Bali road map

After hectic parleys that promised little, an Indian proposal brings the U.S. on board and saves the Bali conference from being a disaster.

in BaliSwiss Environment Minister

What use is a road map without a destination? wondered Stavros Dimas, the European Union Commissioner for Environment, at a press conference during the annual meeting of the United Nations Framework Convention on Climate Change (UNFCCC) in Bali, Indonesia, held from December 3 to 14, 2007. The cause of his bewilderment could, perhaps, be explained by the fact that 10 days of hectic parleys on the future of the international communitys response to climate change were yet to yield any concrete results.

In a dramatic finale, that some analysts likened to a Bollywood blockbuster, the United States stood down on a proposal put forward by India, and supported by G-77/China, to include nationally appropriate mitigation actions by developing country- parties in the context of sustainable development, technology financing and capacity building in a measurable, reportable and verifiable manner. The Indian proposal came as a final attempt to address a long-standing U.S. concern that all signatories to the Convention on Climate Change be held accountable for mitigation measures.

Scheduled at a time when the Synthesis Report 2007 of the Intergovernmental Panel on Climate Changes (IPCC) bold assertion that warming of the climate system is unequivocal, as is now evident from observations of increases in global average air and ocean temperatures, the UNFCCC was expected to deliver the much-anticipated Bali road map to chart out a course to check rising temperatures and restore the global climate system to a degree of stability. As has become evident, the root cause of global warming lies in the increasing concentration of greenhouse gases (GHG), particularly carbon dioxide, in the earths atmosphere in the period following the Industrial Revolution. The conference, like the 13 others that preceded it, was tasked with the aim of reducing anthropogenic GHG emissions in a bid to tackle rising global temperatures.

Science has spoken, intoned Yvo de Boer at the opening session of the Conference on December 3, 2007. It is for politicians and policymakers to respond to its conclusions. But, as events at the conference suggested, science itself is never truly free of politics.

In December 1997, delegates convened at Kyoto, Japan, to launch a Protocol that would, for the first time, commit developed countries to mandatory and legally binding cuts in their carbon emissions. Based on the system of common but differentiated responsibility, the Protocol required 36 developed countries and economies in transition (termed Annex 1) to an average reduction of GHG emissions to 5.2 per cent below 1990 levels with differing specific reductions. The first commitment period was to come into force between 2008 and 2012, when countries were expected to meet their targets. Delegates at Bali 07 had convened to arrive at a post-Kyoto road map at a time when the IPCC report suggested that subsequent commitment periods would require far more drastic cuts. According to the report, Atmospheric concentrations of carbon dioxide and methane in 2005 exceed by far the natural range over the last 650,000 years. Increases in GHG emissions in the atmosphere are largely because of fossil fuel use, with the energy, transport and industrial sectors accounting for nearly 60 per cent of GHG emissions in 2004.

The centrality of these three sectors in any economy and the vast disparity in fossil fuel and energy consumption across nations have meant that emission reductions have been politically difficult for many economies to accept: particularly the United States, the worlds largest emitter of GHGs. Thus, despite signing the framework, the U.S. has not taken on binding emission targets and, as has been evident from its actions at Bali, has systematically stymied negotiations at every level.

As outlined by the UNFCCC, the Bali outcomes were expected to deliver along two major axes: Negotiation Tracks and Building Blocks; not, as the Executive Secretary was at pains to point out, specific targets for emission reductions.

It is difficult to explain progress at Bali to our constituencies back home, explained a delegate, as voters often dont understand why agreeing to negotiate can be so problematic. However, as the delegate explained, a summit like Bali serves to separate the negotiable from the non-negotiable, thereby setting the parameters for compromise, concession and, hopefully, agreement.

Broadly speaking, Negotiation Tracks refer to discussions on the long-term future of the entire process once the Kyoto Protocol lapses, post-2012. These discussions focussed on the need to address the widening chasms between developing and developed countries and to re-engage with the U.S., the worlds largest GHG emitter and notable Kyoto truant. They were also expected to provide a diplomatic framework to address, and act on, the IPCCs dramatic findings.

The biggest stumbling block in the negotiation process was whether any future agreement on emission cuts would be grounded in the principles of the existing convention, the centrepiece of which is the mandatory reductions by Annex 1, or would proceed through an entirely new dialogue a position favoured by the U.S. Thus, the U.S. consistently pushed for a draft text that read that the Conference of Parties launch a process to develop a comprehensive international framework for long-term cooperative action beyond 2012 rather than the widely accepted version that called for a comprehensive process to enable the full, effective and sustained implementation of the Convention through long-term cooperative action, now, up to and beyond 2012.

While the two sentences may seem similar, the former suggests the possibility of evolving an entirely new framework and convention (that may or may not require mandatory emission cuts); the latter suggests that any progress be grounded in the principles of the existing convention which includes mandatory emission cuts by Annex 1 countries.

The launch of the Ad Hoc Working Group on Long-term Cooperative Action and the continued tenure of the existing Ad Hoc Working Group on Further Commitments for Annex 1 parties suggest that these issues were resolved to a considerable degree. According to the final text agreed upon by all parties, these negotiation tracks shall be finalised by the Copenhagen Summit in 2009.

Another outcome of the Negotiation Track process was that, in a first for climate-change negotiations, the Bali Action Plan speaks of Developed and Developing Countries rather than Annex 1 and non-Annex 1 parties; a breakthrough that offers an avenue to work countries that have not signed the Kyoto Protocol, particularly the U.S.

On the other hand, the Building Blocks process took the future of the negotiating process for granted and focussed on the key issues of mitigation, adaptation, technology transfer and finance. Mitigation proved to be the most bitterly contested, with delegates divided over the degree of ambition to be introduced in the preamble to the draft agreement. All agreements contain a non-binding preamble coupled with the binding operative portion of the text. The European Union and developing countries were keen that the preamble contain an IPCC observation that limiting the increase in average global temperature to less than 2C above pre-industrial temperatures would require 25-40 per cent emission cuts below 1990 levels, by 2020, thereby reflecting the urgency of the situation and goading developed countries to take deeper emission cuts.

The U.S., by contrast, refused to accept this phrase, arguing that it would pre-judge the outcome of a two-year negotiation process. In the event, the final text shied away from specific figures, choosing instead to refer to the IPCC observations that delay in reducing emissions significantly constrains opportunities to achieve lower stabilisation levels and increases the risk of more severe climate change impacts.

The conference saw significant progress with the establishment of an Adaptation Fund and an agreement on the Adaptation Fund Board. Currently valued at about $37 million, the fund could rise by $1 billion to $5 billion by 2030, and shall be disbursed to countries in need of resources to adapt to the vagaries of climate change. The resources could be for projects like capacity building and disaster management. Organisations such as Oxfam, however, have pointed out that the annual costs of adaptation could hit $50 billion a year. At present, the Adaptation Fund is financed by a 2 per cent levy on the Clean Development Mechanism (CDM).

The CDM allows developing countries to set up projects in a wide range of sectors such as energy production and distribution, manufacturing and industries, transport, mining and waste disposal that would demonstrably reduce emissions against a business-as-usual scenario and thereby earn carbon credits. One carbon credit refers to one tonne of carbon dioxide emissions avoided by the adoption of a certain practice when compared with a businessas-usual scenario and can be sold on the carbon market to a company in the developed world looking to offset excess emissions.

For instance, a biomass gasification project registered with the CDM board in December 2007 in Coimbatore district, Tamil Nadu, uses coconut husks to produce electricity that is exported to the Tamil Nadu Electricity Board and claims that the combustion of biomass does not result in a net increase of GHG emissions, and that there are increased efficiencies of between 22 and 37 per cent compared with conventional biomass combustion technologies. Thus the project claims to produce only 28 tonnes of carbon dioxide a year as opposed to a baseline (business-as-usual) figure of 3,418 tonnes a year and so earns itself 3,390 tonnes of avoided emissions in the first year. This can be sold as carbon credits and used to finance the project.

Depending on where one stands, the CDM can be considered the most innovative or the most deceptive trade mechanism designed. Its proponents speak of a carbon market that is worth approximately $32 billion in its five years of existence, while its detractors point out that the CDM and carbon trading allow developed countries and big industries to continue polluting at the same rate at the expense of the developing world.

In fact, the latest data suggest that the majority of the Annex 1 countries will meet their emission targets through offsets rather than any real reduction. However, supporters of the carbon market say it is the only way to finance the huge costs of mitigating climate change: a view that found much support with delegates at the conference.

At the Bali conference, delegates sought to bring the Reduction of Emissions from Deforestation and Degraded lands in Developing Countries (REDD) under the CDM/carbon market mechanism by arguing that deforestation accounts for nearly 20 per cent of global GHG emissions; curbing deforestation shall reduce emissions as compared to a business-as-usual scenario and so should be eligible for carbon credits and trade. Problems arose when a number of countries, including India, suggested that conservation of existing forests should also be clubbed under the scheme. This way, countries would vie for credits by promising not to cut their existing forests.

India hopes to reach 33 per cent forest cover in the next ten years, claimed N.N. Meena, Minister of State for Ministry of Forests and Environment, as he sought to explain Indias support for the conservation agenda. Indias stand, however, was blocked by countries such as Brazil which stated their opposition to marketisation of forests, arguing that while REDD could raise money for stopping deforestation, moving conservation onto the agenda would, once more, allow developed countries to avoid real cuts in emissions by buying credits from the Third World.

However, some delegates privately stated that, with one of the fastest rates of deforestation in the world, Brazils position arose out of a desire to garner the largest possible share of REDD largesse. This, the delegates believed, penalised those with good conservation records.

Cow dung cakes,

This represents a peculiar dilemma where incentivising harm reduction in effect dis-incentivises good practices. Theoretically, it is in a countrys self-interest to deforest and then re-forest rather than just to leave its forests alone. Implementation of REDD would create several other problems, notably that of permanence, monitoring and governance.

What happens when a forest committed to the carbon market is destroyed by a wildfire? asked an audience member at a Greenpeace side event on REDD.

We could devise a scheme to force that country to buy back an equivalent amount of carbon credits from the carbon market with an appropriate penalty, answered Bill Hare, the architect of Greenpeaces own hybrid part market-part state approach to REDD. However, it would be hard to accomplish in practice and the countries that stand to gain the most from selling their forests on the carbon market, such as Myanmar and Liberia, are also those with fragile governance and monitoring structures and a limited ability to buy back. There is also the legitimate concern that opening up forestry to the carbon market would lead to a scenario where the supply of credits would far outstrip demand resulting in the collapse of the carbon market. However, there are still those who believe that such issues can be resolved in the medium term. The biggest thing holding back the forestry sector is the non-participation of the U.S. markets, says Marc Stewart, cofounder of Ecosecurities, a firm that specialises in developing and marketing CDM projects and has a market capitalisation of about $40 million, Once the U.S. opens up, there will be enough demand to support the market.

Groups representing indigenous people have also attacked REDD as they feel that the commoditisation will result in new regimes of displacement, dispossession and coercion by state and private agencies. Their opposition must be seen in the context that indigenous people across the world, and particularly in India and Brazil, are the ones who have consistently fought for the preservation of forests, fending off the persistent onslaught of the state and industry. A market dispensation shall allow the very same states and industries to profit once more to the detriment of indigenous communities.

At present, the REDD standoff has been resolved by replacing the word conservation with the phrase sustainable management of forests, which India insists encompasses conservation, while Brazil maintains it does not. In the absence of a clear definition of the phrase, and a final decision still years off, both parties have kept up a brave front.

While the ramifications of the decisions and developments at Bali 2007 can, and should, be debated at length, the one thing that is certain is the centrality of the climate change issue in global development politics.

The degree of public pressure, particularly on developed country delegations, suggests the beginning of a deeper engagement with the challenges posed by climate change. Saving the poor seems to have lost some of its lustre at global conferences, but saving the planet has clearly struck a chord with governments across the world.