Klimaverhandlungen, Quelle: Öko-Institut

The Madrid climate talks failed to deliver. What now? [eng]

The 25th international climate conference in Madrid ended with a new record in the history of climate conferences: a delay of 44 hours. Despite the extra negotiation time, tangible results are hard to find. Countries failed to agree on a clear roadmap for enhancing the ambition of climate targets in 2020 and delayed several important decisions, in particular rules for international carbon market mechanisms. In this blog, the Oeko-Institut team provides a viewpoint from inside the negotiations.

Sitting for two weeks in the negotiation rooms of climate conferences is like living in a parallel universe. In this universe, countries have fundamentally divergent views and perceptions of the same reality, and yet can only move ahead by consensus. Some countries have different views but are trying to achieve ambitious outcomes, but others seem mainly busy with findings ways of delaying climate action. What makes it even more difficult is that climate talks are money talks: which proposal will benefit which country in particular? Who should pay for reducing emissions and adapting to climate change? And how can different interests be balanced in a fair way?

In the light of these challenges, the adoption of the 2015 Paris Agreement and its rulebook at the 2018 Katowice conference were landmark achievements in both the multilateral response to climate change and climate diplomacy. This year’s conference felt like having accidently been beamed in the wrong universe. While hundreds of thousands of people were marching in the streets of Madrid to call for bold action, some countries tabled proposals that would lead to even higher emissions. Moreover, the formal withdrawal of the United States – the second largest emitter of greenhouse gases – from the Paris Agreement cast a dark cloud over the meeting. As a result, many developing countries were antagonized and less willing to support progressive countries in their calls for ambitious rules and action. In the end, the least common denominator was postponement of key decisions.

But there is no time left. Global greenhouse gas emissions are increasing year on year, while we need immediate and steep emission reductions to still achieve the goals of the Paris Agreement to limit the global temperature increase to well below 2°C or even to 1.5°C. There is a tremendous gap between countries’ current mitigation efforts and the deep emission reductions needed to achieve these goals.

Paving the way for more ambitious targets in 2020

The main political decision from Madrid acknowledges “the growing urgency of enhancing ambition” and the “urgent need” to close the current mitigation gap. But the language remains weak when it comes to the need for countries to enhance the ambition of their current climate targets.

The Paris Agreement requires countries to update their nationally determined contributions (NDCs) every five years. Formally, however, only countries with 2025 targets need to update their NDC by 2020. This includes 13 countries which together cover less than one percent of global greenhouse gas emissions. All other countries could in theory wait until 2025 with updating their NDCs. This is way too late to achieve the goals of the Paris Agreement. In Madrid, some countries proposed language that clearly calls on countries to enhance the ambition of their current NDCs by 2020. The final language, however, only recalls the existing timeline and principles for updating NDCs and urges countries to „consider“ the mitigation gap. Well, let’s carefully consider this gap and its implications!

The main question in next year’s climate diplomacy will thus be: which countries are ready to voluntarily update their NDCs and commit to more ambitious 2030 targets? The EU and its Member States will play a pivotal role here. The announcements on the European Green Deal and on climate neutrality, made by the European Commission and the European Council during the second week of the Madrid conference, need to be turned into concrete actions and an update of the EU’s current 2030 target well before next year’s climate conference in Glasgow. In the best case, this could motivate other countries to ratchet up their climate targets.

Difficult talks on carbon markets

After failure to reach agreement at the 2018 conference in Katowice, the rules for international carbon markets under Article 6 of the Paris Agreement were a key focus in Madrid. As in previous years, these talks proved to be particular contentious. At the heart of the controversy are the interests of maintaining sovereignty in determining NDCs and flexibility in implementing carbon market approaches on the one hand, and ensuring environmental integrity, transparency and comparability of efforts on the other hand. On top of these political interests comes the challenge that some issues are technically rather complex.

In the last hours of the conference, a deal to balance the different interests seemed close but could once again not find consensus. In essence, the deal aimed to trade some banking of carbon credits from the Kyoto Protocol’s Clean Development Mechanism (CDM) against comprehensive rules for avoiding double counting of emission reductions.

When countries transfer emission reductions internationally, double counting of emission reductions is a key risk. Robust accounting rules are essential to ensure that only the buyer country can use the transferred emission reductions, while the seller should no longer be able to use them. Some countries – most vocally Brazil, India and Saudi-Arabia – argued against such accounting rules if the emission reductions are generated under a new crediting mechanism established under Article 6.4 of the Paris Agreement (commonly seen as the successor of the Kyoto Protocol’s CDM) or if they are used under a new global scheme to address emissions from international aviation (CORSIA). On this matter, the deal followed the demand from the far majority of countries that double counting should be avoided in all instances.

A similar group of countries, in particular Brazil and India, strongly advocated that CDM credits from the pre 2020 Kyoto Protocol era should be eligible for use to achieve NDCs under the post 2020 Paris Agreement era. This proposal was opposed by most countries, as they fear that this would lead to sustained low carbon prices, not incentivize new mitigation action and undermine the ambition of NDCs. Here the proposed deal provided flexibility to Brazil in India, as it would have allowed a limited, but yet undefined, number of CDM credits to be used towards NDCs.

The deal also aimed to strike a balance between the demand from developing countries that all carbon market approaches must contribute to generating financial support for adaptation, which was as opposed by all industrialized countries, and the demand from some developing countries that a fraction of the carbon credits are not used to achieve targets but to generate a direct benefit for atmosphere, which was also as opposed by all industrialized and some developing countries. Maybe some more flexibility by industrialized countries on these matters could help bringing all developing countries on board for having comprehensive and robust accounting rules.

Overall, the negotiations on international carbon markets showed the technical and political challenges for ensuring that carbon markets enhance and do not undermine ambition. The final negotiation texts included several loopholes that could have led to a significant increase in global emissions. Some of these matters are rather technical but could have considerable impacts. For example, the double counting provisions would have allowed countries to „pick and choose“ between two accounting approaches. Under some circumstances, buyer countries could have counted the total emission reductions they purchase, whereas the seller countries would only have counted half the reductions they sell.

We draw two important lessons from the negotiations on carbon market rules:

  • First, it became even clearer that Article 6 rules will not ensure integrity on their own. At best, they will provide a reasonably robust framework to engage in international carbon market approaches. The main responsibility for ensuring integrity will lie with the countries engaging in cooperative approaches. Much will depend on whether countries will use Article 6 to truly raise the ambition of their NDCs or as a cheap way out.
  • And second, the failure to reach agreement in Madrid could also be seen as a chance. A chance to sit back, look again at the rules, road-test them in the context of real word activities, and carefully assess their robustness. Loopholes that undermine the integrity of carbon markets will not serve anybody, also not those that demand more flexibility. They may ultimately lead to the abandonment of international carbon market approaches if confidence in them is undermined. In 10 years down the time, we researchers want to write success stories when we evaluate carbon market mechanisms, rather than describing how it went wrong. We had enough of these findings and should learn from them now.

Rule 16

Rule 16 is the last resort in climate negotiations. If countries cannot agree on anything – not even procedural conclusions – then rule 16 applies. It means that negotiations start from scratch at the next conference. Usually, rule 16 is only applied to highly contentious agenda items but not to ongoing technical work. But at this year’s conference, rule 16 was applied to more agenda items than usual.

While the first week saw reasonable progress on how countries should report their progress in achieving their NDCs, China blocked attempts to bring the negotiation text forward to the next conference, arguing that not enough progress was made on other agenda items, leading ultimately to no conclusions at all on this agenda item.

The discussions on emissions from international aviation and maritime transport had a similar fate. Countries discussed a call for submissions and considered establishing an informal dialogue on emissions from international transport at the next conference in May 2020 but China delayed these discussions by procedural interventions with the result that the countries could not agree on a conclusion text in the remaining time, so that rule 16 was applied for the fourth time in a row to this agenda item.

By the way, consensus decision-making goes back to 1992 when Saudi Arabia and other OPEC countries, well foreseeing that they may face less income from oil sales if countries get serious about climate change, insisted at the Rio Earth Summit that decisions in international climate negotiations can, different to other United Nation bodies, only be made by consensus. However, consensus can only be abandoned by consensus.

Outlook

We hope that Glasgow will provide a more favorable political landscape to make the progress that is urgently needed. We in the EU need to make sure that the EU delivers by updating its NDC. Maybe US voters can help us by electing an administration that announces its return to the Paris Agreement with a new climate pledge just ahead of the start of next year’s climate talks. And maybe more time, analysis and discussions will help to understand the merits and risks of different options for carbon market approaches and result in more robust rules and more support for developing countries.

Lambert Schneider, Lorenz Moosmann and Martin Cames are researchers at Öko-Institut and are part of the EU delegation at international climate negotiations. They support negotiations on transparent reporting, international carbon markets and emissions from aviation and maritime transportation.

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