Download Hot topics Global warming and climate change

Hot topics
Global warming and climate
change
COP17 and what it means for
business
Q: What is COP17?
A: The United Nations Framework
Convention on Climate Change (UNFCCC or
FCCC), ‘the convention’, is an international
environmental treaty that was produced
at the United Nations Conference on
Environment and Development (UNCED)
(informally known as the Earth Summit) in
Rio de Janeiro in 1992.
The convention aims to stabilise greenhouse
gas concentrations in the atmosphere at a
level that would prevent human activity from
causing dangerous interference with the
climate system – commonly believed to be
around 2°C above the pre-industrial global
average temperature.
In its original form, the convention set
no mandatory limits on greenhouse gas
emissions for individual nations and
contained no enforcement provisions. It is
therefore considered legally non-binding. The
convention did, however, include provisions
for updates (known as protocols) that would
set mandatory emission limits. The principal
update is the Kyoto Protocol adopted in 1997.
Since the UNFCCC came into force, the
Conference of the Parties (COP) to the
UNFCCC has been meeting annually to assess
progress in dealing with climate change.
Countries who sign up to the UNFCCC are
known as ‘parties’. There are currently 192
signed up parties.
The COP adopts decisions and resolutions,
published in reports of the COP. Successive
decisions taken by the COP make up a
detailed set of rules for practical and effective
implementation of the convention.
COP17 – Durban – 28 November to 9
December
The United Nations Climate Change Conference in
Durban will bring together representatives of the
world’s governments, international organisations
and civil society. The discussions will seek to advance
the implementation of the Convention and the Kyoto
Protocol, as well as other plans and agreements reached
at previous COP conferences
Principles underlying the UNFCCC
A key element of the UNFCCC is 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’. The principle
of ‘common but differentiated responsibility’ comprises two
fundamental duties:
• A common responsibility of parties to protect the
environment, or parts of it, at the national, regional and
global levels; and
• The need to take into account the different circumstances,
particularly each party’s contribution to the problem and its
ability to prevent, reduce and control the threat.
Another element underpinning the UNFCCC is the polluter
pays principle. This means that the party responsible for
producing pollution is responsible for paying for the damage
done to the natural environment.
Q: Why is the Kyoto Protocol important?
A: The Kyoto Protocol is an international agreement linked
to the UNFCCC. The major feature of the Kyoto Protocol is
that it sets binding targets for 37 industrialised countries and
the European community for reducing greenhouse gas (GHG)
emissions .These amount to an average of 5% against 1990
levels over the five-year period 2008-2012. Under the protocol,
countries’ actual emissions have to be monitored and precise
records have to be kept.
Recognising that developed countries are principally
responsible for the current high levels of GHG emissions in the
atmosphere as a result of more than 150 years of industrial
activity, the protocol places a heavier burden on developed
nations under the principle of ‘common but differentiated
responsibilities’.
Under the protocol, countries must meet their targets primarily
through national measures. However, it offers them an
additional means of meeting their targets by way of three
market-based mechanisms:
• Emissions trading;
• Clean development mechanism; and
• Joint implementation.
These mechanisms are aimed at helping to stimulate green
investment and helping parties to meet their emission targets
in a cost-effective way.
Key terms
Emissions trading
The Kyoto Protocol allows countries that have emission
units to spare (emissions permitted them but not used)
to sell this excess capacity to countries that are over their
targets. This creates a new commodity in the form of
emission reductions or removals. Since carbon dioxide
is the principal greenhouse gas, people speak simply of
trading in carbon. Carbon is now tracked and traded like
any other commodity in what is known as the ‘carbon
market’.
Clean development mechanism (CDM)
The CDM allows a country with an emission-reduction
or emission-limitation commitment under the Kyoto
Protocol to implement emission-reduction projects in
developing countries. Such projects can earn saleable
certified emission reduction (CER) credits, each
equivalent to one tonne of CO2, which can be counted
towards meeting Kyoto targets. The mechanism is
seen by many as a trailblazer as it is the first global,
environmental investment and credit scheme of its kind,
providing a standardised emissions offset instrument in
the form of CERs.
Joint implementation (JI)
This mechanism allows a country with an emission
reduction or limitation commitment under the Kyoto
Protocol (Annex B party) to earn emission reduction units
(ERUs) from an emission-reduction or emission removal
project in another Annex B party, each equivalent to one
tonne of CO2, which can be counted towards meeting
its Kyoto target. Joint implementation offers parties a
flexible and cost-efficient means of fulfilling a part of
their Kyoto commitments, while the host party benefits
from foreign investment and technology transfer.
The Kyoto Protocol, like the UNFCCC, is designed to assist
countries in adapting to the adverse effects of climate change.
It facilitates the development and deployment of interventions
that can help increase resilience to the impacts of climate
change. The Adaptation Fund was established to finance
adaptation projects and programmes in developing countries
that are parties to the Kyoto Protocol. The fund is financed
mainly by the proceeds of CDM projects.
Significance of the Durban Conference
Since the initial commitment period for the Kyoto
Protocol ends in 2012, a primary focus of COP 17 will
be to negotiate and ratify a new global climate change
framework that can deliver the emission reductions that
are needed to meet the targets set out in the convention.
Q: How is South Africa preparing for COP
17?
A: Government
The Minister of Water and Environmental Affairs, Edna Molewa,
committed to engaging all South Africans and specifically
business in formulating South Africa’s negotiating positions for
COP17, at a series of meeting held in April 2011.
The Minister said she hoped to raise the general awareness of
all South Africans around climate change and has challenged
business and public interest groups to assist in this mobilisation.
South Africa’s response to climate change has two objectives:
• To make a fair contribution to the global effort to stabilise
greenhouse gas concentrations so as to ensure that average
global temperature do not increase to dangerous levels; and
• To effectively manage unavoidable climate change impacts
through interventions that build and sustain South Africa’s
social, economic and environmental resilience and emergency
response capacity.
The global response to climate change is guided by the UNFCCC
and the Kyoto Protocol. South Africa has committed to engage
in the UNFCCC with a view to securing a binding, multilateral
international agreement that is inclusive, fair and effective in
dealing with climate change.
South Africa has taken the position that the international regime
should balance priorities between adaptation and mitigation
responses, striking an appropriate balance between development
and climate responses that recognise the development needs of
developing countries.
The Department of Environmental Affairs (DEA) released the
National Climate Change Response White Paper in October 2011.
The White Paper will inform the country’s climate change policy
and the DEA has indicated that it will put forward a legislative,
regulatory and fiscal package dealing with climate change by
2012.
The policy statement in the White Paper states that South Africa
will ensure ‘the prioritisation of mitigation interventions that
significantly contribute to a peak, plateau and decline emission
trajectory, where greenhouse gas (GHG) emissions peak in 2020
to 2025 at 34% and 42% respectively below a business as usual
baseline, plateau to 2035 and begin declining in absolute terms
from 2036 onwards’.
Business
Organised business’ preparation for COP17 have been
spearheaded by the National Business Initiative (NBI), a
voluntary group of leading national and multi-national
companies, working together towards sustainable growth and
development in South.
In preparation for the Durban conference, the COP17 CEO
Business Forum was established in March 2011 as a vehicle for
businesses in South Africa to become directly engaged in climate
change mitigation and adaptation. The forum comprises the
chief executive officers of 40 companies, including leading JSElisted companies and state-owned enterprises. These include
Impala Platinum, Eskom and Sasol, whose CEOs also jointly chair
the forum.
The main objectives of the forum are: • To improve knowledge about climate change;
• To become active in policy discussions and partner more
closely with the Government in tackling climate change.
In so doing, the forum aims to ensure that as South Africa
transitions to a low-carbon economy, the country increases
its competitiveness and creates new industries and jobs; and • To ensure that COP17 is a successful event.
The forum was established as a short-term initiative in the
build-up to COP17 and will be disbanded after the conference
is concluded. Given its limited window of opportunity, the
forum has set boundaries to its activities. Its main undertaking
is to engage with government structures such as the DEA and
National Treasury on policies such as the National Climate
Change Response White Paper and the carbon tax proposals.
While the creation of the forum reflects the growing
seriousness with which business leaders in South Africa
are viewing climate change, what has been lacking is
representation of and engagement with SMMEs, which,
according to the Government account for more than half of
national gross domestic product. Since the forum will not exist
after COP17, this is an issue that will need to be taken up by
entities such as the National Business Initiative and Business
Unity South Africa.
Meanwhile, the NBI presented its draft plan for COP 17 at the
end of May 2011, summarised below:
Core purpose of business engagement in
COP17
To show the commitment of South African business and
promote the efforts of South African business in reducing the
impact of climate change by:
• Building confidence in business and attracting international
investment;
• Establishing trust between South African business and the
South African Government; and
• Fostering a sense that solving climate change is going to
need the collective effort of all stakeholders.
Feedback on this plan included suggestions to:
• Show that South African business is committed to preventing
climate change by showing what it is doing and pointing out
the gaps;
• Showcasing the fat that business in South Africa recognises
it’s role in being part of a solution in which many
stakeholders need to collaborate;
• Highligh the fact that business is capable of and is working
to solve the problem of climate change, but that it also needs
time and incentives to achieve this; and
• Emphasise the need to support business with its socioeconomic obligations in relation to climate change.
Q: What are the key themes being spoken about at COP 17?
A: Based on our discussions with role-players and PWC
globally, the following topics are anticipated to be a focus at
COP 17:
• Green tax;
• Green finance;
• Green economy;
• Green energy; and
PwC contacts
• Green agriculture and land use
Lookout for more PwC thought leadership on these topics
in the coming months.
Q: What opportunities are there for
business?
A: COP17 offers opportunities for South African business to:
• Enhance understanding and awareness of the climate
change issue and negotiations;
• Interact with SA government around negotiating issues – be
part of the solution;
• Interact with key players across sectors;
• Interact with international business organisations and
companies; and
• Showcase South African businesses’ work around climate
change.
Jayne Mammatt
Climate Change Project Lead
+27 (11) 797 4128
[email protected]
Chantal van der Watt
Climate Change Project Support
+27 (11) 797 5541
[email protected]
Kyle Mandy
Tax and Climate Change
+27 (11) 797 4977
[email protected]
Luther Erasmus
Water and Agriculture
+27 (11) 797 4106
[email protected]
Kasief Isaacs
Renewable Energy
+27 (21) 529 2741
[email protected]
pwc.com/za
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