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Focus: Copenhagen – a (small) step forward

23 December 2009

In brief: After years of planning, months of great expectation, weeks of negotiation, days of drama and a crucial few final hours of exasperated deal-making, world leaders emerged late last Friday with a tentative political accord that sets out the broad framework from which a comprehensive treaty to address climate change may eventually emerge. Partner Grant Anderson and Lawyer Fergus Green report on the outcome of the Copenhagen Conference and its implications for Australia.

How does it affect you?

  • The Federal Government will announce Australia's 2020 emissions reduction target by the end of January 2010, and this will be an important element of its proposed Carbon Pollution Reduction Scheme (CPRS) when it reintroduces the legislation for that scheme in the following month.
  • Unfortunately, uncertainty will continue at the international level over the next year, as further efforts are made to thrash out a climate change treaty.

Background

The Copenhagen Conference was supposed to be the end-point of a two-year process for negotiating a comprehensive new climate change agreement to extend or replace the Kyoto Protocol, the first commitment period of which expires at the end of 2012. Owing to long-standing disagreements between developed and developing countries about the legal form that a new agreement should take (the former favour an entirely new treaty; the latter, an extension of the Kyoto Protocol), these negotiations have taken place under the auspices of two 'ad-hoc working groups'. The first of these groups was set up for the purpose of negotiating amendments to the Kyoto Protocol to cover (among other things):

  • developed countries' emissions reduction targets for the 2013-20 period;
  • accounting rules for the land-use and forestry sectors; and
  • the continuation and expansion of the Clean Development Mechanism.

The second group was established under the United Nations Framework Convention on Climate Change (the UNFCCC) to negotiate a broader suite of issues, including:

  • a set of long-term emissions reduction goals;
  • the mitigation commitments of developing countries;
  • measures to curb tropical deforestation; and
  • measures to facilitate and finance 'green' development and climate change adaptation in the developing world.

The work of both the 'Kyoto Track' and the 'Convention Track' has proceeded slowly since the Bali Conference two years ago, hobbled by the requirement that all decisions (including the endorsement of every word of treaty text) must be made by consensus. Countries submitted their contributions into draft negotiating texts that, by the middle of this year, contained a range of different options and identified a large number of points of disagreement. Going into Copenhagen, the draft negotiating text under the Convention Track stood at around 180 pages and included some 2000 square brackets, which represented disputed text. Nonetheless, the two weeks of negotiations in Copenhagen did see substantial progress being made by the two working groups towards reaching agreement on a comprehensive package of decisions, conclusions and amendments that, it was hoped, would eventually constitute a new legally binding agreement (in the form of one or more treaties). By the end of the Conference, the texts had been streamlined and the options consolidated. Under the Convention Track, a 10-page draft framework text was prepared, along with nine draft decisions of the Conference of the Parties (the COP) that would serve as more detailed satellite texts to accompany the framework text. The Kyoto Track produced a set of proposed amendments to the Kyoto Protocol, accompanied by a series of five draft decisions of the COP and the Meeting of the Parties to the Kyoto Protocol (the MOP).

This still left a handful of contentious issues that remained to be resolved, and there was simply neither the time, nor the willingness to compromise, to settle these outstanding matters. By way of example, there was widespread disagreement on a global 2050 emissions reduction target (anywhere between 50 to 95 per cent of 1990 levels), the aggregate 2020 emissions reduction target for developed countries (from 25 to 50 per cent at 1990 levels), and the emissions abatement to be achieved by developing countries. It was in an effort to deliver some tangible outcomes that these 'bottom-up' negotiations were supplemented with parallel negotiations over shorter texts produced by smaller groups of countries and shopped around to others in order to build consensus in a more 'top-down' process. It was one of these texts that became what is now known as the 'Copenhagen Accord'. While the Accord was endorsed by most countries, as this was not unanimous it could not be formally adopted. Instead, the Conference merely agreed to 'take note of' it.

Legal status of the Copenhagen outcomes

The Copenhagen Accord is a political agreement between world leaders, not a formal legal treaty. As such, it is not legally binding on Australia. Nonetheless, given the Federal Government's firm commitment to the UN process and its deep involvement in the negotiations, Australia has created a public expectation that it will comply with the Accord. Indeed, Prime Minister Kevin Rudd has already signalled Australia's firm commitment to implement it, and confirmed that Australia will announce its 2020 emissions reduction target in accordance with the timetable set out in the Accord.

The incomplete packages of draft decisions, conclusions and amendments negotiated under the Kyoto Track and the Convention Track are also not legally binding on Australia or any other country. However, the progress made in these negotiations has been captured in formal decisions of each of the ad hoc working groups and the unfinished negotiations over these texts will be carried forward into 2010.

Parlaying the Accord into a binding international agreement will be a real challenge. The next scheduled COP/MOP meeting is in Mexico, from 29 November 2010 to 10 December 2010, yet the Accord makes no mention of a target date for reaching such an agreement. While the Accord recognises climate change as 'one of the greatest challenges of our time', its opening paragraph encapsulates the range of positions that need to be accommodated – and, in this regard, highlights the immensity of the task ahead. This paragraph states:

We emphasise our strong political will to urgently combat climate change in accordance with the principle of common but differentiated responsibilities and respective capabilities. ... [We] shall ... on the basis of equity and in the context of sustainable development, enhance our long-term cooperative action to combat climate change. We recognize the critical impacts of climate change and the potential impacts of response measures on countries particularly vulnerable to its adverse effects and stress the need to establish a comprehensive adaptation program including international support. [our emphasis]

Emissions targets

The Copenhagen Accord commits developed countries, including Australia, 'to implement individually or jointly the quantified economy-wide emissions targets for 2020, to be submitted [by them] ... by 31 January 2010'. This clause is understood to require (in a political sense) developed countries to commit to a final 2020 target by 31 January 2010, although the baseline against which each country's target is to be set seems to be left to the individual country. A number of developed countries have already announced their (indicative) 2020 targets. These include the European Union (at least a 20 per cent reduction from 1990 levels), the United States (a 17 per cent reduction from 2005 levels), Japan and Russia (a 25 per cent reduction from 1990 levels) and Australia (a 5 to 25 per cent reduction from 2000 levels). However, these targets were largely put forward on the basis of there being a comprehensive treaty that would provide context in the sense of the emissions reductions commitments other countries would be prepared to adopt and the associated measures that would accompany these commitments (such as longer-term emissions reduction goals and new rules about accounting for emissions from the land-use and forestry sectors).

This puts the Federal Government in the vexed position of having to commit to a 2020 emissions reduction target before these issues have been determined. While the Government has committed to an unconditional target of holding 2020 emissions to 5 per cent below 2000 levels, the question is whether Australia will adopt a higher target. Technically, in the absence of a formal agreement, none of the conditions the Government set in May this year for accepting a higher (15 per cent or 25 per cent) 2020 emissions reduction target have been met. However, the Prime Minister has indicated that Australia will consult with other governments in the month ahead regarding their targets and commitments and, on the basis of these consultations, make an assessment of the aggregate emissions reductions that would result from the implementation of those commitments and the share of that reduction task that Australia is prepared to bear.

The conditions the Government has laid down for a 15 per cent emissions reduction target include global action being on track to achieve atmospheric greenhouse gas concentrations of between 510 to 540ppm, and advanced economies committing to reduce their aggregate emissions by between 15 and 25 per cent below 1990 levels by 2020. The conditions for a 25 per cent emissions reduction target are international emissions reduction commitments that, in aggregate, are consistent with atmospheric greenhouse gas concentrations of no greater than 450ppm (with global emissions peaking no later than 2020) and advanced economies committing to reduce their aggregate emissions by at least 25 per cent below 1990 levels by 2020.

The recognition in the Accord that it is highly desirable to hold the increase in global temperature to below two degrees Celsius suggests that any international climate change agreement should seek to stabilise atmospheric greenhouse gas concentrations at no more than 450ppm. However, at this stage it is very doubtful that the commitments that developed and developing countries will be prepared to make will be sufficient to achieve this outcome. Moreover, from the perspective of the Federal Government's commitments, the conditions for accepting a 2020 emissions reduction target in the 15 to 25 per cent range relate not only to quantities of emissions reductions but also to the mitigation commitments made by developing countries and the scope of a new international agreement – including its coverage of land-use, the reduction of emissions from deforestation and forest degradation, the expansion of carbon markets, and technology transfer and financing. These issues are only addressed cursorily in the Copenhagen Accord, although substantial progress was made in their negotiation during the Copenhagen Conference.

In so far as developing countries are concerned, the Copenhagen Accord merely commits them to implementing 'mitigation actions', which are to be detailed by 31 January 2010 and updated over time. In addition, the results of these actions (which are to be reported every two years) are generally only to be subject to domestic measurement, reporting and verification (while the Accord envisages the creation of guidelines for a process of international consultation and analysis in relation to the emissions outcomes of these actions, these guidelines are required to respect 'national sovereignty'). The exception is where the actions are supported by internationally provided finance, technology or capacity building, in which case those actions will be subject to international monitoring, reporting and verification.

This outcome reflects the reluctance of developing countries to submit to international monitoring, reporting and verification of their emissions mitigation actions in a context where they feel the developed world has not met its commitments. While there are some promising signs (with China, for example, having adopted a voluntary 2020 target of reducing its emissions intensity by 45 per cent on 2005 levels), it seems highly unlikely that these commitments will result in the major developing economies collectively reducing their emissions by anywhere near 20 per cent below business-as-usual by 2020 (this being a precondition for Australia adopting a 25 per cent 2020 target).

Land use and avoided deforestation

Some progress was made at Copenhagen at working group level in relation to the issue of land-use, land-use change and forestry (LULUCF), albeit with a number of areas of disagreement still to be resolved. A detailed draft decision under the COP/MOP LULUCF proposes the creation of a work program to explore ways of moving towards more comprehensive accounting of emissions and removals from LULUCF, and an additional program to consider and develop modalities and procedures for including LULUCF activities under the Clean Development Mechanism. This is a matter that is significant to Australia, as there is much potential in the agricultural sector for emissions abatement through avenues such as soil sequestration and improved crop/grazing management practices.

Considerable progress was also made on measures for reducing emissions from deforestation and forest degradation (REDD) under the Convention Track. Given the near-complete agreement reached by countries on the REDD texts by the end of Copenhagen, some had expected that a long-term deal on REDD would be announced. However, because REDD is merely one component of the negotiations, the REDD negotiations will only be finalised as part of a comprehensive climate change agreement. Nonetheless, the Copenhagen Accord recognises the 'crucial role' of REDD and the need to provide incentives for developing countries to reduce deforestation through the 'immediate establishment' of mechanisms to allocate financial resources toward REDD actions. While the Accord does not itself establish any such mechanisms, the finance section of the Accord does mandate the provision of additional financial resources, including 'substantial finance' for REDD. On the sidelines of the Copenhagen Conference, a commitment was made by a group of major developed countries (Australia, the US, the UK, Norway, Japan and France) to provide US$3.5 billion in public funding over the next three years in incentives to encourage REDD projects in developing countries, with a view to the further expansion of REDD mechanisms under a new international agreement for the post-2012 period.

The Clean Development Mechanism

Another area of negotiation was the expansion of the Clean Development Mechanism (the CDM). However, the draft COP/MOP decision on the CDM reflects some considerable disagreements between parties over issues such as the expansion of the CDM to cover carbon capture and storage activities and nuclear power facilities, the development of standardised baselines against which to measure the additionality of CDM projects, measures to expand the geographical coverage of the CDM, and the consideration of co-benefits in the CDM application and registration process. Disagreement also persists over the extent to which developed-country parties will be entitled to apply certified emissions reductions (CERs) from the CDM (and other Kyoto units) towards meeting their assigned emissions reductions under the second commitment period under the Kyoto Protocol (assuming this is eventually agreed).

Financing for mitigation and adaptation

The Copenhagen Accord records the 'collective commitment' by developed countries 'to provide new and additional resources, including forestry and investments through international institutions, approaching USD 30 billion for the period 2010-2012 with balanced allocation between adaptation and mitigation'. However, the individual contributions by countries such as Australia have yet to be negotiated. The Accord also records a further commitment by developed countries 'to a goal of mobilizing jointly USD 100 billion dollars a year by 2020', to be derived from a mix of public, private and alternative sources of finance, to fund mitigation and adaptation in developing countries. The language is intentionally aspirational, and does not amount either to a collective or an individual commitment to provide that funding. Moreover, the funding is tied to 'meaningful mitigation actions and transparency on implementation'. Nonetheless, the significance of this language in the Accord is that it will set the benchmark for long-term funding under an eventual legal agreement. While many had hoped that Copenhagen would result in an agreement on long-term financial contributions by individual developed countries, prior to the Conference there was not even any agreement on what the aggregate figure should be. Consensus on the $100 billion benchmark is, at least, a significant step towards a more detailed agreement on financing.

Progress was also made under the Convention Track negotiations towards an agreement on new financial governance mechanisms and arrangements. In the meantime, the Copenhagen Accord includes a decision to establish a 'Copenhagen Green Climate Fund' as an operating entity of the financial mechanism of the UNFCCC to support mitigation and adaptation activities in developing countries. In addition, negotiations under the Convention Track addressed the transfer of clean technologies to developing countries.

Next steps

Negotiations will continue under both the Kyoto and Convention Tracks, with no end date having been set. The next major conference is scheduled for Mexico at the end of 2010, although it is possible that a further conference will be held mid-way (possibly in Germany) in July 2010. Meanwhile, the immediate focus will be on the 2020 emissions reduction targets to be put forward by developed countries (including Australia), and the mitigation actions to be proposed by developing countries, by the end of January 2010. The Federal Government has stated that it will reintroduce its CPRS legislation in February, and Australia's 2020 emissions reduction target will be an important component of this.

If you would like further information in regard to the Copenhagen Accord or the Federal Government's proposed CPRS, please contact any of the people below.

For further information, please contact:

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