Durban, South Africa. Home to the Shark Tank (where Kwazulu-Natal's rugby team, the Sharks, plays), extensive beaches and South Africa's busiest port. But not home to a new treaty to address climate change. COP-17 gets underway on Monday and the delegates haven't even met yet; some might think we are being somewhat premature. We think not. There is an election here next year. Europe is mired in a sovereign debt crisis. China and India will not derail their economic growth just to appease the industrialized West.
Notwithstanding that there will not be any legally binding agreement, the discussions in Durban are of some moment. Before we get to that, let's make sure we are all on the same page. COP-17 is the annual "Conference of the Parties", the yearly meeting of the United Nations Framework Convention on Climate Change. In diplomat-ese, it is also 7th Session of the Conference of the Parties serving as the Meeting of the Parties (CMP7) to the Kyoto Protocol. The ultimate objective of the Framework Convention is “to stabilise greenhouse gas concentrations at a level that will prevent dangerous human interference with the climate system”. Nearly all nations (including the United States) are members.
There are three primary subjects that will be considered in Durban:
1. Kyoto Protocol - This treaty entered into force in 2005 and established a regime to address greenhouse gas emissions around the world. There were two tiers: developed nations and developing nations. The standards for the first group were stricter than those for the second. While most nations signed on to the treaty, the United States (and Andorra, Afghanistan and South Sudan) did not. The United States' primary criticism is that the Protocol did not appropriately take into account the massive greenhouse gas contributions that are now coming from developing nations like China and India. Now Kyoto is set to expire. COP-17 is to set up the next stage. However, the United States, Russia and Japan have stated that they will not sign on for a second stage. The consensus of observers is that Kyoto will not be extended.
2. Green Climate Fund - At COP-15 (Copenhagen in 2009), developed nations promised to provide by 2020 $100 billion per year or more to help developing nations address climate change. As noted by the Overseas Development Institute in the United Kingdom, how to do this is not simple, even apart from finding the funds. The payors (wealthy nations) favor funds to reduce emissions and running funds through the World Bank (where large donors have more control). The payees (poorer nations) have a much more pragmatic approach. They favor direct access to funds and more adaptation than mitigation. To quote Greenpeace Africa: “The argument is that the developed countries, especially the United States and Western Europe, built their economies on dirty energy – principally coal. So they’re chiefly responsible for the greenhouse gases, such as carbon dioxide, that are causing climate change. Yet the worst of the climate change impacts are being felt in least developed countries. So there is definitely a strong argument for the developed countries to greatly help poorer countries to switch to renewable energies.” In October the UN Transitional Committee submitted a draft instrument on the structure of the Fund. News reports state that the United States does not support the draft.
3. REDD+ - Reducing emissions from deforestation and forest degradation is an additional path to addressing greenhouse gas emissions, separate and apart from combustion sources. Forest degradation is responsible for up to 20% of global greenhouse gas emissions. The UN organized a program in 2008 to address this problem. "Reducing Emissions from Deforestation and Forest Degradation (REDD) is an effort to create a financial value for the carbon stored in forests, offering incentives for developing countries to reduce emissions from forested lands and invest in low-carbon paths to sustainable development.“REDD+” goes beyond deforestation and forest degradation, and includes the role of conservation, sustainable management of forests and enhancement of forest carbon stocks." Some have claimed that REDD is "the fastest-moving portion of the whole climate negotiations." Some environmental groups want a portion of the Green Climate Fund earmarked for REDD.
So why does this have any significance for businesspeople in the United States? We start from the premise that climate change is occurring. No dispute about that. There will be significant changes as a result. No dispute about that either. And humans, as is their nature, will respond to the change in their habitat. Likewise, no dispute. In the jargon, there will be adaptation - armoring the shore against rising sea levels, further restrictions on water usage for drought areas, more hurricane-proof building codes, enhanced floodplain analysis - and there will be mitigation - efforts at reducing the emissions of greenhouse gases. For better or worse, the COP meetings set the rules of the mitigation game, and influence responses to adaptation. Although the Kyoto Protocol was not adopted in the United States, it led to the establishment of a billion dollar trading system in Europe on carbon credits. It influenced RGGI and the Western Climate Initiative here. We have written about how the European system is set to impact American air carriers at the first of the year. Down the road, we believe the nations of the world, including the United States, will come together to address climate change. The frameworks that are in place - built by the COP meetings - will inevitably be important in cementing and implementing the mutuality of purpose.