Countries, stakeholders gear up for UN climate talks

26 May 2015

A series of climate policy announcements were unveiled last week by various nations as negotiators prepare to head to Bonn, Germany in June to make progress on a draft UN climate deal slated to be agreed by the end of this year.

German Chancellor Angela Merkel and French President François Hollande issued a joint statement at an international climate meet held in Berlin from 18-19 May calling for universal efforts to move towards a carbon-free economy over the course of this century.

The pair also advocated introducing carbon markets at national and regional levels in order to provide “strong economic incentives” for a global economic low-carbon transformation.

The annual Berlin meet, known formally as the Petersberg Climate Dialogue, brought together environment ministers and delegates from 36 countries, in a bid to further consensus on the international climate negotiations.

Last week also saw Saudi Arabia, the world’s largest crude exporter, tout the possibility of phasing out the use of fossil fuels by 2050 or thereabouts in comments made by the country’s oil minister Ali al-Naimi during a business climate change conference held in Paris, France.

Earlier in May, a visit by Indian Prime Minister Narendra Modi to China yielded a joint statement on climate change, expressing support for a successful UN climate deal. The two nations also called on developed countries to raise current climate action efforts and to honour climate financing commitments.

Just under 200 nations have pledged to hammer out a global emissions-cutting deal under the UN Framework Convention on Climate Change (UNFCCC) in time for a December meet due to held in Paris, France.

Long-term decarbonisation?

Several climate watchers welcomed the firm decarbonisation rhetoric used at last week’s Petersberg meet. A long-term goal to end carbon emissions has until now proved elusive in the UNFCCC talks.

UN climate scientists have called for a 40 to 70 percent drop in emissions in the next 40 years relative to 2010 levels and a move to phase these out by the end of the century in order to avoid the worst consequences of climate change. Under current policy arrangements temperatures are on track to warm by 3.6 degrees Celsius by the end of the century. (See BioRes, 4 November 2014)

Various analysts, including the UNFCCC Secretariat, have said that it would be important to include language around long-term emissions cuts targets in the planned Paris agreement.

“We haven’t had clarity up to this point,” said Jennifer Morgan, global director of the climate programme at the World Resources Institute, a US environmental research group, welcoming the developments in the Franco-German joint statement.

The Petersberg dialogue also saw Merkel indicate that Germany would aim to double its climate finance by 2020 compared to last year, through an annual doubling of its aid budget, and increasing available funds in the country’s development bank. Climate finance has traditionally been one of the more difficult areas to navigate in the UN talks.

Global carbon market?

Speaking just ahead of last week’s Petersberg dialogue Angela Merkel, during her weekly national video address, said that some sort of global emissions-trading system could help to curb climate change.

The German leader also suggested extending Europe’s emissions trading system (ETS), currently the world’s largest, to other regions.

The EU’s ETS has nevertheless struggled in recent years to put an effective price on carbon due to excessive emissions allowances outstripping demand. EU diplomats recently reached a deal, however, on a carbon market reserve designed to help better regulate the supply of allowances. (See BioRes, 8 May 2015)

As of February, some 17 emissions trading schemes were in place on four continents, covering 35 countries, 12 states of provinces, and seven cities. Together, these jurisdictions account for around 40 percent of GDP, while other major global economic players such as China are in the process of introducing a national ETS. 

However, bid to co-ordinate market-based approaches under technical work in the UNFCCC has proved slow, and countries remain divided on what role carbon markets should play in the new Paris deal.

These dynamics have led some players and analysts interested in using trade and market tools to look at the possibilities of linking existing carbon markets or creating “clubs” of carbon markets.

Last month the Canadian province of Ontario, for example, opted to join the North American carbon market system. (See BioRes, 16 April 2015)

A number of experts have said that the price level set by ETS certificates is nonetheless critical for success and that these must be high enough for companies to invest in clean technology.

Paris climate week

A climate summit geared towards boosting private sector engagement in the UN climate talks followed hot on the heels of the Petersberg dialogue, held during Climate Week Paris, an event organised by think tank The Climate Group.

Opening the Business and Climate Summit last Wednesday, France’s Hollande said that climate change was both an environmental and economic challenge, and that business would have a key role to play in implementing national climate commitments.

The French chief used the occasion to reiterate his commitment to carbon pricing as well as to the decarbonisation of investment portfolios.

Meanwhile some 2000 business leaders voiced support for robust and predictable carbon pricing, as part of the conclusions from the business climate summit. 

The introduction of carbon pricing mechanisms would help to achieve global net emissions reductions at the least economic cost, the conclusions affirm. This would also include the elimination of fossil fuel subsidies in order to redirect consumption to clean energy sources.

“Companies that have seized low-carbon opportunities are increasingly seeing rewards. To go further, we need a strong international climate agreement that sends a clear and credible signal to businesses that low-carbon policies will endure,” said Paul Polman, Chief Executive Officer of Unilever at the business-led event.

Christiana Figueres, the UN’s climate chief, said that the Paris business summit represented a “turning point” in debates about global warming and long-term goals.

Some environmental groups, however, were critical of the business summit’s outcomes and pledges.

“The Business and Climate Summit was an opportunity for companies to lead by example, and though several did show willingness, it was not nearly enough to champion the urgent action needed to help combat climate change,” said Céline Charveriat, international director of advocacy and campaigns at non-profit group Oxfam.

Fossil fuels

Word at the Business and Climate Summit that Saudi Arabia could phase out fossil fuels later this century took a number of participants by surprise. The wealthy Arabian kingdom also used the occasion to affirm its plans to become a global power in solar and wind energy, according to The Financial Times.

However, Ali al-Naimi added that the call to leave the world’s current known fossil fuels in the ground was overly ambitious, and would come at an economic expense.

This view was shared by a number of energy giants such as Statoil, Glencore, and Total, according to media reports. 

Debates around conventional energy sources such as oil, coal, and gas have long seen clashes between the imperative of tackling climate change and energy access. Many current global governance conversations are however, now focused on how to scale up sustainable energy supply. (See BioRes, 25 May 2015)

A number of economists have argued that the use of fossil fuel consumption subsidies, in particular, are a misplaced waste of fiscal resources and often do not reach the world’s poorest. The precise measure of such subsidies’ costs, however, continues to prompt debate.

The International Energy Agency estimates that governments around the world spend US$550 billion annually on fossil fuel consumption subsidies.

Last Monday, the International Monetary Fund said that the real price tag of conventional energy subsidies this year would be US$5.3 trillion this year, taking into account costly environmental and health impacts. This weighs in at 6.5 percent of the global economic output.

ICTSD reporting; “Kingdom built on oil foresees fossil fuel phase-out this century,” THE FINANCIAL TIMES, 21 May 2015; “Merkel Seeks Global Emissions-Trading Market to Protect Climate,” BLOOMBERG BUSINESS, 16 May 2015; “Merkel and Hollande pledge an end to fossil fuel pollution,” THE FINANCIAL TIMES, 19 May 2015; “Hollande backs business with demand for global carbon price,” RTCC, 20 May 2015. 

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