During the weekend, the global fight against climate change reached another milestone when negotiators from 196 countries finalised a rulebook for the 2015 Paris Agreement. The finalisation paves the way for implementation of the Paris Agreement, which is supposed to replace the existing Kyoto Protocol in 2020.
The creation of the rulebook at the annual year-ending, two-week climate change conference, this time held in Katowice, Poland, has been hailed as an important step that has breathed life into the Paris Agreement. At the same time, several countries and nongovernmental organisations have said the deal reached in Katowice, though welcome, was not enough.
What is in the rulebook?
Broadly, the Paris Agreement, which seeks to keep the global average temperatures “well below” 2°C from pre-industrial times, specifies what steps countries need to take in the fight against climate change. The rulebook prescribes how to do those things, and how each of them would be measured and verified.
For example, the Paris Agreement says every country must have a climate action plan, and that this should be periodically updated and submitted to the UN climate body. The rulebook now specifies what actions can be included in the action plan, how and when to submit them. Further, the Paris Agreement asks every member nation to submit information about their greenhouse gas emissions every two years. The rulebook specifies which gases to measure, what methodologies and standards to apply while measuring them, and the kinds of information to be included in their submissions.
Again, under the Paris Agreement, developed countries are supposed to provide “climate finance” to developing countries to help them deal with climate change, and submit an account of this. The rulebook says what kinds of financial flows — loans, concessions, grants — can be classified as climate finance, how they should be accounted for, and the kind of information about them needed to be submitted.
The rulebook contains various other processes and guidelines needed for implementing the other provisions of the Paris Agreement. In short, it holds the operational details of the Paris Agreement. That is why the Paris Agreement is just 27 pages long while the rulebook is spread over 133 pages, and is not yet complete. The rulebook is a dynamic document, meaning new rules can be added, or existing rules amended.
Was Katowice only about the rulebook?
It was primarily about the rulebook. But a few other discussions had also become important, particularly the one around the need to step up climate actions in the light of several studies that pointed out that current level of actions were insufficient to hold the global average temperature within 2°C above pre-industrial levels. The special report of the Intergovernmental Panel on Climate Change (IPCC) on the feasibility of attaining a 1.5°C target, which had come out weeks ahead of the Katowice meeting, had added urgency to the discussions.
It was expected that the countries would give some indication of their willingness to do more that what they were currently committed to, and would agree to start a process towards that. But that did not happen. Instead, an ugly battle was fought over how to acknowledge the IPCC report, which had been requested by this same conference three years ago, in the final outcome.
The absence of any indication towards increasing “ambition” of climate actions was one major disappointment of the Katowice conference, and it was voiced repeatedly by the small island states and the least developing countries, which are expected to face the worst impacts of climate change. It also prompted UN Secretary-General Antonio Guterres, who had played a key role in getting an agreement finalised in Katowice, to say that from now on his focus would be to work towards getting the ambition of climate action increased.
Has the rulebook addressed all issues it was meant to look at?
One important element could not be agreed upon and had to be deferred for until next year. This relates to Article 6 of the Paris Agreement which talks about setting up a market mechanism for trading of carbon emissions. An emissions trading system already exists under the Kyoto Protocol, though it has become ineffective over the last few years and is meant to end with the end of Kyoto Protocol in 2020.
A carbon market allows countries, or industries, to earn carbon credits for the emission reductions they make in excess of what is required of them. These carbon credits can be traded to the highest bidder in exchange of money. The buyers of carbon credits can show the emission reductions as their own and use them to meet their own reduction targets.
In the last few years, as several countries walked out of the Kyoto Protocol, and no country was feeling compelled to meet its 2020 emission reduction targets, there has been virtually no demand for carbon credits. As a result, developing countries like China, India and Brazil have accumulated huge amounts of unused carbon credits. Together, China and Brazil are estimated to account for about 70% of global unused carbon credits. When the rulebook was being discussed in Katowice, these countries argued that their unused carbon credits should be considered valid in the new market mechanism that was being created, something that the developed countries opposed strongly.
The battle was fought by Brazil, while countries like India and China offered silent support. The developed countries questioned the authenticity of the unused carbon credits, pointing to weak verification mechanisms of the Kyoto Protocol that allowed dubious projects to claim carbon credits. The developed countries also argued that some of the proposals being put forward by Brazil for the carbon markets would lead to double-counting of emission reductions.
The battle held up negotiations in Katowice for two days and a night. With no side willing to concede ground, there was no option but to defer the discussion over carbon markets to next year, while allowing for the rest of the rulebook to be finalised.
The confrontation has been put off for the time being, but will reemerge as soon as the discussions are taken up again next year. The fact that no side was ready for a compromise, and preferred to reengage at some other time, is an indication of the importance that countries are attaching to the new emission trading system, and their high stakes in that market. The reemergence of carbon market could be the next big thing to watch out for in the climate space.
Hits & Misses: Takeaways From COP24
Article 4: Pledges
Article 4 of the 2015 Paris Agreement mandates nationally determined contributions (NDCs) by countries. The rules agreed upon in Katowice seek to address what should be in these pledges. The rulebook says, “The Conference… reaffirms and underscores that… support shall be provided to developing country Parties for the implementation of Article 4 of the Paris Agreement…” and “decides that… parties shall provide the information necessary for clarity, transparency and understanding… as applicable to their nationally determined contributions…”
Article 6: Carbon markets
Article 6 covers voluntary carbon markets. Countries earn carbon credits for any emission reductions in excess of requirement; these credits can then be traded for money. The Katowice talks were unable to reach agreement on a new market mechanism. Brazil, which — like India and China — had already amassed carbon credits under an earlier mechanism, wanted these accounted for; developed countries objected. The COP24 statement on Article 6 stated: “Draft decision texts on these matters in the proposal by the president were considered, but… parties could not reach consensus thereon.”
Article 9: Climate finance
Developed countries are supposed to provide climate finance to developing countries to help deal with climate change, and submit an account of this. The rulebook spells out what kinds of financial flows can be classified as climate finance, how they should be accounted for, and the kind of information about them needed to be submitted. Interpreting the rules, an article on the portal Carbon Brief said the language is relatively permissive, with countries allowed to report the full value of loans as climate finance, rather than the “grant-equivalent” portion; they can voluntarily report grant-equivalent values.
IPCC report: 1.5°C
While the Paris Agreement seeks to restrict within 2°C the rise in average global temperatures since pre-industrial times, a special report of Intergovernmental Panel on Climate Change (IPCC) addresses the feasibility of attaining a 1.5°C target. The IPCC report divided countries. Noting that the US, Saudi Arabia, Russia and Kuwait refused to “welcome” the report, Carbon Brief stated: “The wording was somewhat fudged in the final COP decision text. It did not ‘welcome’ the report, but did welcome its ‘timely completion’ and ‘invited’ countries to make use of the report in subsequent discussions…”