Durban Climate Deal a Desperate Delay
At the weekend, negotiators in Durban spent inevitable sleepless nights so that everyone could finally come to an agreement to negotiate to do something at some point in the future.
That’s about the sum of it, despite the outlook that some observers have that this represents a significant step forward. Everything of substance has yet to be agreed.
The further delay to action means that greenhouse gas emissions levels will stray into dangerous territory.
In reality, the outcome really only means that a process is still alive. Those observers that are pleased, are pleased that all Parties, including large developing countries, have agreed to negotiate: that hope persists and the UN talk fest still has legs.
UNFCCC delegates have four years to agree a globally binding treaty. The new body which will undertake these discussions is the pithily-named “Ad Hoc Working Group on the Durban Platform for Enhanced Action“.
Oh: even if a treaty is reached under these negotiations, then national parliaments may not ratify it. This happened when the US administration agreed to Kyoto under Clinton, but congress refused to ratify. What is more, it may still be that a change in Government or policy in any significant country may yet lead to them refusing to participate in any negotiation.
The Green Climate Fund was agreed to, which is meant to provide funding to mitigation and adaptation activities in developing countries. Yet it is still unfunded. There are 8 years before it will allegedly disburse $100 billion per annum. A Standing Committee under the UNFCCC has the job of trying to figure out where the cash will come from.
The tricky part is, that the original concept of rich countries contributing funds to pay developing countries for climate change activities is blatantly an anachronism: countries previously considered rich are now begging for funds from the fast-growing developing countries. With continued deleverage in OECD countries likely persisting for years to come, it is hard to see the viability of such a substantial wealth-transfer mechanism in the future.
So the brouhaha about an agreement to negotiate a global deal with legal force by 2015 is as devoid of substance as it sounds.
In the period leading up to a supposed global binding treaty in 2020, countries will get on with their voluntary climate pledges. Maybe.
The common denominators to prospects of achieving outcomes from any agreed approach are: a public commitment; transparent and comparable tracking and reporting mechanisms; and appropriate penalties and retribution in case of non-compliance.
It’s not like anyone is that scared of compliance measures or penalties under the current Kyoto accords. There are clear examples of Parties to the Kyoto Protocol missing their targets by a country mile. It is not clear how any future compliance provisions might work any better, or if countries will be willing to sign up to them.
For that matter, it’s pretty obvious that nations aren’t too worried about (the lack of) penalty instruments associated with other international accords either. Just think of attitudes towards sanctions under international monetary (Euro) and non-proliferation (nuclear) treaties.
We have a commitment to commit. We don’t have agreed monitoring, reporting, and verification processes.
As yet, none of the crucial factors for success are in place. Significant barriers persist, but the Durban agreements at least provide a chance that, one day, a global compact will be reached. Let’s hope it’s not too late.
This week Ernst and Young, reported by Reuters, stated the bleeding obvious: OECD countries don’t have the cash they promised to deliver under climate change negotiations.
The report came out the week that Berlusconi resigned, Spanish bonds hit 7%, and Germany downgraded future solar installation targets.
Agreeing to detail and commitments to funding for greenhouse gas emissions carbon abatement, including renewable energy and forestry investment, plus ‘adaptation’ investment, is a key part of the Durban deal for the successor to the Kyoto Protocol.
You don’t have to be smart to point out that the OECD handing over $100 billion per annum from 2020 to fund further power, forestry and agriculture projects in developing countries is very hard to imagine at this point in time.
At this blog, we wrote about the potentiality of these financial commitments to come unstuck a year ago, and also examined what Australia was going to fund and how here and here.
While the EU has agreed to commit a first tranche of funds of €4.68 bn to ‘Fast Start Finance’, a recent EU Council communique suggests that there may already be some backsliding:
In light of severe fiscal constraints facing many governments, EMPHASISES that a public finance contribution to the commitment made needs to be consistent with sound and sustainable public finances, and sound public financial management through careful evaluation of needs, effective disbursement and an open attitude toward innovative sources of finance and approaches to broaden private sector involvement.
In total, OECD (developed) countries committed to €30 bn in ‘Fast Start Finance’ for 2010-2012. There is no common transparent reporting format for these commitments – leaving open plenty of wriggle room for evasion. The WRI has also helpfully provided an overview of the FSF country commitments. Australia committed $599m over 3 years.
One of the main points is that funding should be additional. The definition of ‘additional’ therefore becomes interesting. At Cancun it was agreed that developed country financial commitments should have monitoring, verification and reporting systems enhanced and in a comparable format. The World Resources Institute has written a good paper on this. In that the hope is that much of the investment should come from the private sector, the question then is: through what mechanism?
At the recent warm-up meeting in Cape Town, the outlook for the Second Commitment Period of the Kyoto Protocol was left uncertain. It remains so for the Durban meeting. From our perspective, the challenges for a binding global agreement look insurmountable. This will negatively impact the stringency of obligations that developed countries will seek to apply to their private sectors, in turn impacting flow-on private sector investment in developing countries. We would be pleased to be proved wrong on this.
Also at Cape Town, participants could not agree on the final structure for the Green Climate Fund (GCF), proposed at Cancun. Saudi Arabia and the US stepped in to bar final resolution. It will again be picked up in Durban. Completion will be very difficult. The GCF is supposed to be a central element of the climate financing tools.
Where on earth will countries with long-term deep-seated structural financial problems, coupled with domestic spending constraints, find $100 bn a year? In a good paper, Frank Jotzo and friends at Australian National University examine this issue for Australia.
While the recent IEA 2011 World Energy Outlook warns us of impending irreversible climate damage from runaway greenhouse gas emissions, the political and financial capacity of nations to meet the challenge through provision of the committed finance looks seriously impaired.
Map: Australia’s New Electricity Generation Projects
The most recent snapshot of the distribution of new power generation in Australia has been released.
The map below shows advanced new energy generation projects in Australia:
Source: BREE 2011
Of this capacity, 46% are renewable energy projects – primarily wind.
This ratio of renewables:non-renewables is reflected also in the balance of less-advanced projects.
Of the less advanced projects, there are plans for 17,698 MW of wind capacity from 92 proposed projects.
Planned wind investment is only outstripped by proposed gas-fired generation capacity: 19,330 MW from 42 projects – 40% of which are planned for NSW.
The realities of project implementation in a time of gas price increases and uncertainty, and continued market constraints in the market for Renewable Energy Certificates, will inevitably mean that some of these projects will remain on the drawing board.
Resilience to Energy Supply Shocks an Australian National Priority
The Standing Council on Energy and Resources today confirmed that building Australia’s resilience to energy supply shocks is a national priority.
The Council works under the auspices of the Council of Australian Governments (COAG) and covers other issues including resource and petroleum exploration and extraction, clean technology coordination, and efficient electricity market governance.
The Council’s terms of reference specify a mandate to identify:
Changes required to ensure market resilience and energy security
One might imagine that this refers to two aspects:
First, to electricity market security, given the signficant changes in hand related to the introduction of carbon pricing. The recently legislated carbon tax will lead to a shift in electricity production away from coal, and towards gas and renewables. However, there is much uncertainty in the evolution of the sector as newly accessible gas markets due to LNG export terminal development mean that domestic gas prices are deemed to rise substantially, while the vaunted mandatory renewable energy target will be very hard to meet from renewable energy supply options.
Second, Australia’s liquid fuels (oil) deficit is widening. Production and reserves are declining, while consumption is expanding inexorably. There is very little envisageable substitutability for liquid fuels. Vehicle fleet efficiency and electric vehicle facilitation may be the focus.
WEO 2011: Natural Gas and Renewable Energy to Dominate Growth
Natural Gas and Renewable Energy will dominate growth in world primary energy demand, according to data released today in the World Energy Outlook by the International Energy Agency (IEA).
Source: WEO 2011
Taken together, natural gas and renewable energy meet two-thirds of future additional global primary energy demand to 2035.
This growth is reflected in the share of power generation investment and production from the two categories. Together, natural gas and renewable energy account for approximately two-thirds of power generation investment.
Source: WEO 2011
Taken together, renewable energy technology investment accounts for more than double new investment into new coal generation plant.
In Focus: Water, Energy, Food Nexus – Report
This week the Stockholm Environment Institute (SEI) released a background paper ‘Understanding the Nexus‘ as an input to the forthcoming Bonn 2011 Nexus conference on Water, Energy, and Food.
This week also marked the International Conference on Climate Change and Food Security in Beijing, co-sponsored by the International Food Policy Research Institute. In January this year we wrote about the work on this nexus under the World Economic Forum (WEF) program – which is one of the contributors to the SEI report (along with IFPRI, FAO, WBCSD – among others).
As the report says, the point of a nexus approach is on:
‘system efficiency, rather than on the productivity of isolated sectors’.
To improve water, energy, and food security the report recommends a focus on resource use productivity and efficiency, incentive structures, governance and institutions.
The report notes that food, energy, and water stresses can be impacted both by the effects of climate change, as well as the measures and policies designed to address it.
The paper underpins the draft policy recommendations of the Nexus conference which will presently be open for comments and accessible here.
Who Will Pay Australia’s Carbon Tax?
Who will be liable to pay the carbon tax is the big question that everyone is asking: investors, the public, and providers of solutions.
There is no publicly-available list.
Most recent data shows the largest emitters by company. The list can be viewed here.
However, the tax is only payable if a facility generates over 25,000 t/CO2e. Companies with facility emissions near that threshold will be working hard to reduce site emissions. A company can emit well over that threshold in aggregate without paying the tax – so long as the 25,000 t/Co2e threshold is not met at any given facility.
For now, the company carbon emissions list will provide a good idea of those that will have to pay the carbon tax. Now that greenhouse gas emissions have become a balance sheet and liability issue, public statements related to liability can be expected.
On ABC’s four corners report tonight, questions are raised about the possible impact on environmental quality of the LNG port under construction at Gladstone harbour.
Australia is currently undergoing a massive resource boom – including in natural gas exploitation from coal seam gas.
The report finds that there are fisheries health issues at present in Gladstone harbour, which may or may not have some association with the LNG project.
It is unclear whether dredging associated with the development of the massive new LNG processing facility, or recent high rainfall events, may be the cause of strange colouration and illness discovered in local fish.
In addition, a signficant uptick in ship traffic associated with LNG terminal development brings further dangers including introduction of alien species, oil spills, and direct strike on protected species such as dugongs.
The context for these questions is the intervention of UNESCO to question whether the development may negatively impact the universal value of the great barrier reef – a World Heritage site.
There are six major LNG export expansion projects planned inshore from the Great Barrier Reef. A further coal export terminal is proposed at Bathurst Bay in northern Queensland.
The report states that “the resources boom will profoundly test the reefs resilience”.
In March 2012 a team from the UNESCO committee will be in Australia to consider potential cumulative effects of resource projects on the World Heritage site.
Already, Australia’s gas industry faces tough questions about the environmental impacts of upstream gas extraction on water quality and aquifer levels. The gas development industry has come into conflict with farmers, environmentalists, and environmentalists.
Now, tough questions are being asked about the environmental impacts of the downstream processing and export facilities – in the jewel of the crown of Australia’s tourism industry. The social and environmental integrity of Australia’s economic development, currently largely based on gas and coal resource extraction and export, is in the balance.
Ideas Needed: Clean Energy Finance Corporation
The ‘Expert Review’ of the Clean Energy Finance Corporation (CEFC), through the Treasury, has released a request for submissions to assist them with ideas as to governance; investment mandate; risk management; and implementation.
The Australian Government has been badly burnt by mismanagement in it’s clean energy investment programs.
Spending $10 billion over five years in a responsible and profitable manner is not going to be easy. Some previous funds (think: ‘Regional Development Fund’ under the Howard Government) became perceived as being politicised: little more than quasi-slush funds for electoral advantage.
The scope of the review is set out in the request for submissions. It reiterates the plan to facilitate investment rather than compete with it, and to split investment into two separate streams – with one being dedicated to renewable energy and the other to energy efficiency and low emissions technologies. Both manufacturing and projects are under consideration.
While the opposition has not obstructed passage of ARENA (the R&D/Commercialisation part of the package), they are expected to continue to oppose CEFC as it will be payable from the income of the carbon tax. As ARENA is to be funded by dividends from CEFC, future financing of that organisation does not have bipartisan support.
The Clean Energy Finance Corporation must be viewed as being as impartial as it is nominally established as being. There will no doubt be much more examination of how technology, philosophical, and political preferences are (not?) expressed within the operational rules.
Wind Turbines Harvest Birds the World Over: the Daily Show
Australia has a massive task ahead of it to reach the mandated national renewable energy target by 2020. While most renewable energy technologies will have a role to play, including solar and geothermal, they are but bit-players to the leading role that wind power must take.
The main obstacle to wind farm development in Australia is well-understood: community opposition. It comes down to people not wanting their views obstructed, and a sense of unease at having massive rotating blades in their vicinity.
For legal purposes, as for opponents of other development types, environmental impact justifications are sought out to prevent development. Famously, Australian turbine proponents have come up against the orange-bellied parrot. In the UK, it’s hawks and the Royal Air force.
One wind farm developer in the US has problems with ducks.
Jon Stewart’s coverage of the issue in a show produced in August is amazing, and a must-see: Fowl Wind. (unfortunately doesn’t seem to be accessible for viewers in the Australia).
It’s actually also reminiscent of a situation of which we are aware relating to hydropower: fish must be saved from the turbines…. so that they can be caught by anglers and die in the weir gates.
