Beyond Kyoto

In Bali in December last year, the US finally agreed to get on track towards a binding agreement on climate change. But, asks Mike Scott, what has actually been achieved?

The road to Bali was dotted with promising signs - the success of Al Gore's An Inconvenient Truth; the publication of the Stern report, which cogently set out the economic case for tackling climate change now rather than later; the IPCC's series of reports last year, which firmed up consensus on the scientific case for action; the Nobel Peace Prize for Gore and the IPCC; and finally Australia's new prime minister reversing years of opposition by signing up to the Kyoto Protocol at Bali itself.

Then, a dramatic final session saw an extraordinary dressing down of the world's most powerful nation by a delegate from Papua New Guinea, who told the US delegation: "We ask for your leadership, we seek your leadership... If you can't give us what we want, please get out of the way," after which the US dropped its opposition to the wording of the text, allowing an agreement to be reached. But what was actually achieved?

The UN hailed the adoption of the Bali roadmap, which "charts the course for a new negotiating process to be concluded by 2009 that will ultimately lead to a post-2012 international agreement on climate change".

Core elements of the roadmap include:
  • Science - an agreement that IPCC report is the most authoritative assessment of climate change to date
  • Emissions reduction - a two-year roadmap was agreed for talks to agree action by all countries from 2013
  • Verification - measures are to be put in place to ensure that mitigation actions by developing countries are "measurable, reportable and verifiable"
  • Adaptation - funding for adaptation programmes in developing countries under the management of the Global Environment Facility (GEF)
  • Technology - GEF and financial sector to push forward demonstration projects on technology transfer
  • Deforestation - to be an important part of the post-2012 climate change regime
  • Carbon capture and storage - consideration of including CCS in geological formations as CDM project activities
Those hailing the deal as a success said that it bound the US, India and China to greenhouse gas goals for the first time and committed them to work towards a post-2012 framework. Many of the reasons for optimism are relatively mundane, but it is this mundanity that is encouraging. While previous meetings have been marred by disagreements on the fundamental elements of the issue - the science - now everyone is talking about the details of how to move forward.

The measures on verification are encouraging. Once India and China are measuring and reporting on their emissions, it will be harder for them to insist that the problem is the West's alone. The Global Environment Facility to fund adaptation programmes in developing countries, moves on technology transfer, carbon capture and storage and deforestation all help address the concerns of developing countries and should help to bind them into a process that will have to ask more of them than Kyoto did. Tom Delay, the Carbon Trust's chief executive said: "One of the key outcomes was the agreement by the Western world to help developing countries tackle climate change via technology transfer. Not only will this speed our own move towards a low carbon economy but will also enable the UK to reap the economic benefits of exporting these technologies overseas."

The Roadmap says the parties at Bali recognise "that deep cuts in global emissions will be required to achieve the ultimate objective of the Convention and emphasise the urgency to address climate change".

This will strengthen carbon markets, which are already predicted to exceed £30B in 2008, said Matthew Farrow, head of environment policy at the CBI. "It is very important that there is a comprehensive post-Kyoto settlement. The Bali agreement is a step forward and makes it increasingly sensible for businesses to bet that the emissions trading scheme will continue and that there will be a meaningful carbon price after 2012.This has a big effect on business plans for investment."

This will allow project developers to proceed with more confidence, particularly on projects with a long-term payback period that extends beyond 2012. It also adds impetus to moves to introduce carbon markets in the US, Australia, New Zealand and Japan and to improve the EU Emissions Trading Scheme.

Gordon Brown said the deal was "a vital step forward for the whole world," while Humberto Rosa, head of the EU delegation, said: "It was exactly what we wanted." He added, however, that "we will have two tremendously demanding years".

However, the agreement is not perfect. The US, Canada, Japan and Russia rejected binding commitments or targets to cut greenhouse gas (GHG) emissions by 25%-40%, as the EU advocated based on recommendations in the IPCC report. The climate agreement was "stripped of the emission reduction targets that science and humanity demands," said Greenpeace.

At the heart of the problems with the process is the stand-off between the US and large developing countries such as India and China. Essentially, both sides refuse to sign up to binding targets because they believe to do so unilaterally would harm their economies. This position has led to stalemate and is no longer sustainable for any of the parties. Having accepted the findings of the IPCC, these nations have signed up to a document that says their economies will suffer if they do not take action. Their political intransigence is simply slowing down the progress that is needed in moving to a lower-carbon economy.

In addition, the entire process is held hostage by the US presidential timetable.

George W Bush will remain president until January 2009, giving a new administration very little time to negotiate in the run-up to the Copenhagen meeting the same year.

"There was no way the US was going to agree to a mandatory cut in emissions and no-one thought it would happen," said Bill Thomas, of law firm Clifford Chance. "I think they said yes because no-one knows what we are saying yes to and if we don't like it, we will say no later."

Ultimately, though, the outcomes of Bali should be viewed with optimism. Partly, this is because of what happened there - all nations signed up to the idea of "measurable, reportable and verifiable" mitigation actions. As clean energy analysts, New Energy Finance said this may sound prosaic, but "the wording shows that the world is moving painstakingly towards a properly policed and regulated regime". Everyone is now signed up to the concept of some kind of post-Kyoto framework, which was not certain even six months ago. Furthermore, the agreements on technology transfer, deforestation, CCS and the Global Environment Facility give impetus to further progress in tackling climate change in developing countries.

Another reason for optimism is the relative dullness of the Bali meeting - there were no arguments over the fundamental issue, the science of global warming. That dispute, a feature of every meeting before Bali, has now been settled and from here on in, we are essentially arguing over who pays. On top of that, the UNFCCC process - once the main driver for action on climate change - is no longer the only game in town.

US participation
During the conference, the US Senate approved a bill introducing tighter fuel efficiency rules for the first time in 30 years. Meanwhile, ten north-eastern states and, separately, a group of western states along with British Columbia, are pressing ahead with plans for emissions trading schemes to complement the EU's scheme.

The UK is in the process of introducing the world's first climate change legislation that will commit the government to meeting emissions reduction targets, while other countries are looking at emissions trading schemes of their own.

At the start of the year, the oil price hit the symbolic $100 mark - the strength of the oil price is due to a number of factors, of which climate change is probably the least relevant. They include the instability of many oil-producing countries, runaway demand - especially in emerging markets and oil producing countries themselves - and fears over the amount of oil left. Energy security fears and the oil price are driving improvements in energy efficiency and the expansion of renewable energy capacity as much as climate change is. Another factor is that the positions of national governments such as the US and China are becoming increasingly untenable and indeed irrelevant in the face of growing action from consumers, businesses and regional authorities. This is one of the reasons that investment in clean energy topped $100B last year, growing 35% to $117B, according to New Energy Finance.

There is a growing realisation that action must be taken to deal with climate change, that unilateral action is not enough and that global co-operation will be necessary. The outcomes of Bali may leave a lot to be done, but they are the first step to securing the post-2012 framework the world needs.

Mike Scott is a freelance journalist

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