What Hath Copenhagen Wrought? A Preliminary Assessment of the Copenhagen Accord

After years of preparation, the Fifteenth Conference of the Parties (COP-15) of the United Nations Framework Convention on Climate Change (UNFCCC) commenced on December 7th, 2009, and adjourned some two weeks later on December 19th after a raucous all-night session.  The original purpose of the conference had been to complete negotiations on a new international agreement on climate change to come into force when the Kyoto Protocol’s first commitment period comes to an end in 2012.  But for at least the past six months, it had become clear to virtually all participants that such a goal was out of reach — and the COP-15 objective was publically downgraded in mid-November to a non-binding agreement by heads of state at a meeting in Singapore of the Asia-Pacific Economic Conference.

I begin by describing what were reasonable expectations going into the Copenhagen negotiations and appropriate definitions of success for COP-15, and then turn to the unprecedented process which unfolded over the final 36 hours of the conference.  Next, I describe the fundamental architecture of the sole product that emerged – the Copenhagen Accord – and describe its key provisions, with an assessment of each component.  I close with an examination of the major pending issues and the available procedural routes ahead.

Sensible Expectations and Definitions of Success for Copenhagen

There was much hand-wringing in the months leading up to COP-15 about how difficult the negotiations had become.  I saw this as something of “A Silver Lining in the Climate Talks Cloud,” because the difficulty was largely a consequence of key countries of the world taking very seriously the task of expanding the coalition of the willing.

Going into Copenhagen, the challenge was very great, largely because of fundamental economic (and hence political) realities, as I explained in a previous post, “Chaos and Uncertainty in Copenhagen?” Given legitimate concerns about issues of efficiency, on the one hand, and distributional equity, on the other hand, it was not surprising that the industrialized countries (particularly the United States) insisted that China and other key emerging economies participate in a future agreement in meaningful and transparent ways, nor that the developing countries insisted that the industrialized countries foot much of the bill.

The key question was whether the negotiators in Copenhagen could identify a policy architecture that is both reasonably cost-effective and sufficiently equitable to generate support from the key countries of the world, and thus do something truly meaningful about the long-term path of global greenhouse gas emissions.  There were (and are) some promising paths forward, as we have documented in the Harvard Project on International Climate Agreements, and as we examine in a pair of current books (Post-Kyoto International Climate Policy: Summary for Policymakers; and Post-Kyoto International Climate Policy:  Implementing Architectures for Agreement).

At the final hour in Copenhagen, the leaders of a small number of key countries worked creatively together to identify a politically feasible path forward.  I have previously argued (“Defining Success for Climate Negotiations in Copenhagen”) that the best goal for the Copenhagen climate talks was to make progress on a sound foundation for meaningful, long-term global action, not some notion of immediate, numerical triumph.  That has essentially been accomplished with the “Copenhagen Accord,” despite its flaws and despite overt challenges from five of some 193 countries represented (Bolivia, Cuba, Nicaragua, Sudan, and Venezuela).

An Unprecedented Process

Before turning to the substance of the Copenhagen Accord, it is worthwhile taking note of the quite remarkable process that led up to its “last-minute” creation.  From all reports, the talks were completely deadlocked when U.S. President Barack Obama arrived on the scene at 8:00 am on Friday, December 18th, the scheduled final day of the conference.  Through a series of bilateral and eventually multilateral meetings of President Obama with Chinese Premier Wen Jiabao, Indian Prime Minister Manmohan Singh, Brazilian President Luiz Inacio Lula da Silva, and South African President Jacob Zuma, a document gradually emerged which was to become the Copenhagen Accord.

It is virtually unprecedented in international negotiations for heads of government (or heads of state) to be directly engaged in, let alone lead, negotiations, but that is what transpired in Copenhagen.  Although the outcome is less than many people had hoped for, and is less than some people may have expected when the Copenhagen conference commenced, it is surely better – much better – than what most people anticipated just three days earlier, when the talks were hopelessly deadlocked.

The Copenhagen Accord – Its Fundamental Architecture

The fundamental architecture of the Copenhagen Accord is one we recently analyzed in the Harvard Project on International Climate Agreements in “A Portfolio of Domestic Commitments: Implementing Common but Differentiated Responsibilities,” and about which I blogged at the end of November (Approaching Copenhagen with a Portfolio of Domestic Commitments).  Essentially, under such an approach each nation commits and registers to abide by its domestic climate commitments, whether those are in the form of laws and regulations or multi-year development plans.  This is essentially the “schedule approach” introduced by the Australian government in spring 2009.

After its release, President Obama characterized the new Accord as “an important first step” at his press conference shortly before returning to Washington.  I would prefer to amend that characterization to call the Accord a potentially very important third step.  Step One was the UN Earth Summit in Rio de Janeiro in 1992, which produced the U.N. Framework Convention on Climate Change.  Step Two was the Kyoto Protocol, signed in Japan in 1997.  But what many policy wonks (myself included), not to mention the United States Senate, immediately recognized was the absence from the Kyoto Protocol of involvement in truly meaningful ways of the key, rapidly-growing developing countries, a small set of important nations that are now better termed “emerging economies” – China, India, Brazil, South Africa, Mexico, and Korea.  This was a primary deficiency of Step Two, as well as the lack of serious attention to the long-term path of emissions (as opposed to the five-year time horizon of Kyoto).

The Copenhagen Accord establishes a framework for addressing both deficiencies, and thereby can be characterized as a potentially very important third step – expanding the coalition of the willing and extending the time-frame of action.  With this step, all of the seventeen countries of the Major Economies Forum– which together account for some 90% of global emissions – are agreeing to participate.  Nevertheless, let’s be honest about the difference between the outcome of the 1997 negotiations in Kyoto (a detailed 20-page legal document, the Kyoto Protocol) and the outcome of the 2009 negotiations in Copenhagen (a general 3-page political statement, the Copenhagen Accord).  Still, it remains true that the COP-15 negotiations were “saved from utter collapse” by the creation and acceptance of the Copenhagen Accord.

The Copenhagen Accord – Key Provisions and Preliminary Assessment

It is unquestionably the case that the Accord represents the best agreement that could be achieved in Copenhagen, given the political forces at play.  Indeed, were it not for the spirited – and as I suggested above, quite remarkable – direct intervention by President Obama, together with the other key national leaders, there would have been no real outcome from the Copenhagen negotiations.  That said, let’s take a critical look at the Accord, item by item.  The key provisions (as I interpret them, with my own numbering, not that of the Accord) are these:

1.      The signatories validate their will to “urgently combat climate change in accordance with the principle of common but differentiated responsibilities and respective capabilities.”  The signatories agree that deep cuts in global emissions are required to hold global temperature increases to 2 degrees Centigrade, and commit to take actions to meet this objective, “consistent with science and on the basis of equity.”

Assessment: Although the Accord notes the importance of the frequently-discussed 2 degrees Centigrade target, it does not spell out actions that will achieve it.  The Accord also notes the importance of the principle of “common but differentiated responsibilities,” which is of great importance to developing countries.

2.      Action and cooperation on adaptation is urgently required, particularly in the least developed countries, small island developing states, and Africa.  Developed countries commit to provide financial resources to support adaptation measures in developing countries.

Assessment: Recognizing the importance of adaptation and providing financial resources to support it in developing countries is an important departure from Kyoto.  Targeting the funds to the “least developed countries” is sensible.

3.      Annex I Parties of the Kyoto Protocol (the 1997 list of the industrialized countries and the emerging market economies of Central and Eastern Europe) commit to implement mitigation actions (specified in Appendix I), and Non-Annex I Parties (the developing world, as defined in the Kyoto Protocol) also commit to implement mitigation actions (specified in Appendix II), all of which will be submitted to the UNFCCC Secretariat by January 31, 2010.

Assessment: These appendices (“schedules”) of domestic mitigation targets, actions, and policies are the heart of the Portfolio approach, as I described above.  This is where the action is.

It is unfortunate (but was probably politically necessary) that the Accord maintains the distinction of Annex I versus non-Annex I countries from the Kyoto Protocol.  I have characterized this distinction in the Kyoto Protocol as the “QWERTY keyboard” (unproductive path dependence) of international climate policy, because it has been the greatest impediment to developing a meaningful international arrangement.  It is because of the presence of this distinction that developing countries have insisted on a continuation of the Kyoto Protocol for a second (post-2012) commitment period.

Note that even if the Annex I list was appropriate in 1997, it surely no longer is:  more than 60 non-Annex I countries now have greater per capita income than the poorest of the Annex I countries.

An important improvement would be to employ a formulaic mechanism that takes a variety of factors into account, including per capita income, to determine the stringency of ambition, targets, or actions for individual countries, rather than the dichotomous distinction of having targets or not (“Global Climate Policy Architecture and Political Feasibility: Specific Formulas and Emission Targets to Attain 460 PPM CO2 Concentrations”).

If a continuous spectrum with all countries listed in the same table is not politically feasible, then a mechanism is needed for countries to transition from one list to the other.  Korea and Mexico joined the OECD six months after Kyoto, but they remain off the Annex I list.

4.      Emissions reductions for the Annex I parties will be measured, reported, and verified according to guidelines (to be established), which will be rigorous and transparent, whereas mitigation actions taken by non-Annex I parties will be subject to domestic measurement, reporting, and verification (MRV) reported through national communications, with international consultation and analysis.

Assessment: There was a great deal of attention to this issue in Copenhagen, with all members of the U.S. delegation talking about the importance of “transparency.”  The compromise seems acceptable:  developing countries employ domestic measurement, reporting, and verification, but it is subject to “international consultation and analysis.”

Interestingly, the Accord is silent on the issue of “international competitiveness” and the possible use of border adjustments (border taxes or import allowance requirements in national cap-and-trade systems).  This is a controversial point, since inclusion of such mechanisms is important in domestic U.S. politics, but is anathema to China, India, and other developing countries.

5.      Least developed countries and small island developing states may undertake actions voluntarily and on the basis of support (from other countries).  Such actions will be subject to international measurement, reporting, and verification.

Assessment: This is the third element of the national schedules, reserved for the poorest developing countries (which contribute only trivially to greenhouse gas emissions), and it seems acceptable, although a graduation mechanism would again be desirable.  Interestingly, if their actions are funded by developed countries, then those actions are subject to the most stringent MRV.  So-called technology transfer mechanisms are included in this context.

6.      The parties will establish positive incentives to stimulate financial resources from developed countries to help reduce emissions from deforestation and degradation.

Assessment: This is a potentially important change, as the lack of meaningful attention to retarding deforestation was a significant deficiency of the Kyoto Protocol.  We have investigated appropriate mechanisms in the Harvard Project on International Climate Agreements (“International Forest Carbon Sequestration in a Post-Kyoto Agreement”).

7.      The parties agree to pursue opportunities to use markets to achieve cost-effective mitigation actions.

Assessment: As we have documented in the Harvard Project (“Linkage of Tradable Permit Systems in International Climate Policy Architecture”), it is very important that future international agreements facilitate or at least not discourage voluntary linkage of national and multi-national cap-and-trade systems.  Needless to say, this provision in the Accord – like virtually all of the provisions – will require specific details to make it operational.

8.      Predictable and adequate funding will be provided to developing countries for emissions mitigation, reduction of deforestation, and adaptation.  There is a collective commitment from developed countries “approaching” $30 billion for the period 2010-2012, “balanced between adaptation and mitigation,” with adaptation funding being prioritized for the most vulnerable developing countries.

Assessment: To whatever degree the funding for mitigation is of government-government form (expanded foreign aid), legitimate concerns exist about both the feasibility of marshalling the necessary amounts and the efficiency of its use.  The private sector needs to be employed, as I have previously argued (“Only Private Sector Can Meet Finance Needs of Developing Countries”).

9.      The developed countries commit to a goal of jointly mobilizing $100 billion annually by 2020 from sources both public and private.

Assessment: It is important that the Accord notes that the funds can come from either public or private sources.  Governments can — through the right domestic and international policy arrangements — provide key incentives for the private sector to provide the needed finance through foreign direct investments for emissions mitigation (clearly a role exists for government assistance for adaptation).  For example, if the cap-and-trade systems which are emerging throughout the industrialized world as the favored domestic approach to reducing CO2 and other greenhouse gas emissions are linked together through the existing, common emission-reduction-credit system, namely the Clean Development Mechanism (CDM), then powerful incentives can be created for carbon-friendly private investment in the developing world.

Clearly the CDM, as it currently stands, cannot live up to this promise, but with appropriate reforms there is significant potential.  Of course, problems of limited additionality will inevitably remain.  Therefore, what is needed is for the key emerging economies to take on meaningful emission targets themselves (even if equivalent to business as usual in the short term), and then participate directly in international cap-and-trade, not government-government trading as envisioned in Article 17 of the Kyoto Protocol (which will not work), but firm-firm trading through linked national and multi-national cap-and-trade systems.

Such private finance stands a much greater chance than government aid of being efficiently employed, that is, targeted to reducing emissions, rather than spent by poor nations on other (possibly meritorious) purposes.

10.  Evaluation of the Accord’s implementation is to be completed by 2015, including consideration of strengthening the long-term goal as the science indicates.

Assessment: Depending upon when the Accord is implemented, completing an assessment by 2015 might or might not be reasonable.  A provision to strengthen the long-term goals of the Accord may be sensible, but it would seem that the provision should provide more generally that the long-term goal should be “adjusted as the science indicates,” so as not to pre-judge what future scientific research may reveal.

11.  In the official version of the Accord released by the UNFCCC, Appendix I (quantified 2020 economy-wide emissions targets for Annex I countries) and Appendix II (nationally appropriate mitigation actions of developing country parties) are left blank, to be completed by January 30, 2010.

Assessment: It is unfortunate that no numbers or other specifics were included in the two appendices, because many of the various parties have previously made public statements regarding commitments, plans, or expectations that would actually have provided considerable information.  Some specificity of the tables – both numerical pledges from Annex I countries and “voluntary pledges” from developing countries — would have better demonstrated the compelling substance of the Accord, and would thereby have given the agreement greater credibility, at least in news media reports.

The Way Forward

Many details regarding these elements of the Accord as well as other unspecified issues remain on the table, and will presumably be examined and negotiated if nations move forward with the Copenhagen Accord and the basic architecture it promulgates.  We are already at work on many of these issues in the Harvard Project on International Climate Agreements, including:

·         metrics for evaluating commitments

·         climate policy review mechanisms

·         compliance mechanisms

·         afforestation and deforestation mechanisms

·         facilitating international market linkage

·         fostering technology transfer

·         methods of negotiating and updating climate agreements

·         methods of providing incentives for developing country participation

·         methods of carbon finance

·         making an international climate agreement consistent with international trade rules

Whether the next step in international deliberations should be under the auspices of the UNFCCC or a smaller deliberative body, such as the Major Economies Forum (MEF), is an important question.  Given the necessity of achieving consensus (that is, unanimity) in United Nations processes and the open hostility of a small set of nations, bilateral and multilateral discussions, including via the MEF, could be an increasingly attractive route, at least over the short term.  (Such questions about preferred institutional venues for international climate negotiations and action constitute an important topic on which we are focusing research in early 2010 in the Harvard Project on International Climate Agreements, and about which I will write in future posts.)

The climate change policy process is best viewed as a marathon, not a sprint.  The Copenhagen Accord – depending upon details yet to be worked out – could well turn out to be a sound foundation for a Portfolio of Domestic Commitments, which could be an effective bridge to a longer-term arrangement among the countries of the world.  We may look back upon Copenhagen as an important moment – both because global leaders took the reins of the procedures and brought the negotiations to a fruitful conclusion, and because the foundation was laid for a broad-based coalition of the willing to address effectively the threat of global climate change.  Only time will tell.

Epilogue

After I completed writing this blog post, I came across a superb essay on the same topic by David Doniger, Policy Director of the NRDC Climate Center in Washington, D.C.  It deserves to be read (and distributed).

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Only Private Sector Can Meet Finance Demands of Developing Countries

Things are getting hot here in Copenhagen.  It’s not the weather outside, but the debate taking place inside the Bella Center, home of the 15th Conference of the Parties of the UN Framework Convention on Climate Change.  This afternoon, the main session of the talks was suspended, following protests led by African countries, which accused the industrialized countries of trying to wreck the existing Kyoto Protocol.  At the heart of the controversy is the “finance question,” as it’s called here, with the developing countries asking for more than $100 billion to $200 billion annually to pay for their carbon mitigation and climate change adaptation through 2050!

At the National Journal’s “Copenhagen Insider” Blog, Congressman Ed Markey poses the highly relevant question of how much should wealthy countries help poor countries address climate change.  In response to Congressman Markey’s question, I maintain that it is inconceivable that the governments of the industrialized world, including the United States, will come up with sufficient foreign aid to satisfy the demands for financial transfers being made by the developing countries in Copenhagen.  However, governments can — through the right domestic and international policy arrangements — provide key incentives for the private sector to provide the needed finance through foreign direct investments.

For example, if the cap-and-trade systems which are emerging throughout the industrialized world as the favored domestic approach to reducing CO2 and other greenhouse gas emissions are linked together through the existing, common emission-reduction-credit system, namely the Clean Development Mechanism (CDM), then powerful incentives can be created for carbon-friendly private investment in the developing world.

Clearly the CDM, as it currently stands, cannot live up to this promise, but with appropriate reforms there is significant potential.  Of course, problems of limited additionality will inevitably remain.  Therefore, what is needed is for the key emerging economies — China, India, Brazil, Korea, South Korea, South Africa, and Mexico — to take on meaningful emission targets themselves (even if equivalent to business as usual in the short term), and then participate directly in international cap-and-trade, not government-government trading as envisioned in Article 17 of the Kyoto Protocol (which won’t work), but firm-firm trading through linked national and multi-national cap-and-trade systems.

Such private finance stands a much greater chance than government aid of being efficiently employed, that is, targeted to reducing emissions, rather than spent by poor nations on other (possibly meritorious) purposes.  So, all in all, the job can be done, and governments have an important role, but as facilitators, not providers, of finance.  This should be the focus of the discussion here in Copenhagen.

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Defining Success for Climate Negotiations in Copenhagen

The fact that President Obama has decided to attend the United Nations climate change negotiations in Copenhagen at the end of the two-week meetings on December 18th, rather than during the previous week on his way to Oslo to receive the Nobel Peace Prize, is important, because it increases – in my mind – the likelihood of a significant outcome from the negotiations.  However, my reasoning – as I explained in a blog post for the Financial Times – is not what most people may think.  It is a matter of what is called “endogeneity” in economics, that is, there is causality in both directions.  That’s a bit cryptic, so let me explain.

[Before I proceed, I should explain that I have agreed to blog periodically from Copenhagen for the Financial Times, analyzing some of the issues before the negotiators in response to questions from the Financial Times‘ editors and reporters.  Those posts can be viewed at the Financial Times energy-source web site.]

Although it is true that President Obama’s presence on the concluding day of the negotiations (when – taking Kyoto in 1997 as an example – some of the key deals are finally struck) can have some influence, it is even more true that this decision by the White House signals that the Administration has reason to believe that there will be a visibly successful outcome of the Copenhagen talks.

His initial decision to visit the negotiations the previous week would have shielded the President – to a considerable degree — from any embarrassment and bad publicity if the negotiations were to fall apart.  (The President does not need to fly back from Copenhagen a second time having failed on his mission; his attempt to bring the Olympic games to Chicago is still fresh in the minds of the international press.)

Therefore, the fact that the White House has decided to send the President to Copenhagen for the final day, where he will assemble with some 90 other world leaders, and participate in closing statements (not to mention photo opportunities), indicates that the Administration is relatively confident that the talks will not collapse in a logjam of disagreement between the industrialized world and the developing countries, but rather that there will be a successful outcome.

The key outstanding question is whether the outcome will be one that provides a sound foundation for meaningful, long-term global action, not simply some notion of immediate, albeit highly visible triumph.  This is a subject on which I wrote in the Boston Globe (“A Silver Lining in the Climate Talks Cloud”) on Sunday, December 6, 2009, and it is my major focus here.

The gloom and doom predictions we’ve been hearing about the global climate negotiations taking place in Copenhagen this week and next are fundamentally misguided.  The picture is much brighter than it might seem for this international conference aimed at coming up with a successor for the Kyoto Protocol, which essentially sunsets in 2012.

The best goal for the Copenhagen climate talks is to make real progress on a sound foundation for meaningful, long-term global action, not some notion of immediate triumph.  This is because of some basic scientific and economic realities.

First, the focus of scientists (and policy makers) is and should be on stabilizing concentrations at acceptable levels by 2050 and beyond, because it is the accumulated stock of greenhouse gas emissions — not the flow of emissions in any year — that are linked with climate consequences.

Second, the cost-effective path for stabilizing concentrations involves a gradual ramp-up in target severity, to avoid rendering large parts of the capital stock prematurely obsolete.

Third, long-term technological change is the key to the needed transition from reliance on carbon-intensive fossil fuels to more climate-friendly energy sources.

Fourth, the creation of long-lasting international institutions is central to addressing this global challenge.

Indeed, it would be easy, but unfortunate, for countries to achieve what some people wish to define as “success” in Copenhagen:  a signed international agreement, glowing press releases, and related photo opportunities for national leaders.  Such an agreement could only be the Kyoto Protocol on steroids:  more stringent targets for the industrialized countries and no meaningful commitments by the key rapidly-growing emerging economies of China, India, Brazil, Korea, Mexico, and South Africa (let alone by the numerous developing countries of the world).

Such an agreement could — in principle — be signed, but it would not reduce global emissions and it would not be ratified by the U.S. Senate (just like Kyoto).  Hence, there would be no real progress on climate change.

If it’s not reasonable to expect that a comprehensive post-Kyoto policy architecture will be identified in Copenhagen, what would constitute real progress?  One important step forward would be a constructive joint-communiqué from major countries (just seventeen industrialized and emerging economies account for about 90% of annual emissions).

Such a joint-communiqué could lay out key progressive principles to underlie a future climate agreement, such as making the United Nations notion of  “common but differentiated responsibilities” meaningful through a the dual principles that:  all countries recognize their historic emissions (read, the industrialized world); and all countries are responsible for their future emissions (think of those rapidly-growing emerging economies).

This would represent a great leap beyond what has become the “QWERTY keyboard” (that is, unproductive path dependence) of international climate policy:  the distinction in the Kyoto Protocol between the small set of Annex I countries with quantitative targets, and the majority of countries in the world with no responsibilities.  Various policy architectures could subsequently build on these dual principles and make them operational, beginning to bridge the massive political divide which exists between the industrialized and the developing world.

In addition, a mid-term agreement could be reached on an approach involving an international portfolio of domestic commitments, whereby each nation would commit and register to abide by its domestic climate commitments, whether those are in the form of laws and regulations or multi-year development plans.  Support for such an approach has been voiced by a remarkably diverse set of countries, including Australia, India, and the United States.

The key question is not what this approach would accomplish in the short-term, but whether it would put the world in a better position two, five, and ten years from now in regard to a long-term path of action.

Consistent with this portfolio approach, President Obama recently announced that the United States would put a target on the table in Copenhagen to reduce emissions 17 percent below 2005 levels by 2020 (in line with climate legislation in the U.S. Congress).  In response, China announced that it would reduce its carbon intensity (emissions per unit of economic activity) 40 percent below 2005 levels over the same period of time.  Subsequently, India announced similar targets.  Given these countries rapid rates of economic growth, the announced targets won’t cut emissions in absolute terms, but they are promising starting points for negotiations.

So, despite the multitude of negative pronouncements about the slow pace of international climate negotiations, there are positive developments and promising paths forward. It is fortunate that a few key nations, including the United States, appear to be more interested in real progress than symbolic action.

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