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Tiempo Climate Cyberlibrary, Tiempo - Issue 38/39, "In Vain" – a review of COP-6
"In Vain" – a review of COP-6
Lavanya Rajamani analyses the issues that confronted negotiators at COP-6, considering why so many have proven so difficult to resolve.
The author is Junior Research Fellow in Public International Law at Worcester College, Oxford, UK. She is also Project Director at the Yale Center for Environmental Law and Policy, Managing Editor of the Review of European Community and International Environmental Law and Writer/Editor for the Earth Negotiations Bulletin.
In search of silver and of gold -
He searched a lifetime and he found
“In Vain” is a quatrain written by Gerrit Komerij, Poet Laureate of The Netherlands. The quatrain was recited by the Conference President, Jan Pronk, at the closing plenary of the ill-fated Sixth Conference of the Parties (COP-6) to the UN Framework Convention on Climate Change in November 2000.
This quatrain encapsulates the profound sense of frustration and disappointment that most COP-6 delegates carried away with them from The Hague. Indeed, years of tedious work, number crunching, conference-hopping, and spirited negotiation appeared to have been in vain.
Parties failed to reach agreement on the key issues confronting the climate regime. COP-6 was “suspended” and its President was requested to “seek advice on the desirability of resuming the session in May/June [2001] in order to complete work and adopt a comprehensive and balanced package of decisions on all issues covered by the Buenos Aires Plan of Action.”
Whether a few months’ reprieve, given the chasm that separated the players on the crunch issues, would produce an atmosphere conducive to a deal was questionable at the time, and has proved even more so with the passage of time.
The Kyoto Protocol to the UN Framework Convention on Climate Change, adopted in December 1997, requires certain developed country Parties listed in Annex I to the treaty to reduce their overall emissions of a basket of greenhouse gases by at least five per cent below 1990 levels in the commitment period of 2008 to 2012. The United States agreed to an emissions cut of seven per cent, Japan six per cent and the European Union eight per cent.
The Kyoto Protocol provides three so-called flexibility mechanisms to aid Parties in achieving compliance with these commitments: Joint Implementation, Emissions Trading between Annex I countries, and the Clean Development Mechanism (CDM) between Annex I and non-Annex I countries.
The November 1998 Buenos Aires Plan of Action, a schedule for resolving various issues related to the Kyoto Protocol, calls for “demonstrable progress” according to established time frames on, inter alia, the mechanisms of the Kyoto Protocol. It established COP-6 as the deadline for a final decision on the Protocol mechanisms.
Parties to COP-6 met at The Hague, The Netherlands, between 13-25th November 2000 to fulfil their Buenos Aires Plan of Action commitments.
The significance of COP-6
Parties have a commitment under the Kyoto Protocol to make the required emissions reductions in the first commitment period, 2008-2012, and to make demonstrable progress towards this aim by 2005. They can only fulfill these commitments if they have the domestic systems in place to do so. The domestic systems will, however, only be put in place once there is reasonable certainty that the Protocol will be ratified. The Protocol will be ratified if countries are clear about the cost implications of complying with their commitments. But the compliance cost implications of the Protocol depend entirely on the way the mechanisms are fashioned.
The COP-6 deadline established by the Buenos Aires Plan of Action was designed to flesh out the Protocol in time to permit Parties and industry to evaluate the costs, benefits and feasibility of compliance in the lead-up to the first commitment period. In the absence of such an evaluation and, therefore, significant prospect of ratification, at best, no-regrets policies that entail benefits whether the Protocol comes into force or not will be adopted, and, at worst, a business-as-usual policy.
The latter is a terrifying prospect given what we know today about climate change and increasing emissions trends in Annex I countries. The Intergovernmental Panel on Climate Change (IPCC) Third Assessment Report projects an increase in global mean surface temperatures of between 1.5°C and 6°C by 2100 (see page 23ff). Meanwhile, in recent National Communications, many Annex I Parties have reported increases in emissions equal to or greater than five per cent above 1990 levels.
The longer the fate of the Kyoto Protocol continues to hang in balance (and Parties adhere to business-as-usual or no-regrets policies) the less likely it is that Parties will be able to meet commitments under the Protocol, if ratified. This in itself will provide a significant disincentive to its ratification.
Numerous issues took up negotiating capital at COP-6. Of these, issues that can be characterized as deal-breakers were the issues of, inter alia:
project eligibility under the CDM;
accounting with respect to land use, land use change and forestry (LULUCF);
consequences of non-compliance; and,
composition of the compliance committee.
These issues, among others, remain to be resolved at COP-6 Part 2. COP-6 Part 2 is the resumed session of COP-6, scheduled to take place in Bonn, Germany, 16-27th July 2001.
The issues of technology transfer, capacity building and adverse effects were clustered together as ‘developing country issues’ at COP-6. Although developing country issues occupied significant negotiating time, it seemed evident at the end of the second week of negotiations that, if an agreement could be reached on funding for these activities, draft decisions and frameworks for action could be adopted. The issue of funding, however, proved controversial.
The Protocol mechanisms
The creation of an operational framework for the flexibility mechanisms that strikes a balance between environmental integrity, cost-effectiveness, and equity between the Parties is critical to the fate of the Protocol. In the lead-up to COP-6, Parties prepared a comprehensive negotiating text cataloguing a host of complex issues, technical and political, on which little agreement exists. Of these, two issues in particular generated considerable controversy at COP-6:
supplementarity across the mechanisms; and,
project eligibility under the CDM.
The Kyoto Protocol specifies that the use of the mechanisms by Annex I Parties shall be supplemental to domestic actions for the purposes of meeting emissions reduction commitments.
Since Kyoto, Parties have been struggling to provide meaning to the term ‘supplemental.’ This issue has fundamental implications for the ratifiability of the Protocol. Limiting the use of the mechanisms will increase compliance costs while failure to limit their use will significantly impact environmental integrity and intra-generational equity.
The Umbrella Group (a varying grouping of Annex I countries including Australia, Canada, New Zealand and the United States) has consistently maintained that it is unnecessary to elaborate on the term “supplemental.” Their participation in the Protocol is premised on the flexibility of the mechanisms, so as to ensure cost-effectiveness in meeting Protocol targets.
In the run up to COP-6, the European Union proposed a set of complex formulae to establish a quantitative ceiling on the use of Protocol mechanisms. The ceiling would, in effect, ensure that at least fifty per cent of the Parties’ emissions reductions are achieved through domestic action. The European Union believes that the environmental integrity of the Protocol will be significantly impaired if there is no cap imposed. If a cap is imposed, it would, at least in part, address the issue of ‘hot air trading,’ an issue that has haunted the negotiations since Kyoto. If no cap is imposed, hot air trading could make a mockery of the Kyoto targets as nations claim credit for non-existent emissions reductions.
The G-77/China group is also in favour of a quantitative ceiling on the use of the mechanisms. Their position stems from a concern both for environmental integrity and intra-generational equity. They contend that greenhouse gas emissions in large parts of the developing world are ‘survival emissions,’ while those in the developed world are ‘luxury emissions.’
A significant quantity of greenhouse gas emissions from the developing world are methane emissions from rice fields, while most of the emissions from the developed world are carbon dioxide emissions from fossil fuel burning. Although it may be more cost-effective to reduce X acres of rice fields than to reduce the miles per gallon in luxury cars, it would hardly be the more equitable option.
To the extent that the lack of a ceiling on the mechanisms postpones action in developed countries wishing to retain their luxurious lifestyles and at the same time promotes action in developing countries that have subsistence lifestyles, the G-77/China group views the practice as inequitable.
Until COP-6, the European Union and the Umbrella Group had maintained a truce on the question of supplementarity, perhaps in deference to the conventional wisdom that the unresolved political differences were so fundamental that a premature debate could derail the negotiation process. This truce inevitably unravelled at COP-6 and this, indeed, derailed the process.
Despite several hours of negotiation, Parties could not reach agreement on the issue. The Umbrella Group countered the European Union insistence on a quantitative ceiling by querying whether the European Union was ready to have the ceiling apply separately to each country within the European Union bubble. This issue remains the most difficult sticking point in the negotiations.
The second issue that generated controversy at COP-6 was project eligibility under the Clean Development Mechanism.
The CDM is directed at assisting non-Annex I Parties achieve sustainable development and Annex I Parties meet part of their emission reduction commitments. Although there is a built-in sustainable development limitation on the type of projects eligible under the CDM, there is no consensus on the nature of this limitation.
In the lead-up to COP-6, the European Union proposed that CDM projects be drawn from a “positive list” of safe and environmentally-sound projects such as projects on renewable energy, energy efficiency, and demand side management. The European Union’s proposed positive list would, by implication, exclude sinks and nuclear energy projects.
The European Union argued that a positive list would, inter alia, ensure environmental integrity, increase certainty for investors, and help garner political and public support. However, the Umbrella Group and several other large developing countries are fundamentally opposed to such a list.
The Umbrella Group believes such a list is unnecessary, while some developing countries believe that the list should include nuclear energy and sinks projects. The G-77/China group’s common position is that it is for the host developing country Party to judge whether a project activity meets its national sustainable development objectives and priorities.
The Umbrella Group and several South and Central American countries wish to include LULUCF or sinks projects (relating to, inter alia, reforestation, afforestation, sustainable forest management, and protection of endangered protected areas) in the CDM. They wish to do so because such projects could, by focusing efforts on carbon sequestration, contribute to sustainable development and biodiversity protection. They believe that the methodologies exist to deal with the concerns related to sinks.
The anti-sinks Parties, which include the European Union, the Alliance of Small Island States (AOSIS), China, and India, have concerns relating to measurement uncertainty, leakage, and non-permanence, which, they consider, could, if realized, make or destroy the integrity of the Kyoto Protocol targets.
India and China wish to include or, at the least, not exclude nuclear energy projects from the CDM. AOSIS, however, and, by a curious coincidence, the Organization of Petroleum Exporting Countries wish to exclude them.
Annex I Parties have played their cards quietly with respect to this issue. In the final negotiations, discussions centered on a possible exhortation to Parties to not engage in nuclear energy projects, but this did not appeal to those Parties wishing to include nuclear energy projects in the CDM.
There was no consensus on CDM project eligibility issues, either with respect to the inclusion of sinks or the exclusion of nuclear energy projects. This issue remains to be resolved at COP-6 Part 2.
Kyoto Protocol Articles 3.3 and 3.4 permit Annex I Parties to take into account afforestation, reforestation, and deforestation and other agreed LULUCF activities in meeting their emission reduction commitments. In addition to the concerns relating to measurement uncertainty, non-permanence, and leakage, there is a concern stemming from an ambiguity in Article 3.4.
While the Protocol allows Parties to use direct human-induced LULUCF activities (limited to afforestation, deforestation, and reforestation) begun since 1990 to meet emission reduction commitments in the first commitment period, it reserves the inclusion of “additional human induced activities” for the second commitment period. It then proceeds to qualify this, with the statement that a Party may choose to apply additional human induced activities for its first commitment period, provided that these activities have taken place since 1990. This proviso, typical of the ambiguities inherent in the Protocol, has permitted some Parties to argue that additional human induced activities, such as crop land management and grazing land management, could be included to meet emission reduction commitments in the first commitment period.
The potential scale of credits that Parties could claim for combined Article 3.3 and 3.4 activities is tremendous. A note prepared by the UNFCCC Secretariat in the lead-up to COP-6 reveals that the full use of Article 3.3 and 3.4 activities might permit Parties to substantially increase their emissions under the Protocol.
At COP-6, the Umbrella Group argued in favor of including additional activities in the first commitment period. However, the AOSIS and the European Union opposed it.
At the end of the first week, the United States, on behalf of the United States, Japan, and Canada, suggested phasing-out credits for activities under Article 3.4. This suggested that all countries would be able to count only 20 million tons of annual carbon uptake in managed forests. Credits beyond this level would be discounted by two-thirds. Discussions proceeded based on this offer, but they proved inconclusive.
At the final all-night negotiation session, tentative agreement emerged on the inclusion of certain Article 3.4 activities within the first commitment period, but no agreement could be reached on the precise nature of the cap on the use of Article 3.4 credits. This issue also awaits resolution at COP-6 Part 2.
The compliance regime under the Protocol
The key to a credible and effective Kyoto Protocol lies in the strength of its compliance system. In the lead-up to COP-6, Parties prepared a detailed negotiating text containing options for:
the principles that should guide the system;
the structure of the compliance committee (the mandates of its two branches, the enforcement and facilitative, its composition and procedures); and,
While many disagreements remain, the two most controversial ones relate to the consequences of non-compliance and the composition of the compliance committee.
Earlier, certain Annex I countries had argued in favor of politically, rather than legally, binding consequences. At COP-6, however, a general agreement emerged that legally binding consequences were necessary to ensure that the compliance system had some teeth.
Many types of legally binding consequences were discussed. Of them, one proved particularly controversial. If a Party is determined to be in non-compliance with its emission reduction commitments, it could, at a ‘penalty’ rate, subtract the excess emissions from its assigned amount for the subsequent commitment period. That is, if X is the penalty rate, it could subtract X times the excess tons of emissions from its assigned amount for the subsequent commitment period.
Parties tentatively agreed on the need for such a consequence as it would provide an incentive for Parties to remain in compliance in the first commitment period, but no agreement exists on the precise numbers for the penalty rate. While the European Union and the G-77/China group proposed an initial penalty rate of two (to be progressively increased if the non-compliance continues in subsequent commitment period), the Umbrella Group suggested penalty rates ranging from one to 1.3. Parties could not reach agreement on this issue and the debate continues.
The composition of the two branches of the compliance committee, the enforcement and facilitative, has been, since the beginning, a site of power struggle.
The G-77/China group has consistently argued for both branches to be staffed on the basis of equitable geographical representation of the United Nation’s five regional groups. The European Union and the Umbrella Group have argued for the composition to reflect the Annex I-non-Annex I distinction, with a majority for the Annex I. Indeed, for the enforcement branch, the Umbrella Group wishes all members to be nominated by Annex I Parties. The rationale for their position is clear, since the enforcement branch applies only to Annex I Parties, they believe Annex I Parties alone should be in charge. The G-77/China group, on the other hand, believes that since the consequences of non-compliance affect all nations, the five United Nation’s regions must be represented on the enforcement branch.
Parties could not agree and the issue remains unresolved.
In recognition of the fact that effective implementation of the climate treaty by developing countries would hinge on the resolution of outstanding issues relating to technology transfer, capacity building, adverse effects and funding, the issues were clustered together as ‘developing country issues’ at COP-6.
During the first week of negotiations, these issues were discussed in issue-specific contact groups and informal consultations. At the end of the first week, the key outstanding conflicts on these issues related to funding and decision language relating to funding – whether it should be mandatory or discretionary.
The Umbrella Group then circulated an offer that expressed intent to seek a significant funding increase for international climate-related activities. In addition, Annex II Parties declared their intent to establish a new window in the Global Environment Facility (GEF) containing two funds, for adaptation of the adverse effects of climate change and for greenhouse gas mitigation. The adaptation fund would be financed by a levy on the CDM and voluntary contributions from Annex II Parties. The total amount of additional contributions was provisionally estimated to involve up to US $1 billion during the first commitment period.
The European Union circulated an offer that committed Annex II Parties to successful replenishment of the GEF at a higher level than previously. It also proposed the establishment of an Adaptation Plus Fund, funded through a levy on the CDM and voluntary contributions from Annex II Parties, to fund concrete actions agreed upon at COP-6. This would cover primarily adaptation measures but possibly also technology transfer.
The G-77/China group reacted adversely to both offers, particularly the Umbrella Group’s offer. The Umbrella Group’s offer seemed to make financial resources available for mitigation activities. The G-77/China group is averse to any discussion on mitigation-related commitments or resources for developing countries. Only Annex I countries have mitigation-related commitments under the Protocol. This is a burden-sharing arrangement the G-77/China group perceives as equitable as the historical responsibility for climate change lies at the doors of the developed nations.
The G-77/China group objected to the channeling of finances through the Global Environment Facility. The developing countries are wary of channeling all available financing through the Global Environment Facility because they find its procedures bureaucratic, its funds difficult to access, and its disbursements slow. Annex I Parties are, however, cautious about creating new funding institutions and would prefer to address the Global Environment Facility’s shortcomings. The G-77/China group also opposed the carefully crafted discretionary language and the lack of proper reference to technology transfer in both the offers on financial resources. The issue of funding also remains to be resolved at COP-6 Part 2.
At 9am on November 25th 2000 the informal all-night negotiations were brought to a close. After the developing countries had left, the ‘main actors’ got down to business. The European Union, the United States and Japan hammered out a tentative deal. Final negotiations are rumored to have focused on the following:
inclusion of additional activities in the first commitment period, with a maximum number of absorbed emissions for each country;
no decision on sinks in the CDM pending consideration by the Subsidiary Body for Scientific and Technological Advice (SBSTA) on the issues of permanence, additionality and leakage; and,
no quantitative cap on the use of the mechanisms – Annex I Parties were merely required to ensure that domestic action constituted a “significant” part of its efforts.
On the issue of additional activities, the United States originally sought to negotiate for credit for 310 million tons of absorbed emissions yearly, but that figure came down to 75 million tons after a long telephone conversation between then-United States President Bill Clinton and British Prime Minister Tony Blair.
When this compromise deal was presented to the 15 European Union countries for final approval, Germany and Denmark refused to sign on to it and the deal fell through. It is a moot point whether, even if the deal had garnered enough support within the European Union, it would have been accepted by the G-77/China group who are perhaps justifiably tired of being locked out of final negotiations and presented with a fait accompli.
Allegations flew fast and furious after COP-6 over which group of Parties was to blame for its failure: the Umbrella Group (and in particular, the United States, within it) that was asking for too much; or the intransigent European Union that was refusing to compromise? From the point of view of the Kyoto Protocol’s integrity, this inquiry is of little consequence. The final tentative deal discussed at COP-6 would have wrecked the implementation of the Kyoto Protocol.
The combination of additional activities in the first commitment period with the attendant uncertainties, and the lack of a ceiling on the use of the mechanisms with the implied potential for unlimited trading of hot air, would have sounded a death knell for the Protocol. It would have enabled Parties to meet their Kyoto targets by engaging talented professionals to do the mathematics and throwing money at the problem overseas. Creative accounting is not a solution to the climate change problem.
The long-term success of the Kyoto Protocol hinges on a decrease in the energy intensity of economies, particularly industrialized ones that account for 70 per cent of global annual carbon. The intense opposition from United States industrial lobbies and conservatives to the Kyoto Protocol is perhaps evidence that this realization has sunk in.
Post COP-6 consultations
Despite the plethora of unresolved issues and the manifest difficulties in resolving them, the political momentum generated at COP-6 did not come to an end with Jan Pronk’s recitation of the quatrain, In Vain. Within a week, United States President, Bill Clinton, approached the European Union for a quick resumption of talks at the ministerial level. At his request, Norway tentatively agreed to host the high-level ministerial meeting in Oslo the week before Christmas.
In the lead up to the meeting, informal consultations were held on 6-7th December 2000 in Ottawa, Canada, between the European Union and the Umbrella Group. Though aimed at identifying common ground, Parties left with a clear idea that a chasm separated the European Union and the Umbrella Group.
Shortly thereafter, in a scheduled quarterly meeting, European Union environment ministers met and resolved, inter alia, that: a limited opening of Article 3(4) sinks with a tight cap could be accepted for the first commitment period; there should be no sinks in the CDM in the first commitment period; the compliance regime should contain, amongst other things, clear economic incentives and a compliance action plan; and domestic action should be the primary part of each Annex I Parties’ efforts.
Meanwhile, United States Senator Frank E Loy wrote to the European Union, outlining issues on which the European Union had to move in order for the Oslo meeting to prove productive. The European Union reacted negatively to these perceived preconditions, and, after a conference call between the two sides, the Oslo meeting was called off.
Early in 2001, the Umbrella group submitted a request for postponement of COP-6 Part 2. The European Union reluctantly agreed and the resumed session will take place in July 2001.
Between Part 1 and Part 2
In the aftermath of COP-6 Part 1, there was widespread fear that history could prove the deal-that-might-have-been to be more environmentally sound than any deal possible with a United States negotiating team now guided by a Republican President. This is a fear that the new United States President has done little to allay and much to aggravate.
To the dismay of the international community, President George W Bush went on record on March 13th 2001 expressing his complete opposition to the Kyoto Protocol. He based this opposition on “the incomplete state of scientific knowledge of the causes of, and solutions to, global climate change...” and the fact that the Protocol “... exempts 80 per cent of the world, including major population centers such as China and India, from compliance, and would cause serious harm to the United States economy” (Text of a Letter to Senators Hagel, Helms, Craig, and Roberts, The White House, Office of the Press Secretary, March 13th 2001).
In late March 2001, Environment Protection Agency chief, Christine Whitman, announced that, with Congress refusing to ratify the Protocol, the Bush Administration had “no interest” in implementing it.
President Bush commissioned a new report by the National Academy of Sciences, asking the Academy to examine not only the certainties and uncertainties of climate science but also the credibility of the latest IPCC report.
The homegrown review, published in June 2001, confirmed the IPCC conclusions, citing the Working Group I report as “an admirable summary” of climate science and refuting critics’ claims that the policymakers’ summary was the result of political sleight of hand.
Meanwhile, United States Department of Energy statistics revealed that, between them, China and India have reduced their emissions by ten per cent over 1995 to 1999, while the United States has increased its emissions by six per cent, further eroding President Bush’s position. Neverthless, in a policy statement in early June, he said again that major developing nations such as China and India must participate in solving the climate problem.
Calling the Kyoto Protocol “flawed,” the other main objection cited in the June statement was that the Kyoto targets were “arbitrary” and “not based on science.” This is, perhaps, another way of saying that there is no way that the United States can meet its Kyoto commitment given that its fossil carbon emissions stood 13 per cent above the 1990 baseline in the year 2000 (Tiempo, Issue 36/37, September 2000).
Despite the less than constructive stance, the Bush Administration is not questioning the seriousness of the climate threat nor is it backing out of the original UN Framework Convention on Climate Change, signed by George Bush senior in 1992. Preference is, however, to be given to exploring voluntary systems, not based on formal targets, looking for “creative ways to stabilize concentrations of greenhouse gases, drawing on the power of markets and technology.”
With the United States Senate now controlled by the Democrats, President Bush wishes to be seen to be taking “a leadership role in addressing the issue of climate change.” He will support a new multi-million dollar research programme on causes of climate change and technological development – scientific research as an excuse for inaction? – as well as committing US $25 million to building observational systems in developing countries.
The Protocol’s entry-into-force requirement makes the participation of the United States, responsible for 36 per cent of 1990 Annex I Parties’ carbon emissions, critical. Technically, an alliance between the European Union, Japan, Russia and Countries-with-Economies-in-Transition would be sufficient to bring the Protocol into force, but fears about competitive economic disadvantages have deterred these countries from ratifying the Protocol without the United States.
There is now evidence, however, that the European Union may assume a leadership role, albeit a reluctant one, in the process. According to the Director General of the German Environment Ministry Rainer Hinrichs-Rahlwes, it may be “necessary to ratify the Protocol without the United States” and pave the way for them to join later. An increasing number of nations are committing to ratify the Protocol as COP-6 approaches, with intergovernmental discussions underway regarding bringing the Protocol into force without the United States.
The host of difficult issues that haunted negotiators at COP-6 last November will dog their footsteps to COP-6 Part 2. Few, if any, of the key issues were resolved. The deal-breakers – that is, supplementarity and sinks – involve, in essence, a re-negotiation of Kyoto targets. A re-negotiation that is to some the only path to ratification, for the ability to meet the earlier targets, in all their stringency, does not now exist, whether for political or economic reasons. The choices are stark, and the interests deep-rooted and, perhaps for now, non-negotiable.
Where fundamental political differences exist, the fate of recent negotiations on environment and on trade at Cartagena and at Seattle has made failure acceptable, perhaps even a valid alternative. Parties chose that alternative at COP-6 Part 1 and may well do so at COP-6 Part 2.
Meanwhile, it is important to recognize that implementing the climate treaty is about much more than Kyoto. One can only hope that the incremental progress on the broader convention issues of technology transfer, capacity building and adverse effects is not held hostage to the failure of the negotiations on the Kyoto Protocol.
Lavanya Rajamani, RF in Public International Law, Worcester College, Oxford OX1 2HB, UK. Email: lrajamani@hotmail.com.
This contribution draws on the article “Re-negotiating Kyoto: A Review of the Sixth Conference of the Parties to the Framework Convention on Climate Change,” by Lavanya Rajamani, published in the 2000 Yearbook of the Colorado Journal of International Environmental Law and Policy, summer 2001.