Negotiating emissions cuts

Anthony Skinner reviews the progress made on climate change commitments around the world

The July 2009 meeting between G8 nations and eight developing economies in L’Aquila, Italy, reflects how much negotiation still needs to occur if an international consensus is to be reached on global emissions reductions.

It is far from certain whether attendant states, which included Brazil, China and India, will be able to strike a deal at the Copenhagen climate change summit in December to replace the 1997 Kyoto protocol. This is despite the consensus amongst scientists that greenhouse gas emissions must peak by 2020 at the latest in order to avoid the worst effects of global warming.

Limited headway

The outcome of the L’Aquila meeting left much to be desired. There was no agreement to halve greenhouse has emission by 2050—as was planned by G8 members. China and India refuse to agree to such a commitment without assurances that the rich countries will provide poorer nations with funds to cut emissions and develop green solutions. Before considering cuts of their own, China, and other emerging economies, demanded that G8 nations agree to cut their own emissions by at least 40% below 1990 levels.

Some progress, however, was made during the meeting. All parties agreed to attempt to prevent the global temperature rising more than 2 degrees Celsius above pre-industrial levels. They also committed to double their investment into climate-friendly technologies by 2015. These promises go further than any made by leading economies in the past ten years.

It would have been unrealistic to expect greater and more detailed commitments from the meeting, particularly considering that both developing and developed countries want to maintain a strong hand in future negotiations.

Superpowers must agree

The success of Copenhagen will, to no small extent, depend on the ability of Beijing and Washington to agree on a bilateral deal on emissions reductions well before the end of 2009. An agreement between the US and China (which in combination account for 40% of world CO2 emissions) could provide other countries with the necessary incentive.

“The outcome of the L'Aquila meeting left much to be desired.

Forging such a plan of action is proving difficult. Beijing, like New Delhi, continues to refuse to accept binding emissions targets as demanded by the developed world. China insisted that rich countries should set aside between 0.5% and 1% of their GDP to help developing countries tackle global warming—a demand which developed countries have rejected.

The Obama administration is moving ahead with plans to pass crucial environmental legislation. The American Clean Energy and Security Act (ACES) narrowly passed through the US House on 26 June 20009—albeit in a watered down form to accommodate the interests of industrialists and Republicans. In the original draft, emissions were to be cut 20% from 2005 levels by 2020. This was revised to 17%.

These revisions will likely weaken the US when negotiating with China and other emerging countries on matters related to climate change. President Obama was particularly critical of a last-minute addition to the bill which allows tariffs to be imposed from 2020 onwards on imports from countries with lower carbon restrictions than the United States. The addition was demanded by energy-intensive industries, which fear that the implementation of emissions regulations in the US would place China and India at a competitive advantage.

This kind of protectionism will make a breakthrough at Copenhagen difficult to achieve by fortifying claims that countries such as the US are not dealing with the developing world even-handedly.

Awaking the giant

There is cause for hope that China and the US will assume a more united front in the coming months. In July 2009, US officials left open the possibility that China may not have to accept a hard cap on its greenhouse gas emissions at Copenhagen. During a recent visit to Beijing, US Energy Secretary Steven Chu acknowledged that China has been taking important steps to confront emissions. The People’s Republic said it aims to cut emissions by 15% from 2005 levels by 2010. By contrast, Russia aims to slash emissions from 1990 levels by 10% to 15% by 2020, and India has no such target in place.

There are also signs of increased cooperation. For instance, in July 2009, China and the US launched a joint research initiative to produce more fuel-efficient vehicles and buildings, committing an initial US$15m to the undertaking. The project will also focus on developing new technologies to reduce and sequester carbon dioxide emissions from burning coal.

Business opportunity

“A bilateral agreement between the US and China could provide other countries with the necessary incentive.

Those companies at the cutting edge of green technology development stand to benefit by transferring their knowhow and technologies to the developing world. By further increasing their investment in reducing their carbon footprints, such companies can gain shareholder value and boost demand for their products at home. Wal-Mart for instance revealed plans in July 2009 to construct a comprehensive sustainability index that would allow its customers to identify the environmental and social sustainability of products on their labels.

The bargaining and trade-offs that need to be made ahead of the Copenhagen meeting will prove difficult. The Chinese and Indians show little sign of budging on their demands from developed countries before contemplating a hard cap on greenhouse emissions. And the world’s rich countries will likely continue to refuse to channel anything like 0.5% to 1% of their GDPs for the greening of less developed countries.

Rather than providing the likes of China and India with direct handouts to adopt green technologies, developed countries want to establish a mechanism for the private sector to help provide finance for developing countries. Yet, experts say, the amount of funding required for developing countries to adapt to climate change and cut their emissions amounts to a mammoth US$150bn per year.

As in the past, many leaders will try to avoid getting pinned down to ambitious medium-term emissions reductions targets, mindful that they would be challenged by industry and could be punished in future elections. President Obama’s leadership, combined with the progress made during the L’Aquila meeting, means that the adoption of an international landmark protocol in December is not altogether inconceivable.

Anthony Skinner is a Principal Analyst at global risks specialist, Maplecroft