EDF Talks Global Climate

U.S. subnational leaders enjoy banner event at COP 23

America's Pledge event at COP23 | Photo: UNClimateChange

COP 23 has been a banner event for subnational actors, and especially for California. Between events and breaking news, our EDF California team has enjoyed visiting informally with representatives from around the world.

One theme from these conversations is “we’re so glad you are here!”

The presence of American states and NGOs, and the leadership of states like California, has not gone unnoticed, especially when the absence of U.S. leadership on climate is so obvious.

Some have asked if we have received backlash from the United States about being here (so far so good!), and there’s universal enthusiasm for the US Climate Action Center (or “igloo” – nicknamed both for the big white tents and chilly temperatures).

It is clear from these announcements and conversations that the leadership of California is more critical than ever.

Here’s a quick round-up of key state-level news:

America’s Pledge – California Governor Jerry Brown and former New York City Mayor Michael Bloomberg shared the first report of their joint initiative, America’s Pledge. A reaction to the United States’ dismissal of the Paris Agreement, this project demonstrates the power of collective action and aims to spur greater climate ambition. If they were one country, the signatory cities and states would have the third largest GDP in the world, and would be home to one-third of the American people. This is a significant rejection of the Trump Administration’s rhetoric on climate, and a testament to Governor Brown and Mayor Bloomberg’s leadership.

Under2 Coalition Signing – A joint initiative of Governor Jerry Brown and the German state of Baden-Württemberg, the Under 2 Coalition commits ambitious states and regions around the world to making commitments on emission reductions consistent with the Paris Agreement and to keeping global warming below 2°C. Virginia became the latest partner in the Under 2 Coalition, solidifying its climate leadership and the state continues to works toward greater electric vehicle infrastructure and reducing carbon emissions from the power sector.

California’s Progress and Promise – Governor Brown, CalEPA Secretary Matt Rodriguez, Assembly Member Cristina Garcia and others have each had speaking engagements at COP 23, and across them all two themes emerge. First, California is leading the way on reducing emissions, cleaning up pollution, and striving for equitable climate policy. But the second theme is that there is much more to do. While celebrating these achievements, the state has further to go de-carbonizing the economy and improving local air quality.

California-Acre Luncheon – One of the most exciting things about COP23 is the opportunity to build connections across countries and cultures on issues of mutual importance. The California Legislative Delegation had the opportunity for lunch with the delegation from the state of Acre, Brazil. They discussed deforestation and its impact on the climate and local communities, as well the need for global partnerships to go further and faster stopping climate change.

2018 Global Climate Action Summit – Want your own COP-like experience? Governor Brown invited attendees to join him and sub-national leaders from around the world at the 2018 Climate Summit in San Francisco! Described as the “COP for subnationals,” one key goal is to establish a San Francisco agreement on sub-national climate action. Businesses, cities, states, investors, and civil society will explore how much more we can do together on climate action, learn from each other, and build positive momentum for COP 24 in Poland.

It is clear from these announcements and conversations (not to mention Governor Brown’s rock star status at COP 23) that the leadership of California is more critical than ever. This is especially true now that the United States is the sole country opposing the Paris Agreement, now that Syria and Nicaragua have joined the agreement.

California’s role as climate champion, success in reducing greenhouse gas emissions while maintaining economic prosperity, and concerted efforts for greater climate equity are all stories we are proud to be sharing with the rest of the world.

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Agriculture negotiations reach agreement at COP23

Photo by UNClimateChange

In what could be the iconic decision of COP 23, negotiators in Bonn agreed to new future negotiation processes to “jointly address” a number of new agriculture topics, overcoming longstanding hurdles that had blocked progress on the topic in recent years.

Why is this important?

Emissions from agriculture are expected to continue growing as the world’s population continues to expand and diets change with rising incomes.

However, a recent journal article by Griscom et al. published in the Proceedings of the National Academy of Science found activities under the agriculture and grasslands rubric, such as management of fertilizer use, could achieve roughly 6% of needed emission reductions to stay below a 2 degree temperature change. To realize that potential though, farmers need new tools and incentives.

Additionally, farmers are expecting to find their jobs of growing our food harder as climate change makes weather patterns more unpredictable, and makes climatic events such as droughts and flooding more frequent and intense. Farmers will also need new methods and technologies to make their farms more resilient and adapt to the new conditions.

Agriculture has been discussed for years, but progress had been stymied by disagreement related to potential trade implications on key commodity exports, whether to prioritize adaptation or mitigation in the agenda, and UNFCCC process-oriented concerns on what could and couldn’t be negotiated based on the last agriculture decision.

What’s in the decision?

The negotiators agreed to have the Subsidiary Body for Science and Technological Advice (SBSTA) and the Subsidiary Body for Implementation (SBI) review issues associated with agriculture by using workshops and technical expert meetings.

Using both the SBI and SBSTA to review a topic “jointly” is not a frequent negotiation strategy pursued by negotiators. That’s because the complexity of the negotiation rises exponentially when a topic is jointly negotiated rather than negotiated in a single process. But this process was used for the set of policy approaches for Reducing Emissions from Deforestation and Degradation (REDD+), which ended up being the only sector with its own article in the Paris Agreement.

Regarding topics in agriculture that the processes might first consider, they include:

  • How to assess adaptation, adaptation co-benefits (code for mitigation), and resilience
  • How to improve soil health, soil carbon in grasslands and croplands, and related water management
  • How to improve nutrient management – e.g. more efficient fertilizer use
  • How to improve livestock management systems
  • Studying the socioeconomic and food security issues associated with climate change in the agriculture sector
  • Any of the previous topics discussed in a set of workshops in recent years

Importantly, the negotiators also left other agenda items to be added as needed, which let countries see flexibility in the future to add a topic of more relevance to them.

 What is the timeline for the process?

The decision asks for reports back in three years at COP 26 in 2020. If the process is successful, countries should then have more knowledge and methodologies at their disposal to take action in their respective agriculture sectors in the post-2020 climate regime. At the moment, there is no clear guidance for them on how they might take such action, nor are there incentives for them to do so.

With this momentous decision on agriculture at COP 23, we now have a great opportunity for making our food supply and farmers’ livelihoods more resilient while also contributing to mitigating climate change.

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The evolution of US-China collaboration on environmental protection

President Trump and First Lady Melania Trump in Beijing with President Xi and his wife Peng Liyuan on November 8, 2017 | Photo: State.gov

By Zhang Jianyu, Managing Director for Global Strategy, EDF. See also his interview in China DailyExpert: China, US now equals in pollution fight.

As one of the earliest representatives of an international environmental organization working in China, I have witnessed the progress of environmental protection collaboration between the US and China in the past 20 years and witnessed many specific incidents that have given me a good understanding of the different roles played by each country and how they have changed over time.

In 1999, the Chinese Premier at that time – Premier Zhu Rongji, visited the US and signed the very first environmental protection memorandum of collaboration between the Chinese and US environmental protection agencies. This memorandum spurred 10 collaborative sub-projects and was also the first practical environmental protection collaboration since the signing of the technology collaboration memorandum in 1979. The first sub-project was the SO2 emissions trading program, which EDF participated in creating. At the same time, I had just completed my studies in the US and was heading back to China to participate in this exciting, US- China environmental protection collaboration.

With the changes in China’s societal and economic developments and the political turnover in the US, the collaboration between the countries has entered a new phase that is showing new characteristics.

In the following years, China implemented several policies to promote the country’s environmental protection by referencing similar US policies and experiences such as pollution emissions trading, daily penalty system, green supply chain, and emissions permit system.

I had participated in the implementation of those policies and experienced first-hand how willing US colleagues were to share experiences and in return, how willing the Chinese Ministry of Environmental Protection (MEP) was to learn from them. I will never forget when Ms. Cheryl Wasserman from the US EPA’s Compliance and Enforcement Bureau even enlisted her husband – who was working at EPA as well—to help record a remote training course on the top 10 characteristics of US environmental enforcement.

Recent U.S. administrations

Climate change is an important example of a new kind of bilateral relationship between China and the US. President Xi and President Obama had jointly issued three climate change-related agreements and set stage for the creation and success of the Paris Agreement and the developments in the arena of international climate change.

Both sides were working towards a common goal despite the differences in their positions and tension-filled negotiation processes. Fortunately, both nations’ leaders participated in person at the last minute and confirmed the US emissions reduction targets and China’s resolution to launch the largest carbon market in the world.

Today, with the changes in China’s societal and economic developments and the political turnover in the US, the collaboration between the countries has entered a new phase that is showing new characteristics.

Exchanges at the governmental level still continue. For example, in May 2017, China’s Ministry of Environmental Protection (MEP) visited the US Environmental Protection Agency’s (EPA) National Enforcement Investigation Center to conduct a survey in preparation for establishing a Chinese national environmental enforcement support agency.

Environmental issues also remain a critical bilateral focal point, as was the case at the U.S.-China Social and Cultural Dialogue concluded in Washington DC in Sept, 2017. In addition, the collaborations between the US states and Chinese provinces are still thriving.

Chinese companies are becoming more active on the global stage. On May 10, 2017, the CEOs from 30 multinational corporations, with EDF's support, issued a joint statement in the Wall Street Journal and the New York Times urging the US government to stay in the Paris Agreement. For the first time in history, a CEO from a Chinese corporation – Mr. Zhang Yue from Broad Group was among them.

In the summer of 2017, California not only renewed  the AB-32 bill that was passed in 2013 to 2030, with the support of EDF, but continued to make efforts to expand its outreach. During California Governor Jerry Brown’s visit in June 2017, he was warmly received by President Xi. Prior to Governor Brown’s visit, he had expressed the interest in discussing with China the possibility of linking California ETS with China’s future national carbon market. EDF has been playing a bridging role in the formation of this initiative, and we hope to continue supporting both sides to fulfill their objectives.

Today

On President Trump’s first visit to China as president, he was accompanied by a trade delegation consisting of 29 U.S. corporate representatives, 11 of which represent energy and environment corporations.

Presidents Trump and Xi signed the US-China collaboration agreement, which includes text regarding energy and environmental protection cooperation – evidence that exchanges and collaboration in the energy and environment sectors are still a primary focus for the two countries’ strategic development.

As a witness and a participant of US-China environmental exchanges, I have personally felt the changes in the interactions between the US and China on environmental protection and from which represents a reflection of the changes in political relations between the two nations. I hope environmental protection will always be a key topic and connection for both sides as we only have one Earth.

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Part II:  Amazon Hydroelectrics, the UN Climate Treaty and the International Civil Aviation Organization (ICAO) – will greed and corruption derail the international climate negotiations?

Santo Antônio Dam under construction in the state of Rondônia, Brazil, 2009 | Photo: Wiki Commons

Brazil’s climate change negotiators are trying to throw the best hope for at-scale finance for stopping deforestation under the bus to ensure a big payday for bogus carbon credits from Amazon dams and other Clean Development Mechanism (CDM) projects  — benefitting the scandal-plagued national power company Eletrobrás at the expense of the Amazon. (See EDF and Brazilian partners report.) There are far better ways to combat climate change.

A Better Mousetrap

One of the best examples of how to do it, ironically, is what Brazil and Amazon states have actually done in reducing Amazon deforestation since 2004. Government ramped up enforcement, recognized indigenous territories and protected forests for other communities, and consumer goods companies like Walmart told their suppliers they needed zero-deforestation commodities. The result was a 70% reduction in deforestation by 2016 that kept 3.65 billion tons CO₂ out of the atmosphere – on the order of what the European Union achieved, only in one developing country. But positive incentives for forest protection called for repeatedly in legislation never materialized, so pushback from the big ranchers’ and farmers’ caucus in the Congress has put all of these gains at serious risk, and deforestation started to tick up again.

There is a lot at stake here, for the atmosphere as well as the forest. New research shows that much more cost effective climate change mitigation than anyone suspected – 11 billion tons of CO2 per year till 2030 — can come from “natural climate solutions”, mostly from stopping tropical deforestation and forest degradation. This is almost 40% of the mitigation needed by 2030 to have a 66% or better chance of keeping warming below 2°C, according to the authors.

Bringing jurisdictional reductions in deforestation and forest degradation into carbon markets could generate the funds that Brazil needs to end Amazon deforestation and effect the transformation to low-carbon sustainable agriculture. 

Reducing and ultimately stopping large-scale deforestation is fully feasible. We know this because Brazil and the Amazon states have done it. They have taken reductions targets below historical levels, and made world-leading reductions while increasing cattle and soy production – historically the major drivers of deforestation (Figure 1).  Making emissions reductions at the scale of a state or region or country is much more like the EU or California cap-and-trade systems than an offset project. It’s actually systemic climate change mitigation. Bringing jurisdictional reductions in deforestation and forest degradation into carbon markets could generate the funds that Brazil needs to end Amazon deforestation and effect the transformation to low-carbon sustainable agriculture. Transparent accounting, rigorous double-entry bookkeeping to avoid double counting, and fair benefit sharing will be critical to making it work, but are also completely feasible. Doing sustained, large-scale deforestation reduction would also allow Brazil to call for more ambitious goals for other big emitter countries, and create cost-effective opportunities to make that happen. A revamped CDM could then channel funds to the least developed countries that most need them.

Figure 1. Brazil annual Amazon deforestation, soy and cattle production 1996 – 2016 (source: Stabile, M. 2017. Amazon Environmental Research Institute (IPAM); Brazil National Space Research Institute – INPE/PRODES; Brazilian Geographical and Statistical Institute – IBGE PPM and PAM, Amazon Fund.

Operation Car Wash and Chico Mendes

So why wouldn’t any country with a lot of forest to protect, and potentially a lot to gain from it, want to continue a winning streak? Well, as Brazil’s experience shows, there’s a lot less opportunity for corruption in reducing deforestation than there is in, say, building dams. Carbon credit for Amazon dams fits right in with the massive corruption, “Operation Car Wash”, super-sketchy side of Brazil. World-leading emissions reductions from controlling Amazon deforestation are an example what we could call the Chico Mendes side of the country. Brazil has always had these two sides. Corruption is endemic but so is innovative public policy. Brazil’s world-class AIDs program, which has kept infection rates far below other early hotspots; the sugar cane ethanol program that gave Brazil the biggest flex-fuel automotive fleet in the world; internationally recognized high-tech remote sensing monitoring of deforestation; and former President Lula’s poverty reduction programs are all examples.

Brazil has an exceptional opportunity to become an economic/environmental innovator and global leader of truly transformative impact – a 21st century environmental/economic superpower — if it succeeds in creating real economic value for living forests. What Acre Governor Tião Viana calls “the low-carbon, high social equity economy” shows the way to zero deforestation, sustainable commodity and family farmer agriculture, and sustainable, prosperous forest communities.

Which side of Brazil’s Jekyll-Hyde political character will win? When Chico Mendes was alive, most people would have probably picked the Car Wash side. Along with ever-increasing numbers of Brazilians, I’d pick Chico’s side.

Both sides are on display at the international climate negotiations, where Brazilian negotiators are pushing hard for deeply flawed CDM projects including Eletrobrás’s Amazon dam boondoggles. Which side wins won’t only affect Brazilians. It will make a real difference to the atmosphere, and to us.

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Amazon Hydroelectrics, the UN Climate Treaty and the International Civil Aviation Organization (ICAO) – will greed and corruption derail the international climate negotiations?

Belo Monte Dam under construction on the Xingu River in the state of Pará, Brazil in 2013 | Photo credit: Letícia Leite-ISA

Brazil’s climate policy theater: Brazil climate negotiators fight for carbon credit payout for scandal-plagued national power company Eletrobrás and Amazon mega-hydroelectrics, block carbon finance for ending Amazon deforestation.     

Behind the headline-grabbing news about Brazilian political corruption, Brazilian climate change negotiators are busy pushing proposals that could seriously damage important new climate change agreements – and shut the door on much-needed finance for stopping deforestation.

New market mechanisms in the UN Paris Agreement and in the International Civil Aviation Organization’s Carbon Offsetting and Reduction Scheme for Civil Aviation (CORSIA) could provide money Brazil needs to protect its rainforest, including protecting heavily threatened indigenous territories twice the size of California. The new mechanisms could also help other tropical countries stop deforestation. That would be great news for the global atmosphere and for the people who live in the forests.

But Brazil’s negotiators are dead set against it. Instead, they’re fighting hard to preserve the Clean Development Mechanism (CDM), a relic of the Kyoto Protocol. Global climate change champions California and the European Union have largely or entirely shut the CDM out of their markets because they’ve concluded, rightfully, that its claims to environmental integrity have lost credibility.

Brazilian negotiators say the CDM is the gold standard for environmental quality, and reducing deforestation is too risky for carbon credit. A new report by EDF and Brazilian partners – along with a plethora of other analyses — reaches a different conclusion.

Bogus Carbon Credit for Amazon dams

The CDM was created in 1997 by the Kyoto Protocol to allow emissions reductions projects in developing countries to generate tradeable carbon credits, called “Certified Emissions Reductions” (CERs), which, the Protocol specifies, could be used by industrialized countries to help meet their emissions targetsduring the years 2008-2012. But since new targets for these countries didn’t take effect under the Kyoto Protocol, CER prices plummeted for lack of buyers. Brazil has a big portfolio of projects that are generating currently zero-value CERs that could turn into real money if the new market mechanisms of the Paris Agreement and CORSIA accept CDM credits. No wonder they like the CDM.

Three Amazon dams – Santo Antônio, Jirau and Teles Pires – are Brazil’s biggest CDM projects, and say a lot about what’s wrong with the mechanism.

Starting in 2012 affiliates of Brazil’s state power company, Eletrobrás, registered the mega-hydroelectric dams in the Amazon as CDM projects. They said that the dams would reduce greenhouse gas emissions that would have otherwise happened, and that since they were big, risky projects, they wouldn’t be financially viable unless they got the carbon credit. The CDM approved the dams, issued millions of CERs for them, and stands ready to issue hundreds of millions more.

Carbon Credit for Corruption?

But, a little later, these dams were implicated in the “Operation Car Wash” investigation, probably the largest corruption investigation in the world. The investigation first uncovered bid rigging, bribery and kickbacks worth billions of dollars in state oil company Petrobrás. It has now convicted scores of politicians and top executives at Brazil’s biggest companies. Eletrobrás executives engaged in exactly the same schemes in the three Amazon dams and other projects, according to whistleblowers. One former officer of an Eletrobrás subsidiary has been sentenced to more than forty years in prison for bribery, money laundering, obstruction of justice, tax evasion, and participation in a criminal organization, and similar charges are pending against others.

Eletrobrás’s stock price crashed as a result. US investors brought suit against the company, now pending in federal court in New York. They allege that Eletrobrás publicly claimed it was keeping clean books and building legitimate energy projects, while in fact concealing massive corruption and kickbacks. The dams ran up billions in cost overruns (allegedly to pay the bribes and kickbacks) at the investors’ expense.

Meanwhile, while it told the CDM that carbon finance was crucial for the dams to go forward, the company went ahead and built the dams.

Certified Emission Reductions market price crashed after the end of 2012 | Source: eex.com

The dams are operating today with basically zero carbon finance, because the CERs became virtually worthless after the end-of-2012 the price crash. If the dams in fact caused any emissions reductions, they did it without money from the CERs – so they  would have happened anyway. But, in fact the dams never caused any emissions reductions – the decision to build them was political, not economic. Opportunities for bribes and kickbacks were by all indications a key factor. It’s not surprising Eletrobrás and affiliates never told its investors that it needed carbon credit for the dams to pay off – the credits were just icing on the cake.

In 2016, KLP, one of the world’s largest investment funds, managing over $36 billion in pension funds in Norway, decided to exclude investments in Eletrobrás, citing “unacceptable risk of gross corruption. According to the company's financial reports to US authorities, Eletrobrás contracts with suppliers have been overbilled during a period of almost seven years, with the excess funds paid out to Brazilian politicians, political parties and company executives.”

That the CDM approved the dam projects at all is a serious indictment of its rules. Lots of other analyses have concluded that this mechanism needs serious overhaul or phase-out. See my next post for a better approach to international collaboration on climate change mitigation.

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California to showcase subnational climate action at COP 23

This week, signatories to the United Nations’ Framework Convention on Climate Change (COP 23) meet in Bonn, Germany to discuss implementation of the Paris Agreement. While much of the domestic news will focus on the Trump Administration’s “break-up” with the Paris Agreement, there will also be significant focus at the COP on actions of sub-nationals: cities, states, and regions around the world who are stepping up to address climate change.

California is a leader in sub-national climate action, and Governor Jerry Brown has been designated Special Advisor for States and Regions to COP 23. He will be welcoming new partners in the Under2MOU: a coalition of 188 jurisdictions around the world acting to keep global warming below 2 degrees Celsius. Governor Brown was also instrumental in creating the U.S. Climate Alliance, a bi-partisan group of states committed to reducing greenhouse gas emissions consistent with the goals of the Paris Agreement, even if Washington, DC tries to walk away.

At the U.S. Climate Action Pavilion at COP 23, Governor Brown, together with Michael Bloomberg, will release a new report on November 11th highlighting the progress of U.S. states, cities, and businesses in addressing climate change. He will also be participating in other events with the “We Are Still In” effort to promote American climate action and leadership. These are important examples of sub-national action that increases the ambition of other regions in reducing greenhouse gas emissions.

To illustrate California’s state-level achievements, Environmental Defense Fund has two new publications for COP 23. “California’s Cap-and-Trade Program Step by Step” explains how California set up its cornerstone climate policy, cap and trade, in an easy-to-follow 10-step formula. Other sub-nationals as well as interested countries will be able to learn from the state’s experience in developing their own emissions trading system.

Cutting Carbon and Growing the Economy” highlights the progress California has made since cap and trade began in reducing emissions, strengthening the economy, and ensuring all California residents benefit.

Reducing emissions and growing the economy go hand-in-hand. The state is on track to beat the target of reducing greenhouse gas emissions to 1990 levels by 2020 and the state’s Gross State Product has increased more than 16% since 2006.

At the same time, California’s job growth has outpaced the nation, and the growth in “clean jobs” has dwarfed overall job growth. Revenues from cap and trade mean over $5 billion is being invested in communities across the state. This includes funds directed toward air quality and other environmental justice issues in the most polluted neighborhoods.

Together, these publications demonstrate the progress California has made in addressing climate change. In partnership with the California State Delegation to COP 23, EDF will illustrate to the world that the Trump Administration doesn’t have the last word on American climate action. States like California are leading the way and are encouraging other sub-nationals to join them in ambitious climate action.

For further questions please reach out to any of EDF California’s delegation heading to Bonn this week: Quentin Foster, Erica Morehouse, or Katelyn Roedner Sutter.

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