Amid the dismal global economic climate and the nearing expiration of the sole international agreement that obligates nations to cut their greenhouse gas emissions, the Kyoto Protocol, representatives from more than 190 countries are gathering in Durban, South Africa to continue negotiations toward a comprehensive global agreement to curb climate change.

Regrettably, but not surprisingly, this year’s annual two-week meeting of countries party to the U.N. Framework Convention on Climate Change (UNFCCC) – the 17^th Conference of Parties, or COP-17 – is generally anticipated to make only modest, incremental progress toward that goal.

Modest success for the Durban conference would entail countries producing a timetable and clear path to negotiate a new comprehensive agreement that has binding obligations to reduce global emissions and achieve climate safety. Countries also need to commit to further reducing emissions through pledges and commitments – ideally by signing up for a second round of commitments to the Kyoto Protocol.

However, given political realities and the global economic downturn, even that’s a heavy lift.

Under these unfortunate circumstances, our expectations for Durban must fall far short of our desired outcomes.   Instead, the best outcomes EDF can foresee in Durban are:

1. For countries to maintain forward momentum in the UN climate negotiations process.  A reasonable expectation is for agreement on a negotiating “work plan” that states which issues countries will tackle for the next couple of years, and for a clear path toward a comprehensive, binding agreement.
2. Incremental progress in setting up the institutional structures needed to implement the Cancun Agreements.  Most notably, countries should launch and agree to begin funding the Green Climate Fund, dedicated to helping developing countries address and adapt to climate change.
3. A positive signal to the carbon market that there’s life after Durban.  Australia’s passing a domestic carbon price sent a very strong signal just this month.  But more countries need to step up to the plate.
4. For emissions from land-use change and forestry, the adoption of rules for accounting that determine with environmental integrity whether countries have in fact reduced their emissions and met their obligations.

Later in this post, we analyze in greater detail these and other key issues likely to figure prominently in the upcoming negotiations.

The U.S. role in Durban

There’s a perception that the United States – in the midst of President Obama's reelection campaign– does not want to rock the boat in Durban, since climate change isn’t a high-profile issue in the race back home.

It’s also very difficult for the U.S., which never ratified the Kyoto Protocol and has no near-term prospect of domestic federal climate legislation, to support a negotiating mandate whose goal is a binding, ambitious global climate deal anytime soon.

But the Obama Administration is trying to walk a fine line between urging global action and putting the brakes on negotiated outcomes too ambitious for its domestic politics.  At a press conference during his recent trip to Australia, Obama reiterated the U.S. position of wanting all countries – not just major developed countries – to address climate change:

We all have a responsibility to find ways to reduce our carbon emissions [but] advanced economies can’t do this alone…  [S]o, ultimately, what we want is a mechanism whereby all countries are making an effort.  And it’s going to be a tough slog, particularly at a time when… a lot of economies are still struggling.  But I think it’s actually one that, over the long term, can be beneficial.

The critical question for the other countries around the table is now this: do they temper the ambition and reshape the objectives of this process to accommodate the U.S. domestic situation, or do they continue striving for the kind of comprehensive, binding agreement needed to deal with the problem?

Regardless, until the U.S. can bring more to the climate change negotiations than empty pockets on its domestic policy side, emerging economies are unlikely to come forward with bold actions themselves.  Put another way, incremental progress is probably the most the UN process can expect for the foreseeable future.

Real progress being made through national, regional, local “bottom-up” measures

UN climate negotiations, while important, are fortunately but one front of several in the fight against disastrous climate change.  When looked at in the broader context of what must happen, Durban in and of itself is not the place where the battle will be won or lost.

Real progress is taking place at the national, regional and local levels, creating a world of bottom-up actions addressing climate change.

• In Australia, an official carbon price goes into effect in July, which should help dent its emissions – the highest, per capita, of any developed country.
• Europe’s Emissions Trading System continues its steady growth, and soon will cover aviation emissions.
• California has just approved the largest, first-ever economy-wide carbon market in North America, which could eventually link to other carbon markets around the world.
• China’s latest five-year plan has a limited cap-and-trade system and significant carbon intensity reduction targets.
• New Zealand has a domestic emissions trading system.
• Korea has pending legislation to create its own domestic emissions trading system.

A great story in the Financial Times along these lines says that despite the “glacial pace” of the UN talks, it has become “more and more evident that many of the world’s biggest countries and companies are pressing on regardless. From China to California, from Ford to PepsiCo, there has been a striking surge in emissions-cutting activity."

Policy issues to watch

EDF's experts have been closely tracking policy issues leading up to Durban, and below we highlight some background and recommendations for those likely to feature prominently in the negotiations.

Kyoto Protocol

Durban is not a case of “the future of Kyoto hanging by a thread,” although that’s how some have been casting it.  Rather, nations are grappling with how to proceed, despite there having been very few developments to help them overcome the historically deep divides between industrialized and developing countries on climate policy, divides whose origins go back to the birth of the UNFCCC more than twenty years ago.

Notably, the U.S. is not offering anything new to help overcome these divides. The dismal state of US federal climate policy has raised problems for both the Dialogue on Long-Term Cooperative Action (“LCA” – discussions under the UNFCCC track, in which the US participates) and for the talks about extending the Kyoto Protocol through a second round of emissions reduction commitments (in which it does not). But the US paralysis, and consequent exacerbation of the gaps between and among the countries in those forums, open up, for those nations that do want to move forward, an important opportunity to closely consider what they really need and want from the Kyoto Protocol and the UNFCCC in order to tackle the climate change problem effectively.

What’s important here is not specifically whether nations agree in Durban to a second commitment period under Kyoto.  Their low probability of doing so at this meeting has been widely recognized for some time. What IS important is that the nations participating in Kyoto have learned a lot about its fundamental architecture in the fourteen years since it was adopted.  They have learned that much of that architecture is capable of catalyzing large amounts of investment, innovation, and finance for low carbon development.  They have also learned that, frankly, some of that architecture is clunky and could usefully be revised.  Based on that learning, many nations are sorting out which elements of Kyoto they want to keep and build upon, which elements could usefully be changed, and what new elements might need to be added in order to improve the efficiency and effectiveness of efforts to tackle and respond to climate change and foster low-carbon economic development.

What’s clear is that, at the top of the list, many nations have learned that well-designed carbon market frameworks have great potential for helping achieve these goals.  So they want to keep, in some fashion, and to build upon, the carbon market elements of the Kyoto Protocol.  That’s why we are seeing continued progress in the Kyoto Protocol and LCA on market infrastructure and expansion, for example in the areas of MRV (infrastructure), and REDD+, and sectoral mechanisms (expansion), and we expect that Durban will yield positive incremental results in these areas. That’s also why we are seeing the EU moving forward with its carbon market, and new carbon markets under development in Australia, New Zealand, California, and China.

Where Kyoto’s architecture is incomplete, nations will continue to try to build out new elements, focusing, for example, on adaptation and finance. Whether nations ultimately build on the elements of the Kyoto Protocol under the auspices of that agreement, or under the UNFCCC through the LCA track, or by developing new frameworks that build on the key elements of each, will not be sorted out completely at Durban.

In fact, the Durban meeting could simply agree to apply the existing Kyoto framework as a practical matter for a few years beyond 2012 as nations undertake this build-out process. But what is clear is that core elements of the Kyoto Protocol – including the core concepts of carbon markets – will continue, through Durban and beyond. 

Climate Finance

Financing both the reduction of greenhouse gas emissions and countries' adaptation to the changing climate will be one of the most critical issues in this year's negotiations.

Often the current global economic crisis is offered as a reason for slow actions on climate finance. For a while this was true but this is rapidly evolving. It should be noted that liquidity exists in the market and capital is seeking good places for investment – meaning now is the time to really leverage climate finance as one of the tools to catalyze investments and job creation while addressing climate change.

Countries must think creatively about new and sustainable sources of financing.  Most observers, including the UN Director General's advisory committee on finance, recognize that much of the $100 billion will have to come from private sources.  Well-functioning carbon markets (including linked global markets) are one way to finance and efficiently reduce emissions globally.  But especially in the interval while that market is developing, the role of well-directed scarce public finance is critically important to progress on climate mitigation and adaptation.

In Cancun, countries agreed to establish a “Green Climate Fund.” In Durban it’s likely – and we believe necessary – that countries make critical progress on the Fund by determining where it will be housed.  There are many options available for where and how the Fund will operate, but the ultimate system selected should leverage existing institutional capacities, and not create a new bureaucratic structure.  It should also be efficient, transparent and effective, and include methods for measuring return on investment.

We urge countries to direct climate finance funds to investments that:

• Avoid overly political allocation decisions.
• Help countries adapt to climate change.
• Include good climate effectiveness, ensuring that funds lead to real emissions reductions.

With finance being a major issue in Durban, countries can’t afford to allow the global economic crisis or political issues to undermine much-needed funding efforts. If nations don’t pay for climate mitigation and adaptation to avert problems now, they will be paying for it later in the aftermath of devastating natural disasters, destruction of farmlands and other inevitable impacts from unchecked climate change.

REDD+ and Indigenous Peoples

Reducing emissions from deforestation and forest degradation (REDD+) was a highlight of Cancun last year, as parties put their stamp of approval on and agreed to the basic framework for the REDD+ program.  In Durban, the parties could agree on REDD+ policy details that would enable countries to move forward with their own initiatives while ensuring environmental integrity –  but decisions on REDD+ are likely tied to achieving breakthroughs on the higher profile , more political issues, such as the fate of the second commitment period of the Kyoto Protocol and the launch of the Green Climate Fund.

If countries do overcome these major political issues, Durban could produce REDD+ decisions on:

1. Social safeguards/ information for safeguard systems: The discussions over the past year, most recently in Panama, of a safeguard information system – a system to provide information on the implementation of safeguards that ensure respect for the basic human rights (rights to resources, land, consultation, etc.) of people affected by REDD+ activities – have provided enough momentum to help the Parties reach a decision in the Subsidiary Body for Scientific and Technical Advice (SBSTA).  Although a final outcome may be beyond reach in Durban, EDF believes that even a basic outline for safeguard strategies, which includes support for indigenous peoples, will help move REDD+ policy in a good direction.
2. REDD+ finance: With a few exceptions, countries have largely agreed that carbon market financing should be included as a potential source of financing for REDD+.  Although broader financing decisions may not be reached, we hope that the Durban conference will formally adopt the use of carbon markets as a finance option.
3. Reference Levels: Countries in Durban may, though are unlikely to, settle on REDD+ reference levels (that is, initial reference points for countries which help them determine their total emissions from deforestation and measure their progress in reducing emissions).
4. Measuring, reporting and verification (MRV): MRV is its own agenda item in the negotiations, but the MRV of REDD+ is unique, since measuring emissions in relation to trees is different from measuring emissions from cars or smokestacks.  We don’t expect MRV to be decided for REDD+ in Durban, either in the MRV discussions or in the REDD+ discussions.

Most easily attainable of these REDD actions  would be a technical decision on a framework for the functioning of the safeguard information system, followed by REDD+ finance.  But if the talks stall on the larger political issues, even these REDD+ decisions will, unfortunately, get pushed off to next year.

Land Use, Land-Use Change & Forestry (LULUCF)

Issues related to the greenhouse gases associated with land use and forestry are tremendously important for climate change, but over the years they have consistently been among the most contentious topics in the UNFCCC, as covered under rules for Land Use, Land-Use Change & Forestry (LULUCF).

Forests sequester vast amounts of carbon every year, removing greenhouse gases from the atmosphere, and for some countries the management of their forests makes a huge difference in whether they can meet their national targets for reducing emissions.  However, forests are natural systems, and their dynamics are not entirely under human control, making it difficult to account for the effects of forest management and other land-use activities.

Forest accounting discussions are important for both developed countries that are managing emissions from their forests, and developing countries that are working to reduce emissions from deforestation.  Flawed forest accounting rules could directly reduce the financial support for both efforts.  The accounting rules for forests in developed countries may serve as a guide for future accounting rules for developing countries under REDD+, so all countries have a stake in these rules.

This year, we have seen reasonable progress on forest-related accounting issues.  In Cancun, the developed countries agreed to submit new, more detailed information on their forest emissions. All of this information was subjected to an expert review, giving us a higher level of clarity about what is happening in their forests.  Also, the countries negotiated solid provisions to deal with unforeseen disturbances (such as wildfires and tsunamis) and to improve accounting for durable wood products, such as housing and furniture.

We think the time has come for countries to adopt a set of robust rules for forest accounting, so that the issue does not impede the effort to set new Kyoto Protocol targets.  At the same time, we insist that these rules have environmental integrity – civil society and vulnerable countries will not — and should not — accept a set of rules that undermine the goals of the Convention and the Kyoto Protocol.

A group of African countries has been working on an approach that we think could break the logjam in Durban on this difficult and complex issue. It would award countries credits toward their targets only after they reduce their forest emissions to below historical levels. That approach could give countries the necessary flexibility to stabilize emissions from forest management over the longer term. EDF experts have been advising the Africa group on their work.

The proposal by the African nations could correct a flaw in another approach, called Reference Levels, which would permit countries to increase their emissions by cutting down more forests, without paying the price for those emissions.  Since increasing emissions from forests has the same atmospheric impact as burning fossil fuels, we consider increasing forest emissions without consequences to be unacceptable.

International Transport

Efforts to curb emissions from international aviation, one of the more contentious issues of  the year, will likely spur heated debate during the Durban climate negotiations as Parties push for action to tackle emissions reductions in the separate UN agencies responsible for global aviation and maritime shipping.
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Tensions already are high with a case against the European Union’s law to reduce emissions from aviation pending in the European Court of Justice, a U.S. House-passed bill to prohibit airlines from complying with the EU law, and a recent UN International Civil Aviation Organization (ICAO) Council meeting where disagreements flared over the EU law.

To push regulatory efforts of ICAO and the UN's International Maritime Organization (IMO) forward, Parties to the UNFCCC need to send a clear signal in Durban that these two agencies must not delay in designing and implementing a multilateral approach to reduce greenhouse gas emissions from their sectors. However, it is crucial countries do so in a manner that does not jeopardize national or regional policies to reduce emissions from aviation and shipping, such as the EU aviation directive.

‪Negotiations on emissions from planes and ships came to a standstill in Cancun, but were resurrected at meetings earlier this year, with the slight hope of fruitful negotiations in Durban.  But the UNFCCC’s role in regulating these emissions is limited, ever since the UNFCCC booted decisions on reducing emissions from aviation and maritime to the sectors’ respective UN agencies – ICAO and IMO – nearly two decades ago. Since then, countries have yet to produce any policy solutions in these forums as they struggle over how to reduce emissions from international aviation and maritime shipping.

Legal Architecture of a UN Climate Agreement

Though many nations remain committed to an international framework for reducing greenhouse gas emissions and limiting global warming, the legal architecture of such an agreement or agreements – how it could be spelled out or structured in legal terms – is in great flux.

EDF supports a continuation of the Kyoto Protocol architecture, with as many countries as possible participating with their own binding commitments, and the option for other countries to link with their own national systems at a later point.

Regardless of the outcome at Durban, the fundamental infrastructure and principles of the Kyoto Protocol have proven successful.  Many aspects of the Kyoto Protocol are now being incorporated into national systems, including:

• Binding caps on emissions
• Flexible market mechanisms to meet these caps
• Accountability

We strongly encourage nations to enshrine these principles in a legally binding framework that is open to any country willing to participate. Disagreements between major emitters or a lack of universal agreement on a legal format should not impede nations that are willing to be climate leaders from moving forward from  Durban with an architecture that supports environmental integrity and predictability for markets.

Measurement, Reporting and Verification (MRV)

In Cancun last year, nations agreed to develop new rules for keeping track of global warming emissions and emissions reductions in both developed and developing countries.

Robust and transparent measuring, reporting, and verification (MRV) is essential for building the trust necessary for countries to take action and compare efforts in reducing emissions, and for creating a structure that would encourage  investment, innovation, and finance for low-carbon development.

In negotiations since Cancun, nations have already produced preliminary guidelines for reporting to be undertaken by developing and developed countries, as well as mechanisms for analyzing the results and providing support to improve future efforts.

In Durban, they have the opportunity to strengthen provisions for transparency and accountability to ensure environmental integrity and improve the quality of carbon markets.  EDF also supports proposals that allow major-emitting developing countries to step up to a higher level of MRV.  Parties will also work on resolving such issues as timelines for reporting, and the proper role of NGOs in ensuring transparency and accountability in national reporting.

If the Kyoto Protocol's history is a guide, Durban is likely to yield a foundation that leads to tighter standards on MRV over time.  It took two or three years from the time Kyoto was agreed to when nations sorted out some of the regime's accounting rules.  We may expect a similar timeline for working out the kinks of Cancun's MRV agreements.

Closing Observations

Eyebrows sometimes get raised at the size and scope of the UNFCCC’s large annual gatherings, which bring together not only delegates from more than 190 countries, but a host of other participants, many of whom never see the inside of the official conference venue, much less buttonhole a negotiator.  This is especially the case in years with modest negotiating ambitions.

But it's important to remember that these annual COPs also host the lower profile working meetings that implement the various existing agreements and provide support and education to the parties.  And over the years they have taken on almost a medieval fair aspect, becoming the annual meetings of a de facto global trade association of climate change professionals, activists, and their supporters.  The city will serve up a rich smorgasbord of official and unofficial “side events”,  receptions, and hallway conversations where participants share exciting new ideas, launch reports, and recount progress and problems taking place outside the UN's auspices.

The annual gatherings also are important for helping keep the pressure on countries, refocusing international media attention on climate change, and serving as crucial action-forcing events.  It’s not a coincidence that Australia passed its carbon price just weeks before Durban, or that South Africa, as the host country, released its own climate plan last month.

Making Durban a success is a daunting challenge, and even more so for the conference's hosts, South Africa –  logistically, substantively, and diplomatically.  They are hosting a huge gathering of ministers, negotiators, myriad environmental, labor, business, agricultural and other stakeholders, activists, indigenous peoples, and youth, all while wearing three distinctly different hats:  neutral COP chair, member of the BASIC major emerging economies bloc (with Brazil, India and China), and representative of the Africa Group of countries, whose members include the some of the most vulnerable, least developed nations.

We wish the South African hosts well, and urge all the gathered nations to work hard and negotiate in good faith.  They must deliver on the modest expectations they have set themselves; our planet's future cannot afford anything less.