What’s up in global climate negotiations?

While Australia has been very wrapped up in our own arguments about climate and energy policy in recent years, climate change is a global issue and trends in the international conversation tend to shape the local agenda. With an election coming up at which climate will once again be a key battleground between the parties, it’s timely to check in and see what is going on overseas.

For that reason Ai Group participated as an accredited observer in the 24th Conference of the Parties to the United Nations Framework Convention on Climate Change. This post outlines key developments at ‘COP24’ and provides links to notes that give a flavor of the wide array of topics discussed at the conference.

Business organisations including Ai Group (at right) present to attendees at COP24

What happened at COP24?

COP24 was held at Katowice in Poland from 2-15 December 2018, with the primary task of finalising the ‘Paris Rulebook’ – fleshed out rules for matters like emissions accounting and transparency to operationalise the high level deals reached in the Paris Agreement in 2015.

The Paris Agreement is holding up better than some feared after the Trump Administration announced its intention to exit; the US remains constructively involved pending exit in late 2020, and other countries have remained committed; while Brazil’s new President Jair Bolsonaro would like to exit, Brazil’s governance structures make this unlikely.

Ai Group participated in ‘COP24’ as an accredited observer of the negotiations and a participant in the wider conference of international businesses, scientists, nongovernmental organisations and national delegations. We presented to open and closed sessions on (largely negative) lessons from Australia’s experience of political dysfunction around climate policy, and made a statement to Ministers and negotiators on behalf of global business organisations at the closing plenary where the COP’s outcomes were agreed.

Key takeouts from COP24 include:

Agreement of the Paris Rulebook

COP24 was largely successful in its main task. Effective rules were agreed to operationalise most elements of the Paris Agreement. This involved overcoming two critical and linked political challenges: differentiation and finance. The UN process has been dogged by the question of whether and how to differentiate between developed and developing countries; equity suggests developed countries should do more to combat climate change, but in practice no response can succeed without full involvement by all.

Polish Secretary of State for Energy and COP24 President Michał Kurtyka celebrates agreement at COP24 (credit: IISD)

The Paris Agreement as fleshed out by the Rulebook largely ends differentiation in many crucial areas. All countries will be subject to the same accounting, reporting and scrutiny arrangements on their emissions reduction pledges. The price for this was that developed countries agreed to more scrutiny of their pledges on climate finance, and to start work in 2020 on a new global climate finance goal to succeed the current commitment to USD$100 billion per annum by 2020 (a figure which sums the whole value of public and private finance for low emissions development and adaptation).

International emissions trading

The big issue that was not finalised at COP24 was rules for international trade in emissions rights and offsets. This was deferred to the 2019 conference after differences between Brazil and other parties, especially the EU, proved unresolvable.

Brazil favours rules under which a country generating an offset and selling it to another country would not have to make a corresponding adjustment to their emissions inventory. Most see this as opening the door to double counting, undermining the integrity of emissions pledges. The issue may not be resolved at all given entrenched views. If so, there would be no successor to the current UN Clean Development Mechanism as a single global platform for offsetting.

However, nations could still construct bilateral and plurilateral offsetting or emissions trading arrangements, as long as they were consistent with principles in the Paris Agreement on integrity and avoidance of double counting. The upshot is that there is still no guidance on possible volumes and prices of international abatement available to Australia beyond 2020.

Raising ambition is the next focus

Paris established the expectation that every nation would pledge a commitment and periodically extend and intensify that pledge in a regular cycle. With the pieces largely in place to implement Paris, many stakeholders, nations and institutions are urging all parties to start raising ambition before 2020, when current pledges commence. Ambition involves emissions reduction, climate adaptation and resilience, climate finance, and technology and innovation.

UN Secretary-General António Guterres will convene a summit of heads of state and government in New York in September 2019 at which deeper pledges will be encouraged. This may well become a significant event in Australian politics, particularly if the ALP forms government after the next election and pursues their 45% 2030 target.

Deeper goals are taking shape but emissions are rising again

There was wide and intensive discussion of the Intergovernmental Panel on Climate Change Special Report on Global Warming of 1.5°C. Keeping warming to 2°C, as currently targeted, would still involve serious negative consequences such as increased heat stress, agricultural stress, inundation of island and coastal areas and nearly complete loss of current corals. The idea of strengthening the goal of climate policy to avoid warming above 1.5°C rather than 2°C is gaining currency and will keep coming up.

However, this goal would be extremely difficult to achieve. Stabilising temperatures requires stabilising global greenhouse gas concentrations, which in turn means that eventually greenhouse gas emissions must fall to net zero – a balance between emissions and sequestration. Achieving 1.5°C would require net zero around 2050, around two decades earlier than achieving 2°C. Current national pledges under Paris would see temperatures hit around 3°C by 2100 (and higher thereafter), and current action in many countries is insufficient to achieve even these pledges – the United States and China saw emissions rise in 2018, after declining for several years, though both are likely to reduce emissions again in 2019 as electricity transformation continues and China shifts away from emissions-heavy construction-led growth and stimulus. The tension between increasingly ambitious goals and inadequate action will grow.

The Polish pavilions at COP24 featured local products, controversially including coal-based jewellery

Just Transition agenda

Pursuing global net zero emissions will mean big changes to many industries – whether closure (likely including all coal generators and most coal production), scaleback (oil and, in most scenarios, gas production), or fundamental change in technology and operations (fossil-heavy industry, or potentially fossil power incorporating carbon capture and storage).

There is increasing discussion of how to manage these changes and their potential impacts on affected workers, supply chains and regional communities. The International Labor Organisation and global unions have taken a strong interest in a ‘Just Transition’ agenda; the Polish Presidency of COP24 has made a global statement on Just Transition a priority for 2019; global business has endorsed the concept; and in Australia the Federal ALP has announced a Just Transition Authority to coordinate a response to closures.

Beyond wind and solar

Wind and solar energy are primed for substantial further cost reductions and growth. Projections suggest that they will become an enormous part of the future energy system worldwide, particularly in the most aggressive emissions reduction scenarios. However, a wide range of work presented at COP24 highlights that other technologies will also play a role. Carbon capture and storage is seeing much activity, with generous expanded subsidies now available in the United States, a range of power and industrial CCS projects under development, and a big role for gas CCS and especially bioenergy CCS (BECCS) in IPCC mitigation scenarios. A very large source of net negative emissions would make staying within 1.5°C or 2°C much easier; BECCS is the most modellable option at present, with other technologies like direct air capture still at very early stages. Nuclear energy plays an important role in modelling, though nuclear projects in developed countries have been dogged by severe cost problems and cancellations.

Pro-nuclear youth activists and Melty the Polar Bear sing opera in the COP24 food court to promote nuclear solutions

Beyond electricity

Electricity sector emissions and the electrification of currently fuel-based activities have been much discussed and are very important. However, electricity is only part of the emissions picture (in Australia, around 30% of current emissions), and many activities may not be possible or practical to electrify (such as steelmaking, heavy freight and international transport, or some kinds of industrial heat).

Addressing emissions in these sectors may involve a range of technologies including CCS, biofuels, hydrogen and synthetic fuels. All face challenges of scale and speed of adjustment, but also present opportunities – particularly for Australia, which has great scalable potential for CCS and production of hydrogen from electrolysis with renewable energy (“green hydrogen”) or from fossils with CCS (“blue hydrogen”). More strategic attention to these issues is essential.

Australia’s 2018 emissions data, projections and targets broken out by sector. Electricity is around 30%

Further useful summaries of COP24 are available from the International Energy Agency and the International Institute for Sustainable Development.

COP24 side events

Ai Group attended a wide range of side events at COP24 where experts, industry, activists and governments spoke about issues of interest. Below are links to notes of each event, together with some high level take out points from most.

Science and impacts

What if we miss the target? Impacts of warming of 1.5C to 4C+

https://twitter.com/TennantReed/status/1072806279926689792

  • This event was a COP24 highlight.
  • Impacts are becoming better understood, with higher resolution models to consider flooding risk, agricultural impacts, human heat stress and more. Impacts rapidly increase beyond 1.5C. 2C is bad. 4C is terrible.
  • Nonlinear impacts and tipping points are becoming clearer too. These would radically increase damage and are not yet incorporated into any economic modelling of climate change.
  • At this point it seems inevitable that the 1.5C limit will be exceeded, with increasingly severe consequences.

Understanding the Intergovernmental Panel on Climate Change Special Report on Global Warming of 1.5C

https://twitter.com/TennantReed/status/1069890065621508096

  • The IPCC did not say that there are 12 years left to save the climate or that there is a bright line at 1.5C between a safe climate and an unsafe climate.
  • There are bad impacts at 1.5C and progressively worse ones above that. Every fraction of a degree matters. If we miss 1.5C (or 2C), action still matters.

Contributions of the research community to mitigation and adaptation

https://twitter.com/TennantReed/status/1069911231593660416

Sectoral issues

Business and Industry views on raising ambition (Schneider, Alstom, Standard & Poor’s, Natura)

https://twitter.com/TennantReed/status/1070611974734692352

  • Range of current and emerging zero carbon activities and opportunities in energy, transport, consumer products, finance of wider economy

The global aviation sector’s Carbon Offsetting and Reduction System for International Aviation (CORSIA)

https://twitter.com/TennantReed/status/1069928555558113281

  • Pilot phase 2021-23, full mandatory from 2029, targets 2% efficiency annually and carbon neutral growth
  • Includes market mechanism for trading and offsets – potential big source of demand for offsets

International Maritime Organisation strategy to reduce shipping emissions 50% by 2050

https://twitter.com/TennantReed/status/1069660784937066496

  • Targets 40% reduction in shipping CO2 intensity by 2030, 70% by 2050
  • Targets peaking of emissions ASAP and 50% absolute cut by 2050
  • Policy options still being considered – market mechanisms are needed but well behind ICAO in development

International transport emissions reduction – independent views

https://twitter.com/TennantReed/status/1071073261059039233

  • Aviation and maritime policies are weak and targets are far short of what’s needed
  • Reliance on offsets is problematic as quality is often low
  • Electrofuels are essential – batteries won’t be energy-dense enough, LNG is barely lower-carbon than oil-based fuels, biofuels have scale limits. Drop-in synthetic fuels needed but electricity required to make is huge.
  • Transport demand reductions also need to be considered

Climate Smart Agriculture – Identifying the Best Bets

https://twitter.com/TennantReed/status/1070351066540244992

Investment and finance

Scaling up investment in low carbon (partial notes)

https://twitter.com/TennantReed/status/1072149848525336576

  • Major investors, well beyond the social investment/activist subsector, have climate firmly on their agenda and are asking more from companies.

Technology

Powering Ambition: Energy and Technology Solutions to Build Low Carbon Economies

https://twitter.com/TennantReed/status/1071359472180830208

  • Standout presentation from Solar Impulse founder Bertrand Piccard on technology solutions and profitable approaches to solving climate
  • Energy efficiency in buildings and wider economy has high potential still
  • Clean molecules and clean heat are important, not just clean electricity

Carbon capture and geological storage – role in NDCs and mid century strategies

https://twitter.com/TennantReed/status/1070262454645604352

  • Lots happening on CCS – US tax incentives, projects around world, huge role for CCS with bioenergy in IPCC deep decarbonization scenarios

Renewables and energy storage: an ideal marriage for a low carbon world?

https://twitter.com/TennantReed/status/1070998238231257088

  • IPCC scenarios have wind and solar at up to 60% of global electricity supply in a range of 1.5C-compatible scenarios. Lots of variability to manage, storage helpful
  • Thermal energy storage may be cheap and important
  • In the absence of climate policies, energy storage can help fossils deal with their inflexibility just as it helps renewables deal with their variability
  • Lots of other insights on storage and energy tech.

Accelerating Energy Transition – International Energy Agency panel

https://twitter.com/TennantReed/status/1072834991615369217

  • Huge gap in IEA projections between current policies scenario and sustainable development scenario – lots of techs needed to bridge it inc big RE, CCS, nuclear, efficiency
  • Chinese concerns about climate, energy security and clean air have led to big action. Coal has dropped from 70% of the electricity mix to 60% since 2013, 7 points of gas and 3 points of renewables.
  • Range of updates from China, India, EU, global finance

Technology initiatives for net zero emissions – Direct Air Capture roadmap, integrated assessment and innovation

https://twitter.com/TennantReed/status/1072162118949056513

  • 1.5C or 2C likely needs carbon-negative technologies on a gigatonne (very large) scale.  Direct Air Capture of CO2 from the atmosphere, for use or storage, is one option.
  • DAC is at an early stage but there are real companies winning actual contracts to do the easiest applications. Much activity to come here.

National policies

US side event on producing and using fossil fuels

https://twitter.com/TennantReed/status/1072102385688985601

  • Sole official US event was deliberately controversial and heavily protested
  • Big plans for expanded fossil production (especially gas for export) were highlighted
  • CCS tax incentives are substantially expanding

National experience and plans in developing2050 climate strategies – Fiji, EU, France, Costa Rica, UK

https://twitter.com/TennantReed/status/1070295791128854529

  • Lots to learn about Long Term Strategies from other countries – Australia will need to do one by end 2020.

Future Earth in China – research on climate and mitigation

https://twitter.com/TennantReed/status/1073179486718447616

  • The presentation by Kejun Jiang on China’s scope to raise climate ambition was a COP24 highlight.
  • Substantial figures in China’s public policy conversation are pushing for substantially deeper emissions targets, off the back of analysis that finds these are highly affordable and achievable.

New climate policy approaches in China

https://twitter.com/TennantReed/status/1072889027257348099

China’s Belt and Road Initiative and green development (US panelist presentation an eye-opener)

https://twitter.com/TennantReed/status/1072859796309794817

  • China has a strong domestic green finance segment which accounts for 9% of total loans and has better credit quality.
  • China is pushing the notion of the Belt and Road Initiative as an environmental tool.
  • Critics find most energy-related external investment under the Belt and Road Initiative is in fossil energy. Rules and priorities are laxer/dirtier on external investment than domestic.

Multilateral assessment of the climate actions taken and planned by the EU and Canada

https://twitter.com/TennantReed/status/1069531543520116736

  • Update on policies in major economies and sample of grilling by others.

Comparing mitigation policy choices and levels of effort

https://twitter.com/TennantReed/status/1073251052827361280

  • Use of Integrated Assessment Models to try to compare the ‘effort’ implied by different national commitments under Paris. Some look easier than others.

Global business engagement in national policy development and raising ambition

https://twitter.com/TennantReed/status/1072072755447848960

  • Lessons from Australia, Morocco, Turkey, USA on how business gets involved in climate policy

International emissions accounting and trading

International trade in mitigation outcomes – elaborating and implementing Article 6 of the Paris Agreement

https://twitter.com/TennantReed/status/1072502535309664257

  • This was a highlight event of COP24.
  • Lots of insight into the basic value of international offsetting and trading (high), function of international emissions trading to date (many flaws) and options to improve in future (some good, others not worthwhile)
  • Practical insight from Chilean negotiator on dynamics in the Article 6 discussions and middle income country policymaking

New Paris Agreement market mechanisms – trading, offsets, Article 6 – critical panel

https://twitter.com/TennantReed/status/1069999452805623810

  • Trenchant critiques of offset schemes performance to date
  • Aggressive options for safeguards on future international emissions trading

Emissions accounting and avoiding double counting in Article 6 carbon markets

https://twitter.com/TennantReed/status/1070692786037579776

  • Practical options for a highly credible framework around trading

Lessons from the Clean Development Mechanism

https://twitter.com/TennantReed/status/1069604130564554755

Policy issues and design

Role of International Trade Law and Policy in Implementing and Strengthening the Paris Agreement

https://twitter.com/TennantReed/status/1070706769784160256

  • Hard to change trade law to support climate action, but much can be improved within existing frameworks
  • Carbon border adjustments can be designed to be wholly compatible with WTO

Legislating on climate change – an assessment of experiences and impacts of climate and energy laws

https://twitter.com/TennantReed/status/1072468858840248325

  • Much experience of national comprehensive climate laws. More countries are planning them now.
  • UK model (cross-party agreement to establish a nonpartisan authoritative body to advise on carbon budgets) has worked very well.

A new understanding of Paris-compatible climate action

https://twitter.com/TennantReed/status/1070321474903392257

  • Insights from 1.5C scenarios suggest a lens for considering suitability of new investments – some assets are clearly compatible, others could be depending on implementation, some (like new coal mines) are clearly incompatible.

Lessons from Nationally Determined Contributions for making climate action more transparent and ambitious

https://twitter.com/TennantReed/status/1069964236368035840

  • The first wave of NDCs was extremely varied in format and content. The process of preparing them enhanced domestic understanding and action, and iterating should help further.

Just Transition to a low carbon economy

https://twitter.com/TennantReed/status/1069556417491869697

  • Managing impacts of the emissions transition on workers in high carbon industries and the communities they are part of is an increasingly widely recognised priority
  • There are different views on the scope of just transition, from workers only to community continuity to radical economic transformation.

Title image: © cop24.gov.pl

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Tennant Reed
Tennant is Principal National Adviser – Public Policy at Ai Group. He has worked heavily on climate and energy issues, advising Ai Group’s Leaders’ Group on Energy and Climate Policy and developing reports on natural gas supply, energy prices and energy efficiency. He also works on a range of issues related to manufacturing and innovation. Previously he was an adviser in the Department of Prime Minister and Cabinet, working on fiscal policy, stimulus and infrastructure.

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