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Hopes and fears for Copenhagen climate change talks *The climate change summit in Copenhagen next week is the most ambitious yet. There is literally the world to play for, and success is far from a done deal. Roger Milne reports.* Next week, an estimated 20,000 people will converge on Copenhagen to decide how the world responds to escalating climate change over the next half century. In an unprecedented move, some 40 heads of state are due in the Danish capital including the US president and our own prime minister. This suggests that many countries are taking the talks very seriously indeed. This has been underlined by the fact that in the past fortnight, key players such as China and the US have made it clear they will arrive armed with significant proposals for emissions cuts. That said, the run-up to the event has been full of alarms and excursions, dire predictions of failure and some cautious optimism. *Miliband on carbon prices* Energy and climate change secretary Ed Miliband said recently: "There are reasons to be optimistic in the sense that lots of countries have responded to the [Copenhagen] deadline. What is tantalising about this is that lots of the jigsaw pieces are on the board for a decent agreement. The question is whether we have the political skill, imagination and globally the collective, not just will, but method to put it together." He has made it clear that an ambitious deal later this month could have a significant impact on carbon prices. This is because a tough agreement in Copenhagen would mean the European Union would sign up to 30 per cent emission cuts by 2020, a move that would mean the third phase of Europe's Emissions Trading Scheme (ETS) would have a much tighter cap. Miliband told MPs recently: "The most important thing we can do for a robust carbon price is to get agreement at Copenhagen. If the EU can move from 20 per cent to 30 per cent, we will have a more restrictive ETS regime and, therefore, a higher carbon price. If we are to give business the certainty it needs in terms of investment, we need a higher carbon price than we have at the moment and Copenhagen needs to make that happen." *Generators want clarity* Unambiguous messages are certainly what the energy sector wants from Copenhagen. David Porter, chief executive of the Association of Electricity Producers, says: "Electricity producers in the UK want to invest in low-carbon technologies. Companies are already making plans to develop new renewables, carbon capture and storage [CCS] demonstrations and new nuclear plant. "But the government must provide clarity and detail on how the UK is to achieve emissions targets to minimise investment risks. Any legally binding global climate change agreements resulting from Copenhagen must be able to translate into national policy." David Green, chief executive of the UK Business Council for Sustainable Energy, agrees. "It is vital we get a clear outcome from Copenhagen," he says. "Business needs messages that have the long-term clarity needed to secure investment, loud enough to be heard across a wide variety of boardrooms and legally underpinned to create the new framework for delivery that will be needed." He adds: "Central to this needs to be the emergence of a roadmap that shows governments are serious and will stick to things - that's why we have always preferred binding agreements, particularly if we are to get the transformation needed to deliver what needs to be done." *Success checklist* What must the Copenhagen meeting deliver to be judged a success? The UN officials have their own checklist. "The first is clarity on the mid-term emissions reduction targets that industrialised countries will commit to. Second, there must be clarity on the actions that developing countries could undertake to limit their greenhouse gases. Third, it must define stable and predictable financing to help the developing world reduce greeenhouse gas and adapt to the inevitable effects of climate change. And finally, it must identify institutions that will allow technology and finance to be deployed in a way that treats the developing countries as equal partners in the decision-making process." Certainly a tall order, but then again, the stakes are pretty high, too. *What's what in Copenhagen* The Copenhagen meeting is being held under the auspices of the United Nations and consists of two sets of meetings. The first is known officially as the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC). The UNFCCC was established at the so-called Earth Summit in Rio de Janeiro in 1992. The regular meetings of the 192 states who signed up are known as Conferences of the Parties (COPs) and each meeting is numbered. Copenhagen is COP 15. Copenhagen will also host a Meeting of the Parties to the Kyoto Protocol. Known as MOP 5, this involves 184 states. That protocol was negotiated in Japan in 1997. It runs out in 2012. Under this treaty, 37 industrialised countries and the European Community (known collectively as Annex I countries) have committed to reducing their greenhouse gas emissions by an average of 5 per cent by 2012 against 1990 levels. The other states (known as Annex II countries and including China, Brazil and India) were not obligated to make emissions cuts. The protocol requires countries to take domestic action to reduce emissions, but also allows them to achieve cuts abroad by using "market-based mechanisms". There are three. One is carbon trading. The others are known as Joint Implementation and the Clean Development Mechanism. *The elements of a deal* On the table at Copenhagen is a global agreement that the world needs to set a goal to keep global average temperature below 2C in comparison with pre-industrial levels. This is in line with scientific guidance that a temperature rise above that could have increasingly dangerous and unpredictable effects. To limit temperature rise, countries must agree to reduce global emissions by at least 50 per cent below 1990 levels by 2050. Central to this would be a deal on deforestation, crucial because nearly 20 per cent of the carbon dioxide released into the atmosphere by human action is the result of the destruction of forests. How would this goal be met? At Copenhagen, much of the negotiating will be about an agreed high-level declaration and a set of substantive agreements in the form of targets and timetables from developed countries and emissions reduction actions by developing countries. Financial commitments from the former to support the latter in their mitigation and adaptation efforts between now and 2020 would be a key element of the deal. Very large sums of money are being bandied about. One figure suggests that by 2020 the equivalent of $250 billion (£150 billion) will be required to help developing countries adapt to the impact of climate change and reduce their emissions. There is strong pressure for the developed countries (the US, the EU, Japan, Australia, Canada and Russia) to commit to reduce emissions by at least 80 per cent by 2050. That bloc might also commit to cutting collective emissions by 25-40 per cent below 1990 levels by 2020. This may be translated in economy-wide reduction targets known as "quantified emission reduction commitments". At this stage it is not clear what legal form the Copenhagen agreement will take. There are a number of proposals on the table. These include: an amended Kyoto Protocol; a new protocol; and a set of individual decisions on how to tackle climate change which enter into force in 2013. In fact, the outcome could be a combination of all these options. Many countries (especially from the developing world) are keen to maintain and strengthen the Kyoto Protocol. Others, notably the US, prefer to work closely within the framework of the United Nations Framework Convention on Climate Change. It is entirely conceivable that countries will fail to decide on a final legal form for an agreement but set a date for agreement and how it will be negotiated. It may yet turn out that the nailed-down legal deal is delivered at a continuation of COP 15 somewhere else in the world, possibly next June or at the next regular COP meeting, COP 16, scheduled for Mexico a year from now. *Linking the world's carbon trading systems* One area where Copenhagen should make a difference is in the move to more carbon trading. The UK government will turn up at the talks and push strongly for a global cap and trade network building on the EU Emissions Trading Scheme (ETS). That will not necessarily be universally welcomed. Major non-governmental organisations such as Friends of the Earth are sceptical. The green campaign group has just published a report claiming that plans to extend carbon markets could trigger a second sub-prime-style financial collapse. It argues that the majority of carbon trading is carried out by banks and investors who are packaging carbon credits into increasingly complex financial products similar to the "shadow finance" around sub-prime mortgages, which triggered the recent economic crash. The government, though, wants to scale up the flows of private sector finance to developing countries by increasing their access to a global market. It sees carbon trading as a key ingredient and has been lobbying hard to establish what it terms new "transitional" market mechanisms by 2020 at the latest. So under discussion at Copenhagen will be an international framework that supports the linking of emissions trading systems between developed countries by 2015. There will also be talks around the argument that new sectoral carbon trading systems should be established by 2020, at the latest, to allow the more economically advanced developing countries to access finance and cost-effective emissions reduction in their power sectors and potentially in some other sectors that use a lot of energy, such as cement, aluminium, iron and steel. Source: Karma Ockenden © Faversham House Group Ltd 2009. News articles may be copied or forwarded
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