January 09, 2012
The Pros and Cons of COP17
by Robert Kropp
Nations agree to agree on a binding emissions reduction treaty, and the Green Climate Fund is
established, but details on both are lacking and may not prevent warming of more than two degrees
The narrative following last month's COP17 climate change conference in South Africa has
focused on positive developments, some of them unexpected. Thanks in large part to intensive
last-minute lobbying efforts by the European Union, China and India agreed to emissions limits for
the first time, and as a result an agreement was reached to establish binding commitments by 2015.
Implementation of the commitments, however, will not occur until 2020.
Negotiators also agreed that developed nations will mobilize $100 billion per year by
2020 for climate adaptation and mitigation in developing nations through the Gre
en Climate Fund. Thus far, the agreement merely sets out the legal structure of the Fund, and
not where the money is to come from.
Nevertheless, that an agreement on binding
commitments was reached at all came as something of a surprise, and in the view of some is enough
to provide corporations with a compelling reason for addressing climate change more aggressively in
their business operations.
This week, former UN climate chief Yvo de Boer told the UK-based Guardian, "The world is moving forward on climate change, with
business now able to seriously calculate the implications of a low-carbon economy."
international agreement for global action on climate change is within our reach and should
therefore be considered within every forward looking business strategy," de Boer continued.
And while funding for the Green Climate Fund was left unclear at the conference, de Boer said,
"The Fund will have a facility to fund private sector initiatives. It will seek actively to promote
business involvement and catalyze further public and private money."
The need for
increased clarity of government policy is shared by investors. According to Paul Clements-Hunt of
the United Nations Environment Program Finance
Initiative (UNEP FI), "85% of financing for climate change mitigation will come from private
A report issued in
September by three major investor climate change networks called on governments to work toward a
binding international treaty, support the development of international carbon markets, and support
funding mechanisms such as the Green Climate Fund.
In a report published during COP17, the Brookings Institute stated, "Private
sector investors will deploy their capabilities and capital on low-emission investments only to the
extent that risk-adjusted returns are positive and competitive."
The Green Climate Fund
provides for a private sector facility, enabling it to finance private sector mitigation and
adaptation activities at national, regional, and international levels. But according to the
Brookings Institute, strengthening "the enabling environment for private sector investment will be
critical, but not sufficient."
The Fund "should look to ways to use its funds to catalyze
the private sector more directly for scale-up and leverage."
Additional leverage is
necessary because, according to the recently published World Energy Outlook of the
International Energy Agency (IEA), $500 billion per year between 2010 and 2035 will be needed to
keep the increase in global average temperature below two degrees Celsius.
delaying until 2020 the implementation of legally binding limits makes it increasingly unlikely
that global temperature increases will be kept below two degrees Celsius. According to the IEA's
report, by 2017 the global environment will have locked in the entire carbon allowance of the
energy sector to 2035, unless action is taken immediately.
COP17 also extended a second
commitment period for the Kyoto Protocol, and it appears likely that the Clean Development Mechanism (CDM) will be extended as well. The
CDM allows developed nations to meet some of their emissions reduction obligations under the
Protocol through emissions reduction projects in developing countries.
On the other hand,
Japan and Russia have refused to accept emissions limits under a second commitment period, while
Canada has withdrawn from the process entirely. In 2007, Canada's greenhouse gas (GHG) emissions
were 26% higher than 1990 levels and 34% higher than the target it agreed to in the Protocol, and
faced fines for failing to reach its 2012 targets.
The increases in Canada's emissions are
due primarily to the extraction of oil from the tar sands in the province of Alberta. In addition
to emitting high levels of greenhouse gases (GHGs), the controversial practice requires the
consumption of three barrels of natural gas to create one barrel of oil and leaks approximately
three million gallons of contaminated water into surrounding rivers and groundwater each day.
So while positive signs did come out of COP17—in particular, an agreement on eventual binding
limits sends a signal to business and investors that governments seem ready to accept their
responsibilities to address climate change—the likelihood is, as Graham Sinclair of AfricaSIF recently told SocialFunds.com, "We're
going to blow past two degrees Celsius."
Following the conference, the Intergovernmental Panel on Climate Change (IPCC)—whose Fourth
Assessment Report established the two degrees Celsius limit—stated, "The series of agreements
reached on Sunday by nearly 200 countries in Durban lays a foundation for the global community to
tackle climate change."
However, IPCC continued, "The earlier action is taken, the cheaper
and more effective it will be."