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Durban - slow progress ahead on climate change

Article that appeared in the New Zealand Herald on 29 November 2011

The international community has come a long way from the heady days preceding the Copenhagen climate change conference in 2009 – all hope of a quick global agreement on cutting greenhouse gas emissions is almost officially gone.

Well, it is gone, but no one in authority wants to put it that simply. From here on, it is incremental, year-by-year, meeting-by-meeting progress, which years in the future may see all major emitters agreeing to make cuts.

Australia and Norway have proposed that a binding global pact to limit emissions should not be finalized until 2015. They say it will take four years to agree on a legally-binding deal that includes emission targets for developed and developing countries.

Britain’s Minister of State for Energy and Climate Change, Greg Barker, says a new and broader climate deal is out of reach for now and instead nations need to focus on how to replace the Kyoto Protocol before 2020. The EU’s chief climate negotiator, Artur Runge-Metzger, says a successful outcome for the current global climate change conference in South Africa, which started in Durban on 28 November, would be to get everything in place for a legally binding successor to the Kyoto Protocol in less than five years. Ratification could take several years more after that.

What does this mean for New Zealand? It points to continued uncertainty about the international framework into which our domestic policies, such as the Emissions Trading Scheme, fit. We face pursuing climate change policies aimed at cutting emissions in the absence of a binding international target, and proper sharing of the burden between countries, after 2012.

Added to this uncertainty is the patchy nature of emissions trading around the world. Apart from Europe and New Zealand, the only national-level carbon pricing scheme is in Australia where legislation passed just this month will see a carbon tax applied from next July. We have to wait and see whether the Australian tax will endure long enough to transition into an ETS. Japan’s ETS plans are back on the shelf, the proposed start date for South Korea’s ETS has been pushed back from 2013 to 2015 and the start of California’s cap-and-trade scheme has been pushed out by a year to January 2013. China continues to talk about emissions trading, but officials will only say “within the next five years”.

Certainly, the European Union has a long-standing ETS, but this scheme is facing a major crisis due to the recession and over-supply of carbon units, which have led EU carbon prices to drop more than 40% since June. Analysts say they could plunge further, with UBS suggesting the EU market could crash.

With more than 190 nations meeting in Durban this week, no one expects a breakthrough agreement, which leaves the Kyoto Protocol obsolete as an instrument for binding developed nations to emissions cuts. Japan, Canada and Russia refuse to agree to any more targets under the protocol once the current targets expire in 2012, while Europe and others like New Zealand won’t agree to binding targets unless the major emitters also sign up to binding commitments, particularly the US and China.

So, with a truly global agreement likely to be several years away, what might be achieved in Durban?

Durban’s success will be judged on the degree to which it maps out a new path for negotiations, a path that leads away from the Kyoto Protocol as we know it and towards a realistic global agreement on emissions reductions that engages all major emitters.

Close observers foresee a possible political deal whereby ministers promise to do things without a legally binding framework. If Durban produced an agreement from the major players to discuss a binding global agreement, this would be a major step forward.

A key issue is what to do when the Kyoto Protocol First Commitment Period ends in 2012. Once that date comes around, developed countries will have no binding targets for cutting emissions. There will be a legal gap in the process, which could last for years.

There is a danger that, in trying to encourage major emitters to sign up to a new agreement or to bridge the Kyoto legal gap, New Zealand might commit itself to something short of a global deal that binds us to making economic sacrifices which are not reflective of fair burden sharing. This would be a mistake, achieving nothing in terms of reducing global emissions but imposing a significant economic cost on New Zealand.

Concerns that New Zealand needs to commit to more action are misplaced. Our ETS already puts us ahead of the rest of the world in terms of incorporating a price of carbon into the economy.


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