advisory positions.

Such an approach within the UNFCCC framework and applied to NAMAs would address the dual coordination issues of the use of implementation tools (Green Climate Fund, CDM, Technology Centre etc.) available to a NAMA and the regional infrastructure development associated with a number of major projects.

An individual emerging-economy NAMA (in the context of this discussion a NAMA represents a large scale implementation of technology based projects, e.g. a number of offshore wind farms, large scale application of CCS, with the goal to drive significant emissions reduction within a given country) which focuses on the right hand side of the abatement curve will require technology access and development, early demonstration then larger scale deployment, funding to bridge the required carbon price, proposals for project submission and clear communication of all the above. Each NAMA, or potentially a regional group of NAMAs, should be supported by a NAMA Development Platform (NDP) to perform the necessary coordination role. This would be funded primarily from the technology mechanism, but also with business contribution. At a minimum, the NDP would act in an advisory capacity to government with regards implementation. Its membership would include business, academia, civil society and civil servants from relevant national ministries (e.g. Department of Energy).

We shouldn’t imagine that all this will be done in Bonn, but a start could be made. In particular, there should be clarity from the UNFCCC that the business role must go beyond observer status at meetings or “special invitations” to contribute via ad-hoc roundtables and interactions. An immediate step would be to give parties the opportunity to be exposed to the proposals of businesses through in-session workshop(s) and/or facilitate meetings between businesses and the key negotiating groups (G77, Cartagena, Umbrella, etc.). The “side event” process (the opportunity to hold formal presentation sessions in side rooms at the conference venue) is not serving the business community well.

For further discussion on the above you may wish to download the document “Structural Approcahes to Emissions Mitigation and the Role of Business”.