Bridges Warsaw Update #1: Financing key to unlocking progress at COP 19

11 November 2013

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The familiar sense of urgency is conspicuously absent as climate negotiators arrive at this year's UN Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP) in Warsaw. In 2011, countries meeting at COP 17 in Durban, South Africa negotiated for two additional days to plot a course for multilateral climate change cooperation post-Kyoto. Despite finding themselves near the brink of collapse in the early hours of Sunday, 11 December, negotiators managed to find enough common ground to strike a deal on the path forward.

The sense of urgency in Durban pushed all major emitters - including the US, India, and China - to work toward clinching a new binding global agreement by COP 21 in 2015 that would be implemented in 2020. It was a deal to strike a deal, but it was a deal nonetheless.

Given the effort required to bring negotiations to a fragile conclusion in Durban, pressure will be at an all-time high when they meet at COP 21 in Paris. Naturally, the pit stops along the road to Paris cannot be wasted if countries hope to conclude talks on schedule. However, in true UNFCCC negotiating fashion, early progress has been slow. In a culture where the first week of COP negotiations is often eaten up by procedural issues, such as agreeing on an agenda, the glacial pace of early discussions is not surprising. But with such an ambitious goal set for COP 21, protracted wrangling over minor issues - as was seen last year at COP 18 in Doha - could easily leave too much work for negotiators to tackle.

Taking note of the need for concrete and meaningful progress, UN Secretary-General Ban Ki-moon is attempting to expedite the process by inviting world leaders to a special Climate Summit in September 2014. Ban challenged leaders to bring bold pledges along with them to the Summit, in hopes that negotiations will receive the kick they need to head into COP 20 and the final stretch toward Paris.

ADP takes over

In Warsaw, the Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP or Durban Platform) will become the UNFCCC's primary negotiating track. This will be the first COP to occur since the closure of the Ad Hoc Working Group on Long-term Cooperative Action under the Convention (AWG-LCA) and Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol (AWG-KP), which have been the focal points of previous COPs (see Bridges Trade BioRes, 12 December 2012).

Work under the two permanent subsidiary bodies - the Subsidiary Body for Scientific and Technological Advice (SBSTA) and the Subsidiary Body for Implementation (SBI) - will aim to tackle a range of issues in Warsaw. Issues such as improvements of the rules of the Clean Development Mechanism (CDM), modalities for the New Market-based Mechanism (NMM), as well appropriate approaches to Measurement, Reporting and Verification (MRVs) could see progress at COP 19. However, it is not yet clear how an ongoing row over a proposal by Russia, Belarus, and Ukraine will affect SBI talks in Warsaw.

Frustrated over the closing of COP 18 in Doha despite their insistence that more clarity was needed on how unused emissions credits from the first phase of the Kyoto Protocol would be carried forward, the three countries held up mid-year climate talks in Bonn, Germany this past June to the point that the SBI was unable to launch any substantive work (see Bridges Trade BioRes, 20 June 2013). While some reports say Russia has now been placated somewhat, the issues could still affect talks in Warsaw.

Show me the money: Developing countries want less talk, more action

Financing has been one of the most difficult issues to resolve in international climate negotiations. At the troubled 2009 climate meet in Copenhagen, developed countries agreed to provide US$10 billion per year in "fast start" financing for the period of 2010-2012 to help developing countries begin adapting to a changing climate. They also agreed to a separate Green Climate Fund (GCF), which would provide US$100 billion by 2020 to help developing countries reduce emissions and adapt to the warming world.

But turning these financing commitments into action has not been easy. According to the Green Climate Fund Trust, ten contributors have deposited a mere US$7.55 million into the Fund as of 30 June 2013. Developing countries have been clear about the need for developed countries to come through on financing. While there are a wide range of issues at play in the UNFCCC negotiations, the bottom line is that key developed countries like the US will not agree to a 2020 deal unless all countries - including India and China - have binding commitments, while developing countries will not sign on to a deal unless funding is made available to them to allow them to make said emissions cuts.

With many developed countries facing austerity measures at home over the past several years, GCF funding has not been a priority for governments. This has led some to consider alternate means of generating funds, such as through private sector initiatives. Greg Barker, the UK's minister of state for energy and climate change, recently suggested that public-private partnerships are crucial to moving forward.

"I believe we need a new business partnership to tackle climate change, that does so with its eyes wide open, mindful of the costs and careful to catch the opportunities," Barker said. "We can only decarbonise the economy if business comes with us, as an active participant, and at least cost for consumers."

Developing countries, however, have called such proposals a distraction to the real issue at hand, which is providing funds that have already been committed. Indian environment minister Jayanthi Natarajan, says alternative funding sources cannot be the core vehicle for delivering climate financing.

"The most important milestone [for Warsaw] would be climate finance and capitalisation of the Green Climate Fund (GCF), which has not happened at all," Natarajan said in a statement. "Developed countries that made a commitment earlier have now started talking of alternative sources of funding - whereas in our view these are commitments of the parties to the COP. While others and alternate sources need not be excluded, I think the fundamental commitment is the provision of finance."

With financing already causing significant difficulties in UNFCCC talks, some observers were surprised to see mention of the establishment of a possible international mechanism to finance "loss and damage" in last year's Doha package. The "institutional arrangements, such as an international mechanism" would aim to address loss or damage resulting from climate change - including "extreme weather events" and "slow onset events" - in countries that are particularly vulnerable to the adverse effects of climate change.

While the issue is earmarked to be resolved in Warsaw, lack of progress under the SBI in Bonn earlier this year meant that the issue has yet to be discussed. Loss and damage is expected to be a key bargaining chip for least developed countries (LDCs) moving forward. In a recent interview with the Thomson Reuters Foundation, LDC lead negotiator Quamrul Chowdhury said the creation of a mechanism is of "paramount importance" at COP 19.

Developing countries look for progress on technology transfer

Allowing developing countries to participate effectively in reducing emissions will not only require funding, but also access to clean technologies. Technology transfer and intellectual property rights (IPRs) have been among the more contentious issues in UNFCCC negotiations and the two issues are expected to be discussed in Warsaw.

In their key messages to the talks, African Ministers of Environment stressed "the urgent need to address the issue of technology transfer, including the identification and removal of all barriers preventing access to climate-related technologies." In addition, they called for an "appropriate treatment of intellectual property rights, including the removal of patents on climate-related technologies for non-Annex I Parties." Such demands have been met in the past by strong opposition from industrialised countries which consider IPRs an essential incentive for climate-related innovation.

Warsaw is also expected to witness further steps toward the operationalisation of the UNFCCC Technology Mechanism, in particular the Climate Technology Centre and Network, the operational arm of the Mechanism. In their statement ahead of the COP, BASIC Ministers (representing Brazil, South Africa, India, and China) called "for the full operationalization of and close coordination between institutions established in the Bali process, including the Green Climate Fund, the Standing Committee on Finance, the Technology Executive Committee, the Climate Technology Center [sic] & Network, and the Adaptation Committee."

Response Measures Forum to have a future?

As in previous UNFCCC meetings, ICTSD will be tracking the issue of the unintended consequences of response measures - measures countries take to mitigate climate change - closely in Warsaw. Outside the negotiations, EU trading partners are still grappling with one of the most prominent trade issues related to a mitigation activity: the inclusion of aviation under the EU's Emissions Trading Scheme (ETS). The European Commission has proposed modifying the scheme to include only the portions of flights occurring in EU airspace, after the UN civil aviation body agreed last month to develop an international mechanism to curtail aviation emissions. However, since the proposed change will still affect foreign airlines, many climate observers expect past tensions between the EU and its partners to resurface.

Discussion on response measures covers a wide range of issues - some trade-related, some not - that fall under several possible areas of negotiation at the UNFCCC. Thus, the Convention decided at COP 17 in Durban to establish a forum where these issues could be discussed among parties outside the main negotiating track. The Forum on the Impact of the Implementation of Response Measures held its first session in May 2012 at UNFCCC headquarters in Bonn where it agreed on a work programme for the next two years.

The Warsaw COP will review the work of the Forum to date and will consider whether it has fulfilled its mandate and should be closed down, or if its lifespan should instead be extended. Sources close to the talks say the Forum has addressed a range of issues that would have otherwise side-tracked SBSTA and SBI discussions and, as such, it provides a useful function for expediting the overall negotiating process. Thus, while most parties would like to extend the mandate of the Forum, it is unclear what form such an extension would take if granted.

Workshop to address role of agriculture

While threats to agricultural production from climate change are widely discussed in climate circles, the issue has not been a formal part of UNFCCC negotiations. Discussions at this year's Bonn intersessional meeting, however, resulted in the scheduling of a workshop on the technical and scientific aspects of how climate change could affect adaptation in agriculture. The workshop discussions will take place within the UNFCCC framework, but will not be part of the climate negotiations. Insiders say that if negotiators feel the event is successful, the initiative could be repeated again at future meetings.

Developed and developing countries had previously had difficulty agreeing on whether and how to launch a work programme on climate change and agriculture, with differences of views over the relative importance of climate change adaptation and mitigation at the heart of the controversy. Governments appear to have found a way around the impasse by agreeing to discuss how countries can best adapt to new challenges, while also looking at "possible adaptation co-benefits." Sources say such an approach would open a venue to discuss a range of agriculture and climate change issues, such as how improved land management techniques could boost farm productivity while also contributing to mitigation efforts by helping to sequester carbon.

Success in Warsaw?

There are a range of issues up for negotiation in Warsaw and measuring the success of the meeting will not be simple. Meaningful success would see progress on financing, increased ambition, as well as clarification of the structure, sequence, and content of the 2015 agreement. Underpinning all of these issues is the question of whether parties will be able to move beyond the entrenched North/South divide. While this has been notoriously difficult in previous talks, there are signs of movement.

The Cartagena Dialogue for Progressive Action (Cartagena Dialogue), an alliance of 32 developed and developing countries in international climate talks, is one example of notable progress on bridging this gap. Member countries say they are committed to pursuing low carbon economic and development pathways and wish to do so with a legally binding international agreement applicable to all in place. Other positive signs of progress include the recent agreement by G20 countries in St. Petersburg, Russia to phase out the use of hydrofluorocarbons (HFCs).

While few expect Warsaw to deliver a great leap forward in climate talks, it will be watched closely as a barometer for future negotiations. As Connie Hedegaard, the EU's Commissioner for Climate Action, said in a recent statement, Warsaw is not a destination, but rather an important stop for setting the stage for Paris in 2015.

"In Warsaw, we must agree to prepare strong pledges for the 2015 deal and to step up emission cuts over the rest of this decade," Hedegaard said. "All countries must be ready to present bold pledges before the Summit of World Leaders on climate change."

ICTSD reporting.

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