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.
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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
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 CO 2 trading system in EU and trading workshops in accession countries Strong record of bringing together key gov’t and industry stakeholders to facilitate dialogue on major issues
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
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
Stabilization Needs
Pre-industrial atmospheric CO 2 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)
Possible corridors to stabilization
14 13 12 550 11 10 9 8 7 6 5 1970 1980 1990 2000 2010 2020 2030 2040 450 Source of stabilization paths: IPCC WGIII chapter 2, post SRES scenarios, CO2 only
Post 2012 Framework “Three-legged” policy platform
1. Annex I Parties in KP - Targets 2. Annex I Parties outside KP - Responsibilities 3. Developing countries - Programs
Menu of Options – Annex I
Continue with Kyoto Protocol Technological cooperation or technology protocol Carbon intensity reductions Coordinated sectoral PAMs
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
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
Technology RD&D
2nd track to complement KP targets and timetables – RD&D “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
Mitigation Policy Time Frames
Global GHG Emissions Target emissions level for CO 2 stabilization Short term
2015
Mid term Time
2030
Long term
2050+
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
In 2000, about US$225 billion flows to developing countries from industrialized countries annually —about 4% of the GDP of developing countries.
Financial Flows to Developing Countries from Industrialized Countries, 2000
Other Multilateral Institutions 4% These flows are the financial footprint of industrialized countries in developing countries and a means of influencing the technologies used in the future.
Development Banks 6% Bilateral Aid 12% International Finance Corp.
2% FDI 43% 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 countries —$85 billion in 2000 Other private 27% FDI covered by ECA investment insurance 6%
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
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
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
“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?
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?
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?
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. +1 202 408 9260 [email protected]
http://www.ccap.org