Quote of the Day: “I feel like a swiss clock.”
-UN Climate Chief, Yvo de Boer commenting on the ups and downs of negotiating
When I woke up this morning, I had a funny feeling, replaying in my head RP, IPCC chairman’s presentation to the plenary on Wednesday. The presentation was pretty graphic and had eerie background music, as it showed smokestacks billowing CO2 into the air, and icebergs melting. I had dreamt that I was watching a small group of people watching a video of IPCC Chairman, Rajendra Pachauri’s presentation sometime in the future in which the planet had reaped the worst predictions made by the IPCC, with sea rises, disease, conflicts, and droughts bringing civilization back to a less populous, simpler form. I felt their sense of puzzlement for how we could have let this happen.
Today was the final day to hash everything out here in Bali, but an announcement has just been made that the finale will be postponed until 8am Bali time. I was hoping that we would just get it over with tonight or even better at dawn, for the dawn of a new protocol.
The main numbers at issue are:
1. 25-40 per cent reductions by rich countries by 1990 (rumour is that this was just sacrificed by the EU)
2. Stop the increase in greenhouse gases in next 10-15 years
3. 50 per cent global greenhouse gas reductions by 2050 from 2000 base year
As long as 2 and 3 make it into final text, Bali can be considered a victory as the level of ambition that UN Chief Yvo de Boer wanted will be mostly there--but it will mean a rough and tumble 2-year negotiating period about who does what between Bali and the climate talks scheduled to take place in Copenhagen in 2009.
Of the three points above, I think the 25-40 per cent reduction by rich countries from 1990 is the easiest one to do without for two reasons: one is that the base year of 1990 is a long time ago, and will be a huge sticking point. It would be better to use 2000 as a base year, and a narrower target range if the goal is to get the US on board. Two, if the developed countries say we will do this no matter what, it will build good will, but it will also take negotiating power away that I think will be necessary to bring in the big industrializing countries.
Tidbits of today:
Mayor Mike Bloomberg: ruled out running as VP on Gore-Bloomberg ticket because “I’m too old to work for someone else.”
Munir Akram, Pakistani envoy to the UN and chairman of the G77 said that rich nations were threatening poor nations with trade sanctions if they did not agree to absolute caps. When asked what developing countries could agree to, he said: “voluntary measures at a national level.” I am not sure how well that will work.
Saturday, December 15, 2007
Wednesday, December 12, 2007
Baird goes big on global target and Yvo reveals his secret to Bali success
Some big news today. The first big newsmaker of the day was Yvo De Boer; the UN chief finally clarified what success would mean in Bali, beyond getting a mandate to negotiate further negotiations that is. Bali success will be getting agreement on an overall global target---rather than specific national targets--for emissions reductions consistent with the IPCC recommendations to avoid dangerous climate change. This he said would then guide and the ambition of negotiations going forward to the UN Climate conference in Copenhagen in 2009, when a deal must be hammered out by.
Shortly after this, I asked Minister Baird to clarify if Canada would support a global target consistent with Yvo’s definition of success. He said that Canada would be willing to support a 40 per cent global emissions reduction by 2020 from a 2000 base year. He also mentioned the words common but differentiated responsibility in the same sentence, something that the government was staying away from before. This is huge and at least twice as ambitious as Canada’s current domestic plan. Of course anyone can promise a target. Just ask Jean Chrétien. The hard part is to do the actual implementation, annual updates while setting regular milestones so progress can be regularly evaluated and carbon cycles can be better aligned with political cycles.
Somebody asked Baird about base years. He said that the base years were political; pointing out that he lost 50 pounds in 1996, so 1995 would be a great base year for him.
Negotiations update: There are two lines in the negotiating text being hotly debated at the moment. One references 25-40 per cent cuts by rich nations by 2020 from 1990 base year. The other references 50 per cent global emissions reductions by 2050 from 200 base year. If they are separated Canada, Australia and Japan (part of the quixotic quartet along with the US) will almost certainly support the global target of 50 by 2050, which would then allow the ensuing 2 years to hammer out the mechanism for sharing this responsibility and leave the US isolated until a new President can come on board. The trouble is developing countries will find this difficult to swallow unless it is accompanies by a substantial commitment (say annual $100 billion of funds) from rich nations to finance part of the incremental costs of mitigation including forest preservation and the crucial investments to be made to prepare for adapting to the climate change that would come no matter what we because of the billions of tonnes of GHGs the rich world has already put into he atmosphere. Those are the seeds around which a grand compact between the rich and developing world could be agreed upon.
Tidbits: Stephane Dion said today that the specter of environmental protectionism (which would be legitimate in many case) requires that the “WTO become experts on climate change.”
Tomorrow: Minister Baird and Al Gore will make presentations to the plenary session. It would be pretty cool if our Minister could upstage the Goreacle, but that would involve a substantially bold departure from what is expected.
Who’s Hot?
John Baird for laying down the gauntlet and saying Canada would support and 40 per cent global emissions reduction by 2020 from a 2000 base year
Australian PM Kevin Rudd for admitting that defeating climate change “would not be easy,” in contrast to IPCC chairman’s entreaty that it would be easy as delaying growth by one year.
Yvo de Boer for clariying what Bali success would be (an ambitious global emissions target)
Stephane Dion for not taking potshots at the current government, even when baited in the
Who’s Not
The US for standing in the way of a global greenhouse gas emissions target because it “may predetermine the outcome,” (That’s the point guys—we are trying to predetermine climate change jeopardizing our plant and human security)
Canadian delegation for calling police on your protesters outside Canadian tent
The Daily Telegraph correspondent for whining to UN media man John Hay for not being called on to ask the Secretary General a question. He was wearing a pink shirt, but if he really wants to ask a question he should sit in the centre like Corporate Knights’ Felix Von Geyer, with a pinstripe suit and hand erected high into the air.
Shortly after this, I asked Minister Baird to clarify if Canada would support a global target consistent with Yvo’s definition of success. He said that Canada would be willing to support a 40 per cent global emissions reduction by 2020 from a 2000 base year. He also mentioned the words common but differentiated responsibility in the same sentence, something that the government was staying away from before. This is huge and at least twice as ambitious as Canada’s current domestic plan. Of course anyone can promise a target. Just ask Jean Chrétien. The hard part is to do the actual implementation, annual updates while setting regular milestones so progress can be regularly evaluated and carbon cycles can be better aligned with political cycles.
Somebody asked Baird about base years. He said that the base years were political; pointing out that he lost 50 pounds in 1996, so 1995 would be a great base year for him.
Negotiations update: There are two lines in the negotiating text being hotly debated at the moment. One references 25-40 per cent cuts by rich nations by 2020 from 1990 base year. The other references 50 per cent global emissions reductions by 2050 from 200 base year. If they are separated Canada, Australia and Japan (part of the quixotic quartet along with the US) will almost certainly support the global target of 50 by 2050, which would then allow the ensuing 2 years to hammer out the mechanism for sharing this responsibility and leave the US isolated until a new President can come on board. The trouble is developing countries will find this difficult to swallow unless it is accompanies by a substantial commitment (say annual $100 billion of funds) from rich nations to finance part of the incremental costs of mitigation including forest preservation and the crucial investments to be made to prepare for adapting to the climate change that would come no matter what we because of the billions of tonnes of GHGs the rich world has already put into he atmosphere. Those are the seeds around which a grand compact between the rich and developing world could be agreed upon.
Tidbits: Stephane Dion said today that the specter of environmental protectionism (which would be legitimate in many case) requires that the “WTO become experts on climate change.”
Tomorrow: Minister Baird and Al Gore will make presentations to the plenary session. It would be pretty cool if our Minister could upstage the Goreacle, but that would involve a substantially bold departure from what is expected.
Who’s Hot?
John Baird for laying down the gauntlet and saying Canada would support and 40 per cent global emissions reduction by 2020 from a 2000 base year
Australian PM Kevin Rudd for admitting that defeating climate change “would not be easy,” in contrast to IPCC chairman’s entreaty that it would be easy as delaying growth by one year.
Yvo de Boer for clariying what Bali success would be (an ambitious global emissions target)
Stephane Dion for not taking potshots at the current government, even when baited in the
Who’s Not
The US for standing in the way of a global greenhouse gas emissions target because it “may predetermine the outcome,” (That’s the point guys—we are trying to predetermine climate change jeopardizing our plant and human security)
Canadian delegation for calling police on your protesters outside Canadian tent
The Daily Telegraph correspondent for whining to UN media man John Hay for not being called on to ask the Secretary General a question. He was wearing a pink shirt, but if he really wants to ask a question he should sit in the centre like Corporate Knights’ Felix Von Geyer, with a pinstripe suit and hand erected high into the air.
The anniversary of Kyoto.
Today was the 10th anniversary of the Kyoto Protocol. It started out kind of badly and got progressively worse. As I was leaving my bungalow I crashed my bike into a brick wall—a metaphor for a day that turned out to be almost Shakespearean for its invocation of literary devices.
The morning started out with a press conference put on by Climate Action International, in which the Japanese environmental campaigner said that for Japan to undermine the continuation of the Kyoto Protocol, a great source of pride, was a violation of Japanese honour.
The Canadian daily press conference was held in a tent about a five-minute bike ride away. It was hot in the tent and the Minister was running a little behind, so we were treated to a presentation about some pretty neat Canadian climate change software by a gentleman that bore a strong resemblance in demeanor and appearance to those people you see on the 2 am infomercials for stainerator. When Minister Baird showed up, he had a tough round of questioning from the press corps. The Minister did make the interesting point that “unlike the United States, Canada supports binding emissions targets.” I tried to get him to clarify the global base year Canada wanted to use for plotting emissions reductions (1990, 2000, 2005 or 2006). He chose to remain coy, which is understandable because as soon as you pick a base year that is not 1990 (which is Canada’s assured preference if our domestic plan with a 2006 base-year has any significance), people will attack. I don’t think though that it is fair to use a base year of 1990 if we are going to making a decision today that is far more severe in its annual trillion dollar economic implications that we ever would have imagined in 1990. If we are going to make a bold commitment as the global community in 2007 (including those large emitters that did not make the initial modest at the time Kyoto commitment)--which we must do if we want to avoid “oblivion” in the UN Secretary General’s words—then lets make the base year current and the commitment in line with best current science, which the IPCC says is to ratchet down global emissions 25-40 per cent by 2020 from 2000.
After the Canadian press conference, I shot off to the Intercontinental Hotel for the Finance Ministers meeting where finance ministers and senior officials from 36 countries met for the first time ever to talk about climate change. Lord Nicholas Stern (if his nametag was accurate, he has been promoted from Sir) presented to the ministers on the economics of climate change. The Finance Ministers, like the Trade Ministers, agreed to keep the climate change dialogue going, including on the fringes of the next UN Climate Change meeting in Poland. Stern told the ministers that for $5 billion per year for eight years, it would be possible to build 30 carbon capture and storage coal plants that would not otherwise happen; that for $10-$15 billion per annum it would be possible to halve deforestation, which is responsible for a fifth of human-caused emissions. He also said the science was clear about needing to make 50 per cent emissions reductions by 2050, and that from a fairness point of view, developed countries would have to take at least 75 per cent reductions, which still leaves developing countries with growing economies and populations a fair bit to do—even with the public funds and their multiplier effect leveraging private funds.
India made what I thought was a rather unhelpful contribution during the financial mechanism part of the meetings, saying that a “globally harmonized carbon tax required internalization of greenhouse gas externalities by developing countries on par with developed countries, and is squarely in violation of UNFCCC principles.” In other words, the polluter pays principle is unfair for Indian polluters. Fair enough if we are horse trading, but when the stakes of not doing the job is human suffering beyond the scale of the worst crimes against humanity of the 21st century (including the more than 250 million additional defenseless people in Africa that will be facing drought), that’s not good enough India. There are ways if we put our heads together to put a meaningful price on carbon everywhere that offer cushions and financing for developing countries and we should exploring those rather than throwing up brick walls.
Back at the convention centre, people were celebrating the 10th anniversary of Kyoto with a giant chocolate cake. Weary of the saying that you can’t have your cake and it too, I took a pass on eating a slice, hoping instead to have the substance of Kyoto carry forward.
The next big event of the day was a panel of heavyweights to underline how climate change was not only the environmental challenge of the day, but also the defining human development issue of our time, according the UN Secretary General Ban-Ki Moon, who was on hand. Nick Stern was at this panel too, where he forcefully presented climate change as the defining economic issue of our time. The UN Human development report which was the centerpiece of the event called for a global convergence of per capita emissions over the next 50 years. This sounded like a good idea, but worried me a little. As emissions are well correlated to income, it implies achieving global equality of income (an ideal I deeply believe in), and I wondered if we might be walking into a trap if—even in a world in which everything is connected--we made defeating global warming conditional upon defeating global inequality, an even taller order.
After the event, they served a spread with mostly meat, which was unfortunate considering that meat and all the feedstock and transport around it accounts for 20 per cent of greenhouse gas emissions (climate change).
Next stop was the Canadian Delegation’s official side event. I got there and someone from EnCana was talking about carbon capture and storage but I could not hear him as the acoustics were really bad. In fact, you had to have a radio device on your ear even if you were only 40 feet away to hear what he was saying. They were handing out fortune cookies on the way in. There was one pile for regular people and one for media. Remembering the hard time the media had given the Minister earlier in the afternoon, I asked if the media ones were poisoned. I was assured they were not. I accidentally swallowed my fortune cookie message so I was unable to read it, but a few of my colleagues kept theirs. One read: “check your baselines.” Another read: “Canadian COP out. Scoop at the BICC free bicycles, Wednesday 9am.” A third said: “Beware of intensity-based targets.” At the end of the event right before we were supposed to hear from Minister Baird, it was announced that he would not be speaking, as he had negotiating matters that had popped up he had to attend to, which was his first priority. The youth delegates there were not happy going so far as to walk out and snub free food and drink on offer, which was substantially vegetarian in contrast to the UN event’s meatlovers menu. A seasoned Ministerial aide walked out of the side event with an utterly astonished look, and commented to me that “this was the strangest thing I have ever seen, and I have seen a lot of strange things.”
Rather than complain about sour lemons, I grabbed a glass of lemonade, and gave a proposal to Baird’s spokesperson on how to get meaningful and doable roadmap to Copenhagen on which China and the US could come along.
After, I popped over to the Kyoto party, but when I was arrived, I was told the Kyoto Party was over—I hoped this wasn’t foreshadowing.
On the way home, I almost ran over a black cat and on my kitchen floor was a moribund green gecko, for which a ceremony to celebrate his short wall-crawling life is planned tomorrow.
The morning started out with a press conference put on by Climate Action International, in which the Japanese environmental campaigner said that for Japan to undermine the continuation of the Kyoto Protocol, a great source of pride, was a violation of Japanese honour.
The Canadian daily press conference was held in a tent about a five-minute bike ride away. It was hot in the tent and the Minister was running a little behind, so we were treated to a presentation about some pretty neat Canadian climate change software by a gentleman that bore a strong resemblance in demeanor and appearance to those people you see on the 2 am infomercials for stainerator. When Minister Baird showed up, he had a tough round of questioning from the press corps. The Minister did make the interesting point that “unlike the United States, Canada supports binding emissions targets.” I tried to get him to clarify the global base year Canada wanted to use for plotting emissions reductions (1990, 2000, 2005 or 2006). He chose to remain coy, which is understandable because as soon as you pick a base year that is not 1990 (which is Canada’s assured preference if our domestic plan with a 2006 base-year has any significance), people will attack. I don’t think though that it is fair to use a base year of 1990 if we are going to making a decision today that is far more severe in its annual trillion dollar economic implications that we ever would have imagined in 1990. If we are going to make a bold commitment as the global community in 2007 (including those large emitters that did not make the initial modest at the time Kyoto commitment)--which we must do if we want to avoid “oblivion” in the UN Secretary General’s words—then lets make the base year current and the commitment in line with best current science, which the IPCC says is to ratchet down global emissions 25-40 per cent by 2020 from 2000.
After the Canadian press conference, I shot off to the Intercontinental Hotel for the Finance Ministers meeting where finance ministers and senior officials from 36 countries met for the first time ever to talk about climate change. Lord Nicholas Stern (if his nametag was accurate, he has been promoted from Sir) presented to the ministers on the economics of climate change. The Finance Ministers, like the Trade Ministers, agreed to keep the climate change dialogue going, including on the fringes of the next UN Climate Change meeting in Poland. Stern told the ministers that for $5 billion per year for eight years, it would be possible to build 30 carbon capture and storage coal plants that would not otherwise happen; that for $10-$15 billion per annum it would be possible to halve deforestation, which is responsible for a fifth of human-caused emissions. He also said the science was clear about needing to make 50 per cent emissions reductions by 2050, and that from a fairness point of view, developed countries would have to take at least 75 per cent reductions, which still leaves developing countries with growing economies and populations a fair bit to do—even with the public funds and their multiplier effect leveraging private funds.
India made what I thought was a rather unhelpful contribution during the financial mechanism part of the meetings, saying that a “globally harmonized carbon tax required internalization of greenhouse gas externalities by developing countries on par with developed countries, and is squarely in violation of UNFCCC principles.” In other words, the polluter pays principle is unfair for Indian polluters. Fair enough if we are horse trading, but when the stakes of not doing the job is human suffering beyond the scale of the worst crimes against humanity of the 21st century (including the more than 250 million additional defenseless people in Africa that will be facing drought), that’s not good enough India. There are ways if we put our heads together to put a meaningful price on carbon everywhere that offer cushions and financing for developing countries and we should exploring those rather than throwing up brick walls.
Back at the convention centre, people were celebrating the 10th anniversary of Kyoto with a giant chocolate cake. Weary of the saying that you can’t have your cake and it too, I took a pass on eating a slice, hoping instead to have the substance of Kyoto carry forward.
The next big event of the day was a panel of heavyweights to underline how climate change was not only the environmental challenge of the day, but also the defining human development issue of our time, according the UN Secretary General Ban-Ki Moon, who was on hand. Nick Stern was at this panel too, where he forcefully presented climate change as the defining economic issue of our time. The UN Human development report which was the centerpiece of the event called for a global convergence of per capita emissions over the next 50 years. This sounded like a good idea, but worried me a little. As emissions are well correlated to income, it implies achieving global equality of income (an ideal I deeply believe in), and I wondered if we might be walking into a trap if—even in a world in which everything is connected--we made defeating global warming conditional upon defeating global inequality, an even taller order.
After the event, they served a spread with mostly meat, which was unfortunate considering that meat and all the feedstock and transport around it accounts for 20 per cent of greenhouse gas emissions (climate change).
Next stop was the Canadian Delegation’s official side event. I got there and someone from EnCana was talking about carbon capture and storage but I could not hear him as the acoustics were really bad. In fact, you had to have a radio device on your ear even if you were only 40 feet away to hear what he was saying. They were handing out fortune cookies on the way in. There was one pile for regular people and one for media. Remembering the hard time the media had given the Minister earlier in the afternoon, I asked if the media ones were poisoned. I was assured they were not. I accidentally swallowed my fortune cookie message so I was unable to read it, but a few of my colleagues kept theirs. One read: “check your baselines.” Another read: “Canadian COP out. Scoop at the BICC free bicycles, Wednesday 9am.” A third said: “Beware of intensity-based targets.” At the end of the event right before we were supposed to hear from Minister Baird, it was announced that he would not be speaking, as he had negotiating matters that had popped up he had to attend to, which was his first priority. The youth delegates there were not happy going so far as to walk out and snub free food and drink on offer, which was substantially vegetarian in contrast to the UN event’s meatlovers menu. A seasoned Ministerial aide walked out of the side event with an utterly astonished look, and commented to me that “this was the strangest thing I have ever seen, and I have seen a lot of strange things.”
Rather than complain about sour lemons, I grabbed a glass of lemonade, and gave a proposal to Baird’s spokesperson on how to get meaningful and doable roadmap to Copenhagen on which China and the US could come along.
After, I popped over to the Kyoto party, but when I was arrived, I was told the Kyoto Party was over—I hoped this wasn’t foreshadowing.
On the way home, I almost ran over a black cat and on my kitchen floor was a moribund green gecko, for which a ceremony to celebrate his short wall-crawling life is planned tomorrow.
Tuesday, December 11, 2007
Human Rights
Quote of the Day: “If a country chooses not to undertake the mitigation necessary to avoid dangerous climate change and if a country chooses not to invest in the adaptation to facilitate coping with the climate change that is going to happen that is a choice in favour of the systematic abuse of human rights.” — Kevin Watkins, UN Human Development Report Lead Author, commenting on considering climate change within the context of the Responsibility to Protect doctrine.
I started off the morning with a Press Conference at the Laguna Hotel where Minister Baird is staying. He arrived in jovial spirits and spoke French with the Global Environment Fund chief for a few minutes before making his announcement. He said the climate change science was even stronger (presumably stronger than it was a few years ago, when his Prime Minister dismissed it as a socialist hoax designed to suck money out of wealth producing nations). The Minister said he would not be daunted or deterred by those who preach the art of the impossible with respect to developing countries taking on taking on binding emission limits. He also said that the world needs to “take action under the United St..” before catching one of his rare slips mid-way to say “United Nations.”
Next, I popped down to the press tent to the Indonesian Pavilion, otherwise known as the place to get free cappuccino. A PR lady volunteered me to interview Muhammad Lutfi, the Chairman of Indonesia’s powerful Investment Coordinating Board, who was sitting in a room beside the cappuccino machine. I asked him what he thought about developed countries competitiveness concerns if they moved to put a big price on carbon for their industry while developing countries did not and the temptation for rich countries to impose carbon import taxes (or countervailing duties) like President Sarkozy has called for, while many others are thinking of it. His reply: “If I was the French President, I would probably do the same thing. Trade has to be on a level playing field.”
I also learnt that Indonesia has a big geothermal power strategy. “We’re going to push geothermal like no tomorrow,” Lutfi said. Indonesia has about 16,000 MW of geothermal potential, and plans to have at least 4000 MW of it online for the Java-Bali grid by 2015.
Today was business day, so I headed over to the Conrad Hotel to check it out. A lot of nice suits and finger food. Bjorn Stigson, World Business Council of Sustainable Development chief, seemed to be in his usual professor-type demeanor. He told me “we should not discount the risk of serious distortion to the international trading system, if we fail to reach a comprehensive climate agreement.”
In the afternoon, I met with a colleague of Madame Gro Harlan Brundtland to discuss the Global Leaders for Climate Action initiative and ideas for striking a post-2012 climate agreement grand bargain between developed and developing countries.
The highlight of the day was interviewing Kevin Watkins, the lead author the UN Human Development Report which was published a couple of weeks ago, presenting climate change as the human rights issue of our time, as an analog to the Stern Report that defined climate change as the economic issue of our time. Below is part of the Q and A that was conducted with Balinese drummers in the background doing a jig.
Kevin Watkins, UN Human Development Report Q and A:
What are the human rights of climate change?
The potential costs of avoiding dangerous climate change are in the order of 1.6 per cent of GDP. The potential costs of not undertaking that investment are 400 million additional people exposed to the risk of malnutrition, another 300 million people potentially displaced as a result.
Children born in a drought year face increased risk of malnutrition at age five, by about a third. For people in a vulnerable position, their ability to manage a single climate event like drought is extremely limited.
There is tendency in the west to think of climate shocks as short, sharp events that cause a lot of suffering. But it is indeed a long-lived impact. Poor people in particular have to sell off productive assets, which limits their capacity for recovery. It can take ten years to restore your assets after a single drought event.
If we don’t tackle climate change (mitigation and adaptation), what we will see after 2015 is the potential for some rapid unprecedented reversals in human development.
What about those skeptics like Lomborg who say spending money on climate change is a poor use of funds if human development is the goal?
Climate change is doing is making people more vulnerable to malnutrition, more likely to take their kids out of school, running down their health, and making them less resistant to diarrhea and diseases like malaria. This is not an either or option. What do you prefer? Your head or your heart?
India greeted your report’s suggestion of cutting developed countries emission by 80 per cent by 2050 and developing countries emissions by 20 per cent as unfair, as it would mean taking India’s emissions from 1 tonne of carbon per capita to 0.8 tonnes per capita while the US would go down from 20 tonnes to 4 tonnes, which would still leave them with 5 times as much per capita as India. How do you respond to that?
This is a total straw man. We are not suggesting the 80-20 cuts for any country in particular—these are aggregate reductions meant for the developed and developing countries as a group to lead both groups to converge on two tonnes of carbon emissions per capita by 2060 [they are currently at 7 tonnes per capita]. Countries like India (1 tonne per capita) Ethiopia (0.1 tonne per capita) would be able to increase their per capita emissions--by double in India’s case. By the same token countries like the US [or Canada] with higher than average per capita emissions in the industrialized world, will have to make more stringent cuts than 80 per cent than countries like Japan which are much more efficient. The other point we make is that you can’t expect developing countries to make these cuts without financing from the industrialized world.
How important is putting a price on carbon in the battle against climate change?
Carbon pricing in all countries is a necessary, but not sufficient condition for mitigating climate change.
What do you think of the current pricing approach for carbon?
Cap and trade as its currently being regulated isn’t producing the results needed. What carbon markets do is price scarcity. And if you regulate a market to generate surplus the price tends to disappear. That is precisely what happened with the EU emissions trading system. The problem in Europe is that the political leverage of big utilities is such that politicians haven’t been able to bit the bullet and align the caps in the current trading system with their own climate change mitigation goals. And that’s a problem. The key question is how fast we move to full auctioning of carbon permits.
What do you think about developed countries' competitiveness concerns around pricing carbon?
If governments do take more stringent emission mitigation, it clearly has implications for the competitiveness of industry and it varies by industry according to the costs they can pass through to the consumer. I think it would be quite dangerous if you had major developing countries that developed a comparative advantage in carbon pollution, with the underpricing of carbon.
I finished the day off at some room in the Grand Hyatt complex talking to a Canadian and a guy named Jonas who helped the Pope go carbon-neutral.
Things are starting to get bizarre in Bali.
Quote of the Day:
I wasn’t privy to the conversation, but the body language was peculiar to put it mildly. The Minister was yelling in the face of a David Suzuki climate campaigner, poking him in the chest in what looked to be quite an assertive way. Fortunately no fist-a-cuffs broke out.
On Sunday, Trade Ministers wrapped up their first ever meeting. The following countries sent their Minister to the talks: Indonesia, Australia, Brazil, Finland, Japan, Korea, New Zealand, Portugal, Singapore, Sweden, Switzerand, and the US. Japan, who has been Canada’s soul mate in Bali on the topic of competitiveness concerns to do with tackling climate change, sent a 12-member delegation including its Vice-Minister. Canada was one of only two countries to have a one-man delegation (Argentina was the other) led by John T. Holmes, our Ambassador to Indonesia, who is meant to be a really nice guy, but probably not the best person to be discussing the scope for redefining the multilateral trading system to take climate change into account.
While the Canadian government was missing in action at the meeting, Winnipeg-based International Institute for Sustainable Development’s four-strong delegation led by David Runnalls set the tone, presenting the Ministers with an IISD opening report marking the emergence of climate change as the trade issue of our time.
Bright Spot: Everyone from the US who is not part of the US official delegation is tripping over themselves to explain how there are two America’s and Bush’s climate skeptic America is the old one, soon to give way to a new President, and a current majority of States and Senators to take bold action on climate change. What about Canada? Good authority has it that Quebec (not one to let regionalism get in the way of progress J) may soon join the California Governator’s Western Regional Climate Change Action Initiative (WRCAI), aimed at having an emissiona trading market up and running by August 2008. Manitoba is already on board. Premier McGuinty met with Governator when he visited Toronto. If Ontario jumps on board as well, that will cover off the majority of Canada’s population. Ontario Environment Minister John Garretson is in Bali this week—maybe it will be a topic of discussion.
“I support the principle of common but differentiated responsibilities when it comes to climate change. Yet this principle does not mean that developing countries should do nothing.”Things are starting to get bizarre in Bali. On Saturday night, the environmental groups threw their much anticipated beach bash (which lived up to its billing). When I arrived the US chief negotiator present at the talks for the first week, Dr Harlan Watson was shuffling on the outskirts of the dance floor, Yvo de Boer, the UN climate chief, was busting the moves on the dance floor, and people were swimming out into the ocean with one hand in the water and one hand above holding their beverage. But Minister John Baird took the cake.
— UN Secretary General, Ban Ki-Moon
I wasn’t privy to the conversation, but the body language was peculiar to put it mildly. The Minister was yelling in the face of a David Suzuki climate campaigner, poking him in the chest in what looked to be quite an assertive way. Fortunately no fist-a-cuffs broke out.
On Sunday, Trade Ministers wrapped up their first ever meeting. The following countries sent their Minister to the talks: Indonesia, Australia, Brazil, Finland, Japan, Korea, New Zealand, Portugal, Singapore, Sweden, Switzerand, and the US. Japan, who has been Canada’s soul mate in Bali on the topic of competitiveness concerns to do with tackling climate change, sent a 12-member delegation including its Vice-Minister. Canada was one of only two countries to have a one-man delegation (Argentina was the other) led by John T. Holmes, our Ambassador to Indonesia, who is meant to be a really nice guy, but probably not the best person to be discussing the scope for redefining the multilateral trading system to take climate change into account.
While the Canadian government was missing in action at the meeting, Winnipeg-based International Institute for Sustainable Development’s four-strong delegation led by David Runnalls set the tone, presenting the Ministers with an IISD opening report marking the emergence of climate change as the trade issue of our time.
Bright Spot: Everyone from the US who is not part of the US official delegation is tripping over themselves to explain how there are two America’s and Bush’s climate skeptic America is the old one, soon to give way to a new President, and a current majority of States and Senators to take bold action on climate change. What about Canada? Good authority has it that Quebec (not one to let regionalism get in the way of progress J) may soon join the California Governator’s Western Regional Climate Change Action Initiative (WRCAI), aimed at having an emissiona trading market up and running by August 2008. Manitoba is already on board. Premier McGuinty met with Governator when he visited Toronto. If Ontario jumps on board as well, that will cover off the majority of Canada’s population. Ontario Environment Minister John Garretson is in Bali this week—maybe it will be a topic of discussion.
Monday, December 10, 2007
A fly on the wall
Today, I rode over in my Sunday best to the Bali Intercontinental Hotel in where the trade ministers were meeting for the first time ever on the topic of climate change. I wandered into a big room that had large square table with flags from different countries around the world set. I took a seat behind the table straddling the New Zealand and Norway spots, figuring I’d have a better chance blending in there than with the Philippine or Pakistani delegation.
A few minutes later the room started to fill with trade ministers. Camera crews followed and then were quickly ushered out leaving me as the only apparent member of the media in the room. Below is the summary.
First Trade Ministers Meeting on Climate Change
Hither to, we arrive at the issue. Climate change is not just a problem for environment ministers anymore, a cadre of trade ministers, including US Trade Representative Susan Schwab, were told today at the Bali Intercontinental Hotel on the fringes of UN Climate Change meetings. The meeting marked the first time ever that trade ministers met on the topic of climate change.
Reducing emissions in developed countries by 70-80 per cent by 2050 and substantially bending back the emissions growth curve for developing countries will have profound impacts for the global economy, because energy powers the economy, and meeting the climate change challenge will require no less than a multi-trillion dollar revamp of our energy infrastructure (US$20 trillion of for Asia alone over next several decades), David Runnalls, President of the International Institute for Sustainable Development told the group of ministers and officials, who had commissioned a report on trade and climate change from his Institute.
Mr. Runnalls characterized the Kyoto Protocol as “principally an investment agreement” that involves fundamentally changing our energy system, adding, “a failure to address climate change would constitute a failure of the multilateral trading system.”
So far, climate and trade agreements appear to have been on the same page. Article 35 of the UN Framework Convention on Climate Change clearly states that measures taken to combat climate change should not be disguised restrictions on international trade.
Likewise, the role of the WTO is to advance development objectives in accordance with the principles of sustainable development. But Runnalls cautioned that this honeymoon between trade and climate could soon end if we do not proactively address conflicts that will arise around competitiveness concerns that the prospect of substantial and uneven carbon pricing bring to the fore.
To start, Runnalls urged countries to focus on the promise of trade to combat climate change rather than the potential for conflict. Good places to start include looking at scrapping some of annual US $250 billion in fossil fuel subsidies that International Energy Agency has identified, and looking at how trade policy can best supply climate friendly goods and services, to meet the estimated additional $200-$210 billion dollars per year (compared to present ODA levels of just $100 billion/year) the UNFCCC says it will be necessary to invest over the next 23 years to achieve the climate change mitigation goals of the convention.
The World Bank also presented a preliminary report at the meeting, which showed that trade flows of climate friendly goods and services could expand by as much as 7.2 to 13.5 per cent if tariffs and non-tariff-barriers (NTBs) are removed. The same report found that so far that climate regulations have affected competitiveness much more than carbon taxes, in part because countries generally offset carbon taxes for trade-exposed industries, or the carbon tax rate has not been substantial enough to make that much of a difference.
The World Bank report did find a trend of carbon leakage, whereby carbon intensive industries relocate from high carbon-price jurisdictions to low-carbon price jurisdictions, but this may be due in part to the availability of raw materials and rampant growth in some developing countries like China and India. The World Bank official said the intellectual property rights would also have to be tackled in any agreement to expand technology transfer of climate friendly goods and services.
The most newly minted trade minister, Simon Crean, from Australia was the first minister to speak up, insisting that trade and environment policies must be mutually supportive, identifying the carbon market as one part of the solution, towards which Australia will establish a national emission trading system to achieve its goal of reducing greenhouse gas emissions by 60 per cent from 2000 levels by 2050.
Mr Crean also cautioned about messing with the trade goose that lays golden eggs for the economy. “These international agreements are based on a hard earned consensus,” he said.
In a not so veiled reference to France’s carbon import tax proposal and the requirement for importers of carbon intensive products to purchase emissions allowances under the Lieberman-Warner bill making its way through the US Senate, he went on: “When countries mention things like carbon taxes or border transfer taxes, as trade ministers, we should be quite concerned about such a systemic threat to the trade system that has served us so well.”
The best way to ensure this doesn’t happen, he said, is to “ensure that all major emitters are involved in emission reductions efforts.”
US Trade Representative Susan Schwab echoed Mr Crean’s concern, cautioning, “using climate as an excuse for covert protectionism is a slippery slope and will ultimately hurt all of us.”
Better, Ms Schwab said, to focus on the positive things we can do with trade. She singled out the Doha round as offering the “single best early opportunity to make a contribution that is climate friendly.”
The EU and the US have a proposal on the table at Doha to immediately eliminate NTBs for 43 goods and services that the World Bank has classified as environmentally friendly, and to make progress on a more broadly based environmental goods and services agreement. This could be expected to expand climate friendly trade, and not just the north selling to south, Ms Schwab underlined, pointing out that the US currently imports $18 billion of environmentally friendly goods and services each year, with four of the top ten (including the top two) ports of origin being in developing countries.
Ms Schwab also commented that trade ministers meeting on the topic of climate was long overdue and it was “astonishing that this was the first time that we gathered at the nexus of trade and climate.”
Miguel Jorge, the Brazilian Minister of Development, Industry and Trade, said he would oppose the EU-US proposal because the list of 43 environmental goods and services excluded ethanol.
“Why is ethanol considered an agricultural product, when biodiesel produced from vegetables is not?” he asked. Ms Schwab’s other remarks that regional and bilateral forums would be useful additional forums for opening up the floodgates for green trade also rubbed Mr Jorge the wrong way.
“If there are two things that are global, it is trade and climate change,” he said, citing the risk of a patchwork approach in which the sum of the parts are less than the whole required to meet the global climate challenge. Mr Jorge challenged his colleagues to work with him to find a way to value the ecosystem services and carbon sink function provided by Brazil’s threatened Amazon forest, without exonerating rich countries from making emission reductions themselves.
“Even if Brazil does everything it can to stop further deforestation,” Mr Jorge explained, “without aggressive mitigation of greenhouse gas emission, the Brazilian rainforest will be destroyed within 70 years because of climate change.”
Mr Jorge also suggested that lessons from expanding access to certain pharmaceutical drugs through TRIPS be applied to opening up green trade. WTO chief Pascal Lamy said that an important element of green trade was to change transport patterns.
“Air and truck produces more greenhouse gases than shipping,” he pointed out. Mr Lamy discouraged expanding aid for trade. “We have enough problems we need to address. We should focus on those,” he said.
The Swedish official recommended commencing a multilateral effort to explore using labels and certifications in collaboration with the WTO, UNFCCC and International Standards Organization, pertaining to environmental information about the life cycle impact of products in a way that expands trade rather than erecting impediments as have some other labeling and certification schemes.
The UN Conference on Trade and Development head, Dr. Supachai Panitchpakdi registered strong disdain for using punitive trade measures levied against countries that cannot afford to take aggressive low-carbon development paths. He also made an aggressive pitch for lifting barriers from biofuels as the single measure that would best advance the equally important battles against poverty and dangerous climate change.
The EU trade official, who may have been Peter Mendelson (it was hard to make him out from across the room), delivered a sobering dose of reality to the meeting: “we’d better hope that our colleagues can reach a comprehensive global climate agreement, or we will face problems stemming from competitiveness concerns that go beyond our ability to solve them.” Japan expressed support for the EU-US green trade proposal but requested that hybrid cars be added to the list of 43 approved goods and services.
Of all the speakers, China took up the least amount of floor time, emphasizing that there is no contradiction between trade and climate change, as long as everyone respects the principle of common but differentiated responsibility. China also cautioned that in addition to its low per capita emissions, historic responsibility and lower than average GDP per capita, the reallocation of energy intensive industry into developing countries also had to be taken into account.
India beat its usual drum role about having low per capita emissions and stressed the importance of dealing with intellectual property rights as part of the strategy for scaling up green technology transfer. Russia’s main contribution was to caution that [trade and climate change] “is an extremely sensitive space and we must be careful not to distort the market.”
The UK wrapped up the meeting noting that it was surprising that so little literature existed in the trade and climate change nexus, and suggested commissioning works similar in authority to the Stern Report to help pave the way for a green trading system up to the challenge of climate change.
A few minutes later the room started to fill with trade ministers. Camera crews followed and then were quickly ushered out leaving me as the only apparent member of the media in the room. Below is the summary.
First Trade Ministers Meeting on Climate Change
Hither to, we arrive at the issue. Climate change is not just a problem for environment ministers anymore, a cadre of trade ministers, including US Trade Representative Susan Schwab, were told today at the Bali Intercontinental Hotel on the fringes of UN Climate Change meetings. The meeting marked the first time ever that trade ministers met on the topic of climate change.
Reducing emissions in developed countries by 70-80 per cent by 2050 and substantially bending back the emissions growth curve for developing countries will have profound impacts for the global economy, because energy powers the economy, and meeting the climate change challenge will require no less than a multi-trillion dollar revamp of our energy infrastructure (US$20 trillion of for Asia alone over next several decades), David Runnalls, President of the International Institute for Sustainable Development told the group of ministers and officials, who had commissioned a report on trade and climate change from his Institute.
Mr. Runnalls characterized the Kyoto Protocol as “principally an investment agreement” that involves fundamentally changing our energy system, adding, “a failure to address climate change would constitute a failure of the multilateral trading system.”
So far, climate and trade agreements appear to have been on the same page. Article 35 of the UN Framework Convention on Climate Change clearly states that measures taken to combat climate change should not be disguised restrictions on international trade.
Likewise, the role of the WTO is to advance development objectives in accordance with the principles of sustainable development. But Runnalls cautioned that this honeymoon between trade and climate could soon end if we do not proactively address conflicts that will arise around competitiveness concerns that the prospect of substantial and uneven carbon pricing bring to the fore.
To start, Runnalls urged countries to focus on the promise of trade to combat climate change rather than the potential for conflict. Good places to start include looking at scrapping some of annual US $250 billion in fossil fuel subsidies that International Energy Agency has identified, and looking at how trade policy can best supply climate friendly goods and services, to meet the estimated additional $200-$210 billion dollars per year (compared to present ODA levels of just $100 billion/year) the UNFCCC says it will be necessary to invest over the next 23 years to achieve the climate change mitigation goals of the convention.
The World Bank also presented a preliminary report at the meeting, which showed that trade flows of climate friendly goods and services could expand by as much as 7.2 to 13.5 per cent if tariffs and non-tariff-barriers (NTBs) are removed. The same report found that so far that climate regulations have affected competitiveness much more than carbon taxes, in part because countries generally offset carbon taxes for trade-exposed industries, or the carbon tax rate has not been substantial enough to make that much of a difference.
The World Bank report did find a trend of carbon leakage, whereby carbon intensive industries relocate from high carbon-price jurisdictions to low-carbon price jurisdictions, but this may be due in part to the availability of raw materials and rampant growth in some developing countries like China and India. The World Bank official said the intellectual property rights would also have to be tackled in any agreement to expand technology transfer of climate friendly goods and services.
The most newly minted trade minister, Simon Crean, from Australia was the first minister to speak up, insisting that trade and environment policies must be mutually supportive, identifying the carbon market as one part of the solution, towards which Australia will establish a national emission trading system to achieve its goal of reducing greenhouse gas emissions by 60 per cent from 2000 levels by 2050.
Mr Crean also cautioned about messing with the trade goose that lays golden eggs for the economy. “These international agreements are based on a hard earned consensus,” he said.
In a not so veiled reference to France’s carbon import tax proposal and the requirement for importers of carbon intensive products to purchase emissions allowances under the Lieberman-Warner bill making its way through the US Senate, he went on: “When countries mention things like carbon taxes or border transfer taxes, as trade ministers, we should be quite concerned about such a systemic threat to the trade system that has served us so well.”
The best way to ensure this doesn’t happen, he said, is to “ensure that all major emitters are involved in emission reductions efforts.”
US Trade Representative Susan Schwab echoed Mr Crean’s concern, cautioning, “using climate as an excuse for covert protectionism is a slippery slope and will ultimately hurt all of us.”
Better, Ms Schwab said, to focus on the positive things we can do with trade. She singled out the Doha round as offering the “single best early opportunity to make a contribution that is climate friendly.”
The EU and the US have a proposal on the table at Doha to immediately eliminate NTBs for 43 goods and services that the World Bank has classified as environmentally friendly, and to make progress on a more broadly based environmental goods and services agreement. This could be expected to expand climate friendly trade, and not just the north selling to south, Ms Schwab underlined, pointing out that the US currently imports $18 billion of environmentally friendly goods and services each year, with four of the top ten (including the top two) ports of origin being in developing countries.
Ms Schwab also commented that trade ministers meeting on the topic of climate was long overdue and it was “astonishing that this was the first time that we gathered at the nexus of trade and climate.”
Miguel Jorge, the Brazilian Minister of Development, Industry and Trade, said he would oppose the EU-US proposal because the list of 43 environmental goods and services excluded ethanol.
“Why is ethanol considered an agricultural product, when biodiesel produced from vegetables is not?” he asked. Ms Schwab’s other remarks that regional and bilateral forums would be useful additional forums for opening up the floodgates for green trade also rubbed Mr Jorge the wrong way.
“If there are two things that are global, it is trade and climate change,” he said, citing the risk of a patchwork approach in which the sum of the parts are less than the whole required to meet the global climate challenge. Mr Jorge challenged his colleagues to work with him to find a way to value the ecosystem services and carbon sink function provided by Brazil’s threatened Amazon forest, without exonerating rich countries from making emission reductions themselves.
“Even if Brazil does everything it can to stop further deforestation,” Mr Jorge explained, “without aggressive mitigation of greenhouse gas emission, the Brazilian rainforest will be destroyed within 70 years because of climate change.”
Mr Jorge also suggested that lessons from expanding access to certain pharmaceutical drugs through TRIPS be applied to opening up green trade. WTO chief Pascal Lamy said that an important element of green trade was to change transport patterns.
“Air and truck produces more greenhouse gases than shipping,” he pointed out. Mr Lamy discouraged expanding aid for trade. “We have enough problems we need to address. We should focus on those,” he said.
The Swedish official recommended commencing a multilateral effort to explore using labels and certifications in collaboration with the WTO, UNFCCC and International Standards Organization, pertaining to environmental information about the life cycle impact of products in a way that expands trade rather than erecting impediments as have some other labeling and certification schemes.
The UN Conference on Trade and Development head, Dr. Supachai Panitchpakdi registered strong disdain for using punitive trade measures levied against countries that cannot afford to take aggressive low-carbon development paths. He also made an aggressive pitch for lifting barriers from biofuels as the single measure that would best advance the equally important battles against poverty and dangerous climate change.
The EU trade official, who may have been Peter Mendelson (it was hard to make him out from across the room), delivered a sobering dose of reality to the meeting: “we’d better hope that our colleagues can reach a comprehensive global climate agreement, or we will face problems stemming from competitiveness concerns that go beyond our ability to solve them.” Japan expressed support for the EU-US green trade proposal but requested that hybrid cars be added to the list of 43 approved goods and services.
Of all the speakers, China took up the least amount of floor time, emphasizing that there is no contradiction between trade and climate change, as long as everyone respects the principle of common but differentiated responsibility. China also cautioned that in addition to its low per capita emissions, historic responsibility and lower than average GDP per capita, the reallocation of energy intensive industry into developing countries also had to be taken into account.
India beat its usual drum role about having low per capita emissions and stressed the importance of dealing with intellectual property rights as part of the strategy for scaling up green technology transfer. Russia’s main contribution was to caution that [trade and climate change] “is an extremely sensitive space and we must be careful not to distort the market.”
The UK wrapped up the meeting noting that it was surprising that so little literature existed in the trade and climate change nexus, and suggested commissioning works similar in authority to the Stern Report to help pave the way for a green trading system up to the challenge of climate change.
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