Managing Expectations: The Run-Up to Copenhagen Climate Talks

The run up to international climate change talks in Copenhagen, which open December 7, 2009, have become an exercise in managing expectations. The Copenhagen session, part of the United Nations Framework on Climate Change, was intended as the culmination of two years of negotiations on a global climate change treaty to replace the 1997 Kyoto Protocol on greenhouse gas emissions (“GHGs”). The Kyoto treaty largely expires in 2012.

The run up to international climate change talks in Copenhagen, which open December 7, 2009, have become an exercise in managing expectations. The Copenhagen session, part of the United Nations Framework on Climate Change, was intended as the culmination of two years of negotiations on a global climate change treaty to replace the 1997 Kyoto Protocol on greenhouse gas emissions (“GHGs”). The Kyoto treaty largely expires in 2012. International climate talks have faltered, however, because the United States is not yet ready to commit to binding emission reductions, because of deep divisions between developed and developing nations on global approaches to emissions reductions, and because funding mechanisms for emissions reductions and climate change adaptation are hotly debated.

The final pre-Copenhagen talks concluded last week in Barcelona, with no significant progress on these major issues. Europe has been pressuring the U.S. to come up with specific targets similar to those already made by other developed nations. For instance, the EU has committed to cutting emission to 20 percent below 1990 levels by 2020, but has promised to go to 30 percent if other countries set similar targets, Japan supports a 25 percent reduction from 1990 levels by 2020 if a global deal is cut, Australia will cut emissions 5 percent below 2000 levels or as far as 15 percent under an international treaty, and Norway has promised the biggest cut among industrialized countries, committing to 40 percent reductions below 1990 levels.[1] In contrast, the Waxman-Markey bill passed by the House would cut emissions 17 percent below 2005 levels, while the proposed Senate bill bumps that to 20 percent.[2]

While some climate leaders were hopeful that Barcelona would expedite solutions to set the stage for Copenhagen, the negotiations were beset by acrimony. African nations initially boycotted part of the talks to urge developed countries to commit to deeper cuts and extend the Kyoto Protocol.[3] Additionally, rancor in the Senate last week – in which the Republican minority boycotted an Environment and Public Works Committee markup of the Kerry-Boxer bill – appeared to make legislation in the U.S. even harder to achieve, at least in the near-term. Meanwhile, Senator Harry Reid, the Nevada Democrat and Senate Majority Leader, agreed last week to Republican demands for another in a series of federal studies on the costs of the bill, a process that will take at least five weeks to complete.[4]

In the absence of a firm U.S. commitment to emission reductions, other developed and developing countries have been reluctant to move forward. The current thinking remains that without significant movement by the U.S. Congress, which appears unlikely to occur in the next four weeks, the Copenhagen conference may produce only a “framework for progress” and a promise to meet again to try to work out a lengthy list of difficult issues that go beyond emission reductions by the U.S. and other developed nations.

Background: The Kyoto Protocol

The 1997 Kyoto Protocol, an international agreement that is part of the UN Framework on Climate Change, sets binding targets for reducing GHG emissions among 37 industrialized countries and the EU. The Protocol was entered into force in February 2005.[5] The United States is not a signatory to the Kyoto Protocol. Although the Clinton Administration negotiated and agreed to Kyoto’s terms, the treaty was never submitted to the Senate for its consideration, as it was clear there were not sufficient votes to ratify it. There were concerns at the time that achieving the type of GHG reductions called for by the Kyoto Protocol would damage the U.S. economy. Congress was also uneasy about the lack of specific actions required of developing nations that were emerging as major GHG emitters, like China and India. Those same concerns still remain for many opponents of a new treaty, and a lack of progress on them could bar successful negotiations in Copenhagen.

The Kyoto Protocols were designed to achieve, on average across developed countries, a five percent reduction of GHG emissions from 1990 levels by 2012. Countries could meet the targets by reducing their emissions, or by: 1) emissions trading via a carbon market; 2) purchasing offsets through a “Clean Development Mechanism” (“CDM”); or 3) purchasing offsets through “Joint Implementation.” Emissions trading, as set out in Article 17 of the Kyoto Protocol, allows countries that have emission units to spare – emissions permitted them but not “used” – to sell this excess capacity to countries that are over their targets.[6] The CDM, defined in Article 12 of the Kyoto Protocol, allows a country with an emissions-reduction or emissions-limitation commitment under the Protocol to implement an emissions-reduction project in developing countries to earn saleable, certified emission reduction credits which can be counted toward meeting Kyoto targets. [7] These reductions must be additional to what would otherwise have occurred. Joint Implementation, as defined in Article 6 of the Kyoto Protocol, allows a country with an emissions reduction or limitation commitment under the Protocol to earn emissions reduction units from an emissions-reduction or emissions removal project in another developed country that can be counted toward meeting its Kyoto target.[8]

The Protocol looks largely to developed nations, that is, “Annex B” countries to achieve GHG reductions. Developing nations, or “Annex A” countries, are not expected to commit to their own reductions until the second and subsequent commitment periods after 2012. Essentially, this allows Annex A countries to grow their economies and receive sufficient money and emissions reductions technology transfers from the developed world.

In the current round of negotiations, some countries, particularly in the developing world, have sought a framework parallel to the Kyoto Protocol for the United States, while retaining and strengthening Kyoto for those countries that have ratified the agreement. The Obama administration has rejected the Kyoto framework and has been pushing for a totally new agreement.[9] In between lies the EU, which seeks to maintain the elements of the Kyoto Protocol that support its already-operating carbon market. [10] The U.S.’ rejection of the Kyoto Protocol stems largely from the Protocol’s lack of binding reduction obligations for developing countries, particularly China and India.[11] Developing countries, for their part, continue to support the Protocol because, they argue, they have had little role in historic emissions, and need room for economic growth that is not limited by binding emissions targets.[12]

Issues Facing Copenhagen Negotiators

The four issues that will capture the most attention in Copenhagen center on developed country targets, financing, commitments to and by developing countries, and the legal shape of the agreement.[13]

One of the biggest obstacles to establishing binding targets for developed countries is the lack of US climate and energy legislation.[14] Although the House passed the American Clean Energy and Security Act in June,[15] divisions over the legislation in the Senate appear likely to prevent final Congressional action before the Copenhagen talks get underway.[16] The Obama Administration has been unwilling to commit the U.S. to emission reduction goals before Congress acts. Without a commitment by the U.S., other developed countries are less likely to make their own commitments, even under pressure from the EU, which has put mandatory reduction targets on the table.[17]

Creating the financial structure of an international climate accord also looms large. Wealthy nations have, in principle, agreed to support low-carbon growth in the developing world and to help those countries that would be hardest hit by climate change to adapt. As noted above, a current means of funding exists through the Clean Development Mechanism (“CDM”), which enables developed nations to offset carbon emissions by paying for carbon cuts in developing ones. For example, both the House-passed and the proposed Senate bills would support reforestation in the developing world. The bills allocate emission allowances to these programs. Sale of those allowances would finance the reforestation programs, effectively providing a perpetual federal funding earmark. In addition, the projects would generate emissions offsets, which also could be sold into the U.S. carbon market.[18] Presumably revenue from the offsets would be directed to the country hosting the reforestation project. These projects are not without controversy, however. Questions have been raised about the carbon storage actually achieved by some reforestation projects under the existing CDM program. More importantly, it appears unlikely that the financial expectations of the developing nations will be satisfied by funds generated by the proposed U.S. reforestation program, a continuation of the CDM program, or other fund transfers to developing nations that are tied to GHG emission offsets. While recent negotiations in Barcelona addressed helping developing countries adapt to climate change and the processes for providing aid, the most contentious details of a future funding structure, including actual funding amounts, the types of programs to be funded, and determining which developing countries would qualify for support and cost-sharing, are likely to remain unresolved by the time the Copenhagen summit opens.[19]

Rapidly developing countries, such as China, India, and Brazil have recently expressed their intent, despite varying levels of internal opposition, to include emission reductions in their domestic economic and social planning processes.[20] For example, Brazil has signaled readiness to reduce timber being cut from the Amazon by 80% by 2020, and Indonesia has announced a 26% carbon reduction by 2020.[21] In contrast, less wealthy developing countries continue to be concerned about: 1) the specifics of funding from developed nations for adaptation measures in developing countries, 2) capacity building and technology, 3) obtaining representation for developing nations in the governance of climate finance, and 4) immediate mitigation actions for highly vulnerable countries such as island nations that anticipate catastrophic impacts from rising sea levels.[22]

China, which has recently overtaken the U.S. as the world’s biggest carbon emitter,[23] has pledged to reduce the amount of energy used per unit of GDP by 20%.[24] This sort of reduction in so-called “GHG intensity” is similar to the policies the U.S. has been following for the last decade. While theoretically slowing the rate of growth in GHG emissions, such steps are unlikely to lead to a reduction in China’s total GHG emissions. Reducing China’s emissions also will likely prove exceptionally challenging because 70% of its electricity comes from coal-fired power stations.[25] To reduce these emissions, China is likely to continue to demand funding from developed nations through the CDM, which is becoming a harder sell in light of China’s rapid economic growth. Observers note that China, anxious to appear cooperative with the U.S. and other major powers in Copenhagen, will have to reassure the developed world that China’s emissions reductions and targets can be reached, monitored, and verified.[26]

Finally, the legal shape of a post-Copenhagen agreement remains up in the air, mainly due to disagreements about what should be expected of China, India, Brazil, and other developing nations. Eileen Claussen, president of the Pew Center on Global Climate Change, notes that the U.S. would like an entirely new agreement, the E.U., Japan, and Australia would prefer a new agreement that incorporates Kyoto, and developing countries would prefer to preserve Kyoto entirely.[27]

Reports from Barcelona suggest that while no legally binding agreement will emerge from Copenhagen, there will likely be a political declaration that would give an indication of where the negotiations are going, as well as a date certain to conclude the negotiations.[28] Further progress is likely to depend on the U.S. Congress’ ability to enact binding domestic climate change legislation. It appears that the U.S.’ call in Barcelona for a “framework for progress” is a plea for more time in exchange for the promise that the Congress can deliver climate legislation by next year and be set up for binding U.S. commitments to a new, comprehensive climate treaty by the end of next year.

For more information, contact any member of Marten Law Group’s Climate Change practice group.