An Asian Stir Fry of Options Christine Loh, Civic Exchange Simon Tay, Singapore Institute of International Affairs Andrew Stevenson, Civic Exchange Carissa Yuk, Civic Exchange Phir Paungmalit, Singapore Institute of International Affairs
Acknowledgement
About the Authors
The authors would like to thank CLP Group for sponsoring this work.
Christine Loh
About the Organisations Civic Exchange Civic Exchange is a Hong Kong-based non-profit public policy think tank that was established in October 2000. It is an independent, well-networked organisation that has access to policy makers, officials, businesses, media, and NGOsreaching across sectors and borders. Civic Exchange’s location and expertise in Hong Kong - a key city in Asia for finance, business, and media - makes the organisation well-positioned to influence and link with other cities around the world. It has solid experience in energy, environment and climate change research, as well as economics and governance issues. Recent work in these areas includes studying the impacts of climate change on Hong Kong and the Pearl River Delta as well as two books analysing the changes in Hong Kong’s environmental and air quality policy since 1997. It has also hosted a series of forums that included international speakers on the relationship between energy policy, air quality, and climate change. www.civic-exchange.org
The Singapore Institute for International Affairs The Singapore Institute of International Affairs (SIIA) is a non-profit, non-government organisation dedicated to the research, analysis and discussion of regional and international issues. Its work focuses on environmental policy as well as governance and political security issues. The wide range of research and events - funded by foundations, membership subscriptions and corporate sponsorship - reaches out to policy-makers, business leaders, professionals and youth. One of the SIIA’s major projects has been analysing the causes of the haze since the 1997-98 episodes. At the peak of the haze crisis in September 2006, the institute embarked on a strategy of organising a series of roundtable dialogues and forums involving government and business leaders, NGOs, and local, regional and international experts to urge greater cross-border collaboration and to advocate effective solutions to the problem. The SIIA is also a key member of the ASEAN Institutes of Strategic and International Studies (ASEAN-ISIS), a regional grouping of think tanks that has one member from 9 ASEAN member states (excluding Burma/Myanmar). www.siiaonline.org
Christine Loh LL.B Hons (University of Hull, England) LL.M (City University of Hong Kong) is the CEO of Civic Exchange. She has strong business and political experience having been the regional managing director of a multi-national commodities trading company, and also a member of the Hong Kong Legislative Council. Since 2000, she has focused on policy research. She is an international adviser to the G8+5 Climate Change Dialogue, and also the Senior Policy Adviser to the C40 Cities Climate Change Leadership Group. In her capacity as a director of the Hong Kong stock exchange, she has also encouraged the exchange to look into emissionsproducts trading including carbon.
Simon Tay Simon SC Tay LL.B Hons (National University of Singapore) LL.M (Harvard) teaches international law at the National University of Singapore with a focus on governance and on the environment. He is concurrently chairman of the Singapore Institute of International Affairs, a non-governmental think tank founded in 1961, which represents Singapore in the influential ASEAN-ISIS network of regional think tanks and has major regional businesses as its corporate members. Since July 2002, he has been chairman of the National Environment Agency, the country’s major agency for environmental protection and public health. While also involved in trade, peace and other international issues, he has worked extensively on environmental issues especially the regional haze, climate change and CSR.
Andrew Stevenson Andrew Stevenson is a US Fulbright Research Fellow studying urban planning and environmental policy in Hong Kong during the 2007-8 academic year. Andrew received his B.A. in Geosciences and Environmental Studies from Williams College in Williamstown, Massachusetts, in June 2007.
Carissa Yuk Carissa Yuk graduated from King’s College London, Class of 2007, with a BA (Hons) in War Studies. Her interests lie in the areas of international relations, specifically Sino-US relations, and contemporary Chinese history and politics.
Phir Paungmalit Phir Paungmalit is currently a Ph.D. student at National University of Singapore. He received an LL.M. degree from Duke University and a LL.B. degree from Chulalongkorn University in Thailand. He is also working as a Researcher at the Singapore Institute of International Affairs.
Contents
Acknowledgement...............................................................................................................................................................................2 About the Organisations.....................................................................................................................................................................2 About the Authors...............................................................................................................................................................................2 Glossary of Abbreviations...................................................................................................................................................................4 Report Summary.................................................................................................................................................................................5 Executive Summary.............................................................................................................................................................................6 I. Background 1.1 Introduction..................................................................................................................................................................................8 1.2 The UNFCCC.................................................................................................................................................................................8 1.3 Ditching the Kyoto Protocol?.........................................................................................................................................................9 II. Climate Change and Perspectives From Asia 2.1 China and India...........................................................................................................................................................................11 2.2 ASEAN and Least Developed Countries.......................................................................................................................................11 2.3 Asia’s Developed Countries.........................................................................................................................................................11 2.4 South Korea................................................................................................................................................................................13 2.5 Asian Cities.................................................................................................................................................................................13 2.6 Regional Agreements in Asia.......................................................................................................................................................13 III. Key Issues to be Resolved 3.1 Climate Stabilisation...................................................................................................................................................................15 3.2 Targets or No Targets?.................................................................................................................................................................16 3.2.1 Different Perspectives . .........................................................................................................................................................16 3.2.2 Removing Misperceptions.....................................................................................................................................................17 3.2.3 Binding Target - to What Extent is it a Problem for Asia........................................................................................................17 3.3 Growth vs. Development..............................................................................................................................................................17 3.3.1 Resolving the Conundrum: Sustainable Development...........................................................................................................17 3.4 Deforestation...............................................................................................................................................................................17 3.5 Dealing with Vulnerability and Adaptation...................................................................................................................................20 3.6 Mitigation Measures to Reduce Emissions...................................................................................................................................20 3.6.1 International Emissions Trading ...........................................................................................................................................22 3.6.2 Clean Development Mechanism............................................................................................................................................23 3.6.3 Joint Implementation...........................................................................................................................................................23 3.6.4 Post-2012 Markets................................................................................................................................................................24 3.6.5 Taxation................................................................................................................................................................................25 3.7 Technology..................................................................................................................................................................................25 3.8 The Trade Factor.........................................................................................................................................................................29 IV. Conclusion 4.1 Understanding, Urgency and Uncertainty....................................................................................................................................30 4.2 Co-ordinated and Multi-dimensional Governance.........................................................................................................................30 4.3 Learning and Demonstration: Gazelles and Elephants in Asia.....................................................................................................30 Endnotes...........................................................................................................................................................................................32
Glossary of Abbreviations
APP: APEC: ASEAN: BAU: CCS: CDM: CER: CLRTAP: CO2: CO2e: COP: ET: EU: EU ETS: FAR: GHG: GLOBE: HFC-23: IEA: IETA: IGES: IIED: IPCC: JI: LDC: LULUCF: NAPAs: OECD: R&D: SD-PAMs:
Asia Pacific Partnership on Climate Change Asia Pacific Economic Cooperation Association of Southeast Asian Nations Business as Usual Carbon Capture and Storage Clean Development Mechanism Certified Emissions Reduction Convention on Long-Range Transboundary Air Pollution Carbon Dioxide Carbon Dioxide equivalent Conference of Parties Emissions Trading European Union European Union Emissions Trading Scheme Fourth Assessment Report of the IPCC Greenhouse Gas Global Legislators Organisation for a Balanced Environment Trifluoromethane International Energy Agency International Emissions Trading Association Institute for Global Environmental Studies International Institute for Environment and Development Intergovernmental Panel on Climate Change Joint Implementation Least Developed Country Land Use, Land Use Change, and Forestry National Adaptation Programmes of Action Organisation for Economic Co-operation and Development Research and Development Sustainable Development Policies and Measures
SO2: UNDP: UNESCAP: UNFCCC: WGII: WGIII: WTO:
Sulphur Dioxide United Nations Development Programme United Nations Economic and Social Commission for Asia and the Pacific United Nations Framework Convention on Climate Change Working Group II of the IPCC (Climate Change Impacts, Adaptation & Vulnerability) Working Group III of the IPCC (Mitigation of Climate Change) World Trade Organization
Report Summary
1. Understanding Risks: In the foreseeable future, it is
•
likely that the risks of dangerous climate change will be more fully grasped and mitigation measures better tested, and this will propel all nations to take more stringent action to stabilise GHG emissions.
• •
2. Asia’s “Second Commitment Period” Negotiations: Given that the developing world is not yet ready to agree to a specific stabilisation goal and binding national targets, and in view of the universal desire to ensure that negotiations for the “second commitment period” will lead to meaningful results in the short term, it is essential to align Asia’s growing concerns about energy security and interest in achieving sustainable development by increasing its capacity to achieve a low-carbon future.
Integrating forest mitigation with developing countries’ SD-PAMs; Mobilising financial-technical resources to aid developing countries; and Integrating with Kyoto Protocol’s ‘flexible mechanisms’ to provide incentives for funding and technology partnerships between developed and developing countries.
Promote adaptation in Kyoto Protocol’s framework by: • Enhancing the UNFCCC’s Adaptation Fund and integrating adaptation with Kyoto’s ‘flexible mechanisms’; • Integrating adaptation into the full range of development aid; and • Using ‘climate insurance’.
3. Make Use of Current Technologies: Asia and the developing world can go a long way to be much more energy efficient and reduce carbon emissions using current technologies but they will need to be assisted by the transfers of funds and technology from the developed world.
4. Reform the CDM: An appropriately reformed CDM can
6. Other helpful measures: These include • •
be most helpful to provide Asia and the developing world with a menu of options to be more energy efficient, reduce carbon emissions and achieve sustainable development.
5. Creating a Menu of Options: The ‘menu’ of
•
interrelated options includes Reform the CDM so as to align climate change and developing goals of developing countries by: • Linking CDM to SD-PAMs. • Discounting CERs in order to reduce and not just shift emissions. Include forest mitigation in Kyoto Protocol’s framework by: • Putting in place robust and effective accounting, monitoring, implementation and enforcement at local level;
• •
Developed countries to lead by reducing emissions more aggressively. Governments to provide co-ordinated and multidimensional governance through appropriate regulatory frameworks and legislation to set incentives, encourage investment and develop carbon markets to generate emissions reduction. Decision-makers can set-up a ‘Technology Clearing House’ to help them decide which types of technology are right for their countries. Continue to refine and expand carbon markets. Collaborate on science, research and technology.
7. Asia is learning: Asia is doing ‘homework’ to understand the science and risks of climate change. They need to be ready to step-up and change direction in order to avoid catastrophic climate change.
Executive Summary Approaches for a Post-2012 Regime
The global community’s attitudes to climate change shifted in 2007. Political will to take action on the issue is gathering in many countries. Given the global impacts, urgency and scale of the issue, many see that global action is needed, involving all countries. What may be expected from the countries of Asia to help stabilise GHG emissions? A Shared Vision: A shared vision is needed to prevent dangerous climate change. The international community must provide greater certainty on the steps to achieve this, and confidence that such efforts will be effective in order to bring all states on board. Twenty-five countries account for about 83% of global GHG emissions.1 The US and China are the world’s top emitters, with roughly equal amounts in 2007, accounting for over 40% of global emissions.2 Participation by all these countries is critical and Asian states must respond accordingly. Equity and Common and Differentiated Responsibilities: Agreement on a post-2012 framework on climate change will only be possible if each participating country believes it to be fair and equitable. The developed countries in the North have been and remain the major emitters of GHG and their past emissions are driving much of the present and future changes in the climate. The resources of science, technology and funding needed to address climate change are also predominately with the North. At the same time, developing countries are also responsible for a significant amount of warming, and will need to curb their fast-growing emissions if the world is to achieve global climate stabilisation. For the most part they lack the technology and capacity to deal with this problem at the current time. As such, the principle of “common but differentiated responsibilities” among the countries of the world – as embraced in the Kyoto Protocol and other international environmental treaties and declarations – must remain the key guide for the negotiations. Within Asia, Japan and other more developed Asian states can and should set good examples, take the lead and assist others in the region. 3 Get Beyond Finger Pointing: The principle of “common and differentiated responsibilities” should not however be taken to excuse denial and inaction by developing countries, including those in Asia. All countries are going to be affected by climate change and the least developed countries and those in the equatorial zone are likely to be the most vulnerable, including most states in Asia. Within these countries, moreover, it will often be the poorest communities that will be most affected. Asian states cannot hide behind the old rhetoric and fingerpointing of the North-South Divide. Focus on Adaptation: The world is already locked into a certain degree of climate change due to historical emissions of GHGs. Every Asian state can and should take urgent and serious efforts to evaluate the impacts that climate change will bring to its
society and territory. Most Asian governments have yet to do so. Mechanisms are needed to assist all countries, in particular the poorest, to understand and adapt to the coming changes. Flexibility and a Menu of Options: The Kyoto Protocol suffers from a polarity between the obligations placed on Annex I countries and the lack of any real impetus for non-Annex I countries. Developed countries should continue with binding obligations and indeed ratchet up the percentage of GHGs to be cut. For others, however, a post-2012 framework should allow different types of commitments to accommodate different national strategies and circumstances. There should be a “menu” of options from which a country can choose how to achieve its share of effort. This may include efforts at energy efficiency, avoided deforestation, adaptation strategies and other actions that, while helping reduce GHGs or adapt to climate change, do not presently fit into the Kyoto Protocol and its mechanisms. Monitoring and Compliance: All obligations and other commitments, whether binding or from the menu of options, should be monitored and duly reported by both developed and developing countries. Where a state is not in compliance, a process should be instituted to enquire into the factors behind its non-compliance with a view to enabling it to meet its obligations and commitments. Sustainable Development, Investment and Technology: Development goals and actions to combat climate change should not be seen as incompatible. Policy and strategies in developing countries will be most successful when complemented by assistance, investment, and access to clean technologies from developed countries. Step-up with Science: The science on climate change is still evolving and the consensus represented by the IPCC is considered by many to be conservative in their estimates on the scale and speed of climate change. Other studies suggest that tipping points and accelerated changes are possible. As scientific evidence accumulates, states must be prepared to revisit the consensus and, where necessary, step-up their efforts. Summary Recommendations In the foreseeable future, it is likely that the risks of dangerous climate change will be more fully grasped and mitigation measures better tested, and this will propel all nations to take more stringent action to stabilise GHG emissions. However, given that the developing world is not yet ready to agree to a specific stabilisation goal or binding national targets, and in view of the universal desire to ensure that
negotiations for the “second commitment period” will lead to meaningful results in the short term, it is essential to align Asia’s growing concerns about energy security and interest in sustainable development by increasing its capacity to achieve a low-carbon future. Asia and the developing world can go a long way to being much more energy efficient and reducing carbon emissions using current technologies but it will need to be assisted by the transfers of funds and technology from the developed world. The CDM, if appropriately reformed, can be most helpful to provide Asia and the developing world with a wide menu of options. Recommendations for the negotiators from Asian states of the post-2012 framework are: Understand Urgency and Uncertainty: Asian states must recognise that the need for urgency in addressing climate change is paired with an uncertainty that means the impacts may be more severe and come sooner than presently projected. Align Interests for Low-Carbon Development: The greatest short-term gains are likely to be found if the negotiations focus on areas where developing countries’ existing approach to grow their economies are aligned with the goal to cut GHG emissions, so that they can achieve low-carbon development. Reform CDM, Link SD-PAMs and Discount CERs: The most effective ways to achieving low-carbon development for developing countries is not through pressuring them to accept binding targets. Instead, good results can be achieved by linking SD-PAMs to the Kyoto Protocol’s CDM, which could enable more funds from Annex I countries to flow to non-Annex I countries to support sustainable low-carbon projects with environmental, climate and development benefits for the planet. CDM projects may include reforestation (and arrested deforestation) and adaptation projects. Furthermore, by discounting CERs, overall emissions reductions can also be achieved instead of just shifting them from developed to developing countries.
Set-up Clearing House for Technology: Technology holds the promise of helping Asian states develop without worsening climate change. However, different technologies need to be assessed in many parts of Asia, where technological expertise and experience in research and development may well lag behind the levels of the USA and Europe. Setting-up a clearing house for technologies and best practices would help Asian states better understand and evaluate the many possible paths forward. Let States with Capacity Lead: Asian states are starkly diverse in their levels of development, governance, administrative and regulatory capacity, and expertise in technology and know-how. Given this, it is unrealistic to expect Asian states to move at a uniform pace. The same rules or targets should not be applied to all developing countries, as this would hinder progress among states that already have greater capacity. Instead, the post-2012 framework should encourage some states to take the lead, and move ahead of others. Large, developing states should think through climate change issues and seek their own paths and targets that can be achieved in tandem with economic growth and sustainable development on an urgent basis, rather than proceeding with “business as usual”. Co-ordinate Multi-dimensional Governance: Climate change shows an interlocking and complex triangle of relations between environment, the economy and the use of energy. To respond effectively, states have to create frameworks for evaluating and co-ordinating policies and action across different sectors like energy, trade, finance, infrastructure, city planning, security and technology.
Provide Incentives, Investment and Markets: At the same time, developed countries must establish strategies and institutions, particularly policies, regulations and carbon markets that can provide all economies with incentives to apply innovative practices and technologies that can reduce GHGs. On the investment front, there must be robust support to avoid locking-in carbon intensive investments, whether in the developed or developing world. On the trade front, by tightening energy and fuel performance standards and requirements for products in developing countries (such as electrical goods, energy transformation equipment, and vehicles), exports from developing countries to developed countries can contribute to achieve energy efficiency worldwide. Tariffs can also be removed or lowered for carbon-free or low-carbon products.
I Background
1.1 Introduction Global attitudes to climate change shifted in 2007. A symbol of this was the Nobel Peace Prize shared by Al Gore, who helped publicise the issue with his movie, “An Inconvenient Truth”, and the IPCC, which generated a consensus on the science of the issue. More people and more countries gave more attention to climate change in 2007 than at any time in the last 15 years since the UNFCCC brought the issue to the attention of governments. The Kyoto Protocol, negotiated ten years ago, only obliged the developed countries to reduce their emissions, and then only by small percentages. Some argue that a more ambitious plan is needed after the Protocol expires in 2012. Leaders in the EU, central in implementing the Protocol, have already pledged much bolder cuts by 2050. The USA and Australia, which have to date remained outside the Kyoto Protocol, have also shown signs of changing their policies. At the same time, some developing countries like China have announced their own national plans which, while avoiding binding targets to cut total emissions, set out approaches to minimise the impact of climate change by such measures as energy efficiency and greater emphasis on clean energy. The APEC forum in 2007 has also announced the target of increasing energy efficiency by some 25%. The ASEAN and East Asian Summits in 2007 also issued declarations on environment, climate change and energy. What may be expected from the countries of Asia as the global community gives more attention and calls for stronger action on climate change? How can and should they respond, both now and post-2012? Given that many countries in Asia are still developing with millions below the poverty line, what are the approaches that best suit them and that give priority to continuing the high growth rates of recent years?
1.2 The UNFCCC The UNFCCC 1992 created a global framework for intergovernmental efforts to tackle climate change. The UNFCCC establishes the core principles and preliminary steps for signatory countries to address climate change in good faith with the ultimate aim of stabilising atmospheric concentration of GHGs at a level that avoids dangerous human interference with the climate system.4 From the outset, a worldwide approach was needed to prevent the threat that if only some countries controlled emissions, international industries would simply relocate their activities to other places where there were no such controls.
Despite near universal membership of countries, the UNFCCC reflects fundamental tensions between developed and developing countries over efforts to fight climate change. On the one hand, developing countries argue that the vast bulk of the carbon in the atmosphere today that is driving climate change comes from the rich countries of the North and that these countries must undertake the burden of mitigating climate change. On the other hand, developed countries have pointed to the rising absolute GHG emissions of large and rapidly developing nations, especially China and India, and the need for a global climate policy to reduce emissions. The rejoinder to this from the developing countries is that their per capita emissions remain low by comparison, and poorer countries need to develop so as to alleviate poverty and provide basic needs for their people. This North-South divide is reflected in the UNFCCC’s division of countries into two groups – the developed (Annex I) 5 and developing (non-Annex I)6 nations. The UNFCCC places primary responsibility on Annex I countries to reduce emissions and assist non-Annex I countries in emissions reduction. This arrangement is referred to as the “common but differentiated responsibilities” of the signatory Parties. This principle means that, while all countries share the responsibility to combat climate change, their responsibilities vary according to their differing national circumstances. Developed countries “acknowledge the responsibility that they bear in the international pursuit to sustainable development in view of the pressures their societies place on the global environment and of the technologies and financial resources they command”. This principle also evokes the 1992 Rio Declaration. 7 In Asia, Annex I countries include Japan, New Zealand and Australia. The rest of Asia are non-Annex I countries, including some of the more developed countries like South Korea and Singapore. Arising from the Kyoto Protocol (1997),8 Annex I countries take on legally-binding emissions caps to be achieved during the “first commitment period” between 2008 and 2012.9 Non-Annex I countries have no emission limits. In terms of obligations, they are required to communicate to the COP information on: • • • •
Their emissions by source and removals by carbon sinks10 of all GHGs; National or, where appropriate, regional programmes containing measures to mitigate climate change; Measures to facilitate adaptation to climate change; and Any other information that the Parties consider relevant to the achievement of the UNFCCC objectives.
Non-Annex I countries may host emissions-reduction projects
Countries that ratified the Kyoto Protocol Countries with an emission target under the Kyoto Protocol (potential net buyers in the JI, CDM and IET markets) New Zealand Canada Iceland Switzerland Japan
Australia Norway
Austria Belgium Denmark Finland France Germany Greece Ireland
Italy Luxembourg Netherlands Portugal Spain Sweden UK
Economies in transition (potential new sellers in the JI and IET markets)
Liechtenstein Monaco
Russian Federation Ukraine Belarus (GHG target under discussion)
European Union Bulgaria Czech Republic Hungary
Poland Slovakia Latvia
Croatia Estonia Lithuania
Romania Slovenia
Cyprus Malta
Countries without an emission target under the Kyoto Protocol (potential CDM host countries) Countries that did not ratify the Kyoto Protocol United States Turkey
Argentina Chile
Indonesia Nigeria
Brazil China
Mexico South Korea
Kazakhstan
Figure 1: Countries in the UNFCCC Annex I. Source: Climate Focus based on UNFCCC
under the protocol’s CDM, which was structured to generate development benefits while earning emission reduction credits that may be used by Annex I countries to help meet their reduction targets. The Kyoto Protocol came into force in February 2005 but without the United States – the biggest carbon emitting country – and Australia, both of whose leaders said they believed the commitments too costly and therefore politically unworkable. Moreover, Canada has in effect ignored its Kyoto commitments for the same reason.11 With the end of the Kyoto Protocol’s first commitment period fast-approaching and negotiations on the “second commitment period” of the Protocol being undertaken, pressure from the developed countries is being put for at least the large developing countries like China and India to accept emission reduction targets from 2012. It is obvious that the conflict embodied in the UNFCCC must be resolved if there is to be active participation by all nations. What lies ahead? Recent discussions regarding the future of international climate change policy have set the end of 2009 as the date for completing negotiations on a comprehensive framework. Negotiations for the design of a post-2012 agreement have begun and the next round will take place in Bali in December 2007 at the UNFCCC’s annual COP. The UNFCCC Executive Secretary, Yvo de Boer, views Bali as the key turning point where a vital “road map” will be produced to chart a course for negotiations over the next two years. 12 There is a wide range of formal and informal processes that have been established to encourage discussion on the future regime, some of which may influence the outcome of the post-2012 agreement.13 The flow of information and dialogue has accelerated rapidly in recent months, building on the momentum of major international meetings focusing on climate change over the past several years. However, amidst the myriad proposed measures and aspirational goals that have been
suggested, a clear direction for a future international framework has yet to emerge.
1.3 Ditching the Kyoto Protocol? The problems of the Kyoto Protocol have led to suggestions by some that it should be ditched and for there to be a fresh start.14 There are also many voices in the West calling for tougher steps with deep cuts that are obligatory for all, and for a treaty that will have “teeth” to enforce such obligations. Broad international treaties are not necessarily the best way to deal with complex global problems because “these pacts normally reflect the interests of their least enthusiastic members and are often codified through weak commitments with easy escape clauses for governments that will not readily honour their agreements.”15 Yet we also know that pushing tougher constraints on unwilling governments rarely works. Indeed, there is evidence that suggests that compliance methods of monitoring and assistance that encourage states to meet targets are often more effective, whereas attempts to enforce international law against reluctant states may fail.16 We should not overlook the many areas in which international co-operation has worked reasonably well and grown more effective over time. In this context, given the time that has gone into shaping the Protocol and making it work, it is unwise to abandon the main pillars and broad approach that the UNFCCC and Kyoto Protocol have taken. Rather than starting over with a blank page, the better course is to use its principles and approach for a post-2012 regime that will have greater effect and broader involvement. While there is an urgent need to combat climate change, it has to be recognised that many governments in the world, and in Asia, remain uncertain as to how they can best manage
their GHG emissions. Many states are adopting their own, varying strategies to reduce emissions. These strategies are understandably designed within the context of their respective regulatory capacities and institutions, which vary widely from country to country. As such, a post-2012 framework must allow different types of commitments to accommodate different national strategies and circumstances. It is hard to conceive an agreement without an appropriate “menu” of options from which a country chooses how to achieve its share of effort. The countries of the world can only do more and move ahead much faster when further understanding about climate change and their response capacities has been developed. Scientific understanding will harden and, as it becomes more broadly understood, will propel action. Some have suggested that the best way to start building a consistent global effort while each country decides on their own solution is to introduce an international organisation in charge of securing “best practice emissions estimation and disclosure” from all major sources of carbon around the world. 17
China and India
Emerging National Commitments: China is among the relatively small group of countries in Asia that has done the initial homework on the climate changes likely to have an impact on the country and is ready to debate many issues with the developed countries. India is likely to join with China in pressing the developed countries to do more on mitigation, but India will have to do much more to catch up on its national effort to deal with climate change.
Common Positions •
• This overview explores potential promising options for the post2012 regime in the second commitment period. Approaches can be refined as the world gains greater experience in combating climate change.
Economic development is their main priority and they have a right to achieve the per capita income of developed countries. They however realise the consequences of unchecked growth and look to pursue more sustainable development patterns. Developed countries are responsible for GHG mitigation under the principle of “common but differentiated responsibilities”.
Common Challenges •
•
They will account for 45% of the 57% increase in global primary energy demand by 2030, with coal and imported oil as the primary drivers of this growth. This increased demand will have farreaching impacts on regional and global energy security. They are highly vulnerable to the effects of climate change with regards to agriculture, public health, coastal cities, extreme weather, and water security, but they lack adequate adaptation studies and planning.
Current Policies: China • • •
Released a national climate change assessment in December 2006. Released a climate action plan in June 2007. Set binding domestic target to reduce energy intensity by 20% per unit GDP by 2010, and plan to obtain 15% of primary energy from renewables by 2015.
Current Policies: India • •
Formed the cabinet-level Council on Climate Change in 2007 to develop a national action plan. Key focus on expanding renewable power, and improving energy efficiency.
Sources: IEA 2007, China Climate Change Info-Net 2007, IGES 200618
10
II Climate Change and Perspectives From Asia
2.1 China and India
recognises the need to conserve resources and build an environmentally-friendly society, and enhances national capacity to mitigate and adapt to global climate change Despite this, China has stayed away from accepting binding international targets to curb its emissions.
China India OECD North America Rest of developing Asia Middle East Latin America Transition economies Africa OECD Europe OECD Pacific -2
0
2
4 billion tonnes
Reference Scenario High Growth Scenario
6
8
10
Alternative Policy Scenario
Figure 2: Incremental Energy-Related CO2 Emissions by Scenario Source: IEA 2007 12 6% 17% 8%
11 Reference Scenario
28%
10 Gt of CO2
For a variety of reasons, many scholars and policymakers around the world have pointed to Asia as the region most likely to determine the success or failure of negotiations for the second commitment period. First and foremost, there is the presence of the two Asian giants of the international climate change arena – China and India. These two Asian giants share common positions and challenges regarding climate change. Both continue to focus on economic development and are projected to grow rapidly; accordingly, both forecast huge and ever growing energy demands, and look likely to increase their reliance on coal, which is highly carbon intensive, as the main source for that energy. China and India are reason enough to make Asia the most important region in a postKyoto framework. China has moved further along in developing its policies to address climate change, with the release of its Climate Change National Action Plan in June 2007, 19 which
2.2 ASEAN and Least Developed Countries
41%
9 8 Alternative Policy Scenario
7 6
Beyond China and India, the ASEAN member countries are among the most vulnerable countries to the impacts of climate change, as well as the least prepared in adapting to those changes. Most of them have just begun to understand the magnitude of the economic, infrastructure, and public health impacts of climate change on their countries. Few have completed adaptation studies.
5 2005
2020
2025
2030
End-use electricity-efficiency measures
Switching from coal to gas and improved efficiency on the supply side Renewables and biofuels
Nuclear
Figure 3: China’s CO2 Emissions in the Alternative Policy Scenario Compared with the Reference Scenario Source: IEA 2007 3.5 5% 24%
3.0
19% 18%
Reference Scenario Gt of CO2
Japan and New Zealand are faced with mandatory Kyoto targets in the first commitment period, while Australia had planned to work towards the target it would have faced if it had ratified the Protocol. The Labour government elected to power in Australia on 24 November 2007 has pledged to ratify the Protocol and attend the Bali COP.20
2015
End-use fuel efficiency measures
2.3 Asia’s Developed Countries Asia also includes developed countries, namely Japan, Australia and New Zealand.
2010
35%
2.5
2.0 Alternative Policy Scenario
1.5 1.0 2005
2010
2015
End-use fuel efficiency measures
2020
2025
2030
End-use electricity-efficiency measures
Switching from coal to gas and improved efficiency on the supply side
Although these three countries have similar positions regarding the post-2012 framework, each country has different concerns regarding the impact of climate change and climate change policy on its environment and economy. Although they still have
Renewables and biofuels
Nuclear
Figure 4: India’s CO2 Emissions in the Alternative Policy Scenario Compared with the Reference Scenario Source: IEA 2007 11
ASEAN & Least Developed Countries
Singapore and Indonesia
Bangladesh, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam
While ASEAN member countries share common perspectives on climate change, a few are more active on the issue.
Common Positions
Current Policies and Opportunities: Singapore
•
•
•
These countries are highly vulnerable to climate change (food and water security, extreme weather, public health concerns, and coastal erosion); there is a need for serious vulnerability studies and the creation of adaptation programmes. Economic development is the main priority and climate change has received little attention at the
•
•
•
national level until recently. They strongly believe that developed countries are responsible for the current stock of GHGs.
Common Challenges •
Moving Ahead?
Most have a low capacity at the national level to comprehensively deal with climate change. International assistance is needed especially for the less developed countries like Cambodia and Laos. Energy security is a major concern. While some like Vietnam and Cambodia are exploring new sources of energy, many may turn to domestic reserves of coal in the future. Biofuels production is growing in Malaysia and Indonesia, but has raised questions about deforestation. Some states are also considering nuclear energy.
•
•
• •
•
At their 2007 Summit, ASEAN leaders issued a declaration on environment and sustainable development. They also led the wider East Asian Summit to declare their commitment to the “common goal of stabilising atmospheric greenhouse gas concentrations in the long run, at a level that would prevent dangerous anthropogenic interference with the climate system”. The East Asian Summit includes China and India. ASEAN member countries are evolving in their understanding of climate change and in their approaches to a post-2012 regime.
Sources: IPCC WGII 2007, UNFCCC National Communications and Adaptation Programmes of Action 1999 (Philippines) 2000 (Thailand, Malaysia, Lao PDR), 2002 (Cambodia), 2003 (Vietnam)21
12
committee on climate change, with Ministers from Trade & Industry, Finance, National Development, Foreign Affairs and the Environment & Water Resources reporting to a Deputy Prime Minister. As host of the ASEAN and East Asian Summits in 2007, Singapore has played a role in bringing attention of regional leaders to environmental issues and climate change.
Current Policies and Challenges: Indonesia
Current Policies •
In 2007, Singapore adopted a National Climate Change Strategy and announced an energy efficiency plan targeting at least 25% gains. It is completing a major study on the possible impacts of climate change and preventive measures. Singapore has also created an inter-ministerial
•
For Indonesia, its Midterm National Development Plan mentions that the country shall “improve national capacity in adapting climate change issues into development aspects.” Indonesia has drafted a National Strategy on Adaptation. Indonesia is hosting the Bali COP13 in December 2007, which will begin negotiations on a post 2012 regime. Indonesia also hopes to adjust the existing Kyoto regime to allow reforestation and arrested deforestation schemes to qualify for carbon credits. While Indonesia is currently an energy exporter, projections are that its energy needs will grow as its energy resources dwindle, turning it into a net importer in coming years. Indonesia is expanding biofuels production and considering a nuclear energy plant. Both efforts are however controversial in terms of their potential adverse impacts on, respectively, conversion of forests and safety.
Sources: Singapore National Climate Change Committee 2007, PEACE 200722
a lot of work to do themselves, taking advantage of their policy experience and technology capacity will be vital to helping developing countries in Asia formulate and carry out long term goals and plans.
2.4 South Korea For the 1992 UNFCCC, South Korea was considered a developing, non-Annex 1 country. But it has developed rapidly and is most likely to be reclassified in future negotiations. South Korea’s potential transition to Annex I status could serve as an important example for other rapidly developing countries in Asia to make the move in future commitment periods.
2.5 Asian Cities Asia also contains a disproportionate number of the world’s largest and fastest growing cities, with many having faced serious environmental problems for many years. In addition. Organisations, such as the C40 Cities Climate Leadership Group, have identified cities as being large energy users and carbon emitters.23 The region needs key cities to step up and lead the way, as they have in other countries. Hong Kong and Singapore are both leading cities in the region with excellent infrastructure, considerable wealth, and a compact size. These advantages can be put to good use in the form of climate change leadership positions in Asia.
Japan, Australia, and New Zealand Asia’s Developed Economies Common Positions •
•
•
Current Challenges and Policies: Japan •
• •
Moreover, China, South Korea and India are among the largest hosts of CDM projects in the world, while Japan, South Korea, Australia, and New Zealand are all at various stages in developing national emissions trading systems and plan to ultimately link them with regional and global markets.
Is failing to meet its Kyoto target because of large emissions growth in the commercial, residential, and transport sectors. Is increasing CDM purchases and considering an environmental tax to help meet its target. Believes it has the responsibility to be a regional and global leader in the transfer of emissions reduction technology to developing countries.
Current Challenges and Policies: Australia •
2.6 Regional Agreements in Asia Despite the diversity and differences, Asia has begun to make efforts to come together as a region to understand and address climate change, on its own and also in conjunction with the USA and others in the Asia-Pacific region. Australia has established a prominent position in promoting technology transfer and exchange both among developed countries – through the APP – and between developed and developing countries through its forestry initiatives. APP includes China, India, Japan, the United States, Australia, Canada, and South Korea. Regional organisations such as APEC have also begun focusing on climate change. In addition, the UN has just announced a three-year collaboration programme with China that will focus on improving technology and studying national climate change threats to water, agriculture, and public health. 24
They believe an effective post-2012 framework must include participation of major emitters and some kind of targets for large developing countries. The post-2012 framework should be built around advanced technology transfer from developed to developing countries. Are expected to introduce domestic emissions trading as a central component of reduction strategies.
•
Is concerned about the impact of climate change on its domestic agriculture and water security, as well as on its economy, which relies on cheap domestic energy resources and exports of coal, natural gas and uranium. Is seeking a position of leadership on regional and global forestry initiatives.
Current Challenges and Policies: New Zealand •
•
Is in a unique position because 50% of its emissions come from agriculture and 70% of its energy already comes from renewable sources. Has a goal of serving as an example of a “truly sustainable” country by achieving carbon neutrality in its energy sector by 2040.
Sources: Japan Kyoto Protocol Target Achievement Plan 2005, Australia Department of the Prime Minister and Cabinet 2007, New Zealand Ministry for the Environment 200725
13
South Korea
Transitioning from Developing to Developed Status
Singapore and Hong Kong Cities and Climate Change
Singapore leading, Hong Kong lagging Current Positions • •
•
Believes flexibility, technology transfer and universal participation important for post-2012 framework. Focused on economic growth and concerned that accepting a mandatory reduction target will negatively impact growth. See South Korea in same category as China and India in post-2012 framework.
• •
Common Opportunities •
Current Challenges •
•
Is energy inefficient compared to Japan, and is trying to shift from high to low energy intensity industries to pursue sustainable development and alleviate energy security concerns. Facing international pressure to accept mandatory target as an OECD member and potentially a top-5 global emitter by 2050.
Current Policies • •
Planning to release a national target in spring 2008, followed by targets for specific industries. Planning to focus on industrial and energy sectors reductions through voluntary agreements, and setting-up a national emissions trading scheme.
Singapore has a National Climate Change Strategy and a committee on Climate Change. Hong Kong has taken measures to conserve energy in the public sector and a few attempts at pursuing renewable energy. It is about to embark on a climate change assessment.
Both cities are considering creating emissions trading platforms.
Sources: Singapore National Climate Change Committee 2007, Hong Kong Chief Executive Policy Address 200727
Regional Climate Change Co-operation in Asia APP •
Sources: IGES 2005, Korean Minister of Trade and Foreign • •
An initiative to promote co-operation with respect to clean energy technology. Targets key industrial sectors; members account for 50% of world energy use and emissions. Each sector has an action plan, and projects are being implemented. Focuses on partnerships with business and international organisations.
APEC •
Set “aspirational” goal of a 25% reduction in energy intensity by 2030 at September 2007 meeting.
Other Initiatives •
•
Australia’s Global Initiative on Forests and Climate addresses the impact of deforestation on climate change, partnering with Indonesia. Many countries have bilateral technology exchange partnerships within Asia, with the EU, or with the US.
Sources: APP 2007, APEC 2007, Australian Greenhouse Office 200728
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III Key Issues to be Resolved
The IPCC reports, while looking in the future to 2100, emphasise the need for urgency and action in the near term. Furthermore, while the IPCC Fourth Assessment Report 2007 reinforces previous findings about the certainty of expected sea level and temperature changes within the next century, recent reports have argued that the potential for catastrophic impacts is greater than previously thought. Other scientists have voiced concerns that climate change may be more rapid than originally thought and predict “tipping points” after which the pace of change will sharply hasten with fast deteriorating conditions. 29 Yet, just as the latest science suggests the need for urgent action, climate change negotiations appear to be in political deadlock over the very different perspectives and positions of the Annex I and Non-Annex I countries. For example, in August 2007, the director general of the Chinese Government’s influential Energy Research Institute of the National Development and Reform Commission said that China was unready to join an international framework after 2012.30 China’s Vice Minister for Foreign Affairs, Zhang Yesui, also made it clear in November 2007 that: “Most developing countries are in the process of industrialization and urbanization, and they face the arduous task of poverty reduction … so they need a large period of time for continuous energy demand growth with the growth of greenhouse gas emissions.”31
climate change.33 These studies will no doubt provoke more debate in the coming few years and may well impel the world to seek ways to move more quickly on this issue. But even if we agree that such global goals are needed, how do we get there? Target-setting for each of the countries will be the most controversial aspect of the climate negotiations for the future. The challenge is how the global vision expressed in the form of a stabilisation target can be translated into national obligations for countries. Setting a global target for climate stabilisation requires the consideration of three important factors: timing, enforcement and compliance. In terms of timing, despite the urgency to act, the reality at the moment is that it will take substantially different amounts of time for different countries to translate a global target into national obligations. This is an especially acute problem for Asia, with its diverse and often unpredictable rates of economic growth. It will be relatively easier for a stable and developed Japan, for example, to convert a global vision into national commitments than for others to do so. Enforcement and stringency go hand in hand when attempting to compress a global vision into a national action plan, not to mention provincial and city programmes.
The following elements are being hotly debated:
3.1 Climate Stabilisation In combating climate change and setting a world climate goal, there are various suggested ways to express what a shared world vision means. It could be expressed in terms of: • • •
A target for limiting the rise of global average temperatures (the EU has proposed 2°C), An atmospheric CO2 concentration target (450-550ppm CO2e), or An emissions reduction target (such as ‘X’ per cent reduction from 1990 levels by a certain year).
A number of studies suggest that if global average temperatures rise by more than 2°C, climate change would grow more negative and unpredictable. Suggestions are that this target might be met by stabilising the CO2 concentration. The latest scientific research suggests that stabilising GHG concentrations at 450ppm CO2e would produce a slightly less than 50% chance of limiting global warming to 2°C. Stabilisation at 550ppm CO2e reduces the probability of staying below 2°C to less than 20%.32 There is also emerging science that intervention to achieve climate stabilisation needs to take place very much faster for the world to avoid catastrophic
No Asian country, not even Japan, has come close to setting a long-term emission reduction goal or creating a clear plan for climate stabilisation at the present moment. Japan had proposed that nations cut emissions by 50% by 2050 in its “Cool Earth 50” plan but there has been no clear follow-up to this pitch by other countries.
Japan: “Cool Earth 50” • • • •
•
Announced in May 2007 at the G8 summit by former Prime Minister, Shinzo Abe. Invited leaders of the world to join “Cool Earth 50.” Sets a global target of a 50% reduction in GHGs by 2050. Establishes three principles for an international framework to address climate change from 2013 onwards: broad participation, flexibility, technological development and deployment. Unclear how current Prime Minister Yasuo Fukuda will proceed with this plan.
Source: Shinzo Abe speech 200734 15
3.2 Targets or No Targets 3.2.1 Different Perspectives While developing countries accept that there is an obligation on all countries to take action, the post-Kyoto regime needs to be ‘fair and equitable’. This means:
•
Setting up targets is more workable for developed countries than for developing countries because their economic growth rate and industrial structure is relatively stable and predictable when compared with those of developing countries. Developed countries also have reliable past data to use as a BAU base case. Using a base case scenario of a certain past year, making emissions projections based on a BAU case, and then setting the target based on a reduction trajectory is hard for a developing country. Consequently, developing countries are wary of using this kind of formula because of the complexity of projecting accurate economic growth rates and long-term emissions patterns. Fastgrowing countries (especially China), are concerned about this. They know how hard it has been to estimate growth patterns. Arguably, basing targets on projects that turn out to be wrong is unhelpful and may even be harmful. In the case of China, there has been a large under-estimation of energy consumption, as a result of the rapid growth of heavy industry and therefore its carbon emission. Yet, developed countries appear to believe that imposing a target on developing countries is essential to ensure emission reductions from developing countries – and this is especially important with respect to China and India. Reluctance of developing countries to accept targets is regarded as selfish, unreasonable and therefore globally unfair. 16
12 9 6 3 0 -3 -6 -9 95
96
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02
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Figure 5: GDP growth rates of East Asian economies Source: IMF
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5 0 95
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Total Energy Consumption (10,000 tons of SCE) Industrial Production growth rate
Figure 6: Energy consumption in China Source: National Bureau of Statistics of China and CIA World Factbook
Industrial Production growth rate
Beyond stating these principles, developing countries are wary of accepting targets within the post-2012 framework. It needs to be emphasised that developing countries are not adverse to setting targets per se (for example, China sets all kinds of national and provincial targets to be achieved in its five year plans)37. The problem with the proposed methods, as noted above, is whether they are meaningful.
15 GDP Growth Rate (%)
Action to combat climate change must take account of the circumstances of countries at different stages of development. It must recognise the need for all to enjoy access to energy (not just rich countries) and developing countries must be allowed to provide basic services to their people, including electricity, so as to alleviate poverty and promote economic growth. In other words, it is politically unfeasible to ask China or India to freeze their per capita emissions at much lower levels than those of Japan, EU or the US. Most notably, the US’s per capita emissions are about 5 times the world average. 35 Obligations on countries must be set in line with their capabilities and historical responsibilities,36 and thus the developed countries are not only capable of doing very much more, they should in fact do more.
Total Energy Consumption (10,000 tons of SCE)
•
However, a recent briefing note by the Tyndall Centre for Climate Change Research prompts a more thorough look at the situation surrounding national emission reductions targets. The findings conclude that in 2004, net exports from China accounted for 23% of its total carbon dioxide emissions. This begs the question: “Should countries be concerned with emissions within their borders, or should they also be responsible for emissions due to the production of goods and services they consume?”38 If this were the case, how do we go about setting national targets? It would be extremely complex to even estimate a figure for “exports responsibility” and then relate this figure to a target that should be met by the industrialised countries that consume the exports. The exports issue further complicates the controversy surrounding targets, as not only do we have to examine the feasibility of targets on individual countries, but also transboundary emissions from global trading of goods and services. Some have suggested that the WTO should play a larger role in the regulation of climate-change related products.39 It is of course feasible to calculate a target on an equal global per capita quota basis so that every person on the planet has the same quota but this formula is unacceptable to the developed countries since the bulk of the population is in the developing world. If under attack, the major developing country emitters will continue to use this argument to show the much higher energy consumption and therefore carbon emissions of those living in developed countries. 3.2.2 Removing Misperceptions Climate change negotiations will struggle to progress, largely because of the different positions on target-setting. If misunderstandings are not dispelled, developed and developing countries will be pitched against each other in increasingly acrimonious global slanging matches, with both sides claiming unfairness and inequity. In such an event, much of Asia will take the developing country perspectives. A key issue, therefore, is for political leaders and climate negotiators to suspend judgment for now and take an objective look at the difficulty surrounding target-setting for developing countries and the political feasibility of imposing any form of a target on developing countries. At the same time, they should explore other options that can result in net global emission reductions. 3.2.3 Binding Target - to What Extent is it a Problem for Asia? A hard, legally-binding target effectively caps growth of developing countries. It will be resisted. A target in the form of a voluntary pledge and review could make sense as it can function as a driver for the best possible efforts to reduce GHG emissions. If so framed, then perhaps both developed and developing countries would not have to worry about the reliability of economic and emissions projections. In addition, soft voluntary targets, mostly in the form of industrial targets, are beginning to take shape in Asia. In Japan, Korea and Taiwan,
where a large proportion of industries are energy-intensive, governments are recognising the importance of voluntary agreements and targets, with the Japanese government even planning to establish a mandatory industrial emissions trading scheme eventually. Asian cultures take non-legally binding agreements seriously. Even if binding targets are accepted, compliance is crucial in the management of climate change, an issue that is often downplayed because it may prevent broad participation. A credible compliance mechanism “deter[s] free-riding within the regime, provided that there is transparency, monitoring of actions, and, most importantly, there is pressure for the country concerned to remain part of the regime.” 40 A useful example to draw upon is CLRTAP.
Geneva Convention on LongRange Transboundary Air Pollution, 1979 • •
• • •
•
Established in 1979 and entered into force in 1983. Has 51 Parties, and the Executive Secretary of the United Nations Economic Commission for Europe (UNECE) serves as its secretariat. Has set long-term targets and written them into 8 protocols. Maintains information exchange, as well as research and monitoring systems. Provides governments and subsidiary bodies with scientific information to support the development and negotiation of emission reductions policies within the Convention. Includes enhanced co-operation with supranational bodies like the EU through technical support.
Source: United Nations Economic Commission for Europe 2007.41
3.3 Growth vs. Development 3.3.1 Resolving the Conundrum: Sustainable Development By 2004, GHG emissions from developing countries exceeded those of industrialised countries for the first time.42 Climate change is clearly an issue that the developed world cannot solve on its own, even if it should take on more of the burdens. The need and pressure for the developing countries to do their part will grow. Yet, as discussed, they remain sceptical about the impacts on their growth. How can this be reconciled? A first step is to reconcile development and climate change by taking a sustainable development approach. With such an approach, policies and measures for achieving development within the national development priorities of developing countries are also included in an international climate framework that supports the meeting of those priorities on 17
a low-carbon trajectory. In other words, the idea is to make the development policies of a developing country the basis, or even substitute, for climate policy in that country. Aligning the interest of a developing country in growth with the goal of cutting carbon should result in a lower-carbon outcome. This has been referred to as the SD-PAMs approach.43 SD-PAMs are rooted in the UNFCCC 1992, which requires all countries to develop national GHG mitigation programmes.44 The UNFCCC affirms: “Parties have a right to, and should, promote sustainable development”, and accordingly, “policies and measures to protect the climate … should be integrated with national development programmes”.45 The Kyoto Protocol also stresses that parties should focus on advancing mitigation commitments “in order to achieve sustainable development”.46 Despite these provisions, there is in fact no official recognition of policies and measures undertaken by countries or a review process of their implementations under the UNFCCC or the Kyoto Protocol. As such, these provisions have not been made meaningful to date. A post-2012 framework can build upon the experience on the ground so far to work out how to put low-carbon development efforts into operation. It will be helpful to use the SD-PAMs approach to allow countries to pledge specific actions to be undertaken that not only promote sustainable development, but would also have a beneficial effect on GHG emissions. Such an approach focuses on efforts and policy commitments to a loweremissions outcome that could help to support and encourage equitable contributions from developing economies. 47 Such contributions may also include incentives for new and flexible ways to reduce the GHG emission intensity of economic development, e.g., incentives to reduce deforestation and strengthen other carbon sinks, or to encourage voluntary or regionally-based emissions reduction plans. One example of how this goal could be implemented is the “Sector-Based Approach” proposed by the Center for Clean Air Policy. Under this proposal key developing countries would pledge to achieve a voluntary sector “no lose” GHG intensity target (e.g., greenhouse gas / tonne of steel) in the energy intensive industry sectors (e.g., electricity, cement, steel, oil refining, pulp/paper and metals). Developed countries and international institutions would provide assistance through a “Technology Finance and Assistance Package” that would encourage developing countries to meet more aggressive targets. 48 To ensure that good policies are not just put into place but are in fact practised, efforts to report, monitor and review actions taken will be necessary. It needs to be made clear that the SD-PAMs approach is not a substitute for mitigation by developed countries. It best suits developing countries that are unable to take on the larger mitigation options that developed countries can. However, there can be opportunities to link SD-PAMs to the Kyoto Protocol’s “flexible mechanisms”, which could then enable more funds from Annex I countries to flow to non-Annex I countries to support sustainable projects with environmental, climate and development benefits for both the non-Annex I country and the planet. 18
It would be possible and beneficial to connect pledged SDPAMs to the CDM mechanism. SD-PAMs serve as a platform to support CDMs and in turn, the CDM could expand into more policy or sector-based projects that embrace national objectives or programmes. These projects would then be recognised by the CDM Executive Board (the main regulatory body supervising the CDM), and credits would be allocated. A broader project scope would be beneficial for many developing Asian countries, especially when sustainable development objectives are in line with both GHG emission reductions and national policy. Recent research on SD-PAMs in diverse countries and areas like biofuels in Brazil, electrification in India, transport in China and carbon capture and storage technology in South Africa provide useful examples of how they can benefit both the environment and the economy. 49
Transport efficiency in China and the SD-PAMs approach •
•
•
•
•
The transport sector has enormous potential for uniting climate and sustainable development goals. This includes promoting rail and other public transport options as an alternative to private vehicles. The SD-PAMs approach supports carbon emission reductions, and is in line with China’s policy considerations. Vehicle efficiency and the choice of fuels will affect future emissions growth, but are also important in the macro-environment. This includes issues of congestion and energy constraints. By taking a broad view, policymakers will have more incentives to deal with these constraints and climate benefits together. The Chinese government has already begun to establish stringent vehicle efficiency standards in various phases. The SD-PAMs approach can extend and expand climate benefits in a development context.
Sources: World Resources Institute 2005
SD-PAMs are designed for developing countries specifically because climate policy is typically not a high political priority in these nations and SD-PAMs that build on development objectives would appeal to policymakers, government and industries. Abiding by the same “additionality” principle as the CDM mechanism, SD-PAMs can be used to achieve more than might have been done otherwise.
3.4 Deforestation In pursuing SD-PAMs in developing countries, forestry should be one of the first sectors targeted, although the present rules and approaches to Kyoto do not permit this easily. Yet there are considerable GHG releases from deforestation, especially in the developing countries. As such, forestry emissions mitigation will be an effective way to achieve significant emissions reductions on a global scale at a relatively low cost.50 Moreover, in contrast to many other mitigation strategies, developing countries have the potential to be global leaders in reducing GHG emissions in the forestry sector.51 Furthermore, reducing the rate of deforestation will generate co-benefits that will help reduce adaptation costs and promote sustainable development.52 This is an issue that will be of particular interest in Asia, where there are examples of both of very high forestry-related emissions and successful reforestation.53 Developing countries in Asia should harness this opportunity and make a push for integrating forest management SD-PAMs and policies into the future Kyoto mechanisms.
Indonesia: Forest Emissions • •
• • • •
2nd largest forest area in the world. 5 times greater forestry emissions than non-forestry emissions. If emissions from forestry are included, becomes the 3rd largest emitter of GHGs in the world. 34% of global forestry emissions. 57% of forestry emissions from forest fires. US $400 million to US$ 2 billion could be generated by avoided deforestation CDM. Suffers from poor policy enforcement although have variety of policies to combat deforestation.
Source: PEACE 2007, Stern Review 200654
Recent policy initiatives, proposals, and research provide direction and opportunities for improving forestry emissions mitigation in the first commitment period and potentially integrating forestry-related SD-PAMs into the future framework. One such proposal is the Papua New Guinea Proposal, which allows developing countries to sell avoided deforestation credits achieved below a voluntary baseline on the CDM market. The proposal has been under review for two years and the UNFCCC’s Subsidiary Body for Scientific and Technological Advice is expected to release its findings at Bali. However, there are concerns that this could de-stabilise the carbon market by depressing existing prices because of a sudden influx of supply.55 In this context, the World Bank has announced that it will soon be launching the Forest Carbon Partnership Facility to serve as a two-stage pilot programme: first helping developing countries establish appropriate baselines for deforestation, and then purchasing credits they generate from reducing emissions below this level.56 19 Photo © WWF-Canon / Alain COMPOST
The experiences of China and Australia in this area are also useful. China has developed an effective national strategy to encourage reforestation, while Australia has positioned itself as a regional leader in promoting and financing LULUCF (Land-use land-change and forestry) mitigation.57 National initiatives such as these are likely to be successful if they are brought into the broader post-2012 discussion so that they can provide lessons for policymakers in other countries. Although these policies are good first steps, in order to provide incentives for long-term reduction they must move beyond simply paying developing countries to preserve their forests. China’s policies usefully integrate reforestation with sustainable tree harvesting and management. The appropriate incentives must be set so that forest conservation and management becomes a long-term and economically beneficial strategy. This will most likely require working with the WTO to make sure the appropriate international trade framework is in place. Changing the post-2012 Kyoto framework from the project-based CDM to the programme-based SD-PAMs approach will also be vital to encourage developing countries to integrate forest protection with development goals.
However, several inherent difficulties still exist that hinder the integration of forestry into the Kyoto framework. 58 Emissions from avoided deforestation were not included in the first commitment period because of fears that these emissions could be “exported” to other areas and countries. In addition, some have raised the concern that trees could simply be cut down later, making reforestation an impermanent solution. There is also the challenge of establishing a baseline of deforestation rates below which reductions could generate credits. Finally, estimating the opportunity cost of deforestation can be difficult but is vital in order to compensate developing countries in the interest of creating an equitable framework. Implementation, monitoring and enforcement of forest reductions could also prove more costly and difficult than expected, especially since many countries struggle with these issues in the domestic arena. 59 The forestry mitigation section of the post-2012 framework should abide by certain principles: • • •
Australia: Global Initiative on Forests and Climate • •
• • •
Pledged A$200 million on 29 March 2007 for improved forest management. Contributed A$30 million from this fund to the Kalimantan Forests and Climate Partnership with Indonesia. Focused on Asia-Pacific region. Partnering with developing countries and international organisations. Pushing more sustainable sourcing of products such as palm oil.
•
Put in place robust and effective accounting, monitoring, implementation, and enforcement at the local level; Align with developing countries’ sustainable development plans; Mobilise the financial and technical resources of international organisations and institutions to aid developing countries; and Integrate with the Kyoto flexible mechanisms in order to provide positive incentives for funding and technology partnerships between developed and developing countries.
3.5 Dealing with Vulnerability and Adaptation Although the current Kyoto framework includes several mechanisms to address adaptation and vulnerability,60 these aspects of the treaty have been largely neglected. In large part, this is because Annex I and large developing countries are more focused on energy security and mitigation. The way forward should be to shift this focus through the integration of adaptation and SD-PAMs into the mainstream of Kyoto.
Source: Australian Greenhouse Office 2007
China: Promoting Reforestation from Agriculture •
• • • • 20
Gain in forest area of 15,000 square miles per year between 2000 and 2005, more than ten times the second place country. Began a new ten-year plan in May 2002 with US$2.4 billion funding. Goal of planting 170 million square miles in ten years to stop soil erosion and desertification. Offers benefits to farmers who retire marginal land. Integrated with plans for commercial tree farms.
Sources: Stern Review 2006, Xinhua 2002
Adaptation is a very important strategy, especially for developing countries in Asia. According to the IPCC, the LDCs in Asia are likely to suffer from a possible increase in natural disasters such as floods and droughts, decrease in crop yields and more tropical diseases due to climate change although they have contributed the least amount of GHG, which raises the question of equity for developing countries. 61 Moreover, ‘megadeltas’ are also at risk, which affects large regions in China; the ASEAN members of Vietnam, Thailand, Laos and Cambodia; as well as India and Bangladesh.62 Most Asian countries are still in the first stages of understanding their climate vulnerabilities and comprehensive strategies are virtually non-existent. The LDCs’ low adaptation capacity presents a particular challenge.63 They lack the necessary institutional, economic and financial capacity to cope with these effects.
Rhine Moulouya
Shatt el Arab
Sebou
Mississippi
Nile
Senegal
Grijalva Orinoco Amazon
Volta
Ganges Brahmaputra Indus Mahanadi Godavari Krishna
Niger
Yangtze
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Pearl River Chao Phraya Mekong Mahakam
Sao Francisco Extreme High Medium
Figure 7: Relative vulnerability of coastal deltas as shown by the indicative population potentially displaced by current sea-level trends to 2050 (Extreme = >1 million; High = 1 million to 50,000; Medium = 50,000 to 5,000; following Ericson et al., 2006). Source: Reproduced by permission of the IPCC from Chapter 6 of the Working Group II Fourth Assessment (Nicholls et al., 2007).64
Moreover, China, India and Australia are particularly concerned about food and water security, as recent experience has shown that climate change will have significant and difficult-to-predict impacts on domestic agriculture and water resources.66 These countries are already incurring significant costs from greater fluctuations in climate. In addition to drought and desertification in rural areas, many of Asia’s largest urban areas are near the coast and face severe impacts on infrastructure and public health. A recent IIED study identified China, India, Japan, Indonesia, Bangladesh, Vietnam, and Thailand as having seven of the eight largest urban populations in the world in the “Low Elevation Coastal Zone”.67 Mitigation and adaptation are in fact bound. The process of setting targets for developed and developing countries
One way to address the need to integrate mitigation and adaptation is through sustainable development policies. Adaptation is ultimately a development issue, even if there are security, economic and other considerations. It deserves far greater focus in a post-Kyoto regime and can be a major plank to help bring developing countries on board. Yet, currently the Kyoto framework places much greater emphasis on mitigation through co-operation between
Nations with the largest urban populations in the Low Elevation Coastal Zone
90,000,000 80,000,000 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0 Ch in a In di a Ja pa n In do ne si a U SA Ba ng la de sh Vi et na Th m ai la nd Eg yp N et t he rla nd s
For example, while the programmes from Cambodia and Bangladesh show that vulnerabilities have been noted and potential adaptation options identified, there remains much more to be done in terms of mainstreaming them within the national policy-making processes in those countries. 65 A challenge for all LDCs and developing countries is that implementation will require a significant shift in political and financial capital towards adaptation, at a time when their resources to address climate change mitigation are already strained.
are closely tied to how much adaptation will be required by the developing countries, but this is not reflected in the mechanisms or targets of the current Kyoto Protocol. Thus, adaptation must play a greater role in the post-2012 framework.
Urban population in the LECZ
Countries should be encouraged to put together National Adaptation Programmes of Action under UNFCCC. Only then can each country identify priority activities that must be implemented in the immediate future and meet reporting obligations within the first commitment period. Although some Asian countries have conducted initial domestic studies, they have yet to link the identified vulnerabilities to concrete national and local action plans.
Figure 8: Nations with the largest urban populations in the Low Elevation Coastal Zone Source: This figure was prepared by Gordon McGranahan, Deborah Balk and Bridget Anderson from the GRUMP database; see McGranahan, Gordon, Deborah Balk and Bridget Anderson (2007), The rising tide: assessing the risks of climate change and human settlements in low-elevation coastal zones, Environment and Urbanization, Vol. 19, No. 1, pages 17–37. 21
developed and developing countries under the Kyoto mechanisms. Using the SD-PAMs approach would provide the incentive for developed and developing countries to co-operate on adaptation measures as well, allowing the generation and selling of reduction credits from their adaptation programmes. However, this funding and co-operation must move beyond the project-based nature of CDM and focus on building the national institutional capacity for the developing countries to address these issues themselves. Possible policies, with this overall strategy in mind, could be taken forward in three main areas: •
•
•
participants. The stricter the cap, the more likely the emission reduction goals will be met but the price of the allowances will be higher. High prices for allowances create the incentive for the participants to invest in abatement technologies, which may then take a participant’s emissions below its cap, thereby generating surplus allowances that can be traded (i.e., sold) for revenue.71 While emissions trading is expected to grow, the large developing countries, such as China and India, are not expected to participate beyond generating CDMs in the second commitment period. They have already made it clear that they cannot be expected to move too fast given uncertainty over
Enhance the Adaptation Fund under the UNFCCC and integrating adaptation with the post-2012 “flexible mechanisms”;68 Integrate adaptation into the full range of development aid provided by international organisations and developed countries (such as Japan’s recently announced US$2 billion aid package69); Use “climate insurance” (e.g., committing stable funding for an international response fund or to support insurance-type approaches covering climate-related losses).
European Sche
3.6 Mitigation Measures to Reduce Emissions The Kyoto Protocol restricts the emissions of six GHGs by Annex I countries during the first commitment period. It also introduced three “flexible mechanisms” to help establish a market value for those emissions – International Emissions Trading (IET), CDM and Joint Implementation (JI). The aim of creating market value with these flexible mechanisms is, fundamentally, to enable countries to meet their emission targets in a cost effective manner and to create incentives for those countries that can, to emit even less than their maximum caps. Each of these three mechanisms give rise to a separate market, and each of these regulated markets is at a different stage of development and evolution. The CDM market is the most advanced at this moment in time. As its name implies, emissions trading provides for the trading of emissions allowances between governments within a defined system, but CDM and JI are project-based mechanisms involving private sector participants.
Regional Greenhouse Gas Initiative (RGGI) California: Cap and Trade under AB32
Sub National Trading Schemes
Regional Trading Schemes
Listed in (country
Ratified the Framework Convention but not the Kyoto Protocol
Listed in and ratif
Other Countries
Non-Ann (potentia
3.6.1 International Emissions Trading (IET) IET is a mechanism which Annex I countries may use towards meeting their emission targets. The EU designed its Emissions Trading Scheme (EU ETS) in response to the Kyoto Protocol and allows emissions credits from CDM and JI to be imported into the scheme. Having started trading in 2005, it is currently the largest mandatory regional ‘cap and trade’70 system in the world. There have of course been criticisms of the EU ETS. Yet numerous new regional schemes in the US, Australia and Japan are under development and are expected to grow.
How well a cap and trade system works depends on the stringency of the overall cap placed on the emissions of the 22
Figure 9: Kyoto Protocol and other GHG trading schemes. Source: Mallesons Stephens
their emissions levels, the cost of abatement and their need to develop. However, they can be expected to take an active interest in observing how emissions trading will develop and will likely try out local schemes in order to learn.
deployment of breakthrough technologies to achieve deeper reductions in the future; and strengthen resilience (i.e., promote adaptation) to the adverse effects of a changing climate. 3.6.2 Clean Development Mechanism
This is especially true in the case of China, which has been experimenting with domestic emissions trading in SO2 for some time.72 The China Beijing Equity Exchange has plans to allow the trading of pollution credits, which will most likely include carbon although no details have yet been released.73 In the mean time, the CDM may provide more opportunities for immediate cost-effective emission reductions; assist development and
n Emission Trading eme (EU ETS)
The CDM mechanism was launched in 2001 and was designed as an international market mechanism that engages developing countries. It is designed to function as an incentive mechanism to promote emission reduction projects in developing countries. Annex I countries can use project-based emissions reduction credits from projects that are undertaken in Non-Annex I countries to count towards their emissions reduction targets. The credits generated are referred to as CERs. Only projects that were begun after 1 January 2000 are eligible for generating and then obtaining CERs from a CDM project and it is essential that a CDM project meets the three criteria to qualify: • •
•
Japanese Voluntary Emission Trading Scheme (JVETS)
New South Wales Greenhouse Gas Abatement Scheme (GGAS)
n Annex I to the Framework Convention and ratified Kyoto y with emission reduction targets and expected net buyer)
n Annex I to the Framework Convention as and Economy in Transition fied Kyoto (potential JI host country and expected net seller)
nex I to the Framework Convention and ratified Kyoto al CDM host country)
s Jaques, based on UNEP Risoe Centre, 2007
It must show real, measurable and long-term benefits related to the mitigation of climate change; It must result in emission reductions that are “additional” to the baseline emissions that would occur in the absence of the project. This is often the most difficult criterion to meet; and It must contribute to sustainable development in the Non-Annex I country, where the project occurs. It is the responsibility of the Non-Annex I country to determine if a project satisfies this criterion. Thus, host countries for CDM projects must set procedures for reviewing and approving them. The procedures, such as those in China, are considered overly cumbersome.74
The CDM market has seen steady growth.75 One of the prime interests of developing countries in CDM is its potential to facilitate the transfer of clean technologies. China is the largest supplier of CERs with 64% of all CERs to be generated in Asia by 2012. As for projects currently in the pipeline, about 53% of all CERs expected to be generated in the world up until 2012 will come from China. Other significant CER suppliers have been India, Brazil and South Korea.76 The CDM mechanism was not originally designed to achieve an overall global emissions reduction, but to transfer emissions from developing to developed countries. The result to date has shown that the greatest involvement in CDM, measured by the number of projects, has been in the wind power sector. However, in terms of numbers of CERs, decomposition of industrial gases, such as HFC-23,77 and methane capture-destruction projects have made up the greatest proportion of projects. These projects, which have occurred in China, are attractive to the market because they offer the greatest CO2e savings for the least investment. They are also easy to show additionality given the fact that there is no useful by-product (e.g., electricity) and thus show the project would not have gone ahead without the CDM. This has led to the criticism that these projects merely prolonged the life of plants that should have been retired. Questions have arisen as to whether the CDM was misconceived in the first place and should be abandoned after the first commitment period.78
23
Indonesia 1.16%
China’s CDM Fund
Malaysia 1.16%
South Africa 1.29%
Others 7.34%
Qatar 1.43%
•
Argentina 2.20% Chile 2.26%
•
Mexico 3.70% South Korea 8.21%
•
China 45.29%
• Brazil 9.96%
India 15.98%
• Figure 10: Expected average annual CERs by host party Source: UNFCCC, 2 December 2007. http://cdm.unfccc.int
Generate funds by levying fee on CERs. Fees vary, depending on project type (HFCs have high 65% levy). Invest this money in domestic climate change efforts, from renewable energy to adaptation and public outreach. Generate likely US$3 billion in revenue if all 885 of China’s CDM projects currently in the pipeline are eventually registered (60 registered so far). Managed by Ministry of Finance, and receives financing and assistance from Asian Development Bank and World Bank. Designed to help CDM framework achieve overall global emissions reductions rather than just transferring emissions.
Sources: Asian Development Bank 2007, Xinhua 200780 Suggestions have also been made as to how it could be reformed and made optimal to reduce global emissions (not transfer emissions). Thus: •
•
•
The additionality criterion could be removed and the CDM scheme could be linked to SD-PAMs projects, which will allow more projects to qualify and will permit more funds to flow from Annex I to non-Annex I countries; The mechanism could be redesigned to generate net global emission reduction by introducing CER discounting. CER discounting means that only a certain percentage of credits generated by a CDM project in a developing country would be sold to developed countries. This percentage could change based on the type of project or technology used. The credits that were not sold would be the amount of the total reduction; 79and Procedures could be streamlined.
China has recently developed a CDM Fund that will re-invest
2009, as changing the details of how it works does not require the Kyoto Protocol to be amended, only the authorisation of the CDM Executive Board. 3.6.3 Joint Implementation JI is similar to CDM, except that the project-based emission reduction credits come from projects that are undertaken in other Annex I countries rather than Non-Annex I countries. JI projects can only generate credits between 2008 and 2012. So far, Russia and the Ukraine are the dominant potential players, accounting for about 70% of the projects in the pipeline, most of which are aimed at reducing leakage of methane from the Russian gas distribution systems. As the scheme has not started operation yet, it remains uncertain the extent to which these and other countries will enter the market.
money generated from CDM projects into other domestic 3.6.4 Post-2012 Markets Wind N2O Landfill gas Hydro HFCs EE industry Biomass Energy Agriculture 0%
10%
20%
30%
40%
50%
60%
Projections of the development of carbon markets after 2012 are speculative at this stage due to the uncertainty surrounding the future of the post-2012 framework. The result will be very different depending on factors such as the stringency of the global stabilisation goal, whether the US will become party to the new framework, and what obligations China and India will be willing to take on. The benefits of using market mechanisms in reducing the costs of technological application and promoting sustainable development is widely recognised. Indeed, even in the absence of a new framework for post-2012, a number of important decisions have already been taken at regional and local levels, which will expand carbon markets:
Figure 11: Caption: CDM CERs distribution by project type Source: CD4CDM
•
climate change initiatives. The fund has been designed to move in the abovementioned direction.
•
The attraction of reforming the CDM mechanism is that it can be revised at the UNFCCC COP in Bali this year or at the COP in 24
•
The EU has announced that it will carry on the EU ETS beyond 2012 unilaterally, and will involve more sectors, even if the countries of the world fail to agree on a future regime. Japan’s Voluntary Emissions Trading Scheme (JVETS), launched in 2005 and operational from 2006, enables companies to participate and Japan is expected to fine-tune and expand the scheme in the future. The Regional Greenhouse Gas Initiative (RGGI), an initiative
•
• •
•
among Eastern US states, will commence trading in 2009. The Western Regional Climate Action Initiative (WCAI), an initiative among Western US states, is looking to develop a scheme to start trading 2012. Australia and New Zealand are exploring national emissions trading schemes to take effect in 2012. The Hong Kong Exchanges and Clearing Limited, the stock and futures exchange in Hong Kong, is currently conducting a feasibility study of emissions related products in order to explore the potential for trading climate-related products in Hong Kong. China is planning to put in place a system to trade pollution credits for a range of emissions that will likely include carbon.81
All the abovementioned efforts help to establish a price for carbon, which will provide a powerful way to promote the deployment of solutions. Thus, a post-2012 framework should build on the existing flexible mechanisms, and aim to link them to create a global carbon market that will include broad participation and involvement of more sectors. As explained above, a revised and expanded CDM appears to hold the greatest promise. Public and private sector investments in R&D will also be needed to develop longer-term, higher risk solutions. Research funded by the public sector is important, and should focus on technologies that are further from the market.
To Trade or to Tax? Under a ‘cap and trade’ model, aggregate emissions levels are fixed, permits allocated to carbon emitters and a market established to trade permits. The price for a tonne of carbon emissions will be determined by the supply and demand of the permits. Industries and countries are essentially paying for the right to pollute. Those who are able to reduce emissions through technology will be able to sell excess permits for revenue. A carbon tax imposes a price proportionate to the carbon output. Heavy carbon emitters, such as coalfired power plants, will be taxed more heavily than oil or natural gas. A revenue neutral carbon tax can generate revenues to offset other taxes, such as income tax.
The Arguments for Trading • • • •
3.6.5 Taxation Developing countries are wary of emissions trading, mostly because of scepticism over whether the capping of emissions and allocating of permits would be fair and equitable to their circumstances. Taxing carbon emissions is less problematic. The UNESCAP has initiated a policy dialogue to explore green tax reform so that ecological costs are also taken into account and reflect market prices. There are early signs in Asia of countries taking a view on green taxes. South Korea has amended its petroleum excise tax,82 and China is considering a 20%-50% tax on retail gasoline and diesel prices.83 Internationally, there is a continuing debate between those who favour emissions trading and those who champion a carbon tax. These mechanisms are not mutually exclusive but the debate has mostly centred on the advantages and disadvantages of one or the other. The governments of China and Brazil recently commissioned a report that calls for some sort of market system in the form of either a ‘cap and trade’ model or carbon tax reform.84 The challenge for designers of the post-2012 arrangement is to consider how non-Annex I parties can be included in a global carbon emissions trading scheme, and ultimately, how to make these mechanisms function optimally.
Trading leads to higher prices and guarantees emissions will fall. Trading allows reductions to take place wherever costs are lowest. Creating a market system for pollution could drive reductions below targets. Permits allow for adjustments when inflation and external price shocks occur, but taxes do not.
The Arguments for Taxation • •
• • •
Carbon tax provides a more predictable trajectory for energy prices. Taxation would reach not only industries or countries, but also individual consumers and other sectors, such as transportation. Taxation would not be subject to private or special interests. Costs are low and the process is simple for the implementation of taxation, relative to trading. The revenue from carbon taxes can be used to offset other taxes and create profound macroeconomic and political benefits. It could also be re-invested in the same industry that was taxed, promoting energy efficiency or climate change efforts among dedicated companies.
Sources: Global Policy Forum 1998, American Enterprise
3.7 Technology Advanced technology will be a critical component of a successful post-2012 GHG reduction strategy, as it works towards the goal of de-coupling economic development from carbon emissions. Low or zero emissions technology will enable developed countries to maintain their standard of living
25
while still allowing developing countries to reach similar levels. Although conservation and voluntary reduction are important, equity concerns demand that poor countries should be allowed to continue pursuing their development goals, which is one of the main principles held among developing countries. The UNFCCC has recognised the significance of technology by making it an important component of the current framework. It provides that all Parties make a commitment to: “Promote and cooperate in the development, application and diffusion, including transfer, of technologies, practices, and processes that control, reduce or prevent anthropogenic emissions of greenhouse gases”.86 Moreover, the Annex I countries committed to “take all practicable steps to promote, facilitate and finance, as appropriate, the transfer of, or access to, environmentally sound technologies and know-how to other Parties, particularly developing country Parties, to enable them to implement the provisions of the convention”.87 The current framework relies primarily on the Kyoto mechanisms, CDM in particular, to transfer technology from developed to developing countries. Although this has achieved some gains, it has already been discussed above that the CDM needs reform to be more effective. In addition, by using technologies that already exist, and developing new technologies (such as CCS), emissions can be reduced substantially. The question is how the post-2012 framework can most effectively include measures to drive the research, development, diffusion and deployment of the technology that is essential for combating climate change. There are three interconnected policy measures for creating and disseminating technology: •
•
•
26
Support advanced R&D, particularly in the energy sector. There should be a balance between public and private sector funding, targeting a wide range of technologies but also focusing on those that are expected to be of particular importance. This support will come from national governments as well as international organisations and businesses; Deploy assistance via feed-in-tariffs, subsidies, public outreach, capacity and infrastructure building, or other measures that spread new technology. This task will be the responsibility of each country’s national government, although there is the opportunity for international sharing of best practices; and Encourage international technology co-operation between developed countries and between developed and developing countries. This could take the form of research partnerships, global technology standards, development funding, or more informal co-operation. However, intellectual property concerns must be addressed by national governments to ensure the confidence of the owners of technology.
Among Asian countries, Japan believes it has a unique global position in technology transfer leadership, boasting perhaps the most energy efficient economy in the world.88 Its proposed “Cool Earth 50” future climate change plan focuses on new financial mechanisms for dissemination of advanced technology
to developing countries. Australia and New Zealand have also shown a willingness to take regional leadership in technology. Many countries are members of a variety of bilateral, regional, and global technology exchange partnerships, including APEC and APP, which have already set significant targets. Much of this political will and desire to use technology transfer from developed to developing countries stems from energy security concerns. The IEA’s World Energy Outlook 2007 predicted that these concerns will increase substantially in the coming decades.89 As a result, coal is predicted to remain the primary fuel source for China and India as they continue to develop rapidly because of their extensive domestic resources. Least developed countries are also very concerned about maintaining a steady supply of energy to reach their development goals. Energy efficiency is by far the most efficient way to improve security of energy supply, reduce GHG emissions, increase competitiveness and stimulate development of cutting-edge markets for energy efficiency technologies and products. In the EU alone, research suggests that 20% of energy is wasted due to inefficiency. The cost of this is estimated to be 100 billion euros annually by 2020. If the EU succeeds in cutting inefficiency it could save around 780 Mt CO 2e, more than twice the reductions required by the EU under the Kyoto Protocol by 2012. The inefficiencies are very much larger in Asia. Japan’s domestic policy experience can serve as a strong example for other countries. Its Keidanren Voluntary Action Plans demonstrate a successful government-business energy efficiency partnership that could be used in other countries. Many have argued for regional or global product energy efficiency standards, for which the Top Runner programme could serve as a model. Developing countries could introduce these targets more gradually, but these two measures would be an excellent initial domestic framework for improving energy efficiency. Significant policies have also been implemented in Asia to use renewable energy sources as a way to address energy security and efficiency. China has progressed with a number of initiatives in this regard, including: setting specific renewable energy targets; developing strategies to achieve the targets; passing the Renewable Energy Law, and is expected to invest US$10 billion in renewable energy in 2007, second in the world only to Germany.90 Australia, several Indian provinces, and Thailand also have announced significant renewable energy targets.91 Japan has focused on promoting nuclear power as an alternative to fossil fuels. Developed countries should take the lead in promoting research and development while developing countries could potentially serve as manufacturing centres for new technologies. Indeed, most of the world’s solar panels are now being made in China. A key concern is the continued dominance of coal in the primary energy supply of China and India for the next several decades. The IEA predicts that primary energy demand will grow 55% by 2050, with 45% of this growth coming from China and India. They projected coal demand will increase 73% over this time frame, with China and India accounting for 80% of
Japan: Keidanren and Top Runner programs Keidanren Voluntary Action Plans • • •
• • • • •
Initiated in 1996. 10% below 1990 levels by 2010 is the goal for industrial emissions. Begins with reporting of emissions and energy efficiency levels from companies and industries, then setting voluntary improvement targets. 44% of national emissions included among participating companies. 2.2% below 1990 emissions levels by 2010 is the current projection. Expansion is underway to include transport and commercial sectors. Stricter targets and large CDM purchases recently announced by companies. Future plans include a mandatory system that is integrated with ET.
Top Runner program • • •
• •
Introduced in 1998. Includes some passenger vehicles and most home appliances. Requires manufacturers to achieve the highest available standard of energy efficiency within a set number of years. Has dramatically improved energy efficiency of consumer products. Frequently updated and expanded to include new products.
Sources: Keidanren 2006, Government of Japan 200692
this expansion, which makes any reasonable global stabilisation target illusory. Other developing countries in Asia are also considering increasing the amount of coal in their energy mix to address energy security concerns. Thus, CCS technology is seen as uniquely important in slowing the growth of Asia’s GHG emissions.93 Although Australia, US and the EU are all working on developing CCS technologies, it is still at a development stage, and a significant amount of irreversible climate change will be introduced by coal usage in China and India before these technologies become viable for widespread dissemination. The Stern Review cautions strongly against “picking winners” in the quest to find low emissions technology. Nevertheless, some have argued that a deserving case could be made for CCS in light of the world’s dependence on coal. In any event, how governments should deal with the changing world of technology development is far from easy. Despite the keen interests of politicians and climate negotiators to address the role of technology in fighting climate change, there are many questions hanging over what actions should be taken, and in what priority. The many promises made by different technologies need to be assessed. Otherwise, missteps may be taken and cynicism can 27
Share of Cumulative Power-Generation Investment by Technology, 2006 - 2030 20,000
14,000
8%
12,000 6%
10,000 8,000
4%
6,000 4,000
2%
2,000 0 1980
1985
1990
1995
Share of energy R&D in total R&D
10%
16,000 US$ million dollars (2006)
100%
12%
18,000
80%
Energy efficiency
Fossil fuels including CCS
Renewable energy sources
Nuclear fission and fusion
Hydrogen and fuel cells
Other power and storage technologies
Other
Share of energy R&D in total R&D
Figure 12: Public Energy Research and Development Source: IEA 2007 based on IEA R+D Database
10%
16%
37% 53%
60%
56%
40% 57%
20%
37%
20% 8%
0% Reference Scenario
0% 2005
2000
6%
Fossil Fuels
450 Stabilisation Case
Alternative Policy Scenario
Fossil Fuels with CCS
Nuclear
Renewables
Figure 15: Share of Cumulative Power-Generation Investment by Technology, 2006-2030 Source: IEA 2007
CO2 Emissions in the 450 Stabilisation Case
Coal Demand in the Reference and Alternative Policy Scenarios 45
OECD North America Billion Tonnes of CO2
OECD Europe OECD Pacific China India
40 35
CCS in power generation Renewables
30
Nuclear CCS in indusrty Biofuels Electricity end-use efficiency
25
End-use efficiency
Rest of the world 0
500
1000
1500
2000
2500
3000
3500
4000
million tonnes of coal equivalent 2005
20 2005
2010
Reference Scenario
2015
2020
2025
2030
Alternative Policy Scenario
450 Stabilisation Case
2030 Reference Scenario
2030 Alternative Policy Scenario
Figure 13: Coal Demand in Reference and Alternative Policy Scenarios Source: IEA 2007
Figure 16: CO2 Emissions in the 450 Stabilisation Case Source: IEA 2007
Changes in India’s Electricity Generation Mix in the Reference Scenario 1200 1000
TWh
800 600 400 200 0 -200 2005 - 2015
2015 - 2030
Coal
Oil
Gas
Biomass
Other Renewables
Nuclear
Figure 14: Changes in India’s Electricity Generation Mix in the Reference Scenario Source: IEA 2007
28
Hydro
grow about false solutions. These needs are keenly felt in many parts of Asia, where technological expertise and experience in research and development often lags behind the levels of the USA and Europe. A clearing house of technologies and best practices would be of great assistance to help Asian states better understand and evaluate the many possible paths forward. At present, the evaluation is often patchy or, even worse, influenced by the potential providers of that technology. A more rational, impartial and authoritative mechanism for evaluating technologies is needed, much as the IPCC has helped garner consensus on the science of climate change.
3.8. The Trade Factor Another factor that should be considered in the post-2012 regime is that of trade. As mentioned above, as they industrialise, developing countries like China and India are fast overtaking the developed countries in their total GHG emissions. Yet recent research also shows the carbon emissions arising from global manufacturing trade needs to be taken into account since developing countries, especially China, are producing a large variety of products for export to the developed world.94 Other Asian countries too show a high degree of trade with the USA, Japan and other developed country markets, either directly or in intermediate goods through China, as part of the region’s production base. In other words, consumption takes place in the developed world into which goods are imported and yet the carbon emissions are counted as those of the developing countries where those goods are produced. More research will be done on this dimension of trade and consumption and it is an issue that needs rethinking by climate change negotiators. Otherwise, any caps on emissions can be abused or inadvertently lead to barriers to trade and investment for production in developing countries. Rather than distortive barriers and tariffs, we need to use trade measures to incentivise efforts to fight climate change. Calls for freer trade and lower tariffs for climate change friendly goods, services and technologies can and should be the start of helping the global and regional production and trading systems to complement efforts to stem climate change.
29
IV Conclusion
4.1 Understanding, Urgency and Uncertainty Many states in East Asia have been in denial about environmental harms. More often than not, environmental harm was viewed as a price to be paid for rapid economic growth. Conversely, environmental protection was seen as a luxury that Asians could not afford. Climate change cannot and should not be seen in this way. There is scientific consensus that the harms of climate change are not a concern only for the rich. Rather, they will impact developing (especially equatorial) countries most severely. Within these countries, moreover, it will most often be the poorest communities that will be most affected. Therefore, Asian states cannot hide behind the old rhetoric and finger-pointing of the North/South Divide. Every Asian state can and should instead take efforts to study and evaluate the impacts that unchecked climate change will bring to its society and territory. Most Asian governments have yet to do so conclusively. When they have studied their situations, they will better understand their national interests in addressing climate change, and the need for urgency. Asian states must also appreciate that the science on climate change is still evolving and that the consensus represented by the IPCC is considered by many to be conservative in its estimates of the scale and speed of climate change. Many other studies suggest that tipping points and accelerated changes are possible. Furthermore, as scientific understanding has developed in the relatively short existence of the IPCC, predictions about climate change impacts have generally become more severe. Asian states must therefore recognise that the need for urgency in addressing climate change is paired with an uncertainty that means the impacts may be more severe and come sooner than presently projected.
4.2 Co-ordinated and Multi-dimensional Governance Analysis of climate change shows an interlocking and complex triangle of relations between environment, the economy and the use of energy. To grow without increasing the usage of energy, we have to be much more energy efficient. To generate energy without increasing atmospheric carbon, we have to develop alternative and renewable sources of energy. Consequently, for Asian governments to respond effectively to climate change, they must go beyond seeing this as an environmental issue. They have to see climate change and the 30
upcoming negotiations on a post-Kyoto regime as a multidimensional challenge. Asian states would be well advised to structure their governance appropriately. They will need to create multi-agency, multi-sectoral and multi-level frameworks for evaluating and aligning policies and action. Sectors like energy, trade, finance, infrastructure, city planning, security and technology, must be addressed, not just environmental protection. Singapore for example, has recently created an inter-ministerial climate change committee to coordinate national responses. This is headed by the Deputy Prime Minister and oversees Ministers for the environment, trade & industry, national development, finance and foreign affairs. The attention that leaders in recent Asian summits have given to climate change is a start. In following up on the commitments given by their leaders, each government should take concrete steps to create the appropriate new frameworks within their different systems to enable policy co-ordination and multidimensional governance.
4.3 Learning and Demonstration: Gazelles and Elephants in Asia Asian states are starkly diverse in their levels of development, governance and administrative capacity, and expertise in technology and know-how. Also, while progress on environment and climate change has been made in ASEAN and the East Asia Summit, there is also no single strong institution to co-ordinate Asian responses, on par with the EU. Given this, we do not recommend that Asian states move at a uniform pace. While there should be regional consensus about the need to address climate change, it is best that we allow and encourage some states to take the lead and move ahead of others. States that can and should go ahead are those we may call “gazelles�. These states are relatively compact, have strong capacities in administration and technology, and sufficient finances: for example, Japan, South Korea and Singapore. Hong Kong, while not a state, may also be included in this group, as might Taiwan. Hong Kong and Singapore are also capable of leading the way in showing how cities can contribute to carbon emissions reduction more dramatically. The gazelles might set examples and undertake experiments in technology, know-how and administrative practices that could then inform others in Asia. It could be, of course, that a number of these examples and experiments may be flawed. But even so, these would be valuable lessons for others in the region.
Another group of states in Asia that also must be encouraged to move ahead are those we may call “elephants�. These states are large, developing and are releasing increasing the amounts of climate change gases: for example, China, India and Indonesia. The elephants will adversely impact climate change on a global scale if they proceed with BAU. Yet such countries have many areas of poverty and needs for development, and the solutions and sacrifices that the developed countries propose may be unsuitable. They can however start to think through climate change issues and seek their own paths and targets that can be achieved in tandem with economic growth and sustainable development. It is also important that these elephants begin as soon as possible since their size and nature will create many challenges in implementation.
31 Photo Š WWF-Canon / A. Christy WILLIAMS
Endnotes
32
1
Tim Herzog, Jonathon Pershing, and Kevin A Baumert, Navigating the Numbers: Greenhouse Gas Data and International Climate Policy, World Resources Institute, 1 December 2005. Chapter 2, pp.11 http://pdf.wri.org/ navigating_numbers_chapter2.pdf Accessed 21 October 2007.
2
Netherlands Environmental Assessment Agency, “China now no. 1 in CO2 emissions; USA in second position”, 2007. Data from figure GlobalCO2 emissions from fossil fuel use by region http://www.mnp.nl/en/dossiers/Climatechange/ moreinfo/Chinanowno1inCO2emissionsUSAinsecondposition.html Accessed 23 November 2007.
3
The UNDP Human Development Report 2007/8 echoes this need for both developing and developed countries to take responsibility for climate change and work together towards reducing emissions. We would also like to reinforce their calls for technology transfer and the framework to focus on adaptation. However, we do not believe their focus on long term targets will be the most productive way for Asian developing countries to begin addressing climate change. Kevin Watkins, Human Development Report 2007/8, United Nations Development Programme, 2007. http://hdr. undp.org/en/media/hdr_20072008_en_complete.pdf Accessed 29 November 2007.
4
UNFCCC, Article 2 states that the ultimate objective of the Convention is “stabilisation of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system”. See UNFCCC, Full Text of the Convention, 1994. http://unfccc.int/essential_background/convention/ background/items/1353.php Accessed 29 November 2007.
5
Annex I Parties consists of 41 developed countries.
6
Non-Annex I Parties consists of 130 developing countries.
7
Principle 7 provides: “States shall cooperate in a spirit of global partnership to conserve, protect and restore the health and integrity of the Earth’s ecosystem. In view of the different contributions to global environmental degradation, States have common but differentiated responsibilities. The developed countries acknowledge the responsibility that they bear in the international pursuit to sustainable development in view of the pressures their societies place on the global environment and of the technologies and financial resources they command”. Rio Declaration on Environment and Development, UN Conference on Environment and Development, 1992. http://www. unep.org/Documents.Multilingual/Default.asp?DocumentID=78&ArticleID=1163 Accessed 25 November 2007.
8
The Kyoto Protocol was designed to give concrete form to the general commitments in the UNFCCC. It was signed in 1997 and went into force in 2005. See Kyoto Protocol to the United Nations Framework Convention on Climate Change, 1997. http://unfccc.int/essential_background/kyoto_protocol/items/1678.php Accessed 2 November 2007.
9
Although each country’s reduction target is different, together, they are required to reduce GHG emissions by an average of 5.2% below 1990 levels. For example, targets range from a reduction of 8% relative to emission levels in 1990 (in the case of the EU) to an increase of 10% (in the case of Iceland).
10
A ‘carbon sink’ is any process, mechanism or activity that removes a GHG, an aerosol or a precursor of a GHG from the atmosphere. There are two ways to capture carbon from the atmosphere. First, by storing it in organic material, forests and other forms of vegetation are ‘sinks’ because they remove CO2 through photosynthesis. Another way is to store GHGs by capturing them at source and storing them through new CCS technology.
11
The US and Australia both signed the protocol but did not ratify it. Canada signed and ratified the Kyoto Protocol.
12
Yvo de Boer, “Welcome to the United Nations Climate Change Conference in Bali”, UNFCCC, 2007. http://unfccc. int/meetings/cop_13/items/4094.php Accessed 15 November 2007.
13
The most prominent of these processes include the Gleneagles G8+5 Dialogue, the UN Secretary General-led process, the US ‘Major Economies’ initiative, the non-binding APP initiated by the US, Australia, China, India, Japan and South Korea, and the Midnight Sun Dialogue on Climate Change initiated by Sweden in which China takes part.
14
Harvard Project on International Climate Change Agreements, Climate Proposals, 2007. http://www.belfercenter. org/project/56/harvard_project_on_international_climate_agreements.html?page_id=82 Accessed 29 November 2007. Gwyn Prins and Steve Rayner, Time to ditch Kyoto?, Nature 449, 973-975, 25 October 2007. http://www. nature.com/nature/journal/v449/n7165/full/449973a.html Accessed 29 November 2007. Scott Barrett, How Not to Repeat the Mistakes of the Kyoto Protocol, Yale Global, 14 November 2007. http://yaleglobal.yale.edu/display. article?id=9970 Accessed 20 November 2007.
15
Danny Cullenward and David G Victor, Making Carbon Markets Work, Scientific American, 24 September 2007.
16
Oran R. Young, Global Governance: Drawing Insights from the Environmental Experience, The MIT Press, November 1997. Edith Brown Weiss and Harold Karan Jacobson, Engaging Countries: Strengthening Compliance with International Environmental Accords, The MIT Press, December 1998.
17
David Wheeler, Moving Toward a Consensus on Climate Policy: The Essential Role of Global Public Disclosure, Center for Global Development, November 2007.
18
China Climate Change Info-Net, Office of National Coordination on Climate Change, 2007. http://www.ccchina.gov. cn/en/index.asp Accessed September 13 2007. A. Srinivasan, Asian Perspective on Climate Regime Beyond 2012: Concerns, Interests and Priorities, Institute for Global Environmental Strategies, 2006.
19
China’s National Climate Change Programme, National Development and Reform Commission, People’s Republic of China, pp. 17-19, June 2007. http://www.ccchina.gov.cn/WebSite/CCChina/UpFile/File188.pdf Accessed 29 November 2007. Also see the 11th Five Year Plan, which includes a section on environmental policy and resource conservation. National Development and Reform Commission, The Outline of the Eleventh Five Year Plan, 2006. http://en.ndrc.gov.cn/hot/t20060529_71334.htm. and the 11th Five-Year Plan (2006-10) of Environmental Protection http://english.gov.cn/2007-11/27/content_816819.htm Accessed 30 November, 2007.
20
BBC News Asia-Pacific, “Rudd sets new Australian agenda”, 25 November 2007. http://news.bbc.co.uk/2/hi/asiapacific/7111479.stm Accessed 25 November 2007.
21
National Communications from Non-Annex 1 Parties, UNFCCC, 2007. http://unfccc.int/national_reports/non-annex_ i_natcom/items/2716.php Accessed 27 September 2007. IPCC WGII 2007.
22
National Climate Change Strategy, Singapore Ministry of the Environment and Water Resources, 2007. http://www. mewr.gov.sg/nccs/introduction.htm Accessed 27 October 2007.
23
C40 Cities Climate Leadership Group, www.c40cities.org
24
Shi Jiangtao, “UN to help Beijing overcome hurdles on climate programmes”, South China Morning Post, 29 November 2007.
25
Australia’s Climate Change Policy, The Department of the Prime Minister and Cabinet, June 2007. http://www.pmc. gov.au/publications/climate_policy/docs/climate_policy_2007.pdf Accessed 29 September 2007. New Zealand’s Climate Change Solutions, Ministry for the Environment, 2007. http://www.climatechange.govt.nz/ Accessed 28 October 2007. Kyoto Protocol Target Achievement Plan, Prime Minister of Japan and His Cabinet, 28 April 2005. http://www.kantei.go.jp/foreign/policy/kyoto/050428plan_e.pdf Accessed 14 September 2007.
26
Seung-Hwan OH and Tae Yong Jung, Climate Policy in the Republic of Korea, 2005. “Minister Song Stresses Korea’s New Strategy to Cope with Greenhouse Gas, Energy Security”, Dynamic Korea, 2007. http://www.dynamic-korea.com/news/view_news.php?main=KTD&sub=&uid=200700190637&keyword Accessed 17 October 2007.
27
Donald Tsang, CE’s speech at International Conference on Climate Change, GovHK, May 31 2007. http://www.info. gov.hk/gia/general/200705/31/P200705310254.htm Accessed 27 September 2007. Singapore Ministry of the Environment and Water Resources, 2007. 33
34
28
Asia Pacific Partnership on Clean Development and Climate, 2007. http://www.asiapacificpartnership.org/ Accessed 19 November 2007. Sydney APEC Leaders’ Declaration on Climate Change, Energy Security and Clean Development, APEC Australia 2007, 9 September 2007. http://203.127.220.67/etc/medialib/apec_media_library/downloads/ news_uploads/2007aelm.Par.0001.File.tmp/07_aelm_ClimateChangeEnergySec.pdf Accessed 15 September 2007. Global Initiative on Forests and Climate, Australian Greenhouse Office, 2007. http://www.greenhouse.gov.au/ international/forests/index.html Accessed 24 October 2007.
29
David Wasdell, The Meridian Programme, The Unit for Research into Changing Institutions, 22 May 2007. www. meridian.org.uk Accessed 23 November 2007. See also the work of James Hansen of NASA, available from his website http://www.columbia.edu/~jeh1/
30
Hiroshi Matsubara, China not ready to join post-Kyoto Protocol pact, IHT/Asahi, 30 August 2007, Statement by Han Wenke, http://www.asahi.com/english/Herald-asahi/TKY200708290301.html Accessed 20 September 2007.
31
Associated Press, “Beijing won’t budge on emissions despite spewing out 58pc of increased carbon”, 10 November 2007.
32
When stabilizing at 450ppm CO2 equivalence concentrations, the Fourth IPCC Assessment Report concludes that the best-guess warming is 2.1 °C with a likely range between 1.4 °C and 3.1 °C above pre-industrial temperature levels. Hence stabilization at 450ppm CO2e will result in a slightly less than 50% chance of keeping below 2 °C in the long term. Given the already substantial concentrations of greenhouse gases in the atmosphere, stabilization levels that will prevent climate change impacts beyond 2 °C will have to be reached “from above”. Thus, after an initial peaking of CO2e concentrations at levels above the ultimate stabilization level around the mid-21st century, emissions will have to be reduced to sufficiently low levels to allow the atmospheric concentrations of greenhouse gases to fall again towards the end of the 21st century, if climate impacts above 2 °C are to be avoided. Depending on the carbon cycle feedbacks, these global emission reductions are roughly 50% below 1990 levels by 2050 in order to stabilize at 450ppm after an initial peaking at roughly 500ppm CO 2e. John Schellnhuber, supporting note to GLOBE Discussion Paper For Berlin - Combating Climate Change: An International Framework Beyond 2012, 2007, GLOBE G8+5 Climate Change Dialogue.
33
Wasdell, 2007, op. cit.
34
Shinzo Abe, Introduction to ‘Cool Earth 50’: 3 Proposals, 3 Principles, Prime Minister of Japan and His Cabinet, May 2007. http://www.kantei.go.jp/foreign/abespeech/2007/05/24speech_e.html Accessed 14 September 2007.
35
Pew Centre on Climate Change, Climate Change 101: Overview, 2006. http://www.pewclimate.org/docUploads/1114_ OverviewFinal.pdf Accessed 10 November 2007.
36
The accumulated CO2 emissions of Annex I countries from 1860-1990 accounts for 78% of the world total, while they are only home to 22% of world population in 1990. The total per capita emissions of Annex I countries was 3.25 tonnes Carbon in 1990, while that of non Annex I countries was only 0.48 tonnes Carbon in 1990.
37
The First National Climate Change Assessment of China, completed on 26 December 2006, was issued by the Ministry of Science and Technology, China Meteorological Administration, and Chinese Academy of Science. The assessment, begun in 2002, was done in collaboration with 9 other government departments, including the Ministry of Foreign Affairs, the National Development and Reform Commission, and the State Environmental Protection Administration.
38
Tao Wang and Jim Watson, Who Owns China’s Carbon Emissions?, Tyndall Centre for Climate Change Research, October 2007. http://tyndall.webapp1.uea.ac.uk/publications/briefing_notes/bn23.pdf Accessed 15 November 2007.
39
It is believed that no other multilateral environmental agreement in the past will have the potential to impact on so many sectors of the economy, so many economic interests and such high volumes of trade in products and services, as will a new climate change agreement. One of the important challenges facing the WTO, as an established international trade institution, is therefore how it will deal satisfactorily with the increasingly complex interaction between trade and global climate change action. Many observers believe that the international trade regime of the WTO can be a positive force in global efforts to address climate change; it is possible to mitigate climate change and promote economic development from trade liberalisation at the same time. For example, observers have suggested that the further liberalisation of climate-friendly goods and services, especially those related to renewable energy, accompanied by the reduction of subsidies on conventional energy, is an area that the WTO can strategically help without hindering its trade goal.
40
Sir Nicholas Stern, The Economics of Climate Change: The Stern Review, Cambridge University Press, Cambridge, UK, 2006. Part VI, pp. 462
41
Convention on Long-range Transboundary Air Pollution, United Nations Economic Commission for Europe, 2007. http://www.unece.org/env/lrtap/lrtap_h1.htm Accessed 5 November 2007.
42
US Department of Energy - Energy Information Administration, International Energy Outlook 2007, 2007, chapter 7 www.eia.doe.gov/oiaf/ieo/pdf/0484(2007).pdf Accessed 20 November 2007.
43
The term “sustainable development polices and measures” (SD-PAMs) was first used by H. Winkler, R. SpaldingFecher, S. Mwakasonda, and O. Davidson in Policies and Measures for Sustainable Development, in Baumert et al. (eds.), Building on the Kyoto Protocol: Options for Protecting the Climate, World Resources Institute, Washington DC. A Sustainable Development Policy and Measure (SD-PAM) would be a commitment to implement a policy or measure that makes the development path of a country more sustainable, with the co-benefit of lowering GHG emissions. A register of declared SD-PAMs could be created, which would track progress made by developing countries in meeting the objective of the policy or measure. Funding to assist such progress could come from climate and non-climate sources and from public as well as private investment.
44
UNFCCC, op. cit., Article 4.1(b) provides that “all Parties shall … [f]ormulate, implement, publish and regularly update national … programmes containing measures to mitigate climate change”. This provision pertains mainly to developed countries since they have additional specific commitments.
45
UNFCCC, op. cit., Article 3.4.
46
Kyoto Protocol, 1997, op. cit., Article 10.
47
The generally accepted definition of sustainable development is the one proposed by the Brundtland Report of 1987. However, the fixing of a definition has been resisted under the UNFCCC because it may constrain choices. In reality, national priorities are wide and varied, and thus in practice, a country’s definition is in effect the operational definition. This approach would not involve proof of ‘additionality’ in the way that a CDM project needs to as currently structured. In terms of proving that the actions have a beneficial effect on GHG emissions, the actions could be evaluated against some alternative (building renewable power supply vs. coal plants) but it would not have to be calculated against a specific baseline.
35
36
48
The inclusion of the top 10 largest GHG emitting developing countries in each sector would insure coverage of 80%+ of developing country GHG emissions in each of the selected sectors. Emissions reductions achieved beyond the “voluntary pledge” would be eligible for sale as emission reduction credits to developed countries. However, failure to meet the “voluntary pledge” level would not involve any penalties or any requirement to purchase emissions reduction credits from other countries. The Technology Finance and Assistance Programme would support specific commitments for the deployment of advanced technologies, development of small and medium-sized enterprises to assist in technology implementation, capacity building, and support for pilot and demonstration projects. It would be designed to leverage increased private sector investment by writing-down the cost of and mitigating the risk of the advanced technologies (as well as mitigating political risks) to levels that would ensure competitive returns for the investors. Under the Sector-Based Approach, developing country pledges for GHG emission reductions would constitute new contributions to the reduction of atmospheric concentrations of carbon dioxide - this marks an important departure from the current international architecture for emissions reductions. It would also build into the international process an explicit negotiation on technology finance between developed countries and key developing countries. See Ned Helme, Sector-Based Approach for ‘Post-2012’, Center for Clean Air Policy, November 2005. http://www.ccap.org/Presentations/HelmeEU-ChinaSeminarSectoralApproachesforPost2012.pdf Accessed 21 September 2007.
49
Rob Bradley, Jonathan Pershing, Lee Schipper, Kevin A. Baumert, Navroz K. Dubash, Jose Roberto Moreira, Stanford Mwakasonda, Wei-Shiuen Ng, Luiz Augusto Horta Nogueira, Virginia Parente, Harald Winkler, Growing in the Greenhouse: Protecting the Climate by Putting Development First, World Resources Institute, http://www.wri.org/ publication/growing-in-the-greenhouse#, 1 December 2005 Accessed 25 September 2007.
50
According to the Stern Review (op. cit., p. 244), nearly 20% of total global greenhouse gas emissions are from deforestation. Based on a study it commissioned, eliminating deforestation in the 8 countries that are responsible for 70% of emissions from land use could cost around US$5-$10 billion annually at first, although the marginal costs are expected to rise over time. The IPCC’s FAR includes several updated studies on the cost of mitigation through avoided deforestation as well as afforestation and reforestation. These studies also show a relatively low cost and high potential for these mitigation measures, particularly in Asia (FAR, p. 552, Fig 9.5).
51
There are four major ways to reduce carbon emissions from forests: avoided deforestation, aforestation (planting new trees), reforestation (replanting old forests), and improving forest management practices.
52
The Stern Review highlights benefits such as preservation of biodiversity, research and development, sustainability, tourism, and reduced vulnerability to extreme weather events as co-benefits of reducing deforestation in developing countries (Stern, op. cit., p. 314).
53
Several Asian countries including Indonesia and Myanmar also rank among the world’s top LULCUF emitters (Stern, op. cit., p. 606).
54
PEACE, Indonesia and Climate Change: Current Status and Policies, the World Bank Working Paper Series, Department for International Development, World Bank, 2007. Accessed 25 September 2007. Simon Montlake, “In new take on carbon-trading, Indonesia may get paid to save trees”, Yahoo News, 2007. http://news.yahoo.com/s/ csm/20071114/wl_csm/oyardsale_1, 14 November Accessed 20 November 2007. Gabriel Thoumi and Rhett Butler, “Carbon credits could be big earner for Indonesia”, The Jakarta Post, http://www.thejakartapost.com/yesterdaydetail.asp?fileid=20070728.E02, 28 July 2007. Accessed 25 September 2007. Marianne Kearney, “Graft big obstacle to saving Indonesia’s dwindling forests”, South China Morning Post, 29 November 2007.
55
Stern Review, op. cit., p. 616, Box 25.5. The section also includes an overview of other recent policy efforts, as does the IPCC FAR, WGIII, section 9.6.
56
The programme is intended to serve as an example of the mechanism currently being discussed by the UNFCCC for including avoided deforestation in CDM. The World Bank Carbon Finance Unit, http://carbonfinance.org/Router. cfm?Page=FCPF&FID=34267&ItemID=34267&ft=About Accessed 20 November 2007.
57
Australian Greenhouse Office, 2007, op. cit. “China Begins Huge Reforestation Effort”, Xinhua, 15 May 2002. http:// news.xinhuanet.com/english/2002-05/15/content_394262.htm Accessed 15 November 2007.
58
The Kyoto Protocol requires countries to account for LULCUF changes when preparing their national communications and meeting their commitments. As well, it allows countries to generate CDM and JI credits through afforestation and reforestation projects. However, it does not allow for avoided deforestation to generate credits (Stern Review, op. cit., pp. 613).
59
See section 9.4 and chapter 25 of the Stern Review for a discussion of the challenges of integrating forestry into the post-2012 framework. In Asia, Indonesia in particular has struggled with implementation and enforcement of their forest management practice. PEACE, 2007, op. cit.
60
The United Nations Development Programme’s (UNDP) Global Environment Facility (GEF) currently has four funds that go towards climate change adaptation: the Strategic Priority on Adaptation (SPA), Least Developed Countries Fund (LDCF), Special Climate Change Fund (SCCF), and Adaptation Fund (AF, not active until after 2010). The LDCF is the most substantial, with US$ 90 million since 2001 and US$ 150 million projected for the period 200710, although funding is “highly uncertain”. It is targeted to help the Least Developed Countries (LDCs) under Kyoto formulate National Adaptation Programmes of Action (NAPAs) and implement projects to address their most urgent climate change needs. While the first three funds are donor-financed, the AF will be financed by an “adaptation levy” of 2% on the Clean Development Mechanism (CDM). The UNDP also provides support for the National Communications of non-Annex I parties, including China and India, which are required to include an adaptation section.
61
“The UNFCCC Five-year ‘Programme of Work of the Subsidiary Body for Scientific and Technological Advice (SBSTA) on Impacts, Vulnerability and Adaptation to Climate Change’ highlights the urgency for action to address adaptation as a global priority. Adopted in December 2005 and currently implemented, the programme calls for strengthening the adaptation knowledge-base, promoting public participation, mobilizing funds and technology transfer amongst others”. Adapting to Climate Change – WMO Workshop for Implementation of Five-Year Programme, World Climate Programme, October 2006. http://www.wmo.int/pages/prog/wcp/article/documents/WCP_Oct2006.pdf. Accessed 20 October 2007.
62
Cruz, R.V., H. Harasawa, M. Lal, S. Wu, Y. Anokhin, B. Punsalmaa, Y. Honda, M. Jafari, C. Li and N. Huu Ninh, 2007: Asia. Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, M.L. Parry, O.F. Canziani, J.P. Palutikof, P.J. van der Linden and C.E. Hanson, Eds., Cambridge University Press, Cambridge, UK, 469-506, 2007.
63
Adger, W.N., S. Agrawala, M.M.Q. Mirza, C. Conde, K. O’Brien, J. Pulhin, R. Pulwarty, B. Smit and K. Takahashi, 2007: Assessment of adaptation practices, options, constraints and capacity. Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, M.L. Parry, O.F. Canziani, J.P. Palutikof, P.J. van der Linden and C.E. Hanson, Eds., Cambridge University Press, Cambridge, UK, 717-743.
64
Nicholls, R.J., P.P. Wong, V.R. Burkett, J.O. Codignotto, J.E. Hay, R.F. McLean, S. Ragoonaden and C.D. Woodroffe, 2007: Coastal systems and low-lying areas. Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, M.L. Parry, O.F. Canziani, J.P. Palutikof, P.J. van der Linden and C.E. Hanson, Eds., Cambridge University Press, Cambridge, UK, 315-356.
65
S. Huq et al., Mainstreaming Adaptation to Climate Change in Least Developed Countries, IIED, 2003. pp. 6-7
66
“Drought threatens crop catastrophe, Australian prime minister says”, The Guardian, 20 April 2007. http://www. guardian.co.uk/australia/story/0,,2061761,00.html Accessed 20 October 2007. Tim Johnston, “Parched in Australia: Drought changes views on warming”, International Herald Tribune, 7 November 2006. http://www.iht.com/articles/2006/11/07/news/drought.php Accessed 20 October 2007. John Vidal, “Global food crisis looms as climate change and fuel shortages bite”, 3 November 2007. http://www. guardian.co.uk/environment/2007/nov/03/food.climatechange Accessed 19 October 2007. Nitin Sethi, “Cost of dealing with climate change: 2% of GDP”, The Times of India, 16 September 2007. http:// timesofindia.indiatimes.com/India/Cost_of_dealing_with_climate_change_2_of_GDP_/rssarticleshow/2373069. cms Accessed 19 October 2007. China’s National Climate Change Programme, National Development and Reform Commission, op. cit. People’s Republic of China, pp. 17-19, June 2007. http://www.ccchina.gov.cn/WebSite/ CCChina/UpFile/File188.pdf Accessed 29 November 2007.
37
38
67
David Satterthwaite et al., Adapting to Climate Change in Urban Areas, IIED Human Settlements Discussion Paper Series, 2007. http://www.iied.org/pubs/display.php?n=1&l=7&s=HSDP. Accessed 1 December 2007.
68
See note 59 for an explanation of current UNFCCC measures.
69
“Japan unveils ‘green’ aid package at Asian summit”, AFP and AP, Singapore, 22 November 2007, http://www. taipeitimes.com/News/world/archives/2007/11/22/2003389023 Accessed 25 November 2007.
70
Emissions trading is an economic and policy tool used to meet environmental goals – that is, to reduce emissions, by providing participants with the economic incentives to reduce emissions in the most cost-effective manner. There are two basic forms of emissions trading systems – (i) the cap and trade system, which is based on an initial allocation of emission rights (allowances) through a government or regulatory body; and (ii) the baseline-and-credit system, where activities that reduce emissions against a baseline generate credits. The Kyoto Protocol as a whole provides a hybrid, as it uses both systems – cap and trade for emissions trading, and baseline system for CDM and JI.
71
The essential elements of an optimal emissions trading scheme depends on: its environmental integrity; sufficient number of participants with different marginal costs of abatement; reliable emissions inventory; clear eligibility, assessment, monitoring and verification requirements; clear trading system; effective administration and enforcement; clear legal basis; reasonable transaction costs; and active engagement of industry.
72
Christine Loh and Roger Raufer, The Emissions Game: How Markets Can Help Save the Planet, January 2007. http:// www.civic-exchange.org/publications/2007/ET.pdf Accessed 27 September 2007. Ruth Greenspan Bell, “What to Do About Climate Change?”, Foreign Affairs, May/June 2006.
73
Martin Zhou, “Mainland exchange to trade pollution credits”, South China Morning Post, 22 November 2007.
74
The process used for reviewing and approving CDM projects in China consists of 4 main steps and is designed to be completed in 60 days: firstly, a CDM project developer must submit proposals to the National Development and Reform Commission (NDRC), then the NDRC invites experts to review project proposals, followed by a reviewing and approval process by the National CDM board that consists of representatives of 7 government agencies, and lastly, the NDRC will make a decision according to the board’s decision, and issue an approval letter for validation or rejection appropriately. Additionally, the CDM project developer must also be either a Chinese-investor or a Chineseinvestment holding enterprise. Foreign co-operating parties are only allowed to participate in Chinese CDM projects if they are not wholly or majority owned by foreign parties - this is known as the “51-49 rule”.
75
In August 2007, a total 2,425 projects were listed in the CDM pipeline representing 2.26 billion tonnes of CO2e emission reductions by the end of 2012.
76
See data from the UNEP Risoe Centre’s CD4CDM project: http://cd4cdm.org/
77
HFC-23 is a by-product of industrial processes that is 12,000 times as potent as CO2 as a GHG. See Cullenward and Victor, 2007.
78
Thomas Heller argues that the CDM model is limited, including high transaction costs, currency devaluation, and baselines identifiable only for marginal activities. He also points out the existence of CDM mistakes, such as inefficient subsidies, no actual reductions beyond market behaviour, and the displacement of legal controls and voluntary agreements. See Thomas C. Heller, China, Coal and Climate: Dealing with Emerging Economies after Kyoto, presentation at Civic Exchange 2nd Energy Forum, 20 October 2006. http://www.civic-exchange.org/ publications/2006/octtom.pdf Accessed 30 November 2007.
79
Chung makes the case for expanding CDMs pragmatically:- while introducing the idea of discounting CERs, the project scope of CDMs should be altered in two ways: relaxing the project additionality criterion and maintaining strict technical additionality criteria. Rae Kwon Chung, The use of targets or market mechanisms for emissions reductions in developing countries, Climate Action Network, 2007.
80
Haruhiko Kuroda, Asian Development Bank and the CDM Fund: Partners for Clean Development, Asian Development Bank, 9 November 2007. http://www.adb.org/Documents/Speeches/2007/ms2007079.asp Accessed 15 November 2007. “China launches CDM fund to address climate change”, Xinhua, 9 November 2007. http://news.xinhuanet.com/ english/2007-11/09/content_7039202.htm Accessed 15 November 2007.
81
Zhou, 2007, op. cit.
82
Reuters, “South Korea to further reduce its heating fuel tax”, Reuters UK, http://uk.reuters.com/article/oilRpt/ idUKSEO103020071113, 13 November 2007. Accessed 20 November 2007.
83
Chen Aizhu, “China Fuel Tax its Best Weapon to Check Oil Demand”, Reuters http://www.climateark.org/shared/ reader/welcome.aspx?linkid=40385, 30 March 2005. Accessed 20 November 2007.
84
Bruce Alberts and Yu Yongqiang, Lighting the Way: Toward a Sustainable Energy Future, InterAcademy Council, October 2007. http://www.interacademycouncil.net/CMS/Reports/11840/11842.aspx Accessed 11 November 2007.
85
Kevin Baumert, Carbon Taxes vs. Emissions Trading: What’s the Difference, and Which is Better?, Global Policy Forum, 17 April 1998. http://www.globalpolicy.org/socecon/glotax/carbon/ct_et.htm Accessed 10 November 2007. Kenneth P. Green, Steven F. Hayward, Kevin A. Hassett, Climate Change: Caps vs. Taxes, American Enterprise Institute for Public Policy Research, 1 June 2007. http://www.aei.org/include/pub_print.asp?pubID=26286 Accessed 11 November 2007.
86
UNFCCC, op. cit., Article 4.1(c).
87
UNFCCC, op. cit., Article 4.5.
88
James Brooke, “Japan Squeezes to Get the Most out of Costly Fuel”, New York Times, 4 June 2005. http://www. nytimes.com/2005/06/04/business/worldbusiness/04energy.html Accessed 25 September 2007.
89
IEA World Energy Outlook 2007: China and India Insights, International Energy Agency, November 2007.
90
China’s Renewable Energy Law, 28 February 2005. http://www.renewableenergyaccess.com/assets/download/China_ RE_Law_05.doc Accessed 15 October 2007.
91
Renewables Global Status Report 2006 Update, Renewable Energy Policy Network for the 21st Century, 18 July 2006. http://www.ren21.net/pdf/RE_GSR_2006_Update.pdf Accessed 1 November 2007.
92
Results of the Fiscal 2006 Follow-up to the Keidanren Voluntary Action Plan on the Environment, Nippon Keidanren, 14 December 2006. http://www.keidanren.or.jp/english/policy/2006/089.pdf Accessed 17 September 2007. Kyoto Protocol Target Achievement Plan, Government of Japan, 28 April 2005. http://www.kantei.go.jp/foreign/policy/ kyoto/050428plan_e.pdf Accessed 19 September 2007.
93
International Energy Agency, November 2007, op. cit., pp. 42-3, 51
94
Wang and Watson, 2007, op. cit.
39
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