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Tough Issues Linger in New Climate Deal Draft

Climate negotiators at the United Nations Climate Change Conference (COP 21) in Paris have until Friday to reach a global deal to curb greenhouse gas emissions to avoid the most serious climate change impacts. Negotiators released a new, shorter draft of that deal. The 29-page document leaves some major sticking points unresolved, including whether to reduce overall global temperatures 1.5 degrees Celsius above pre-industrial levels or 2 degrees Celsius, who shoulders the cost of moving to a low-carbon economy and how often nations should review their emissions reduction plans.

“On these issues I ask you to scale up your consultations to speedily come to compromise solutions,” French Foreign Minister Laurent Fabius told conference delegates. “We’ve made progress but still a lot of work remains to be done. Nothing is agreed until everything is agreed.”

Many of the countries supporting a 1.5 degree Celsius target are arguing that rich but still developing economies—among them, Bahrain, Qatar, Saudi Arabia, Singapore, and South Korea—provide funds to help the poorest countries adapt to climate change—a move that would upend the Kyoto Protocol’s funding structure, which demands that only those countries designated as industrialized in 1992 pay up (subscription). It may be best, Mexico’s former president Felipe Calderon tells The Guardian, if developing countries were not treated as a single negotiating bloc.

“Sub-Saharan Africa is not the same as China,” Calderon said. “The G77 [comprising most of the biggest developing economies] is not the same as the Alliance of Small Island States. Arabian countries have different interests.”

On Tuesday, the European Union (EU) forged an alliance with 79 poor African and small-island countries that could, reports the Wall Street Journal, help eliminate the 20-year division between developed countries and developing countries on climate issues. It comes with $517 million in EU funding to help reduce greenhouse gas emissions. The announcement focuses on some of the highly debated points at the conference so far—including calling for a mechanism to review emissions targets every five years.

Linking Carbon Markets Explored in Paris

As negotiators continue to stew on the details of the agreement’s level of ambition and funding for developing nations, an interesting undercurrent has permeated the talks—whether national commitments could be linked to create a “bottom-up” carbon market. With many nations now looking to carbon markets to execute their national programs—including the top emitter, China—many stakeholders are expressing a desire for collaborative language that would empower nations to bring their programs together.

In a COP 21 side event co-sponsored by the Nicholas Institute, the International Emissions Trading Association (IETA) and the Electric Power Research Institute (EPRI), stakeholders expressed the logic of such an approach and discussed the language necessary to enable it. According to my Nicholas Institute colleague Brian Murray, the gains from trade increase with the number of participants—the more participants, the lower the cost of compliance.

Steven Rose of EPRI took the concept even further, describing considerations suggested by his modeling of trading among the United States, China and the European Union.

“Expanding the partnership can be welfare improving in total,” he said, “but it can have distributional effects so there will be some strategic incentives and strategic thinking required in terms of the composition of those partnerships.”

These concepts were encouraged by industry representatives from Statoil and the Italian power company Enel. Discussion also focused on what would be required to achieve linkage. In a clear parallel to the “common elements” approach that allows U.S. states to permit linked systems under the U.S. Environmental Protection Agency’s Clean Power Plan, Brian Murray pointed out that only minimal common policies are required to permit jurisdictions to link.

The linkage could be accomplished fairly easily, he said, as long as each jurisdiction adopts a common unit to trade, allows units from other jurisdictions to be used in their own market and participates in a registry that ensures that each unit is counted only once.

There’s been some talk of reflecting the market linkage concept in the eventual climate agreement. A joint proposal from Brazil and the European Union has garnered interest. But the concept does not appear to be in the new draft text released today, and the United States is notably not pursuing it.

“I am speaking for a country that has no intention to use them (carbon markets) in an international concept,” said Christo Artusio, director of the U.S. State Department’s Office of Global Change.  And without the U.S.’s support, it is unclear how far the enabling language will proceed.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.