keshavcdas Uncategorized

Burning issues for COP.21: Road to Paris

720x300_cle0a69baUNFCCC came with a draft negotiation text in March first week, after six days of discussion in Geneva. This ‘negotiation text’ comprises of a wide range of options and proposals, which includes all most everything and anything, which are necessary to combat with climate change issues. This is now the official negotiating text for an agreement to curb greenhouse gas emissions, set to be signed off in Paris this December. However, parties and observer organisations need to evaluate the ‘negotiation text’ with a pragmatic approach to determine, what are the practical and doable goals that world leaders can agree upon to seal a deal in Paris.

Clearly, some of the proposals of this ‘text’ are outcomes of previous COP discussions; for instance, submission of INDCs, national inventory report containing estimated emissions and removals, in accordance with IPCC guidance; undertaking a national adaptation plan (NAP) process and initiate as nationally appropriate mitigation actions (NAMAs) as appropriate in the context of climate resilience and highlighting the need for financing for forestry in line with the Warsaw Framework for REDD+. Focuses on mitigation has been stressed upon by proposing more robust INDCs as well as another newly proposed mechanism as diversified enhanced mitigation actions (DEMAs). These DEMAs also include REDD+.

However, the negotiation text did not provide clear directions on agriculture sector development as major drivers of deforestation, loss and damage as well as mobilising climate finance. Instead the ‘text’ proposes a few debatable issues, which are going to be burning issues in COP.21. For instance, the draft text proposes to introduce an economic mechanism to regulate emissions under which emissions trading system and a new version of the UN’s Clean Development Mechanism would be introduced to support low carbon innovation in developing countries – promisingly entitled CDM+. It means countries with economy-wide emissions reductions targets could trade with one another in order to reach their goals in the most cost effective way. The hope is that this could incentivise emerging economies to adopt this kind of target. However, this has not been linked to the ratification of Kyoto Protocol and it also undermines the chaos, global leaders faced in Doha while giving an extension to CDM.

Another controversy, which could emerge from this draft text, is tax on oil exports. This would be closely modelled on Ecuador’s Daly-Correa tax, which the government has promoted as an effective way to transfer money from rich, oil importing countries to poorer developing nations. Ecuador has already paraded this idea before OPEC, where they proposed that all proceeds of the tax – around 3-5% levied on every barrel of oil – should be transferred directly into the UN’s Green Climate Fund. Similarly, the draft negotiation text also proposes a very ambitious proposal to parties to reduce net emissions to zero by 2050! Interestingly, this proposal is supported by many civil society actors, who see it as key to delegitimising the fossil fuel industry. But it is even more radical than what is proposed by the IPCC, which is that emissions should fall by 40-70% below 2010 levels by 2050 in order to stay below the 2 degree C limit. Another variation includes full decarbonisation by 2050 for rich countries, and a sustainable development pathway for the poorer nations.

Besides, UNFCCC proposes in the text that parties recognise that addressing climate change will also help their countries to attain “the highest possible level of health”. Inclusion of this text will definitely trigger a protest from China considering its industrial cities such as Beijing which regularly finds it choking on the hazardous air quality, partly as a result of burning coal. No need to mention about the emissions reductions targets for ships and planes, climate justice tribunal proposed by Bolivia, human rights and gender equality!

The message is clear; it is good to have this draft negotiation text, but can parties reach into a constructive pre-consensus before Paris or all of us will meet in Paris to disagree? To find answer to this question, we must wait for December.

Keshav C Das

Senior Advisor, SNV Netherlands Development Organisation

Kathmandu, April 01, 2015

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keshavcdas Agriculture, Energy, Environmental Sustainability

FINANCING REDD+ AND GREEN CLIMATE FUND*

5fe714a62d2417e54a50d9a48eeea001Result Based Financing (RBF) was a new addition to the REDD+ domain, incorporated during COP.19 under the Warsaw Framework for REDD+. This new set of financing instruments is designed for disbursing payment against pre-determined performance indicators (both carbon and non-carbon benefits and performance). However, the Warsaw Framework does not address non-carbon benefits of REDD+ or provide methodological guidance on non-market-based approaches for defining performance indicators while implementing REDD+ program interventions. Parties continued discussions of these aspects of REDD+ at the 40th session of the Subsidiary Bodies to the UNFCCC (SB 40) as well as during the meetings of Subsidiary Body for Scientific and Technological Advice (SBSTA). Unfortunately, there is very little progress on this agenda item, and further consideration of these issues was postponed to future sessions. Encouragingly, there are a few promising progresses with respect to the modality of the result based financing of REDD+, which is expected to be linked to the Green Climate Fund (GCF). The key development on this financing modality is presented below.

  1. Parties agreed while developing the Warsaw Framework for REDD+ that the GCF would play an important role in channelling REDD+ payments to developing country governments, and that results-based payments will depend partially on the submission of a reference level for review by experts from an assessment team. Assessment guidelines and procedures were also established, so that developing countries know how their reference levels will be evaluated.
  1. In addition, developing countries wanting to participate in GCF REDD+ activities will have to establish national forest monitoring systems (NFMS) as a basis for estimating forest-related greenhouse gas (GHG) emissions if they do not yet have such systems in place. Changes in emissions levels will be measured against respective national reference levels. In addition, parties officially mandated a link between safeguards (such as respecting livelihoods, the rights of indigenous peoples and local communities, and biodiversity) and payments. REDD+ beneficiaries must submit summaries identifying strategies to address the safeguards framework. Furthermore, all information submitted, including data on payments should be posted on an “information hub” that parties requested the Secretariat to create.
  1. During the fifth part of the second session of the Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP 2-5) and the Ministerial Dialogue on the Durban Platform, the need to capitalize the GCF was underscored. Much anticipation around whether the GCF will be able to provide the necessary financing for REDD+ surrounds the ongoing efforts to operationalize the Fund. Some parties suggested COP 20 should open a REDD+ window in the GCF. During the TEM on land-use, the GCF reported that its initial focal areas include REDD+ implementation and sustainable forest management (SFM).
  1. At the seventh Board Meeting of the GCF, the final six items needed to operationalize the Fund were agreed, including an initial Results Management Framework (RMF). The RMF, as it applies to REDD+, differentiates itself from the Warsaw Framework in that it will also be used for ex ante payments. However, plans for more specific guidance on REDD+ are in the pipeline, as the Board requested the Secretariat to “develop a logic model and performance framework for ex post REDD+ results-based payments, in accordance with the methodological guidance in the Warsaw Framework for REDD+, for consideration at the third Board meeting of 2014.” As an operating entity of the financial mechanism of the UNFCCC, the GCF’s REDD+ approach should be in line COP decisions.
  • Complexities:

The board meeting of GCF and UNFCCC’s meetings (SB, SBSTA, ADP etc.) did not create an enabling environment for motivating financial institutions (donor countries, UN funds, multi-laterals fund like FCPF etc.) to operate under a single umbrella of REDD+ finance. Rather, the FCF stated during it last board meeting that entities not beholden to the UNFCCC COP, however, can continue to operate as they please. The Forest Carbon Partnership Facility (FCPF), which was originally intended to sunset once the GCF became operational, has recently completed a methodological framework for its Carbon Fund based on its experience thus far, and there is no indication that the FCPF will twilight soon. Likewise, UN-REDD, at its recent policy board meeting, adopted a roadmap for the development of a new strategy beyond 2015. Meanwhile, the Food and Agriculture Organization of the UN (FAO) takes its own approach to REDD+, based on its Strategic Framework.

Donor countries also continue to offer REDD+ funds to developing forest countries through bilateral agreements, making their own stipulations as they do so. Norway, through its Climate and Forest Initiative, and Germany, through its REDD Early Movers Program, have taken this approach while REDD+ issues were being sorted under the UNFCCC. Despite the adoption of the Warsaw Framework, donor countries inclined to do so cannot be prevented from making bilateral deals under their own terms and conditions. The primary implication of having various scattered institutions distributing REDD+ finance is that developing countries, their capacity already stretched, have to follow different rules, produce different documents and reach different benchmarks depending on where they turn for REDD+ financing.

With this background, question marks surround the future of REDD+ financing. Some cooperative efforts, such as between UN-REDD and the FCPF, to consolidate financing are yielding positive results for REDD+ readiness, but as financing is scaled to move beyond the readiness and pilot programme phases, will cooperation and coordination efforts be scaled as well? Will the capitalization of the GCF lead to a convergence of REDD+ finance under the GCF?

There is no clear lead to find answers of these questions. The only hope is that parties agreed to continue considering these difficult questions (including the methodological issues related to non-carbon benefits) in 2015 at SBSTA’s 42nd session and to discuss non-market-based approaches at SBSTA 41, to be held in Lima, Peru (FCCC/SBSTA/2014/L.8).

 Lima Expectation:

 Expectations are high for COP 20, which will convene in Lima, Peru, in December, as it is the last negotiating session of the COP before a new legal instrument is to be agreed in Paris in 2015. In Bonn, some developing countries expressed support for including REDD+ in the negotiations of a global agreement, in particular the inclusion of the Warsaw Framework for REDD+. Keeping Lima in mind, UNFCCC parties and the GCF can take a number of actions between now and Lima to build confidence in the efficacy and authority of the guidance created at COP 19. From capitalizing the GCF, to submitting reference levels, to completing the GCF’s “logic model and performance framework,” showing the Warsaw Framework in action will be the most expedient way to encourage convergence to its methodology.

Keshav C Das

New Delhi, August 08, 2014.

[1] Source: http://climate-l.iisd.org/policy-updates/the-direction-of-redd-financing-merging-ahead/

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Energy Demand and Low Emission Pathway-Is it compatible in LDCs?

The relationship among energy consumption, economic growth, standard of living is an interesting subject of research.  Famous Brazilian physicist Jose Goldemberg wrote in Science magazine[1] in 1995 that 75% of the world’s population during 1993, living in the less developed countries (LDCs), used only about 30% of the world’s commercial energy. Conversely, the 25% of the population that live in industrialized countries accounted for 70% of global energy consumption. But Goldemberg projected that by about 2010-12 energy consumption in the LDCs will surpass that in the industrialized countries because of high population and economic growth in the LDCs.

Interestingly, the current scenario of energy consumption in LDCs is now exactly the same as project by Goldemberg. For developing and less developed countries, development means satisfying the basic human needs of the population, including access to jobs, food, health services, education, housing, running water, and sewage treatment. And, to fulfill these needs, we need huge amount of energy sources.

The important aspect is that most of the energy sources in LDCs are inefficient, ill-planned, fossil intensive and un-sustainable, resulting massive green house gas emissions, which is contrary to the global compact for ‘green growth’ or mission to develop low emission economic development philosophy.  The World Bank’s datasheet on CO2 emissions in LDCs exhibits that the emissions (kg per 2000 US dollar of GDP) in LDCs was at 0.62 in 2008-09 and these emissions are stemming from the burning of fossil fuels. They include carbon dioxide produced during consumption of solid, liquid, and gas fuels and gas flaring. A historical trend of CO2 emissions in LDCs is provided below.

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 Political statesmen believe that this emission is necessary for economic growth and ‘development’ of LDCs. If this is true, then, the rationality of the climate resilience, mitigation and developed aid may not be so justified for LDCs.  This also proofs a dual nature and ambiguity of the economic model of LDCs. In short, low emission development pathway at the cost of promoting fossil fuel intensive energy technologies would not be a convincing growth paradigm. And, this shows the incompatibilities of the policies and aspirations of LDCs for development.

How could we then make it compatible? A simple and straightforward answer to this question may be difficult. But, we could think about of adopting clean and renewable energy based economic development model and at the same time, accepting the accountability to keep GHGs emissions at its low throughout the industrial and economic activities in LDCs. Technically and economically it is possible. But, we need a strong political mandate to adopt it. Interestingly, in April this year (2013), the 49-strong group of LDCs agreed to accept binding cuts on emission reduction. This is a clear message on flexibilities of LDCs and its leadership, which is grossly absent in case of China, India and even in case of USA. This development was most desirable to demonstrate that nation needs political will for creating a real and tangible green economy. Unfortunately, many of the key negotiators of UN talks are still in a fictitious world of low emission growth model and green economy, which is far away from the real word assumptions.

It is pertinent to highlight here that over a quarter of a century ago, also in Science[2], Roger Revelle described the historical contribution of energy in shaping the human condition. Roger said : “All ancient civilizations, no matter how enlightened or creative, rested on slavery and on grinding human labor, because human and animal muscle power were the principal forms of energy available for mechanical work. The discovery of ways to use less expensive sources of energy than human muscles made it possible for men to be free.”

It is critical here to note such freedom from energy poverty, economic poverty and freedom from intellectual fallacies is now need of the hour. UN system needs to take a note of this.

 Keshav C Das

[1] Goldemberg, Jose; “Energy Needs in Developing Countries and Sustainability,” Science, Volume 269, 25 August 1995, page 1058.

[2] Revelle, Roger; “Energy Use in Rural India,” Science, Volume 192, 4 June 1976, page 969.

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Shifting Landscape of Carbon Market

The scenario of carbon market is rapidly changing. Prices in the major existing carbon markets are at a historic low. Market encountered another dramatic downfall immediately following the European Parliament’s vote to reject the backloading proposal of European Commission, carbon prices sink heavily by over 45%.

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Even many enthusiastic anti-carbon market activists, who believe that climate change is a hoax, have stated that carbon market is dead! Optimistic project developers are shifting from compliance carbon finance pathway to voluntary and gold standard credit mechanism. Traders and brokers are diversifying their portfolios into other environment product trading like renewable energy certificates, carbon footprint and energy efficiency credits. But, does this shift/adjustment could help us to sustain and grow the carbon market? What would be the future of carbon market; is it going to vanish in a year time?

Carbon gurus and researchers have different versions on these two fundamental questions. A few of these so called market gurus and stereotypic researchers stated that the inception process of carbon market itself was erroneous; without a strong regulatory system, poorly drafted legislations, weak taxation mechanism (resulting billions of euro of lost VAT in fraud), theft, security breaches and badly designed infrastructure. Hence, they believe that the current market ‘failure’ is an issue of technicality of the carbon market and its mechanism.

Whereas in reality, this is a political issue and cannot be solved with technical quick-fix. It will be desirable to address the underlying political issues such as jobs and environment, in country industrialization in EU and environmental concern in foreign policies. It is now increasingly visible in the EU politics that many politicians believe, by protecting environment one would increase unemployment and promote deindustrialization. There is fear that strong emission reduction policies would put trillions of euro investment in rubbish bin, made in big industries and factories. It is also believed that relocation of industrial and manufacturing activities from Europe to developing countries had also contributed to fall of EU emission scheme.

Hence, to restore the normal function of EUETS and build confidence of market players, EU needs to lead climate policy with politics. This is also a leadership challenge, which should be demonstrated by the European Commission by creating an appropriate political debate. The commission needs to be equipped with very competent leaders with extraordinary statesmanship and character to stimulate discussion on climate policy and political questions/issues across Europe. There will be a second chance to manifest this political will on June 19. However, experts do not expect a long term changes to the EUETS in this year until the next European Commission is appointed in 2015.

The good news that while EUETS markets face structural and political issues, it is remarkable that new regional, national, and sub-national initiatives are moving faster than ever, in both developed and developing economies. The World Bank’s Partnership for Market Readiness (PMR) is also helping to design next generation carbon markets, which could definitely provide a boost to the UN climate negotiations. Indeed, this is the flip side of carbon market, which fulfills the need of the world by providing flexible carbon mechanisms to successfully develop into a low carbon economy!

Keshav C Das, June 9, 2013

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REDD and Doha Gateway: An Expectation Gap

ImageAfter an anticipated delay at the UN climate talks in Doha, Abdullah bin Hamad Al-Attiyah, President of COP18, took less than a minute to hammer through a series of ‘decisions’. He then declared the creation of the ‘Doha Gateway’. Immediately after this declaration, Christiana Figueres, Executive Secretary of UNFCCC tweeted: ‘All #COP18 decisions adopted by acclamation. We have a Second Commitment Period of the Kyoto Protocol!’

 By maintaining the tradition of UN climate change conferences, the COP18 presented a new package of climate change expectations; this was in continuation of the Berlin Mandate, the Marrakesh Accords, the Bali Road Map, the Copenhagen Accord, the Cancun Agreements and the Durban Platform. The package of ‘Doha Climate Gateway’ decisions included amendments to the Kyoto Protocol to establish its second commitment period, an affirmation on the need to move towards a legally binding agreement that applies to all countries by 2020, a re-affirmation to continue efforts to scale up climate finance (Green Climate Fund) to help developing countries respond to climate change and developing a loss and damage mechanism.

Within a few hours of this development, the social media networks and corridors of Doha Convention Centre were heated up with frustration of environmental activists. The reaction of parties to the Doha climate deal was tepid and a few parties stated that Doha outcome is not revolutionary but a way forward, which is sufficient to expect more progress on increasing ambition in future.

Indeed, this expectation gap is also applicable for the REDD sector. Doha could not give a decision on verifying carbon emissions from deforestation. Many were expecting to get robust decisions on monitoring, reporting and verification (MRV[*]) of carbon emissions which would be linked with setting up reference emissions levels – the baseline from which countries measure their success in reducing emissions. This did not happen when negotiations on verifications issues were turned into financing and a deadlock was shaped between Brazil (a potential beneficiary of REDD+) and Norway (one of the largest funders REDD) regarding the language governing the standards by which deforestation-related emissions would be verified.

Norway has been advocating for an independent, transparent and internationally accepted verification process, which could enable REDD countries to move forward to the REDD+ implementation phase in a few years time, whereas Brazil and other developing countries have been calling for internal (national) verification requirements and denied to accept an external verification mechanism. It is important to mention here that many developing countries do not have the necessary technical prowess and capacities of Brazil to carry out verification of its own; and therefore, the proposition of having an independent and internationally accepted verification process sounds legitimate. Nevertheless, the key negotiation point on the MRV should have been on the ‘degree of independence of the verification processes’, which could have been helpful to decide how independent the verification process needs to be and how much would be achieved merely with bilateral agreements.  

With respect to the financing matters of REDD, countries struggled to come to an agreement in the LCA (Long-term Cooperative Action) negotiations meeting. However, the irony is that the final LCA Text (FCCC/AWGLCA/2012/L.4) did not make a decision on how REDD should be financed, instead, the LCA decided to ‘undertake a work programme on results-based finance in 2013, including two in-session workshops, subject to the availability of supplementary resources, to progress the full implementation of the activities referred to in decision 1/CP.16, paragraph 70’.

The LCA text also invites parties to submit their views on coordinating and implementing REDD, providing ‘adequate and predictable’ finance and technical support, and the institutional arrangements required for REDD.  The LCA text further requests that SBSTA considers ‘how non-market-based approaches, such as joint mitigation and adaptation’ could support the implementation of REDD. Indeed, all these ‘affirmations and requests’ exhibit good intentions of parties; which is not only an effort to find a market based solution of deforestation but also an attempt to find ‘ways to incentivize non-carbon benefits’. The real question is- do the future REDD negotiations in 2013 could derive and present a ‘complete, ambitious and implementable package’ to move forward to the REDD+ implementation phase?

Perhaps, a direct answer to this question is not yet present. The concern is that due to a lack of meaningful commitments to reduce greenhouse gas emissions by 2015, progress on REDD+ may be held hostage until larger political issues can be sorted out. However, it does look like forests and REDD+ are going to be considered as an integral part of the next international treaty on climate change in 2020.

Keshav C Das, Senior Advisor, Climate Finance

[*] The dispute over verification took place in the SBSTA negotiation meeting. The draft conclusions proposed by the Chair of SBSTA (FCCC/SBSTA/2012/L.31) stated that the discussions will continue at the next SBSTA meeting, which will take place in June 2013 in Bonn.