Download SP_prop_pres_nairobi - BASIC

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COP-12 COP/MOP-2 Side Event
11 November 2006
The Sao Paulo Proposal
for an Agreement on Future International
Climate Policy
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BASIC Project
Building and Supporting Institutional Capacities in Climate
Change
Initially a 2.5 year project to:
– Support implementation of UNFCCC/KP by Brazil, India
China and South Africa
– Assist developing countries with post 2012 climate
negotiations
– Link national & international components of climate policy
Main funding: European Commission
Extra funding from UK DEFRA, Australia plus co-financing/in-kind
support from IDS & WRI, China, IDDRI
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Building And Strengthening Institutional
Capacities in Climate Change
Network of over 20 research & policy institutions, mostly from
BASIC countries, working with international experts on wide range
of issues:
– Task 1: Mitigation, SD & energy, modelling (China Team)
– Task 2: Vulnerability & adaptation (India Team)
– Task 3: Carbon markets & national institutional issues (S.Africa
Team)
– Task 4: Future international climate policy & negotiations
(Brazil Team)
– Task 5: Establishing a DC focused experts network (Full Team)
Project activities comprise a mix of policy analysis, briefings,
workshops, conferences, mentoring and training
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Environment Directorate
General of the European
Commission
MARGAREE
Consultants Inc.
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Sao Paulo Proposal
Not a consensus BASIC document & not the views of
BASIC governments but part of on-going work under
BASIC Task 4 which focuses on:
– Designing international climate change policy and
enhancing negotiations skills (BASIC Brazil Team)
– Still under development & further discussion
Sao Paulo workshop in August 2006:first discussion of
this “package” – more detailed work on-going
Papers and presentations from Sao Paulo & other
BASIC workshops download from:
: http://www.basic-project.net/;
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Summary of Core Proposal Elements
Goal for the Regime
Medium and Long Term Goals
Annex I/B Parties Quantified Commitments
Automatic Extension of Annex I/B Commitments
Options for Non-Annex I Parties
Limits on Cumulative Transfers of CERs and VERs
by Non-Annex I Parties
Carbon Markets
Adaptation
Technology
Universality & Stability
Summary
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Goal for the Regime
Create a comprehensive, stable,
long-term, universal regime to
address climate change
Respect principles of equity and
common but differentiated
responsibilities and respective
capabilities
Establish stable, long-term regime
for technological and structural
change
Flexibility to cope with changing
circumstances
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Medium & Long Term Goals
Goals help assess progress toward UNFCCC’ ultimate
objective in five year reviews
Possible goals
– a maximum temperature increase of 2oC by 2100
– a maximum atmospheric concentration of CO2 such as 450 or
550 ppmv by 2050
– greenhouse gas emissions by Annex I Parties at least 15 per
cent below their combined 1990 emissions in 2020
– maximum loss of natural ecosystems of X% by [date ]
– Others?
Parties’ commitments are not directly linked to these goals
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Annex I/B Parties Quantified Commitments
2008-2012: Kyoto commitments and compliance
features retained
2013-2018: annual commitments, expanded to
cover net LULUCF emissions
More flexibility in the form of the annual
commitments
Automatic 1 year extension of annual
commitments of all Annex I/B Parties each year
With unrestricted carryover of all compliance
units (proposed) annual commitments are
equivalent to five year commitment periods
Compliance still assessed at five year intervals
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Annex I/B Parties Quantified Commitments
Annex I/B Parties negotiate absolute annual
emission limits for 2013 through 2018
Then each Party may express its commitment as
a combination of:
– an absolute emissions limit (tCO2e/year);
– emissions intensity limit (tCO2e/unit GDP);
– new and additional funding (USD per year) to
a maximum of 10% of its commitment (based
on international carbon price)
All intended to have same stringency over time
– intensity coefficient declines by 3% per year
– funding rises by annual increase of real GDP
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Automatic Extension of Annex I/B Commitments
Post 2018, commitments automatically
extended 1 year every year e.g. 2019
commitments agreed in 2013
Commitments for next year (2019)
reduced by equivalent of 1% absolute
(from 2018) if compliance in past year
(2012) easier or less costly
Otherwise commitments for next year
unchanged from previous year (2018)
Annual commitments always known for
next 5 years with a range of 0 to 5%
reduction for the following 5 years
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Automatic Extension of Annex I/B Commitments
Annex I/B commitments for next year (2019)
more stringent if either:
- Total quantity of compliance units in all
registries carried over has increased over
the past year (2012) or
- The international price of AAUs has not
increased by more than inflation during the
past year (2012)
Enforcement Branch of Compliance
Committee makes determination annually
before COP/MOP session
Same adjustment to commitment of every
Annex I/B Party
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Economic Hardship
An Annex I/B Party whose real GDP has declined by
more than 1% during a year may request that its target
be equal to its emissions for that year
An Annex I/B Party may request a change in the form or
level of its commitment. Needs approval of ¾ of Parties
present and voting at next COP/MOP.
Financial payments divided between Adaptation and
Technology Funds by COP/MOP decision
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Options for Non-Annex I Parties
Principles of equity and common but differentiated
responsibilities and respective capacities mean NonAnnex I Parties adopt Annex I/B commitments later
Annex I/B type commitments not appropriate: limited
capacity, rapid economic, social and demographic
changes
For developing countries CC is part of many other
problems
Options for Non-Annex I Parties:
– Host CDM projects
– Quantify emission reductions due to sustainable
development policies (SD-PAMs)
– Adopt sectoral (excluding LULUCF) or national
“no lose” commitment
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Non–Annex I Parties SD-PAMs
Create a new annex listing Non-Annex I Parties that agree to
quantify and report the emission reductions achieved by their SD
actions
Methodologies developed by e.g. Consultative Group of Experts;
results reported in national communications
Actions earn political recognition but do not generate tradable credits
(programmatic CDM and “no lose” commitments can be used for
that)
Participating Parties can use simplified procedures to access
Adaptation and Technology Funding Mechanisms
By lowering per capita emissions, SD actions defer the date at which
a Party reaches its limit on cumulative transfers
Secretariat produces compilation & synthesis report on SDPAMs with quantified reductions where possible
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Non–Annex I Parties “No Lose” Commitments
A Non-Annex I Party may propose a sectoral (except LULUCF)
or national “no lose” commitment
Proposal reviewed by CDM Executive Board which makes a
recommendation to COP/MOP
– Commitment must be more stringent that emissions that
would otherwise occur
– Methodology for calculating emissions achieved must be
suitable (address possible leakage, double-counting)
Must be accepted by ¾ of Parties present and voting
Party earns Voluntary Emission reductions (VERs, equivalent
to CERs) for difference between commitment and actual
emissions certified by an accredited DOE
Commitment must be maintained until Party becomes an
Annex I/B Party
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Limits on Cumulative Transfers of CERs and VERs
by Non–Annex I Parties
An overall limit on transfers of CERs and VERs
by Non-Annex I Parties since 2005 is set
Overall limit allocated among Non-Annex I
Parties based on responsibility, capability and
potential to mitigate; allocation revised every 5
years to reflect changing circumstances
Once the cumulative transfers by a non-Annex I
Party reach its current limit, it is expected to
adopt an Annex I/B emissions commitment
If it decides not to, it is deemed to withdraw and
loses access to benefits
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Limits on Cumulative Transfers of CERs and VERs
by Non–Annex I Parties
Limit of 20 billion tCO2e means 16 to 40 years before
Non-Annex I Parties adopt commitments
Share of each Non-Annex I Party based on its:
– Population
– Responsibility – emissions per capita since 1990
– Capability – current GDP per capita
– Mitigation potential – current emissions per capita
Higher cumulative emissions, GDP, current emissions
per capita = lower share of the limit
Larger population = bigger share of the limit
CERs and VERs retained by host government do not
count as transfers
A Party can reach its limit with no transfers due to
increases in per capita emissions, GDP
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Limits on Cumulative Transfers of CERs and VERs
by Non–Annex I Parties
Ensures Annex I/B Parties undertake significant
commitments before Non-Annex I do so
Allows Non-Annex I Parties to participate in
carbon market and use Adaptation and
Technology Funds before adopting
commitments
Creates incentive for Non-Annex I Parties to
adopt SD policies that reduce per capita
emissions
Equitable distribution of CDM benefits in the
long run
Recognizes changing circumstances of
individual Non-Annex I Parties
Gives each Party some control over when it
“graduates” to Annex I/B
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Limits on Cumulative Transfers of CERs and VERs by
Non–Annex I Parties
Limits set and revised by Facilitative Branch of the
Compliance Committee using procedure approved by
COP/MOP
Countries likely to have a limit of zero based on recent data
include: Cyprus, Israel, Singapore and wealthier OPEC countries
Countries likely to reach their limits soon based on CDM projects
in the pipeline include South Korea (2 years) and Chile (12
years)
Other DCs can use CDM/VERs for another 20-100 years
tCERs and lCERs also count toward the limit
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Carbon Markets
Clean Development Mechanism continues
with minor changes
– current CDM levy could provide
€325million up to 2012
– 2% levy extended to VERs
2% levy on Joint Implementation and to
International Emissions Trading transfers
out of the issuing registry for Technology Fund
Failure to ratify by 30 Sept 2012 stops
issuance and transfer of all units 31 Dec 2012
to encourage entry into force on 1 Jan 2013
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Compliance
Compliance system retained
Compliance of Annex I/B targets
assessed every five year
Penalty remains the same: 30% of
excess emissions deducted from
AAUs in the year after noncompliance determined
Payment of financial component
must be received in full before
compliance deadline
Adaptation Proposals
Inclusion increases chances of agreement
A new Adaptation Committee of Experts
(ACE) to provide coherence/guidance
A pilot phase of “adaptation activities
implemented cooperatively” in 2008
A “pilot phase” shifts emphasis from
– Inaction/workshops and
– Funding stand alone projects
– towards learning-based policy approach
that promotes implementation of
programmatic action
Adaptation Proposals
All Parties revise design parameters and standards for
infrastructure and equipment to address climate change, energy
efficiency and water efficiency
Develop an insurance or risk management mechanism to address
the impacts of extreme weather events by 2010
Develop vulnerability & adaptation tools & methods to target
vulnerable human populations and natural ecosystems
Focus financial support by the Adaptation Fund on assisting the
most vulnerable human populations and natural ecosystems
Increased funding goes to AF from share of the proceeds from
CDM, JI and ET & from Annex I/B financial commitments
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Technology Transfer
Proposal distinguishes between existing & new
technologies;
Most existing technologies are proprietary so
transfer will occur on commercial terms
Work with qualified institutions to improve access
to information on available technologies
Any Party can complain to the Facilitative Branch
that another Party is restricting technology
transfer
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Technology Research and Development
New Technology Funding Mechanism
resourced by JI/ET levy, & funds from Annex
I/B Parties’ financial commitments
Funding provided to Non-Annex I Parties to:
– Participate in international research projects to
develop technologies to reduce emissions of to
adapt to climate change
– Buy down the cost of mitigation or adaptation
technologies to enhance their diffusion
Technology Funding Mechanism to recommend to
COP/MOP how best to use any intellectual
property rights acquired
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Universality and Stability
Memoranda of Understanding (MOUs) could also be agreed to
extend scope of regime by including agreements covering:
– aviation and marine
– global industries e.g. aluminium
Non-Parties
– Proposal allows national or sub-national governments of
non-Parties to agree a MOU which could ensure they are
making comparable efforts & do not benefit from staying
out (as the Montreal Protocol does)
– USA could approve MOU easier than treaty ratification
Trade restrictions could be imposed on countries that are not
Parties and do not have an MOU by ¾ vote of the COP/MOP
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Legal Form of the Agreement
Propose amendment of Kyoto Protocol and COP/MOP
decisions
– Advantage – retains existing institutional structures
– Disadvantages – Non-Parties are observers during the
negotiations and need to ratify the Protocol to be part of
the new agreement
New Protocol to the Convention also possible. Opposite
advantages and disadvantages. Also raises numerous
transition issues
Mix of Convention and Kyoto Protocol actions also possible but
more complex
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Summary
Elements that may appeal to Annex I/B Parties
Future commitments by Non-Annex I Parties
Flexibility in the form of their emissions limitation commitments
Predictable emissions limitation commitments for the next
decade
Relief for economic hardship
Flexible participation through an MOU
Likelihood of a stable, long-term, universal regime
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Summary
Elements that may appeal to Non-Annex I Parties
Likelihood of a stable, long-term, universal regime reducing avoidable
climate risks
Equity - Annex I Parties continue to take the lead in combating climate
change
Equity: Enhanced geographical benefits for LDCs/SIDs as more CDM
goes to them
Equity: Emissions limitation commitments by Non-Annex I Parties
depend on stringency of Annex I commitments
Additional options for participation by Non-Annex I Parties
Enhanced approach to adaptation assistance
Financial support for technology research and development