Climate emergency: COP25 talks fail to keep up with reality
Katie KouchakjiTuesday 21 January 2020
There were high hopes for the 25th Conference of the Parties (COP25) to the UN Framework Convention on Climate Change (UNFCCC), held in early December. Despite over-running by a record-breaking 44 hours, the negotiations failed to produce the outcomes sought.
At the top of the agenda was for outstanding rules for markets and emissions trading as established by Article 6 of the Paris Agreement to be resolved. The conference was expected to lay the foundations for increased ambition, and for governments to arrive at 2020’s talks, in Glasgow, with plans to up their emissions reduction goals.
Governments ultimately invoked Rule 16 of the UNFCCC rules of procedure, meaning that items still unresolved are automatically put on the agenda for the next meeting.
The lack of a uniform set of rules for carbon trading is acting as an inhibitor to climate finance
Wendy Miles
Chair of the IBA Climate Change Arbitration Group
‘I’ve never heard “Rule 16” so much,’ says Yamide Dagnet, a senior associate in the International Climate Action Initiative at the World Resources Institute in Washington, DC, and head of UNFCCC projects there. ‘Too many issues were pushed to the next session.’
‘At a time of climate emergency, using a rule that’s about postponement is… very problematic, on several levels,’ Dagnet adds.
COP25 encountered obstacles even before talks began. Talks were to be held in Santiago, but the Chilean government had to withdraw its offer to host the two-week meeting following weeks of civil unrest. The Spanish government stepped in and, in the space of three weeks, pulled together a venue in Madrid for the Chilean COP presidency.
Speaking at the COP25 opening, UN Secretary-General António Guterres called on parties to demonstrate that they are serious about decarbonisation. ‘We must finally demonstrate that we are serious in our commitment to stop the war against nature – that we have the political will to reach carbon neutrality by 2050,’ he said.
‘We’ve already reached tipping points,’ in terms of climate change, says Mark Baker-Jones, a special counsel at Simpson Grierson and leader of the firm’s climate change practice, who attended as an overflow participant on the New Zealand delegation. ‘You know that analogy that you’re heading into an accident, so you better turn on the brakes? My feeling, after this COP, is that we’re in the accident.’
Progress on the rules for Article 6 were hampered by intransigence on different aspects, chiefly by Australia, Brazil and the United States. Points of contention included the carry-over of units from the Kyoto Protocol into the Paris Agreement and how to account for emissions reductions that are transferred from the country in which the project takes place to the purchasing nation.
‘The Article 6 outcome is a real problem – we need that mechanism for the next decade,’ says Wendy Miles, Chair of the IBA Climate Change Arbitration Group and a partner at Debevoise & Plimpton. ‘It’s critical to climate finance that we have [Article 6].’
‘It was very clear that there were groups of nations that wanted higher ambition… they wanted the rulebook complete and functional. Then there were the others who didn’t,’ says Baker-Jones.
Environmental groups effectively communicated that no deal was better than a bad deal, he adds, placing further pressure on governments after the collapse of Article 6 talks at the 2018 COP meeting.
‘Last year, there was a compromise on the table – it wasn’t pretty, but people were prepared to sign up to it,’ says James Shaw, New Zealand’s Minister for Climate Change, who co-facilitated the Article 6 talks with his South African counterpart at both COP24 and COP25.
Shaw adds that he saw some movement on issues in the intervening months between those that want a tight set of rules and a smaller group who would prefer a more permissive set. However, this movement has also seen some hardening of positions, which meant that they would not agree to a deal that did not preserve the environmental integrity.
‘I don’t want to sugarcoat what happened, but the last 24 hours were very critical – we could have had a worse outcome,’ says Dagnet.
In the meantime, some have speculated that governments will forge their own way via bilateral deals, such as the linkage of the European Union’s and Switzerland’s emissions trading systems as of 1 January 2020. A few countries could even band together in ‘carbon clubs’.
‘There’s nothing to stop parties acting bilaterally,’ says Lisa DeMarco, a senior partner at DeMarco Allan in Toronto. ‘The carbon club idea will get [more attention] at this point.’
‘Carbon clubs are a good alternative – but it’s like a banking system,’ says Miles. ‘If you don’t have a set of globally-agreed standards, you open that system up to problems.’
The continued lack of rules for Article 6 also raise questions about how successful plans in 2020 to increase ambition will be. ‘I think we will see countries raise their ambition – but condition it on Article 6,’ says DeMarco.
‘The lack of a uniform set of rules for carbon trading is acting as an inhibitor to climate finance,’ says Miles. ‘I don’t think states can walk away from that market aspect and expect that [low-carbon] transition to occur without coming down on something like draconian carbon taxes.’
‘For some countries, markets and being able to trade is key,’ says Martijn Wilder, founding partner at advisory and investment manager Pollination. ‘There’s no excuse that you can’t continue to increase ambition, but some countries will need markets to increase ambition, there’s no doubt about that.’
The pressure is on the British Government to deliver at COP26, to be held in November 2020 in Glasgow. COP26 is intended to cap off a year of increased reduction pledges. It now has the added distraction of a third attempt at finalising Article 6 rules.
‘It’s such an important year – I don’t think people would like to risk another failure, so they might find some alliances,’ says Dagnet. ‘If there’s no strong outcome [in Glasgow], people will definitely think about different ways to collaborate.’
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