Agreement on new international climate treaty is still years away

Modest progress on technical issues at global climate talks in Panama masks a continuing impasse over crucial emissions reduction pledges.

Delegates at the last formal UN preparatory climate talks in Panama, ahead of the global conference in Durban in December, have made progress on negotiating texts and technical issues on finance, technology transfer and adaptation.

But developed and developing countries remain polarised over the need for more ambitious greenhouse gas reduction targets and the legal form of a new global climate framework after 2012. With no progress made on an extension of Kyoto Protocol commitments, which end in 2012, a damaging ‘Kyoto gap’ between treaties is now almost inevitable.

The Panama talks focused on institutions and mechanisms that would enable agreement in the longer term. This step-by-step process, agreed on in Cancún in 2010, has progressed slowly after almost complete breakdown at Copenhagen in 2009 (ENDS Report 419, p 55).

Most parties now believe agreement is at least three to four years away. This is likely to depend on a review in 2013-15, agreed in Cancún, covering the scientific adequacy of the 2°C limit and appropriateness of mitigation pledges. The form and shape of the review is set to be one of the most controversial issues in Durban. At present, commitments fall 40% short of the 2°C limit, confirmed Ms Figueres.

Modest progress

The talks did ensure that institutional structures agreed in Cancún, such as the Green Climate Fund, are now on track to be implemented at Durban (ENDS Report 431, pp 6-7).

Early tensions over the lack of proposals on long-term funding for the $100bn a year fund – a crucial issue for developing countries – had threatened to undermine the talks. But late papers submitted by the EU, followed by Australia, the US and Japan, restored momentum.

Ms Figueres said these would help develop a negotiating text in Durban. But there is still no clarity on sources of long-term funding or avoidance of a ‘financing gap’ from 2013 when fast-start finance ends. Scaled-up funding will not begin until 2020.

In Panama, broad discussions began on the legal options for a new global climate policy framework including non-Kyoto parties. These options include a legally binding instrument, or decisions by the conference of the parties. Variants on these options included a mandate to conclude an agreement based on a roadmap with signposts, or a general declaration on a future legal instrument.

Texts were also agreed on emissions reporting guidelines and a registry to track developing countries’ mitigation efforts.

While there has been modest progress on a wider agreement, the future of the Kyoto Protocol remains uncertain. Ms Figueres stressed that these are political issues which will have to wait for Durban. But the technical framework has been laid, existing commitments are being translated into a comparable form and compromise options explored, she said.

At the core of the impasse is the continuing insistence by developing countries that developed countries sign up to a second commitment period under the protocol after 2012, which Russia, Japan and Canada have refused to do.

Argentina’s Jorge Arguello, chairman of the G77 and China, said the Kyoto Protocol is a cornerstone of the climate change regime. “Nothing will be achieved unless it can be adopted in Durban.”

But developing countries are refusing to translate their own voluntary nationally appropriate mitigation actions into equivalent binding commitments.

The EU, which has the majority share of global carbon markets in its emissions trading scheme (EU ETS) and the use of international offsets, now occupies a key position in the future of the protocol.

It previously said it would only sign if the US and major developing countries agreed to a broader treaty, but following a meeting of EU environment ministers on 10 October it has softened its stance.1 It now says it will approve a new commitment period up to 2020 if others adopt a roadmap and legally binding timetable towards a wider global climate deal.

The EU says its support is also conditional on preserving the protocol’s environmental integrity. This depends on limiting carry-over of surplus country credits into a new commitment period and on robust accounting rules for emissions from land use and forestry. Both of these issues have caused tensions with Russia, which has a huge surplus of country credits and large forest resources.

Carbon markets

Meanwhile, the lack of continuity of Kyoto and the absence of a new post-2012 regime continue to trouble carbon market investors. The market for international credits from the Kyoto Protocol’s Clean Development Mechanism (CDM) is under pressure following an EU decision to ban industrial gas offsets (ENDS Report 433, pp 51-53) and there is little sign of progress on sectoral crediting mechanisms.

The carbon market negotiation text was streamlined in Panama, but parties agreed no more progress could be made without a political-level decision. The CDM executive board said in September it would launch wide-ranging stakeholder consultation in Durban on a post-2012 reform of the much-criticised scheme.

Despite uncertainties and a much more protracted process towards a new agreement, the carbon market remains remarkably sanguine. It points to continuing demand from the EU ETS post-2012, new opportunities with growth of regional cap-and-trade schemes in the US (ENDS Report 440, pp 52-53) and the possibility of an Australian scheme.

Miles Austin, director of the Carbon Markets Investors Association, said there is little legal doubt that the CDM (as well as the protocol) will carry on after 2012. “The default assumption is that it will continue.” He called for clear milestones to be set at Durban. “If we are committing to a four to seven-year process in the non-Kyoto negotiating stream then we need to know what this involves.”

However, other parts of the business community, such as the CBI, say companies are losing patience (see p 18).

At the close of the Panama talks, Ms Figueres said progress on technical issues meant governments could now focus on resolving serious differences over the future of the global climate regime. But while negotiations have become less acrimonious since Copenhagen, they are now moving at a much slower pace.