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Another Copenhagen Outcome: Serious Questions About the Best Institutional Path Forward

Whether you like it or not, for the time being the most important product of the December meeting in Copenhagen of the Fifteenth Conference of the Parties (COP-15) of the United Nations Framework Convention on Climate Change (UNFCCC) is the “Copenhagen Accord,” which I assessed in my December 20^th blog post (“What Hath Copenhagen Wrought? A Preliminary Assessment of the Copenhagen Accord”). In the long term, however, it is quite possible that another outcome of the December meetings may prove to be equally or more consequential. I’m referring to the decreased credibility of the UNFCCC as the major institutional venue for international climate policy negotiation and implementation.

One has to be cautious about taking too seriously some of the assertions that have been made in the printed press and the blogosphere about the death of the UNFCCC, partly because many of those commentaries come from people in the press and NGOs who – like me – suffered in Copenhagen because of the terrible logistics provided by the UNFCCC, which kept thousands of people standing outside in the bitter cold for 8 hours waiting to receive their credentials (for which they had been pre-registered) only to be turned away from the Bella Center. I’ve written about that in my December 18^th blog post (Chaos and Uncertainty in Copenhagen?). However, the problems with the UNFCCC that became so apparent in Copenhagen are more fundamental than the logistical failures.

Problems with the UNFCCC Process

The two weeks of COP-15 illustrated four specific problems, most of which were apparent long before the Copenhagen meetings. First, the UNFCCC process involves too many countries – about 196 at last count — to allow anything of real significance to be achieved. As my colleague, Professor Jeffrey Frankel, observed in a panel session in which he and I participated at the ASSA meetings in Atlanta, “it’s difficult enough to reach agreement in a room with 30 people, let alone close to 200.” What is particularly striking about involving 196 parties in the discussion of international climate change policy is the reality that just 20 of them account for about 90% of global emissions!

The second problem – again, illustrated in spades at the Copenhagen sessions – is that the UN culture tends to polarize many discussions into two factions: the developed world versus the developing world. This is troubling, because the world is much more diverse than such a dichotomous distinction would suggest. Clearly, emerging economies such as China, India, Brazil, Korea, Mexico, and South Africa have more in common – along some key economic dimensions – with some countries in the so-called developed world than they do with the poorest developing countries, such as those of sub-Saharan Africa.

The third problem is that the voting rules of the UNFCCC process require consensus for nearly all decisions, that is, unanimity. It was lack of unanimity, by the way, which resulted in the Conference not “adopting” the Copenhagen Accord, but rather “noting” it. After all, only 190 of 196 countries supported it. Six nations threatened to vote in opposition, ironically accusing the 190 of “undemocratic procedures:” Bolivia, Cuba, Nicaragua, Sudan, Tuvalu, and Venezuela.

Fourth and finally, the UNFCCC leadership in Copenhagen was – to phrase it politely – problematic, not only administratively, but substantively as well, according to delegates from a diverse set of countries. (It should also be acknowledged that some responsibility for the problematic leadership of the Conference — both administratively and substantively — rests with the Danish presidency of the Conference. Members of a diverse set of delegations, as well as other observers, have commented on this.)

These problems (as well as others on which readers will probably comment) have caused many observers (as long as eight to ten years ago in the case of some academic economists and political scientists) to question whether the UNFCCC is the best institutional venue for productive negotiations and action on global climate change policy, or at least whether it ought to be the sole venue. So, what are the possible alternatives?

Potential Alternative or Supplementary Institutional Venues

One promising venue was initiated in 2007 by the Bush administration as the “Major Emitter Meetings” – the “MEM process.” It was roundly condemned by environmental advocacy groups and by many supporters of the UNFCCC process. Greenpeace labeled it a “dead-end diversion” – “an attempt by the Bush Administration to deflect international criticism on their do nothing attitude on climate change.” Whether or not that was the Bush administration’s cynical motivation, the fact remains that it was a sensible venue for discussion.

Fortunately, the Obama administration recognized that this was a promising approach, adopted it, changed its name to the Major Economies Forum on Energy and Climate, and continued the process, now commonly referred to as the “MEF.” Several meetings have taken place – in Washington, Paris, and Mexico City – bringing together Australia, Brazil, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, South Africa, the United Kingdom, and the United States. Those 17 countries and regions account for about 90% of global emissions. The U.S. Deputy National Security Advisor for International Economic Affairs, Michael Froman, chairs the meetings. Naturally, some nations (and some advocates) are concerned about a small set of large countries reaching decisions; and no doubt some are not comfortable with a process chaired by the United States.

Another conceivable institutional venue would be the G-20, the “Group of Twenty Finance Ministers and Central Bank Governors,” established in 1999 to bring together the leading industrialized and developing economies to discuss key issues. They recently turned their attention to climate change policy (in Pittsburgh in September, 2009). The make-up of this group is similar to that of the MEF, but there are differences: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, and the United States. For some people, the good news about the G-20 playing a key role as a venue for negotiations is the presence of economic thinking; of course, this is precisely what troubles many others.

No doubt, there are other conceivable multilateral negotiations that could be convened, as well as bilateral approaches, including, of course, ongoing talks between China and the United States.

Don’t Nail Shut the Coffin

Anyone who predicts the death of the UNFCCC is probably letting their hopes infect their predictions. It is simply much too soon for obituaries to be written for this quite durable institution.

The Kyoto Protocol continues at least until the end of its first commitment period, that is, through 2012. The Clean Development Mechanism (CDM) and annual national reporting functions (such as those that are key parts of the Copenhagen Accord) are likely to work through the United Nations, most likely the UNFCCC.

Also, the UNFCCC has a very large constituency of support, including at a minimum most, if not all, of the G-77 group of developing countries, which actually numbers much closer to 140. In addition, the UNFCCC has significant international legitimacy, and is potentially key for implementation, no matter what the venue may be for initial negotiation.

The Path Forward

Whether the next steps in international deliberations should be under the auspices of the UNFCCC or some smaller deliberative body, such as the MEF or the G-20, is an important and open question. Given the necessity of achieving consensus in the United Nations processes as currently defined and the open hostility of a small set of countries, other bilateral and multilateral discussions could be an increasingly attractive route, at least over the short term.

There are many questions, however, that need to be addressed before anyone can identify the best institutional venue (or venues) for international climate negotiations and action. Such questions are now among the major foci of research by the Harvard Project on International Climate Agreements. More about this in future posts.

What Hath Copenhagen Wrought? A Preliminary Assessment of the Copenhagen Accord

After years of preparation, the Fifteenth Conference of the Parties (COP-15) of the United Nations Framework Convention on Climate Change (UNFCCC) commenced on December 7^th, 2009, and adjourned some two weeks later on December 19^th after a raucous all-night session. The original purpose of the conference had been to complete negotiations on a new international agreement on climate change to come into force when the Kyoto Protocol’s first commitment period comes to an end in 2012. But for at least the past six months, it had become clear to virtually all participants that such a goal was out of reach — and the COP-15 objective was publically downgraded in mid-November to a non-binding agreement by heads of state at a meeting in Singapore of the Asia-Pacific Economic Conference.

I begin by describing what were reasonable expectations going into the Copenhagen negotiations and appropriate definitions of success for COP-15, and then turn to the unprecedented process which unfolded over the final 36 hours of the conference. Next, I describe the fundamental architecture of the sole product that emerged – the Copenhagen Accord – and describe its key provisions, with an assessment of each component. I close with an examination of the major pending issues and the available procedural routes ahead.

Sensible Expectations and Definitions of Success for Copenhagen

There was much hand-wringing in the months leading up to COP-15 about how difficult the negotiations had become. I saw this as something of “A Silver Lining in the Climate Talks Cloud,” because the difficulty was largely a consequence of key countries of the world taking very seriously the task of expanding the coalition of the willing.

Going into Copenhagen, the challenge was very great, largely because of fundamental economic (and hence political) realities, as I explained in a previous post, “Chaos and Uncertainty in Copenhagen?” Given legitimate concerns about issues of efficiency, on the one hand, and distributional equity, on the other hand, it was not surprising that the industrialized countries (particularly the United States) insisted that China and other key emerging economies participate in a future agreement in meaningful and transparent ways, nor that the developing countries insisted that the industrialized countries foot much of the bill.

The key question was whether the negotiators in Copenhagen could identify a policy architecture that is both reasonably cost-effective and sufficiently equitable to generate support from the key countries of the world, and thus do something truly meaningful about the long-term path of global greenhouse gas emissions. There were (and are) some promising paths forward, as we have documented in the Harvard Project on International Climate Agreements, and as we examine in a pair of current books (Post-Kyoto International Climate Policy: Summary for Policymakers; and Post-Kyoto International Climate Policy: Implementing Architectures for Agreement).

At the final hour in Copenhagen, the leaders of a small number of key countries worked creatively together to identify a politically feasible path forward. I have previously argued (“Defining Success for Climate Negotiations in Copenhagen”) that the best goal for the Copenhagen climate talks was to make progress on a sound foundation for meaningful, long-term global action, not some notion of immediate, numerical triumph. That has essentially been accomplished with the “Copenhagen Accord,” despite its flaws and despite overt challenges from five of some 193 countries represented (Bolivia, Cuba, Nicaragua, Sudan, and Venezuela).

An Unprecedented Process

Before turning to the substance of the Copenhagen Accord, it is worthwhile taking note of the quite remarkable process that led up to its “last-minute” creation. From all reports, the talks were completely deadlocked when U.S. President Barack Obama arrived on the scene at 8:00 am on Friday, December 18^th, the scheduled final day of the conference. Through a series of bilateral and eventually multilateral meetings of President Obama with Chinese Premier Wen Jiabao, Indian Prime Minister Manmohan Singh, Brazilian President Luiz Inacio Lula da Silva, and South African President Jacob Zuma, a document gradually emerged which was to become the Copenhagen Accord.

It is virtually unprecedented in international negotiations for heads of government (or heads of state) to be directly engaged in, let alone lead, negotiations, but that is what transpired in Copenhagen. Although the outcome is less than many people had hoped for, and is less than some people may have expected when the Copenhagen conference commenced, it is surely better – much better – than what most people anticipated just three days earlier, when the talks were hopelessly deadlocked.

The Copenhagen Accord – Its Fundamental Architecture

The fundamental architecture of the Copenhagen Accord is one we recently analyzed in the Harvard Project on International Climate Agreements in “A Portfolio of Domestic Commitments: Implementing Common but Differentiated Responsibilities,” and about which I blogged at the end of November (Approaching Copenhagen with a Portfolio of Domestic Commitments). Essentially, under such an approach each nation commits and registers to abide by its domestic climate commitments, whether those are in the form of laws and regulations or multi-year development plans. This is essentially the “schedule approach” introduced by the Australian government in spring 2009.

After its release, President Obama characterized the new Accord as “an important first step” at his press conference shortly before returning to Washington. I would prefer to amend that characterization to call the Accord a potentially very important third step. Step One was the UN Earth Summit in Rio de Janeiro in 1992, which produced the U.N. Framework Convention on Climate Change. Step Two was the Kyoto Protocol, signed in Japan in 1997. But what many policy wonks (myself included), not to mention the United States Senate, immediately recognized was the absence from the Kyoto Protocol of involvement in truly meaningful ways of the key, rapidly-growing developing countries, a small set of important nations that are now better termed “emerging economies” – China, India, Brazil, South Africa, Mexico, and Korea. This was a primary deficiency of Step Two, as well as the lack of serious attention to the long-term path of emissions (as opposed to the five-year time horizon of Kyoto).

The Copenhagen Accord establishes a framework for addressing both deficiencies, and thereby can be characterized as a potentially very important third step – expanding the coalition of the willing and extending the time-frame of action. With this step, all of the seventeen countries of the Major Economies Forum– which together account for some 90% of global emissions – are agreeing to participate. Nevertheless, let’s be honest about the difference between the outcome of the 1997 negotiations in Kyoto (a detailed 20-page legal document, the Kyoto Protocol) and the outcome of the 2009 negotiations in Copenhagen (a general 3-page political statement, the Copenhagen Accord). Still, it remains true that the COP-15 negotiations were “saved from utter collapse” by the creation and acceptance of the Copenhagen Accord.

The Copenhagen Accord – Key Provisions and Preliminary Assessment

It is unquestionably the case that the Accord represents the best agreement that could be achieved in Copenhagen, given the political forces at play. Indeed, were it not for the spirited – and as I suggested above, quite remarkable – direct intervention by President Obama, together with the other key national leaders, there would have been no real outcome from the Copenhagen negotiations. That said, let’s take a critical look at the Accord, item by item. The key provisions (as I interpret them, with my own numbering, not that of the Accord) are these:

1. The signatories validate their will to “urgently combat climate change in accordance with the principle of common but differentiated responsibilities and respective capabilities.” The signatories agree that deep cuts in global emissions are required to hold global temperature increases to 2 degrees Centigrade, and commit to take actions to meet this objective, “consistent with science and on the basis of equity.”

Assessment: Although the Accord notes the importance of the frequently-discussed 2 degrees Centigrade target, it does not spell out actions that will achieve it. The Accord also notes the importance of the principle of “common but differentiated responsibilities,” which is of great importance to developing countries.

2. Action and cooperation on adaptation is urgently required, particularly in the least developed countries, small island developing states, and Africa. Developed countries commit to provide financial resources to support adaptation measures in developing countries.

Assessment: Recognizing the importance of adaptation and providing financial resources to support it in developing countries is an important departure from Kyoto. Targeting the funds to the “least developed countries” is sensible.

3. Annex I Parties of the Kyoto Protocol (the 1997 list of the industrialized countries and the emerging market economies of Central and Eastern Europe) commit to implement mitigation actions (specified in Appendix I), and Non-Annex I Parties (the developing world, as defined in the Kyoto Protocol) also commit to implement mitigation actions (specified in Appendix II), all of which will be submitted to the UNFCCC Secretariat by January 31, 2010.

Assessment: These appendices (“schedules”) of domestic mitigation targets, actions, and policies are the heart of the Portfolio approach, as I described above. This is where the action is.

It is unfortunate (but was probably politically necessary) that the Accord maintains the distinction of Annex I versus non-Annex I countries from the Kyoto Protocol. I have characterized this distinction in the Kyoto Protocol as the “QWERTY keyboard” (unproductive path dependence) of international climate policy, because it has been the greatest impediment to developing a meaningful international arrangement. It is because of the presence of this distinction that developing countries have insisted on a continuation of the Kyoto Protocol for a second (post-2012) commitment period.

Note that even if the Annex I list was appropriate in 1997, it surely no longer is: more than 60 non-Annex I countries now have greater per capita income than the poorest of the Annex I countries.

An important improvement would be to employ a formulaic mechanism that takes a variety of factors into account, including per capita income, to determine the stringency of ambition, targets, or actions for individual countries, rather than the dichotomous distinction of having targets or not (“Global Climate Policy Architecture and Political Feasibility: Specific Formulas and Emission Targets to Attain 460 PPM CO2 Concentrations”).

If a continuous spectrum with all countries listed in the same table is not politically feasible, then a mechanism is needed for countries to transition from one list to the other. Korea and Mexico joined the OECD six months after Kyoto, but they remain off the Annex I list.

4. Emissions reductions for the Annex I parties will be measured, reported, and verified according to guidelines (to be established), which will be rigorous and transparent, whereas mitigation actions taken by non-Annex I parties will be subject to domestic measurement, reporting, and verification (MRV) reported through national communications, with international consultation and analysis.

Assessment: There was a great deal of attention to this issue in Copenhagen, with all members of the U.S. delegation talking about the importance of “transparency.” The compromise seems acceptable: developing countries employ domestic measurement, reporting, and verification, but it is subject to “international consultation and analysis.”

Interestingly, the Accord is silent on the issue of “international competitiveness” and the possible use of border adjustments (border taxes or import allowance requirements in national cap-and-trade systems). This is a controversial point, since inclusion of such mechanisms is important in domestic U.S. politics, but is anathema to China, India, and other developing countries.

5. Least developed countries and small island developing states may undertake actions voluntarily and on the basis of support (from other countries). Such actions will be subject to international measurement, reporting, and verification.

Assessment: This is the third element of the national schedules, reserved for the poorest developing countries (which contribute only trivially to greenhouse gas emissions), and it seems acceptable, although a graduation mechanism would again be desirable. Interestingly, if their actions are funded by developed countries, then those actions are subject to the most stringent MRV. So-called technology transfer mechanisms are included in this context.

6. The parties will establish positive incentives to stimulate financial resources from developed countries to help reduce emissions from deforestation and degradation.

Assessment: This is a potentially important change, as the lack of meaningful attention to retarding deforestation was a significant deficiency of the Kyoto Protocol. We have investigated appropriate mechanisms in the Harvard Project on International Climate Agreements (“International Forest Carbon Sequestration in a Post-Kyoto Agreement”).

7. The parties agree to pursue opportunities to use markets to achieve cost-effective mitigation actions.

Assessment: As we have documented in the Harvard Project (“Linkage of Tradable Permit Systems in International Climate Policy Architecture”), it is very important that future international agreements facilitate or at least not discourage voluntary linkage of national and multi-national cap-and-trade systems. Needless to say, this provision in the Accord – like virtually all of the provisions – will require specific details to make it operational.

8. Predictable and adequate funding will be provided to developing countries for emissions mitigation, reduction of deforestation, and adaptation. There is a collective commitment from developed countries “approaching” $30 billion for the period 2010-2012, “balanced between adaptation and mitigation,” with adaptation funding being prioritized for the most vulnerable developing countries.

Assessment: To whatever degree the funding for mitigation is of government-government form (expanded foreign aid), legitimate concerns exist about both the feasibility of marshalling the necessary amounts and the efficiency of its use. The private sector needs to be employed, as I have previously argued (“Only Private Sector Can Meet Finance Needs of Developing Countries”).

9. The developed countries commit to a goal of jointly mobilizing $100 billion annually by 2020 from sources both public and private.

Assessment: It is important that the Accord notes that the funds can come from either public or private sources. Governments can — through the right domestic and international policy arrangements — provide key incentives for the private sector to provide the needed finance through foreign direct investments for emissions mitigation (clearly a role exists for government assistance for adaptation). For example, if the cap-and-trade systems which are emerging throughout the industrialized world as the favored domestic approach to reducing CO₂ and other greenhouse gas emissions are linked together through the existing, common emission-reduction-credit system, namely the Clean Development Mechanism (CDM), then powerful incentives can be created for carbon-friendly private investment in the developing world.

Clearly the CDM, as it currently stands, cannot live up to this promise, but with appropriate reforms there is significant potential. Of course, problems of limited additionality will inevitably remain. Therefore, what is needed is for the key emerging economies to take on meaningful emission targets themselves (even if equivalent to business as usual in the short term), and then participate directly in international cap-and-trade, not government-government trading as envisioned in Article 17 of the Kyoto Protocol (which will not work), but firm-firm trading through linked national and multi-national cap-and-trade systems.

Such private finance stands a much greater chance than government aid of being efficiently employed, that is, targeted to reducing emissions, rather than spent by poor nations on other (possibly meritorious) purposes.

10. Evaluation of the Accord’s implementation is to be completed by 2015, including consideration of strengthening the long-term goal as the science indicates.

Assessment: Depending upon when the Accord is implemented, completing an assessment by 2015 might or might not be reasonable. A provision to strengthen the long-term goals of the Accord may be sensible, but it would seem that the provision should provide more generally that the long-term goal should be “adjusted as the science indicates,” so as not to pre-judge what future scientific research may reveal.

11. In the official version of the Accord released by the UNFCCC, Appendix I (quantified 2020 economy-wide emissions targets for Annex I countries) and Appendix II (nationally appropriate mitigation actions of developing country parties) are left blank, to be completed by January 30, 2010.

Assessment: It is unfortunate that no numbers or other specifics were included in the two appendices, because many of the various parties have previously made public statements regarding commitments, plans, or expectations that would actually have provided considerable information. Some specificity of the tables – both numerical pledges from Annex I countries and “voluntary pledges” from developing countries — would have better demonstrated the compelling substance of the Accord, and would thereby have given the agreement greater credibility, at least in news media reports.

The Way Forward

Many details regarding these elements of the Accord as well as other unspecified issues remain on the table, and will presumably be examined and negotiated if nations move forward with the Copenhagen Accord and the basic architecture it promulgates. We are already at work on many of these issues in the Harvard Project on International Climate Agreements, including:

· metrics for evaluating commitments

· climate policy review mechanisms

· compliance mechanisms

· afforestation and deforestation mechanisms

· facilitating international market linkage

· fostering technology transfer

· methods of negotiating and updating climate agreements

· methods of providing incentives for developing country participation

· methods of carbon finance

· making an international climate agreement consistent with international trade rules

Whether the next step in international deliberations should be under the auspices of the UNFCCC or a smaller deliberative body, such as the Major Economies Forum (MEF), is an important question. Given the necessity of achieving consensus (that is, unanimity) in United Nations processes and the open hostility of a small set of nations, bilateral and multilateral discussions, including via the MEF, could be an increasingly attractive route, at least over the short term. (Such questions about preferred institutional venues for international climate negotiations and action constitute an important topic on which we are focusing research in early 2010 in the Harvard Project on International Climate Agreements, and about which I will write in future posts.)

The climate change policy process is best viewed as a marathon, not a sprint. The Copenhagen Accord – depending upon details yet to be worked out – could well turn out to be a sound foundation for a Portfolio of Domestic Commitments, which could be an effective bridge to a longer-term arrangement among the countries of the world. We may look back upon Copenhagen as an important moment – both because global leaders took the reins of the procedures and brought the negotiations to a fruitful conclusion, and because the foundation was laid for a broad-based coalition of the willing to address effectively the threat of global climate change. Only time will tell.

Epilogue

After I completed writing this blog post, I came across a superb essay on the same topic by David Doniger, Policy Director of the NRDC Climate Center in Washington, D.C. It deserves to be read (and distributed).

Only Private Sector Can Meet Finance Demands of Developing Countries

Things are getting hot here in Copenhagen. It’s not the weather outside, but the debate taking place inside the Bella Center, home of the 15^th Conference of the Parties of the UN Framework Convention on Climate Change. This afternoon, the main session of the talks was suspended, following protests led by African countries, which accused the industrialized countries of trying to wreck the existing Kyoto Protocol. At the heart of the controversy is the “finance question,” as it’s called here, with the developing countries asking for more than $100 billion to $200 billion annually to pay for their carbon mitigation and climate change adaptation through 2050!

At the National Journal’s “Copenhagen Insider” Blog, Congressman Ed Markey poses the highly relevant question of how much should wealthy countries help poor countries address climate change. In response to Congressman Markey’s question, I maintain that it is inconceivable that the governments of the industrialized world, including the United States, will come up with sufficient foreign aid to satisfy the demands for financial transfers being made by the developing countries in Copenhagen. However, governments can — through the right domestic and international policy arrangements — provide key incentives for the private sector to provide the needed finance through foreign direct investments.

For example, if the cap-and-trade systems which are emerging throughout the industrialized world as the favored domestic approach to reducing CO2 and other greenhouse gas emissions are linked together through the existing, common emission-reduction-credit system, namely the Clean Development Mechanism (CDM), then powerful incentives can be created for carbon-friendly private investment in the developing world.

Clearly the CDM, as it currently stands, cannot live up to this promise, but with appropriate reforms there is significant potential. Of course, problems of limited additionality will inevitably remain. Therefore, what is needed is for the key emerging economies — China, India, Brazil, Korea, South Korea, South Africa, and Mexico — to take on meaningful emission targets themselves (even if equivalent to business as usual in the short term), and then participate directly in international cap-and-trade, not government-government trading as envisioned in Article 17 of the Kyoto Protocol (which won’t work), but firm-firm trading through linked national and multi-national cap-and-trade systems.

Such private finance stands a much greater chance than government aid of being efficiently employed, that is, targeted to reducing emissions, rather than spent by poor nations on other (possibly meritorious) purposes. So, all in all, the job can be done, and governments have an important role, but as facilitators, not providers, of finance. This should be the focus of the discussion here in Copenhagen.