Acts or emissions - Neil Hodge

Climate change has taken a back seat to economic woes and the Arab Spring, further diminishing political will to tackle the issue. As successive summits in Copenhagen, Cancún and Durban have produced mixed results at best, IBA Global Insight assesses the challenges.

A commitment to agree to an eventual deal on carbon emissions may have come later than hoped, but hopefully not too late. The conference on climate change in Durban, South Africa in December was seen by many as the last realistic chance of extending the Kyoto Protocol beyond its expiry date of the end of 2012.

And there can now be little doubt that action on climate change does need to be taken. In November, shortly before the Durban conference, the International Energy Agency (IEA) warned in its latest World Energy Outlook that cumulative CO2 emissions over the next 25 years amount to three-quarters of the total from the past 110 years, leading to a long-term average temperature rise of 3.5°C.

‘As each year passes without clear signals to drive investment in clean energy, the “lock-in” of high-carbon infrastructure is making it harder and more expensive to meet our energy security and climate goals,’ said Fatih Birol, the IEA’s chief economist.

The report says that without further action by 2017, the energy-related infrastructure currently in place would generate all the CO2 emissions allowed up to 2035. ‘Delaying action is a false economy: for every US$1 of investment in cleaner technology that is avoided in the power sector before 2020, an additional US$4.30 would need to be spent after 2020 to compensate for the increased emissions,’ it says.

So far, the buzz immediately following the Durban conference has been largely positive, though there are evidently still hurdles to overcome. Negotiators from nearly 200 countries agreed on a deal that provides a second commitment period for the Kyoto Protocol to start from 1 January 2013. It also sets the world on a path to sign a new climate treaty by 2015 that would come into effect in 2020 with legally binding targets.

The agreement – dubbed the ‘Durban platform’ – is different from the other partial deals that have been struck over the past two decades. For the first time, China, along with other developing countries, agreed to be legally bound to reduce its greenhouse gas emissions.

Previously, poorer nations have insisted that they should not bear any legal obligations for tackling climate change, whereas rich nations – which over more than a century have produced most of the carbon currently in the atmosphere – should. Governments also agreed on full implementation of the US$100bn package to support developing nations, formulated in Cancún in 2010.

‘This is highly significant because the Kyoto Protocol’s accounting rules, mechanisms and markets all remain in action as effective tools to leverage global climate action and as models to inform future agreements’, according to Christiana Figueres, Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC). In another first, the US, the world’s second biggest emitter, also agreed that the new pact would have ‘legal force’ – a step it flirted with in 1997 in Kyoto, but soon abandoned as Congress made clear it would never ratify that agreement.

 


‘There is a lag between compliance and an improvement and the longer we take to reach the new agreement, the greater the adverse impact on climate change’
Ian Sampson
Shepstone & Wylie Attorneys

 

Blowing hot air

However, the new agreement is not without significant potential pitfalls. For example, between now and 2020, when the new agreement would come into effect, emissions targets are entirely voluntary and are not legally binding. Governments must also agree country-by-country targets for emissions cuts, taking into consideration the historic emissions each is responsible for, the efforts on emissions each has made, their respective populations and how countries may continue to develop.

Furthermore, although talks are supposed to start immediately, politicians and green campaigners warn that there will be plenty more ‘horse trading’ before a firm protocol is drawn up, which means that targets may be significantly altered and provisions watered down. Casting a long shadow over all of this is the fact that if a Republican were to win the 2012 US Presidential election, it may prove impossible to negotiate a deal anyway.

There is also some concern over the agreement’s phraseology. The form of words settled on – ‘an agreed outcome with legal force’ – means a legally binding commitment, according to EU lawyers, but others claim that it is vague enough for countries to dispute. David Symons, director of environmental consultancy WSP, says that ‘the Durban platform provides an anodyne set of words, with much of the detail yet to be agreed and the teeth not really coming for eight years. The real challenge will be in agreeing the fine print’.

The conference was not without some controversy either. Canada withdrew from the agreement altogether, with the country’s environment minister Peter Kent lamenting that a failure to achieve its Kyoto targets would force the country to spend US$14bn on emissions trading permits. ‘To meet the targets under Kyoto for 2012 would be the equivalent of either removing every car, truck, ATV, tractor, ambulance, police car and vehicle of every kind from Canadian roads or closing down the entire farming and agriculture sector and cutting heat to every home, office, hospital, factory and building in Canada’, Kent said. Japan called the withdrawal ‘disappointing’, while China called it ‘preposterous’. Whether Canada’s withdrawal will have any long-term effect remains to be seen.

 


‘The Durban platform provides an anodyne set of words, with much of the detail yet to be agreed and the teeth not really coming for eight years’
David Symons
Director of environmental consultancy WSP

 

Failure to act

History has shown that international co-ordination and cooperation on climate change has been elusive. Even the Kyoto Protocol endured an eight-year impasse between adoption and implementation to enable states to prepare for its seven-year lifespan.

Earlier attempts to secure an extension of the Kyoto Protocol all failed. The climate talks in Copenhagen in 2009 and Cancún in 2010 met with little progress and no firm agreements. The Copenhagen Accord was drafted by just five countries (the United States, China, India, South Africa, and Brazil) and was not legally binding – delegates only ‘took note’ of the accord rather than adopting it. Nor did it commit countries to agree to a binding successor to the Kyoto Protocol. The accord set no real targets to achieve in emissions reductions and there was no agreement regarding an international approach to implement greener technology and phase out old machinery.

The follow-up UN Climate Change Conference in Cancún was more successful, with global leaders agreeing to try to limit the global temperature increase to 2°C. It also included a ‘Green Climate Fund’ – scheduled to total US$100 billion a year by 2020 – to assist poorer countries in financing emission reductions and adaptation. Developing countries would have their emission-curbing measures subjected to international verification only when they are funded by Western money.

But there was no agreement on how this money would be raised, or whether developing countries should have legally binding emissions reductions or whether rich countries would have to reduce emissions first. Some countries were also accused of scuppering any attempt at negotiating a successor to the Kyoto Protocol. For example, Russia and Japan secured wording that left them with a possible route to escape extension of the Protocol’s legally binding emissions cuts.

Kyoto’s legacy

The Kyoto Protocol, adopted on 11 December 1997 and entered into force on 16 February 2005, is an international agreement linked to the United Nations Framework Convention on Climate Change (UNFCCC) aimed at reducing global warming. Its major feature is that it sets legally binding targets for 37 industrialised countries and the European Community to reduce greenhouse gas (GHG) emissions. These amount to an average of five per cent against 1990 levels over the five-year period 2008–2012. The European Union and 192 states and have signed and ratified the protocol.

One of the unique aspects of the UNFCCC is that it adopts a principle of ‘common but differentiated responsibilities’, which means that the signatories have agreed that the largest share of historical and current global emissions of greenhouse gases originated in developed countries; that per capita emissions in developing countries are still relatively low; and that the share of global emissions originating in developing countries will grow to meet social and development needs.

Furthermore, the Kyoto Protocol has the power to take punitive measures against signatories who fail to meet carbon reduction targets. If the enforcement branch of the UNFCCC determines that an ‘annex I’ (typically industrialised) country is not in compliance with its emissions limitation, then that country is required to make up the difference – plus an additional 30 per cent – and would be suspended from making transfers under an emissions trading programme. Canada, Greece, Croatia, Romania and Bulgaria are among those to have been investigated to see if they are meeting their obligations.

Climate of fear

Environmental and international law experts believe that trying to negotiate an effective and long-term global agreement on climate change could be a slow and painful process, but that efforts to do so should continue to be encouraged. Ian Sampson, partner at Shepstone & Wylie Attorneys in South Africa and Vice-Chair of the IBA’s Environment, Health and Safety Law Committee, thinks that states are taking an incredibly short-term view of a long-term problem and that even with a new agreement, ‘the positive effect on climate change will not be seen for a number of years’.

He adds: ‘In other words, there is a lag between compliance and an improvement, and the longer we take to reach a new agreement, the greater the adverse impact on climate change, and the longer it will take to see an improvement even after a new reduction agreement has been reached’.

Hans Corell, former Under-Secretary-General for Legal Affairs and the Legal Counsel of the United Nations and Co-Chair of the IBA’s World Organisations Committee, says that international law is built on the premise ‘pacta sunt servanda’ meaning that ‘agreements must be honoured’, but adds that there is no truly effective mechanism to take states to task for failure to comply. ‘The UN Security Council has the power to act, but it would be a highly unusual move’, he says.

‘The problem is that each country wants to serve and protect its own interests and not those of the international community’, says Corell. ‘There is also no common view of what the effects of climate change are, how long before decisive action needs to be taken, and what actually contributes to the change. The Intergovernmental Panel on Climate Change has a view but it is not universally shared, which means that it is difficult to reach agreement’, he says.

Corell also points out that it is very difficult to determine whether a country has actually violated an environmental agreement. ‘The international community is largely reliant on individual states to commit to honour the object and purpose of an agreement and monitor compliance. Therefore, we are heavily reliant on the goodwill of governments to ensure best practice and that targets are achieved. This is obviously inadequate’.

‘Also, a lot of environmental damage caused may be outside of the state where the emissions occur and is therefore not monitored: for example, environmental damage affecting the Arctic is almost entirely a consequence of pollution and carbon emissions from elsewhere’.

Eugene Smary, partner at law firm Warner Norcross & Judd in Grand Rapids, Michigan, and the current Chair of the IBA’s Environment, Health and Safety Law Committee, says that environmental issues have become more and more politically contentious, which makes it all the more difficult to form a consensus internationally. ‘In the US, it can be a very divisive issue’, says Smary. ‘The government remains sensitive to imposing stringent environmental rules on US companies which could make them less competitive internationally when companies in emerging markets, for example, are free to operate with less stringent constraints’, he adds.

Businesses lead the way on sustainability

Many of the world’s leading companies have taken a harsh look at the environmental impact of their operations and have set themselves challenging targets, following the lead of organisations like the Global Reporting Initiative (GRI) and the Carbon Disclosure Project, which have established environmental reporting frameworks and encouraged companies to share their emissions data and details on water usage. Companies also face the ‘regulatory creep’ of the US and Europe wanting greater disclosure on ‘green’ and non-financial risks.

Marks & Spencer launched ‘Plan A’ in January 2007, which now sets out 180 sustainable commitments it needs to meet by 2015, ranging from cutting waste and packaging to sourcing more local produce in a bid to reduce the company’s carbon footprint.

British Telecom, which accounts for around 0.7 per cent of the UK’s total electricity consumption, is also one of the country’s largest purchasers of green energy. The company wants to reduce the carbon intensity of its global operations by 2020 to a level 80 per cent lower than in 1997. It has already achieved a drop of over 50 per cent. Last February BT launched its Climate Change Procurement standard which encourages (but does not compel) suppliers to use energy efficiently, and to reduce their carbon footprint during the production, delivery, use and disposal of products and services supplied to it.

Puma released the results of its first environmental profit & loss account (E P&L) to evaluate the impact that its carbon footprint has on its financial bottom line in May 2011. By putting a monetary value on the environmental impacts, the sportswear manufacturer hopes to be ready for potential legislation in the future, such as disclosure requirements.

The analysis revealed that the company’s overall environmental impact was valued at €94.4m for 2010: of that, Puma’s operations accounted for 15 per cent of the overall greenhouse gas emissions analysed, and 0.001 per cent of water consumption – equivalent to €7.2m of the overall valuation. The remaining greenhouse gas and water consumption valuation of €87.2m fell upon its entire supply chain, the main proportion being attributable to ‘tier 4’ raw materials suppliers, such as cattle ranching for leather, and natural rubber production.

The company’s analysis found that the most water-intensive activity in the production of a t-shirt occurs at the initial stage – the cultivation of cotton.

 

Soft law, hard choices

One way forward, says Smary, is for countries to honour the spirit of ‘shallow agreements’ based on ‘soft law’. ‘Shallow agreements are designed to create new behaviour and establish a new “norm” in environmental conduct. These could succeed in gaining international acceptance and compliance as opposed to trying to agree a universal treaty that suits all signatories’, he says.

According to Smary, there are over 500 multilateral environmental agreements in place around the globe. ‘Those that work best are those which have set agreed standards that countries have already largely complied with, or standards that can be attained relatively easily. These are also the standards that can more easily be enforced – the more capable companies are of complying with the standard, the less excuse they have for failure to comply’, says Smary. ‘There is no point imposing standards and rules under the expectation that countries and companies will follow them. There needs to be buy-in from prominent sector representatives that have to comply with these rules – agreements need to be consensual if they are going to be honoured and enforced’, he adds.

Corell also believes that the way forward is to adopt ‘soft law’. He believes that the international community needs to have a standard that advances the status of international law, essentially becoming customary, in much the same way as the UN Universal Declaration of Human Rights has become the bedrock of international human rights law despite its lack of treaty status. ‘We need a similar declaration that countries would follow with regard to environmental protection – “soft law” is more likely to work than an attempt to draw consensus around adopting a legally binding treaty’, he says.

Some experts believe that despite the absence of an international agreement, there are legal mechanisms available for individual states to take action against polluters. Kenneth Thompson, II, global chief legal officer at legal information provider LexisNexis and Co-Chair of the IBA’s Corporate Social Responsibility Committee, says that it is possible for individual states through their own laws and through collaborative enforcement efforts to take unilateral domestic actions that can have an extraterritorial effect. However, he recognises that the most effective method is to recognise the need for international treaty protocols.  

‘One method of extraterritorial enforcement which has been used effectively is in the cruise ship industry’, says Thompson. ‘Here, under the international law of the sea, the state where the cruise ship is registered, or its flag state, is responsible for effectively regulating that ship regardless of where it travels in the world’, he says. It is an approach that could prove useful in other areas of law.


‘The problem is that each country wants to serve and protect its own interests and not those of the international community’
Hans Corell
Former Under-Secretary-General for Legal Affairs and Legal Counsel of the United Nations

Thompson also says that even in the absence of binding international agreements, efforts will still be made to make business operations more sustainable and environmentally-friendly. ‘Companies are going to continue to commit to sustainable business practices, not just because investors and stakeholders want to see it, but because it makes commercial sense. The fact that there is no over-riding international agreement in place – though a successor to Kyoto is welcome – is not going to stop companies pursuing more sustainable and efficient operations’.

Ambitious plans

Experts believe that there is enough momentum at an individual state and corporate level to improve sustainable business practices and continue to cut carbon emissions further, with the hope that national governments will follow suit and impose stricter standards.

Corell emphasises that companies, regulators and consumers may set the standard for environmental protection and sustainability rather than governments trying to agree an over-arching international treaty. ‘A number of major companies have already embraced greener operating practices, and have ambitious plans to become more sustainable within very small timescales’, he reports. ‘Investors want more disclosure on this and consumers are choosing to buy goods and services from companies with a proven track record in being environmentally friendly. Perhaps it is therefore more realistic for national governments to embrace what is happening at the grass roots level and encourage that progression’, he says.

Speaking shortly after the Durban platform was unveiled, Connie Hedegaard, European Commissioner for Climate Action, said that ‘if there is one thing we have learned in Europe, it is this: binding targets work. They help governments remain focused even when other political priorities come up. Important though they are, international agreements are not the only answer to climate change’, she stressed. ‘What defines whether we have strong and effective, or weak and inadequate, climate policies is what nations, regions, municipalities, companies and individual citizens do. Combating climate change concerns us all’.

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Neil Hodge is a freelance journalist specialising in legal and business issues. He can be contacted at neil@neilhodge.co.uk.


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