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COP-17: New meeting, same old problem

The goal of achieving a global CO2 emissions-reduction target remains a distant prospect as the world gathers in Durban

CHINA, the world’s biggest carbon dioxide (CO2) emitter, is showing signs that it is serious about cleaning up its act. But the chances of significant progress at this month’s global climate talks in South Africa remain slim, with the most likely outcome on emissions cuts being the postponement of a pact for several years.

The best the energy industry – by now used to making investment decisions with little idea of what the future might hold in terms of environmental policy – can hope for is that some sort of roadmap will emerge on the timetable and potential scope of a global agreement.

A conference held in Panama City, in mid-October, was regarded as one of the last opportunities for decision-makers attending COP-17 in Durban, the latest UN Climate Change Conference, which opens on 28 November, to nail down the key issues for discussion and work on greenhouse-gas (GHG) emissions-reduction proposals. But while a few relatively minor problems were resolved, progress on the most important issues remains as elusive as it has at the big climate change conferences of the past two years, Copenhagen and Cancún.

So, while Durban may yield pacts on how to structure a global climate-finance fund and how to account for GHGs from land use, agreement on the big prize of legally binding, global emissions-reduction targets is unlikely.

A roadmap towards a comprehensive pact, if it does emerge, may be based on a plan promoted by Australia and Norway. That could provide a framework for a new climate deal to be signed in 2015, which could take effect as early as 2018.

The plan builds on last year’s discussions in Cancún, Mexico, which produced a somewhat nebulous pledge by participating countries to hold a review by 2015 on whether the GHG-reduction measures they are implementing will enable global warming to be limited to less than 2°C above pre-industrial temperature levels.

Australia and Norway propose to harden this pledge, stating that all countries, other than the poorest, must formalise the measures needed to achieve that goal by setting emissions-mitigation targets across their economies that can be verified and compared. Those targets would then be incorporated into a legally binding agreement in 2015.

"Clarifying and formalising mitigation commitments will build confidence in the international regime and assist parties to raise ambition. However, we must ensure there is a structured process in place to recognise additional efforts and drive collective ambition forward," the Australia-Norway submission says.

Thorny issues

But the same thorny issues that have dogged progress in previous meetings still threaten progress in South Africa. EU governments have agreed to increase the bloc’s emissions-reduction target to 30% below 1990 levels by 2020, up from the existing 20% target, but only if other big emitters adopt similar targets – and that seems improbable.

Developing countries want to extend the terms of the existing Kyoto Protocol, which would better meet the view of countries such as China and India that the industrialised world should shoulder the biggest burden of emissions cuts, as it has been responsible for most man-made GHG emissions so far. Meanwhile, governments in industrialised countries think cuts should be shared more evenly worldwide, given that developing countries are now the biggest contributors to emissions increases.

The future of the Clean Development Mechanism (CDM) is also a bone of contention. The scheme was set up under the Kyoto Protocol to allow firms in developed countries to meet their CO2-reduction targets by purchasing tradable certificates from low-emissions projects in developing nations that would not have been built without such support. But the scheme has struggled to gain traction, partly because the EU remains the only sizeable market where the certificates, known as certified emissions reductions (CERs) can be traded.

The eligibility of several projects receiving such support – especially in China – has also been questioned. The EU has said it will not accept CERs from Chinese projects beyond the end of the present phase of its Emissions Trading Scheme, which ends in 2012, although those from projects already registered will remain valid. That has angered China, whose projects are the biggest beneficiaries under the CDM.

In practice, what all this means is that China and the US – which together accounted for nearly 44% of the world’s CO2 in 2010, according to BP – are highly unlikely to sign up to a binding global agreement any time soon.

A subtle shift

But a subtle shift in the balance seems to be taking place. The US government’s hands remain tied by opposition in Congress, which is generally hostile towards climate-change measures that could affect economic recovery. That means the administration of President Barack Obama has no mandate to sign a meaningful climate-change treaty, whatever the timescale.

China, however, has outlined some ambitious emissions-reductions plans and, as a centralised economy, is more likely to be able to put them into practice. "China is implementing a number of climate-policy measures. It is setting pilot trade schemes in the largest industrial regions – it is definitely moving ahead with domestic policies," says Stig Schjølset, head of EU carbon analysis at Thomson Reuters Point Carbon, an energy consultancy.

The Chinese government said earlier this year that excessive growth in power-intensive sectors would be discouraged, while expansion in the services, renewable energy and information-technology sectors would be encouraged. China plans to set up six pilot emissions-trading schemes by 2013 and establish a national trading platform by 2015.

If that does happen, it might make a global climate-change agreement easier to achieve, but it could also pave the way for greater intra-regional co-operation – for example, between China and the EU, which already runs the world’s largest emissions trading scheme.

"We might be moving towards a more bottom-up process, where domestic climate policies are implemented in a number of the world’s regions, which might then be prepared to agree to meet the same targets through a legally binding agreement," says Schjølset.

While the goal of achieving a global CO2 emissions market remains a distant prospect, the run-up to Durban has seen progress in the development of national and regional carbon markets. Australia’s plan to impose a carbon tax on the country’s biggest polluters from July 2012 as a precursor to introducing a carbon trading scheme in 2015 was passed by the country’s lower house of parliament in October, after a bitter political struggle. Australia is one of the world’s largest per capita CO2 emitters, largely because of its heavy use of coal. The plan still needs assent from the upper house, when it is debated in mid-November.

Carbon trading

Meanwhile, on 21 October, California approved rules for the state’s long-awaited carbon-trading scheme, due to start in 2013. While California’s support for green measures is out of kilter with several big industrial states in the US, the establishment of a cap-and-trade scheme could provide a blueprint for wider emissions trading across the country.

The success of such regional schemes is essential if emissions trading is to provide the backbone of any future global climate pact. But the difficulties involved in getting countries with diverse aims to settle the terms of emissions trading have been thrown into relief by the failure of the EU and China to agree how to price emissions from the global aviation sector.

The EU says its rules mean all flights landing in the bloc from next year must buy carbon credits to cover emissions above a permitted level. But China says its adherence to the concept of "common, but differentiated responsibilities", outlined under the Kyoto Protocol, means developing countries should not be subject to the same rules as their industrialised counterparts.

The resulting deadlock may be a foretaste of what is to come if countries decide to move towards a global emissions-trading scheme.

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