During two weeks of sometimes boisterous plenary sessions and equally energetic backroom discussions, the 197 Parties of the Twenty-Fourth Conference of the Parties (COP-24) of the United Nations Framework Convention on Climate Change (UNFCCC), meeting in Katowice, Poland, sought to reach consensus on rules and guidelines for implementing the Paris Agreement. That landmark 2015 accord came into force in 2016, and is scheduled to begin operations in earnest in 2020. The fault lines at the Katowice negotiations were, as usual, largely between two groups: the 43 industrialized countries, and the 154 developing nations.
Hanging over the negotiations was the reality that U.S. President Donald Trump announced in June 2017 that the United States would withdraw from the Paris Agreement (in November, 2020, the soonest that any Party can actually withdraw). Since Trump’s announcement, the former co-leadership by the United States and China, which had been critical to the passage of the Paris Agreement, has evolved into something between sole leadership by China and co-leadership by China and the European Union.
Not long before midnight on Saturday, December 15th, a full 24 hours after COP-24 was scheduled to conclude, consensus was reached on the 156-page Rulebook, with considerable credit due to the Polish presidency of the Conference (not to be confused with the presidency of the Polish nation), in the person of Michał Kurtyka, Poland’s Deputy Minister of Energy. As Jean Chemnick wrote in E&E News, the Rulebook represents a transition from an “idealized expression of world solidarity” in the Paris Agreement to a “set of mechanisms that countries hope will deliver results.”
But was COP-24 Really a Success?
A simple “yes” or “no” response to this question would be misleading. There were literally dozens of aspects of the Paris Agreement on which the delegates to the Katowice meetings wanted to make progress by filling in details in the 29 articles of the skeletal Paris Agreement. In my mind, two areas stood out. One is referred to as “transparency,” and other is characterized (somewhat inaccurately) as “markets.” Combining the achievements and lack thereof on both fronts, I assess the outcome of the Katowice talks to be more than a half-full glass of water (or wine, if you prefer).
First of Two Key Issues: Transparency
Transparency refers to the credibility of each nation’s measurement of its own performance – in terms of its emissions and its policies. The Paris Agreement gave significant wiggle room to the vast majority of countries – the 154 developing countries – by granting them flexibility in meeting the transparency requirements (which were to be established for the industrialized countries). The U.S. delegation – consisting of civil servants led by long-time State Department official Trigg Talley – again worked closely with the Chinese delegation to foster a remarkable consensus that all countries must follow uniform standards for measuring emissions and tracking the achievement of their respect targets (Nationally Determined Contributions or NDCs). This was a significant achievement, and a major step forward toward a level playing field among the countries of the world.
Conceivably, it could make it easier for the Trump administration to remain in the Paris Agreement (if the President were to become convinced that such action would be politically advantageous in the run-up to the November 2020 U.S. presidential election). And, likewise, it will make it easier for a future (Democratic or Republican) administration to rejoin the Paris Agreement if the current President follows through on his promise to withdraw. That is a significant success.
Second of Two Key Issues: Article 6.2 and Carbon Markets
Turning to the second key set of issues at COP-24, I have frequently written that there are two necessary conditions for ultimate success of the Paris Agreement: adequate scope of participation, and adequate ambition of the individual national contributions. The first condition has surely been met, with 97% of global emissions associated with countries taking on responsibilities under Paris, compared with 14% under the current commitment period of the predecessor international agreement, the Kyoto Protocol of 1997. But the factor that brought about such broad participation – namely, that each country’s target is anchored in its own national circumstances and colored by its domestic political reality – suggests that the individual contributions will not be collectively sufficient (due to the global commons nature of the problem).
Because of this, a key question has been whether there are ways that the Paris Agreement itself, as it is fleshed out, can enable and indeed facilitate increased ambition over time? One answer, on which I have carried out extensive research with colleagues, can be provided by the linkage of regional, national, and sub-national policies – connections among policy systems that allow emission reduction efforts to be redistributed across systems.
Linkage is typically framed as between cap-and-trade systems, but regional, national, and sub-national policies will be highly heterogeneous, including a variety of types of emissions trading systems, carbon taxes, and conventional performance and technology standards. As my research in this area with Michael Mehling (M.I.T.) and Gilbert Metcalf (Tufts University) has found, linkage among such heterogeneous policies is not trivial, but is – in many cases – feasible.
This is important because linkage fosters: cost savings by allowing firms to take advantage of lower cost abatement opportunities in other jurisdictions; improved functioning of markets by reducing market power and price volatility; political benefits to linking parties; administrative economies of scale; and – perhaps most important – the possibility of satisfying the UNFCCC’s key criterion of distributional equity – “common but differentiated responsibilities” – without sacrificing cost-effectiveness.
Fortunately, such linkage can be consistent with the Paris Agreement, under the authority of its Article 6, focused on international cooperation. In particular, Article 6.2 provides for cooperative approaches among Parties, with Internationally Transferred Mitigation Outcomes (ITMOs) potentially serving as an accounting mechanism to ensure that international linkages do not result in double-counting or other errors when comparing each country’s emissions to its stated target.
So, What Happened in Katowice?
In Katowice, the delegates sought to write guidelines for Article 6 that could make its promise a reality. Negotiators had an opportunity to define clear and consistent guidance for the accounting of emissions transfers under Article 6.2. My view in advance of the Katowice talks was that a robust accounting framework for ITMO transfers could foster better linkage of climate policies across jurisdictions, but that if the guidance extended much beyond basic accounting rules, restrictive requirements could actually impede effective linkage, and be counter-productive.
In precisely this regard, two potential impediments arose in Katowice. Proposals were introduced to place an explicit tax on ITMO transfers under the rubric of “Share of Proceeds,” meaning a payment by the transferring parties to a fund intended to help vulnerable developing countries meet their costs of adaptation to climate change. Whereas the objective of financing adaptation has great merit, it is well covered and belongs in other parts of the Paris Agreement, not as a tax on trading.
The other potential impediment was in the form of proposals for an implicit tax on transfers, known as “Overall Mitigation in Global Emissions,” meaning that each transfer must result in a net reduction in overall emissions. Again, increasing ambition over time is important, but that is dealt with appropriately in other parts of the Agreement, not by making it an implicit tax on market activity.
As the end of the second week of negotiations approached, it appeared that both of these potential impediments might be finessed, if not completely avoided. But then a single country – Brazil – decided to hold up the talks all night on the final Friday by insisting that it would not let there be any progress on rules for Article 6.2 unless the Conference agreed to state – under Article 6.4, viewed by most as an extension of the Kyoto Protocol’s Clean Development Mechanism (CDM) – that it could use its large surplus of CDM credits (of questionable credibility) to help meet its Paris commitments in a manner that would have resulted in double-counting. The Brazilian delegation refused to budge, and the result was that Article 6 was not included in the Katowice decision. Rather, it was punted to COP-25, to be held next year in Santiago, Chile.
So, the outcome with this second issue was clearly not a great success, but was it a complete failure, or was it something in between? This gets quite interesting. On first blush, a lack of agreement on the rules of the road for Article 6.2 would seem to render ITMO transfers impossible – and hence reduce the scope for bilateral international linkages.
Does the Cloud Have a Silver Lining?
As Nathaniel Keohane (Environmental Defense Fund) has pointed out, countries can move ahead with international transfers even without guidance under Article 6.2, because that article is explicit that countries may use transferred mitigation outcomes toward meeting their national targets whether or not additional rules have been written. The crucial phrase is that any transfer must be “consistent with guidance,” meaning that if guidance exists, it must be followed, but meaningful action does not depend on the existence of guidance. Keohane indicates that this language was intentionally written into the Paris Agreement precisely because the United States and others feared that Brazil would try to hold Article 6.2 hostage to Article 6.4 — exactly as they did in Katowice.
I hope very much that Dr. Keohane’s interpretation is correct. My lingering concern, however, is that in the absence of knowing what some potential future guidance and rules might bring, Parties may be very hesitant to pursue bilateral linkages (and try to justify those in the context of their national targets via ITMO transfers). Only time will tell.
A Sideshow: The IPCC 1.5o C Report and U.S. Schizophrenia
There were several sideshows at the climate talks. One revealed the schizophrenia that has marked U.S. participation in the annual negotiations during the Trump years. The State Department civil servants who continue to represent the United States in the climate negotiations, again played a helpful role, working constructively with other delegations, and in some cases, even played a (admittedly diminished) leadership role, as in the work on transparency I described above. But, in addition, the White House again sent a group of political people to make symbolic statements supporting the use of coal and doubting the urgency of action on climate.
This resulted in the bizarre reality of the United States joining Russia, Saudi Arabia, and Kuwait to block language that would have endorsed the findings of the recent Intergovernmental Panel on Climate Change (IPCC) report on the Paris Agreement’s aspirational target of limiting warming to a 1.5o C increase this century. All other countries wanted to include text that would “welcome” the IPCC report, which would indeed have had the effect of endorsing it. The group of four countries maintained that the report should simply be “noted.” In what has become classic climate diplomacy, the final language said that the Conference “welcomes the timely completion” of the report, not necessarily its findings.
The Bottom Line
Any sound judgment of the ultimate success or failure of the Katowice climate talks – and more important, the success or failure of the Paris Agreement – will depend upon future climate negotiations and upon the domestic policy actions of the key countries of the world. For that, it remains too soon to observe or even predict the long-term outcome.
A Few Additional References:
For a much more succinct assessment of the Katowice climate negotiations, see my column in The Conversation: “An Economist’s Take on the Poland Climate Conference.”
For a summary of the outcomes of the Katowice meetings, see this report from the Center for Climate and Energy Solutions.
For a detailed summary and assessment of the Katowice outcome, see Axel Michaelowa’s slide deck.
For an assessment that focuses on the process and outcome of the Katowice negotiations with regard to the role of carbon markets, see the COP24 Summary Report of the International Emissions Trading Association (IETA).
For a detailed description of the processes and outcomes on transparency, finance, and stock taking, see Jean Chemnick’s story in ClimateWire.