Differentiation and equity – page 1
INDCs / Ratcheting-up ambition – page 2
Legally binding agreement / Long term goals – page 3
Decarbonisation or zero emissions / Adaptation – page 4
Loss and damage – page 5
Climate finance – page 6
Price on carbon – page 7
Differentiation and equity
“Differentiation” is one of the big underlying topics of the UN climate summits, concerning negotiations about which countries bear the main responsibility for climate change, and which countries need to pay for it and act against it first.
The 1992 United Nations Framework Convention on Climate Change (UNFCCC) states that parties should act to protect the climate system “on the basis of equality and in accordance with their common but differentiated responsibilities and respective capabilities (CBDR-RC)”. The principle reflects the historical differences between developed and developing nations. Developed or industrialised nations bear more responsibility for climate change and have greater financial resources to tackle environmental problems (Annex I countries). Developing nations (Non-Annex I countries) have contributed less to global environmental problems and have less economic and technological capacity to tackle the issues.
This was reflected in the 1997 Kyoto Protocol, which obliged only wealthy nations to take action against climate change by reducing carbon emissions. In 2011, countries agreed that the next UN climate treaty should be “applicable to all parties”. Three years later at the COP in Lima, parties confirmed that countries “in a position to do so” should take action. But the issue of “differentiation” has been resurfacing ahead of the Paris COP. A number of nations who have the Non-Annex I status of developing nations and are represented by the group G77+China, say that the 1992 division should remain in place. Some of them call for corrective justice, i.e. “the emissions of the past should be taken into account to achieve equal cumulative emissions per person”.
But industrialised countries point out that global emissions will in the future be more and more dominated by emerging nations such as China and India. China’s per capita emissions are today on par with the EU’s. Rich, oil producing Arab states and Singapore – which have high emissions and boast large financial means – also fall into the 1992 developing nations category. Delegates from developed countries, including the EU, therefore stress that the world is different from 1992 and that responsibilities for causing climate change and capabilities to fight global warming have changed accordingly. The US particularly, but also Canada and Japan, have repeatedly stated that they will not accept an interpretation of CBDR that exempts developing nations from legally binding commitments.
The EU wants climate targets for all countries “based on evolving global economic and national circumstances”. Karsten Sach, Germany’s head negotiator, told the Clean Energy Wire in an interview that his delegation was opposing the “strict separation of the world into two parts according to the 1992 status”. Germany instead advocates sharing obligations, depending on the specific capabilities of each country. This should also be reflected in uniform review and transparency mechanisms.
The question of common but differentiated responsibilities and respective capabilities affects a lot of aspects, including mitigation, climate finance and reporting obligations, Sach said in Berlin in November. If this issue was solved, a lot of the 1,500 parenthesis indicating different options for wording in the negotiating text will disappear, he said.
German chancellor Angela Merkel has made it clear that she deems responsibility for climate action to be resting on many shoulders, including emerging economies. Merkel acknowledges that industrial nations have contributed heavily to climate change and in May 2015 called it an “act of equity” to drive innovation in efficient technologies that can help poorer countries. Developing nations need financial support to mitigate against and adapt to climate change, Merkel said. But she also stressed that “fair and binding rules for both industrialised and developing countries” were needed in order to secure global investment into low-emission development. It was important to show emerging nations that economic growth and climate action can be done at the same time, Merkel said in 2011.
Intended nationally determined contributions (INDCs) are the pledges that each country makes to reduce emissions and tackle global warming. They are seen as a move away from the top-down approach of binding international commitments towards a bottom-up approach of deciding what action each country will take.
Countries have taken different approaches to their pledges, based on their individual circumstances and capabilities. Some give fixed goals for emissions reduction, others give targets for reduction compared to a business-as-usual scenario. A few have set targets for peak emissions years, while others have included adaptation measures as well as mitigation.
The EU submitted a collective INDC for all member states, committing to a 40 percent reduction in greenhouse gas emissions by 2030, compared to 1990. Climate Action Tracker has assessed this goal as “medium” – i.e. below the level regarded as “sufficient”. The 28 member states will not all make the same contribution to achieving the EU-wide goal. Germany’s domestic climate targets are more ambitious than the EU’s: it aims for a 40 percent reduction in emissions by 2020. However, both Germany and the EU are currently struggling to meet their targets. The German government passed a “climate action programme” in 2014 designed to cut an extra 87 million tonnes of CO2 in order to keep it from falling 7 percentage points short of its 2020 reduction target. In a recent progress report, the European Environment Agency (EEA) found that current EU policies were not sufficient to meet the 40 percent target by 2030. These projections, however, did not take into account new policy proposals.
The German government stresses that the INDCs - and the prospect that if fully implemented they could limit global warming to 2.7 degrees Celsius - are an “encouraging sign”. The bottom-up approach of the INDCs means that governments come under pressure from their electorate if they are not complying with climate action targets or are not increasing ambition when necessary. This approach must be backed by a robust monitoring and measuring system that makes sure the efforts of every country are transparent and comparable, state secretary Jochen Flasbarth said in Berlin in November (see also “Ratcheting-up ambition”). “Us Europeans were definitely not in love with the bottom-up approach in the beginning but it has led to an incredible dynamic and to pledges that are able to achieve a 2.7 degrees Celsius warming limit. We have chosen the right way,” Flasbarth said.
But if countries choose to not comply with their emission targets or to not raise ambition, they will not face any legal repercussions on an international level despite transparency and monitoring obligations. That is, unless national emission reductions became part of the legally binding treaty with strong compliance mechanisms (see also “Legally binding treaty”).
INDCs submitted ahead of the final negotiations fall short of keeping global warming below 2°C. This explains why there is a broad backing for a “ratcheting-up” mechanism to review targets, and a growing consensus that ambition should be raised every five years.
UNFCCC Executive Secretary Christiana Figueres has said that finding a way to raise ambition is key to the Paris talks. “I am confident that these INDCs are not the final word in what countries are ready to do and achieve over time,” she said.
Germany supports the principle. Environment Minister Barbara Hendricks saidafter international climate negotiations in Bonn in October: “For months Germany has been strongly in favour of an ambition mechanism being included in the climate agreement – a provision that countries review what additional contributions they can make every five years.”
A draft text of the climate agreement released in October suggested that new pledges for mitigation efforts would be submitted every five years and refers to a “global stocktake” taking place at regular intervals. Countries are to assess the “aggregate progress” of their efforts and consider the “best available science” to enhance the fight. Opinions when to schedule the first assessment, in 2020, 2025 or 2030 differ.
The German negotiators favour a first assessment in 2030 because this would agree with the timing of the targets in the EU and Germany (which are set for 2030), state secretary Jochen Flasbarth said.
Legally binding agreement
What will compel countries to honour their INDC pledges? Germany would like to see a legally-binding agreement forcing nations to comply with their INDCs, with progressive increases over time and a long-term decarbonisation target. “The new treaty must and will be binding according to international law,” Environment Minister Barbara Hendricks said in September 2015. Germany would also like it to hold countries responsible for their climate change mitigation and adaptation pledges – aiming to provide 100 billion USD annually as of 2020 to developing countries.
“This is about no more and no less. Everyone who is familiar with the material knows what this means – that we get a binding climate agreement. It is completely clear: the word ‘binding’ sets high standards. But we have to achieve it,” Chancellor Angela Merkel said at the Petersberg Climate Dialogue in May 2015.
But what does this mean specifically? Theoretically, all who signed the UNFCCC in 1992 already made a legally-binding commitment to curb rising temperatures and slow climate change. The problem is getting countries to commit to actual procedures for evaluation, and measures for enforcing that commitment.
In 2011, countries agreed to come up with a legal enforcement mechanism by the end of 2015. But the extent to which emissions reductions targets will actually be included in any agreement is still up in the air. The German government would be happy to sign up to such a binding agreement but reservations in the US, China and other countries make it unlikely that the treaty will hold countries to their pledges. Even if they are included, the treaty may only require countries to make a ‘best effort’ – while not actually sanctioning those who do not meet their goals. It may, however, make having a national plan for climate action in domestic legislation mandatory.
Long-term goals (LTGs) are big-picture drivers of worldwide efforts to avert climate disaster. The precedent for LTGs already exists on the global stage, as leaders have previously committed to two long-term principles: stabilising greenhouse gas concentrations at a level that would prevent dangerous climate change, and limiting global warming to 2° Celsius – the former specified in Article 2 of the UNFCCC and the latter set out in the Copenhagen Accord.
The goals can also be more tangible policymaking targets, such as CO2 budgets and specific emissions reduction aims. Climate finance to help developing countries in the period after 2020, and climate change adaptation strategies are also LTGs. It is still unknown to what extent LTGs will be included in the Paris agreement, but around 120 countries have already said they want to show some kind of long-term commitment.
Germany would like to see ambitious LTGs included in any final agreement at the UN COP21 summit in Paris in December. Environment Minister Barbara Hendricks has said the goal of a climate-neutral world economy should be written into the agreement in order to “send a strong signal”. Specifically, it should include a clear recognition of the 2°C goal and the need to decarbonise the economy this century, backed by concrete measures like stepping up emissions-cutting targets at regular intervals. Germany also wants an agreement on providing climate finance and climate adaptation. “A clear long-term target is necessary as a signal for investment into a low-CO2 economy,” Rita Schwarzelühr- Sutter, state secretary in the Environment Ministry, said in Berlin in November.
Decarbonisation or zero emissions
A key area under discussion as an LTG is zero emissions or decarbonisation. The Intergovernmental Panel on Climate Change (IPCC) said in 2014 countries needed to cut greenhouse gas emissions to near zero if they wanted to stop the planet from warming by more than 2°C this century. “Decarbonisation” is considered the strongest expression because it would make clear to the financial market, investors and to every business in the world that cutting CO2 was a global agenda, German head negotiator Karsten Sach told the Clean Energy Wire. “Zero emissions” would be the second strongest wording, he said.
The G7 industrialised countries Japan, Germany, the US, the UK, Canada, Italy and France said they supported a global effort to decarbonise after their meeting in Germany in June 2015. In a joint statement that aimed to set the tone for the Paris summit, they emphasised that “deep cuts in global greenhouse gas emissions are required with a decarbonisation of the global economy over the course of this century”. More specifically, they called for a 40-70 percent cut by 2050 over 2010 levels. Chancellor Merkel echoed this position in her speech concluding the June G7 meeting.
Germany’s Environment Minister Barbara Hendricks told parliament in November: “We need a green zero, this means zero CO2 emissions from fossil fuels within this century; we have called this decarbonisation before. […] Our way to run our economies has to fundamentally change.”
The G7 did not go so far as to say how zero emissions would be reached; for example, whether strategies that offset emissions would be used for a so-called “net-zero” effect. This is when some emissions are allowed, but are neutralised. Emissions like those from aircraft or agricultural production are balanced out by planting forests or the use of “negative emissions” technology such as bioenergy with carbon capture and storage, which removes carbon from the air. But the use of these technologies is controversial.
Germanwatch said after the G7 summit that the post-2050 goals rely too much on risky negative emissions technologies and that a quicker path to cutting emissions was required. It said global CO2 emissions needed to “sink to zero by the year 2070”, and “the world economy must be fully decarbonised by then”.
COP21 aims to not only slow global warming, but also to agree measures to cope with its impact, such as floods, droughts and rising sea levels. The countries most affected by global warming are mainly developing nations in the Global South. They argue that richer countries responsible for the bulk of historic emissions need to put up funds to help those worst affected by climate change to adapt.
The Adaptation Fund was established under the Kyoto Protocol and has been active since 2009. At the Warsaw Conference in 2013, countries pledged over 100 million US dollars to the fund, with Germany contributing the largest share at €30 million. In 2014, Germany pledged another €50 million to the fund. At the Petersberg Climate Dialogue in May 2015, Merkel announced that Germany had made €1.5 billion available in loans for adaptation measures in developing countries through the KfW development bank since 2005.
A report into climate finance mobilised in 2013/14 released by the Organisation for Economic Co-operation and Development (OECD) in October found that just 16 percent went to adaptation. A 2014 report by the United Nations Environment Programme (UNEP) found that adaptation costs for developing countries could reach two to three times the previously estimated 70 billion to 100 billion US dollars per year by 2050. It predicted there would a serious funding gap post-2020 unless new funds were made available. The UNEP report also named Germany as one of the biggest contributors to adaptation-targeted climate aid (p. 29).
Loss and damage
Loss and damage (L&D) refers to the disadvantages and impacts of climate change that countries and people cannot adapt to. Both legal and technical questions, including how to calculate costs, and how to manage and respond to loss and damage, remain unresolved. The legal issue centres on whether rich countries that have been responsible for the bulk of historic emissions have to compensate those that suffer the consequences.
The Warsaw International Mechanism institutionally embedded loss and damages in the international climate regime in 2013. It provides a platform for increasing the understanding of climate consequences and finding appropriate tools to address loss and damage. But the details of how this will work are not expected to be hammered out until 2016, after the Paris conference. The group of G77+China are now pressing for L&D to be addressed in the Paris agreement. Industrialised countries are, however, wary of being held accountable for their “carbon debt”. The EU’s vision for the Paris agreement, set out in February 2015, has been criticised for failing to mention L&D at all.
State secretary Jochen Flasbarth, from the Environment Ministry, said the government would do what it could to make sure that L&D received a suitable mention in the Paris agreement, Bread for the World reported.
Germany’s head negotiator Karsten Sach said at a briefing in Berlin in November that it would always remain difficult to connect a particular extreme weather event and the resulting damage to climate change - which makes compensation claims for these events impossible. He stressed that the Warsaw mechanism should be upgraded by being incorporated into the Paris agreement.
The G7 agreement reached in Germany in 2015 includes the aim to make “direct or indirect insurance coverage against the negative impact of climate change related hazards” available to 400 million people in developing countries by 2020. This has been interpreted as a reference to L&D because one of the mechanisms to address L&D is climate impact insurance.
The Heinrich Böll Stiftung has proposed that the most polluting companies – or “Carbon Majors” should carry the burden of L&D compensation. There are 90 companies classed as Carbon Majors, which between them are estimated to be responsible for nearly two thirds of carbon emissions currently in the atmosphere. Three - RWE, RAG und HeidelbergCement – are German firms.
In the Copenhagen Accord of 2009, developed countries pledged to contribute 100 billion USD in climate financing per year by 2020 “to address the needs of developing countries”. Climate finance can come from public and private sources and can be paid according to bilateral or multilateral agreements. A “significant portion” of the funding is to be channelled through the Green Climate Fund.
In October 2015, the OECD presented a report, commissioned by the donor countries, finding that climate finance by developed nations had reached an annual average of 57 billion USD in 2013 and 2014, and 62.8 billion USD in 2014 alone. Some 71 percent of these funds came from public sources. Industrialised nations regard this sum as an achievement but developing nations dismissed the OECD report, saying it included other developing funds re-labelled as climate finance, credit guarantees and re-payable loans.
The 2020 finance goal may not be part of a Paris treaty (which will not come into effect before 2020) but it will still influence negotiations as many developing countries see it as a pre-condition for trusting the pledges of industrialised nations. Furthermore, developing countries want Paris to arrive at a legally binding target for long-term climate finance after 2020.
Merkel has stressed that she considers climate finance to be one of the make-or-break issues of the Paris climate negotiations. The agreement on the annual 100 billion USD for climate finance was one of the few positive outcomes of the Copenhagen summit, she said in May 2015. But in order to reach a consensus in Paris, a clear schedule on how the gap between the 100 billion USD target and the money accrued so far can be closed, had to be laid out. She added that climate finance would have to focus on the poorest nations because they were also the most affected by climate change. Emerging nations, on the other hand, would be able to finance the necessary investment themselves.
Talking to NGOs in November, Norbert Gorißen, head of the International Climate Finance division in the Environment Ministry, said that international climate finance had to become more transparent, easy to plan, and predictable - something that could be achieved in the Paris agreement. A quantitative climate finance target, on the other hand, was not the objective of the negotiations. Gorißen said that for post-2020 climate finance the circle of donor countries had to be expanded to include rich nations currently falling under the Non-Annex I “developing” country status (e.g. Saudi Arabia, Qatar, United Arab Emirates who are rich countries with high per capita emissions). “It’s not because we want to shirk from our obligations, but the task at hand is so large that we need more donors and this is also in the interest of least developed countries and the small island states,” he said.
After their June 2015 meeting in Germany, the G7 heads of state and government announced that they wanted to quadruple the amount of people insured against climate change-related weather damage to 400 million by 2020. They also announced an initiative to make renewable energy sources available to African countries.
Germany supports developing countries in the areas of emission reductions, forest conservation (REDD+) and adaptation to climate change. The government announced this year that it would double its climate finance by 2020 compared to 2014. Public funding by 2020 will amount to €4 billion, with another €6 billion leveraged from private sources, the Environment Ministry says. “These €10 billion make up around 10 percent of the whole 2020 pledge. I believe that’s a more than fair share coming from Germany and I think most people see it that way,” state secretary Jochen Flasbarth told journalists in Berlin.
“The most ambitious player has a responsibility to set a benchmark,” Sabine Minninger, from Bread for the World, told the Clean Energy Wire. “We see a danger that if Germany commits 4 billion USD, no other country will better that.”
The Green Climate Fund has recently approved its first eight investments, among them an 80 million USD project which is partially funded by Germany’s state-owned development bank KfW (15 million USD) for flood protection in Bangladesh.
NGO-run website German Climate Finance monitors the country’s climate action funding. It found that the government’s contribution, and particularly information on actual projects and their implementation, lacked transparency. It criticised Deutsche Bank becoming a partner of the Green Climate Fund since it is a financier of the coal industry. Critics also denounce that KfW still provides financing for coal plants abroad.
Price on carbon
Putting a price on carbon can take different shapes, such as emissions trading systems or carbon taxation. It is favoured by many economists as a market approach that makes polluters pay for their emissions and thus reduces CO2 while stimulating growth of clean technologies. Germany’s chancellor Merkel is among the proponents and recently joined the Carbon Pricing Panel, an initiative launched in October by World Bank Group President Jim Yong Kim and International Monetary Fund Managing Director Christine Lagarde, with support from the private sector. Its website quotes the chancellor saying “Carbon pricing makes investments in low-carbon or carbon-free technologies attractive and ensures that fossil fuels are used efficiently”.
Germany is part of the EU emissions trading scheme (ETS), currently the world’s largest cap-and-trade carbon market. A surplus of allowances in the market means most experts agree it has not been effective at reducing emissions. Speaking at the Petersberg Climate Dialogue, Merkel stressed the importance of carbon pricing and strengthening the ETS, hinting at the potential for a global carbon price, or measures to facilitate trading between schemes. “Our aim must be to have a global carbon market with a robust and reliable CO2 price signal. Then we could set incentives worldwide for achieving our climate targets in a cost-effective way,” she said.
Nonetheless a global price on carbon or a global carbon market are still distant goals because of the widely-varying price of carbon and regulatory differences between schemes.
German climate economists Axel Ockenfels and Ottmar Edenhofer strongly advocate a globally-binding carbon price, instead of relying on voluntary national contributions. Only a carbon price would solve the “free-rider” problem that sees less ambitious states hide behind the measures of more ambitious states.
The International Emissions Trading Association (IETA), whose members include major fossil fuel companies like Shell and BP, as well as German utilities RWE and E.ON, has welcomed a draft text published on October 23, for referring to “international transferrable mitigation outcomes”. The IETA had complained that an earlier version of the text ignored carbon trading.
However, UN climate chief Figueres managed expectations in October when she said Paris would not be able to come up with a global carbon price. Six jurisdictions around the world already had carbon pricing mechanisms. “I would argue we already have a strong carbon price signal,” she said, according to the Guardian.