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Unlike last year's two page Copenhagen Accord, the Cancun Accord, or to be more precise Cancun Accords, run to tens of pages and provide a good deal more detail on how the international community plans to cut emissions than previous deals.
Overall 26 agreements were reached in Cancun, ranging from the crucial outcomes from the working groups on Kyoto and Long-term Co-operative Action (LCA), to somewhat arcane reforms such as Kazakhstan's proposal to amend annex B to the Kyoto Protocol, to housekeeping measures such as the resolution thanking the people of Cancun for their hospitality.
BusinessGreen runs down the main areas of progress, the on-going road-blocks, and the business implications:
Emission targets
Agreement: The emission targets and action plans put forward by both developed and developing countries in the Copenhagen Accord have been officially recognised under the UN negotiating process for the first time. In addition, countries have reiterated their intention to limit average global temperature rises to 2C. Crucially, they have also agreed to review this goal and have acknowledged that a "gigatonne gap" exists between emission targets pledged and the cuts required to stand a reasonable chance of limiting temperature increases.
Implications: This is a major step towards a treaty as it moves developing countries and the US a step closer to accepting some form of "binding" emissions targets in the future, albeit targets they put forward themselves.
For businesses it solidifies the voluntary emission targets already adopted by many governments and provides further evidence that if these targets do change they are only going to get more demanding.
As the LCA text reaffirms, the world's governments are in agreement that "climate change is one of the greatest challenges of our time" and are prepared to take action to tackle it. In other words, this is not a fad.
Monitoring, Verification and Reporting
Agreement: Developing countries will provide updates every two years on their progress against their climate change action plans. Crucially, all parties also agreed that "internationally supported mitigation actions will be measured, reported and verified domestically and will be subject to international measurement, reporting and verification in accordance with guidelines to be developed under the Convention"
Implications: A huge victory for the US. The details are yet to be finalized, but developing countries will submit to a regime of international verification for their emissions targets in return for access to climate finance. This was one of the major barriers to a deal and it looks to have been overcome after China and India appeared to accept the need for some form of monitoring.
For businesses it means they will inevitably come under more and more legal pressure to report on their greenhouse gas emissions.
Climate funding
Agreement: Countries will start a process to design a new "Green Climate Fund", with a board with "equal representation" from developed and developing countries. Crucially, it will be run by the UN and not the World Bank. The timeline for the formation of the fund remains unclear, but the agreement also reiterated the commitment to deliver $30bn of funding between 2010 and 2012 and $100bn a year from 2020. The agreement will also see the launch of a registry to record and match developing country mitigation action plans to the finance and technology support they require from industrialised countries.
Implications: A significant breakthrough and a sizable victory for developing countries who were adamant that any new fund should not be run by the World Bank.
The formation of a single fund should drastically simplify the labyrinthine world of climate financing and make it easier to avoid double counting of aid payments. It should also ensure that investment is more clearly focused on projects that work.
However, negotiators have agreed a fund, but are no closer to agreeing where the money will come from to pay in to that fund. The main issues for businesses will come when next year when governments begin to address which fund raising mechanisms should be used post-2012. It will be interesting to see if the negotiations can continue to move forward as smoothly when proposals such as levies on aviation and shipping are being discussed.
Carbon trading
Agreement: The Kyoto Protocol's Clean Development Mechanism (CDM) offsetting scheme will be strengthened and extended. In particular, Carbon Capture and Storage projects will be eligible for the scheme for the first time and registration processes will be streamlined to ensure emission reduction projects are approved quicker. There were also some indications the scheme could continue post-2012, despite on-going uncertainty over the future of the Kyoto Protocol.
Implications: A major boost for CCS projects in the developing world, but analysts in the carbon market remain concerned that the scheme is not being reformed fast enough and a number of key decisions are not now expected until next year. A lot still depends on the Kyoto negotiations.
Reduced Emissions from Deforestation and Degradation (REDD)
Agreement:
Governments once again agreed to step up action to curb emissions from deforestation and forest degradation. More specifically the agreement calls on developing countries to begin laying the groundwork for the proposed Reduced Emissions from Deforestation and Degradation (REDD) mechanism by establishing forestry base lines and developing national forest protection action plans and monitoring methodologies. It also calls upon industrialised countries to reach bi-lateral and multi-lateral agreements to help fund this "capacity building".
Implications: REDD edges ever closer. Reports suggest most of the fine print for a full blown global forest protection mechanism based on a carbon offset model is pretty much agreed. It could still be scuppered by the failure to agree other parts of the deal, but the chances of a whole new adjunct to the carbon market being launched within the next few years look healthier than ever.
Adaptation
Agreement: Countries have agreed to establish a new Cancun Adaptation Framework to ensure improved planning and access for finance for adaptation projects in developing countries. They have also agreed to continue work with the insurance industry to better understand climate losses and damage and have stressed that "adaptation must be addressed with the same priority as mitigation and requires appropriate institutional arrangements to enhance adaptation action and support".
Implications: It has been under-reported, but this is one of the defining outcomes from Cancun. No one is turning away from the need to cut greenhouse gas emissions, but focus is increasing on the urgent need to invest in adaptation. More and more countries will begin to produce formal climate adaptation plans and will increase investment in climate resilience, opening up huge opportunities and risks for businesses.
Technology Transfer
Agreement:Negotiators have agreed to establish a new Technology Executive Committee and Climate Technology Centre and Network to help foster technology cooperation on adaptation and mitigation projects.
Implications: Again the timeline remains unclear, but this could have sizable implications for businesses, particularly those working on cutting edge clean tech projects. Expect more bi-lateral and multi-lateral technology sharing agreements over the next few years.
The future of Kyoto
Agreement: In the end countries agreed to kick the most contentious issue at the Cancun Summit into next year. The two page agreement on Kyoto simply states that countries will agree on the future of Kyoto "as early as possible and in time to ensure that there is no gap between the first and second commitment periods", which means before the end of next year.
Implications: Who knows. Japan, Russia and others insist they will not sign up to a second commitment period; China, India and virtually every other developing country insists they must sign on to extend the deal or the talks will collapse. It is shaping up to be the defining issue in the run up to next year's summit in South Africa.
The EU looks set to act as a go-between in an attempt to broker a deal, although both sides are currently adamant that they will not compromise. One mooted proposal is that Kyoto is extended for just two years, while a parallel binding treaty is finalized covering all nations. That way industrialised countries will remain covered by a legal instrument for cutting emissions, while developing countries will also be folded into an agreement with binding targets for all. It is a long shot, but it is currently the best idea in circulation.
For businesses the debate over Kyoto is the one area of uncertainty following an agreement that has otherwise served to increase certainty that they will come under increased pressure to cut greenhouse gas emissions and invest in clean technology.
Source: BusinessGreen.com
Author: James Murray
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