Designing Future International Actions on Climate Change

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Designing Future International Actions on Climate
Change

• Ned Helme, Executive Director
• Catherine Leining, Senior Policy Analyst
• Center for Clean Air Policy
• Bonn, Germany
• Eighteenth Session of the Subsidiary Bodies
• June 2003

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About CCAP

• Non-profit environmental think-tank
• Founded in 1985 to develop, promote, and
  implement innovative solutions to energy and
  environmental problems
• Involved in international climate change debate
  for over ten years
• Involved in design of CO2 trading system in EU
  and trading workshops in accession countries
• Strong record of bringing together key govt and
  industry stakeholders to facilitate dialogue on
  major issues

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Overview of the CDM/Future Actions Dialogue

• Brings together negotiators from 30 Annex I and
  non-Annex I Parties for informal discussions
• Design and implementation of the CDM
• International actions on climate post-2012
• 7 meetings since May 2000
• Funded by Annex I governments
• Australia, Canada, Denmark, European Commission,
  Germany, Japan, Netherlands, New Zealand, Norway,
  Sweden, UK, USA

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Partners Collaborators

• Foundation for International Environmental Law
  and Development (FIELD), UK
• Energy Development Research Centre (EDRC),
  South Africa
• ECOFYS, Germany
• World Resources Institute (WRI), USA
• Additional research institutes and consultants

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Stabilization Needs

• Pre-industrial atmospheric CO2 concentration
  280 ppm
• Current concentration 360 ppm
• Future stabilization requires concerted effort
  over short, mid, and long term
• Eventually, global emissions must fall below 1990
  levels for stabilization
• Longer delay means higher stabilization level
• Hedging strategy Leave stabilization options
  open (e.g., 450, 550 ppm)

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Possible corridors to stabilization
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13
12
550
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10
Global anthropogenic CO2 emissions (GtC)
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8
7
450
6
5
1970
1980
1990
2000
2010
2020
2030
2040
Source of stabilization paths IPCC WGIII chapter
2, post SRES scenarios, CO2 only
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Post 2012 Framework

• Three-legged policy platform
• Annex I Parties in KP - Targets
• Annex I Parties outside KP - Responsibilities
• Developing countries - Programs

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Menu of Options Annex I

• Continue with Kyoto Protocol
• Technological cooperation or technology protocol
• Carbon intensity reductions
• Coordinated sectoral PAMs

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Menu of Options - DCs

• Technology transfer, CDM, GEF (current options)
• Sectoral CDM
• Sustainable development policies and measures (SD
  PAMs)
• Reducing emissions footprint from Annex I
  investments (e.g., MNC caps, ECA / WB shift)
• Carbon intensity targets (sectoral, economy-wide)
  or sectoral targets
• Absolute targets

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Other Considerations

• Menu or stepwise approach
• Binding versus nonbinding (pledge review)
• Umbrella indicators versus target
• Hybrid use overarching voluntary carbon
  intensity as indicator and combine with CDM,
  SD/PAMS, etc.
• Holding developing countries harmless in terms of
  cost of reduction or new technologies so their
  development priorities are not compromised
• Creating incentives for long-term transition to
  low-carbon development and economic growth for
  both Annex I and non-Annex I countries

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Technology RDD

• 2nd track to complement KP targets and timetables
• RDD push complements ET pull
• Critical for long-term solution, but not a
  panacea
• Could be based on Montreal Protocol model
  although key differences exist
• Pros of technology approach
• Compatible with economic growth
• Incentives to participate
• Cons of technology approach
• Less environmental certainty
• Government picks technology winners
• Difficulty in setting standards

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Mitigation Policy Time Frames
Short term
Long term
Mid term
Global GHG Emissions
Target emissions level for CO2 stabilization
2015
2030
2050
Time
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Annex I Emissions Footprint

• Annex I GHG footprint in DCs is significant
• Particularly in the power generation sector
• Climate protection may be possible via
  institutions that generate financial flows
• Many complexities exist
• Policy options
• Pool of concessionary funding
• Financial set-asides
• Special lending provisions
• Climate-friendly portfolio standard
• Increased transparency

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• In 2000, about US225 billion flows to developing
  countries from industrialized countries
  annuallyabout 4 of the GDP of developing
  countries.
• These flows are the financial footprint of
  industrialized countries in developing countries
  and a means of influencing the technologies used
  in the future.
• Sources of financial flows are both public
  (official) and private.
• Export Credit Agencies (ECAs) are national
  financial agencies that support exports of goods
  and services from their origin countries85
  billion in 2000

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Sectoral CDM

• CDM currently is project based
• Creates potential disincentive for proactive
  climate PAMs in DCs (tougher baselines)
• Link between project baseline and sectoral policy
  can be complicated
• Enabling sectoral policies as CDM projects
• Provide needed resources for policy
  implementation
• Larger volume of reductions possible with lower
  transaction costs from aggregation
• Reduced potential for leakage
• Challenges of additionality assessment and
  monitoring

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SD PAMs

• DCs could undertake SD PAMs that reduce climate
  impacts of development priorities
• Could be harmonized or country-specific
• Could be binding or nonbinding pledge
• Could leverage climate and non-climate funding
• Could be linked to trading system, or kept
  separate
• Challenges defining SD PAMs, baselines/
  measurement, monitoring, uncertainty of emission
  reductions, capacity needs
• Many DCs are doing this already

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Carbon Intensity Targets

• Different structure from hard caps not more or
  less stringent by definition
• Two approaches
• Sector-specific (e.g, electric utilities)
• Multi-sector/economy-wide
• Largest benefit is correlation between emissions
  target and economic activity
• Largest problems are lack of environmental
  certainty, measurement difficulties,
  transparency, and enforcement

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A La Carte Menu

• Annex I countries achieve absolute emissions
  reduction
• With consideration of costs/benefits distributed
  across constituencies
• DCs determine best approach based on national
  circumstances and capacity
• Rather than strict linear progression
• Key Question
• How do we link a la carte approach to the need
  for real global progress in the 2020 period?

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Discussion Questions

• How can we differentiate among countries
  according to national circumstances and capacity?
• Annex I (inside outside KP)
• Non-Annex I
• Interest in stepwise progression versus menu
  approach for DCs over time?

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Discussion Questions, Cont.

• Interest in approaches that transcend the Annex I
  and non-Annex I divide?
• Harmonized sectoral PAMs and SD PAMs
• Greening financial flows from Annex I countries
  to non-Annex I countries
• How can we create a structure that incentivizes
  technological innovation and implementation and
  engages developing countries?

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For more information.

• Please contact
• Ned Helme or Catherine Leining
• Center for Clean Air Policy
• 750 First St. NE 940
• Washington, DC 20002 USA
• Tel. [phone]
• Nhelme_at_ccap.org, cleining_at_ccap.org
• http//www.ccap.org