Climate Change Business Forum’s organised the Post Poznań Review to report and analyze the United Nations Climate Change Conference in Poznań that spanned the first twelve days of December 2008.
- The Honorable CY Leung, CCBF’s Patron Chair and Chairman of DTZ Asia Pacific, welcomed the panel and guests and summarized CCBF’s role as a leadership platform for greenhouse gas (GHG) emissions reduction in Hong Kong with a focus on research, sharing of best practice and communications.
- Ciara Shannon, CCBF’s Project Director, provided context by explaining that the purpose of the UNFCCC 14th Conference of the Parties (COP) in Poznań was to build on the Bali Roadmap (2007) and to lay the groundwork for negotiations for a post-Kyoto international agreement to be decided in Copenhagen next December. While Bali focused on mitigation’s broader aspects, major outcomes for Poznań included the resolution on the legal capacity of the Adaptation Fund, agreement on the Poznań Strategic Programme on Technology Transfer, and advances in discussions on reducing emissions from deforestation and forest degradation (REDD). Ms Shannon mentioned that approximately US$60-80 million was agreed for the adaptation fund but that this was not nearly enough. (The adaptation fund is currently funded through a 2% levy on Certified Emission Reductions issued under the Clean Development Mechanism (CDM).) Ms Shannon then outlined the three major obstacles to technology transfer as: (1) deciding what “hard” technology to transfer and how; (2) overcoming intellectual property rights; (3) developing the capacity to transfer “soft” technology — the engineering and knowledge needed to utilize tangible technology. Overall, Ms. Shannon contended that the deal breaker for Copenhagen will revolve around funding. Optimistically, she foresaw the funds being found and was encouraged by the EU’s Climate Deal announced at Poznań and by statements from the US’s President-elect Obama.
- Sophie Le Clue, Director of ADM Capital Foundation, summarized Poznań’s progress on reducing emissions from deforestation and forest degradation (REDD). While Hong Kong’s current focus is buildings and transport, she emphasized the rapid deforestation nearby in Southeast Asia. Forests provide invaluable ecosystem services and their destruction leads to large net emissions of carbon dioxide. Moreover, forests support many of the world’s poverty-stricken people, adding a development aspect to forest preservation. Poznań, Le Clue described, focused on preparing REDD for incorporation into the action plan. Forest types require definitions. Deforestation rates need to be compared to deforested areas. Once project levels and boundaries are set, leakage issues (protection in one area causing deforestation in another) arise and need resolution along with requirements for additionality. In addition, ethnic and indigenous groups’ rights need to be considered. Beyond the methodology, Le Clue added, financing from both market and non-market funds was being considered. Despite the challenges, she contended that in 2009 REDD must be integrated into the post-Kyoto agreements to achieve an effective next step.
- Dr Gail Kendall, Director of Group Environmental Affairs for CLP Holdings Limited, attended Poznań as a representative from the World Business Council on Sustainable Development and reviewed “Business Day,” a side event at the COP 14 which focused on business’s role in combating climate change, specifically from the electricity sector’s viewpoint. Generally, she expressed that business will play an integral role in both mitigation and adaptation because much of the investment for technology transfer and REDD will need to be made in a cost-effective manner by businesses. After summarizing electricity generation’s very large impact on anthropogenic greenhouse gas emissions (approximately 40%), she conveyed its potential, notably that electricity can be generated from low-carbon sources and thus will have a major role in the future economy. However, Dr. Kendall reiterated the need for a total global cap on emissions and a trajectory to achieve that goal. This international agreement should be applied by national governments; and the cost of carbon needs to be incorporated into the economy, she continued. While the electricity sector is typically driven by national policy, she believes that international goals will flow down through national policies. More specifically, she emphasized, carbon capture and sequestration (CCS) will be very necessary for the electricity sector to continue providing power. Currently CCS technology is not available in the marketplace; and its use will always raise costs, so there must be research and development now must bring the cost down later. While she was able to present these views to the negotiators, overall Dr. Kendall presented a more cautious view of the negotiations. Throughout, she stressed that the price of carbon is not high enough and that the US will hopefully give negotiations much needed motivation. Even given a hypothetical price path of carbon rising from 10 to 80 dollars per tonne by 2025, she still stated that the markets would not unilaterally pursue CCS. Dr. Kendall proposed, government intervention and public-private cooperation on CCS research and development will be necessary, along with renewable energy targets, to shift to a low-carbon economy.
- Dominic Purvis, Cathay Pacific’s General Manager of Environmental Affairs summarized the Poznań Communiqué, an open letter signed by business and corporate leaders of over 140 global companies. The Communiqué outlines the climate change’s “societal, environmental, and economic risks” and asserts that decisive action and commitments will stimulate economic growth. The Communiqué calls for a science-based agreement to set a long-term global emissions pathway requiring both developed countries to make immediate, economy-wide emission reductions and developing countries to draft emissions reduction plans. They also had more specific requests: a robust GHG market, non-price intervention policies, a revised Clean Development Mechanism (CDM), technology transfer and adaptation frameworks for developing countries, the vital integration of REDD, and global approach to regulating emissions from shipping and aviation. In return, the signatory companies hope to engage governments to help develop national and international measures to shift to a low-carbon economy. Cathay signed, Mr. Purvis explained, to provide some pressure on the negotiations while providing leadership to show that business, especially Asian business, can and must engage in the solution. By working with regulators, badly-designed schemes (i.e. the EU-ETS as applied to airlines) can be avoided and companies can instead gain from the opportunities the new agreement will provide.
- Christine Loh, CEO of Civic Exchange, framed the negotiations as an extraordinary learning year for the world. Governments, business, and NGOs will all be focused with the common goal of reaching a climate deal. The players will need to work together through multiple, complex sustained conversations. The lessons learned simply in creating efficient meetings will be an important step forward, Ms. Loh explained. In addition, she noted that businesses have adopted the role of NGOs in order to participate in the discussion, highlighting their willingness to participate in these conversations. Ms. Loh then moved into three more specific observations. The first is that the earth’s voice has been missing from past negotiations, and it best represented by science being incorporated more regularly. Even now, she stated, we need to make deeper cuts than we planned for two to three years ago. Her second observation was that developed countries approach the negotiations focused on markets and technology while developing countries are still focused on education, public and environmental health, and economic progress. As our current development path is energy- and carbon-intensive, Ms. Loh explained, we need to find a method to decarbonize the path. Her third observation attempted to provide a solution, through special relationships, like between the U.S. and China or between cities, similar regions, and congruent sectors. Ms. Loh proposed that these relationships can help spread best practices and ease development in a low-carbon world. In addition, she emphasized that Asia can and should be actively involved in the negotiations.
- Christopher Tung, a partner at the law firm Mallesons Stephen Jaques, provided a legal viewpoint. Before delving into specifics, he framed climate change issues as only one aspect of general sustainability which will require many consistently improving instruments. Law and policy, he stated, is only part of the toolbox of solutions. Mr. Tung suggested that the EU-ETS will be improved and that with increased clarity, business will better understand the risk and be able to invest. At Poznań, he did not see any major breakthrough, excepting the technology transfer and adaptation fund proposals. He expressed hope that if the draft text is tabled by June of 2009, it would provide additional clarity for both policy initiatives and business investment. He noted improvements in the CDM including both an updated definition of additionality and more consistent standards for verification with the new manual. In addition, Mr. Tung reminded that other agreements are also progressing. Kyoto is not going to expire; and its signatories are bound to a second commitment period, to be proposed by next March. The EU reaffirmed its commitment to reducing its emissions 20% by 2020 and is already planning for Phase Three which covers 2012 to 2020. This longer period, he highlighted, is a business sector reform that extends the investment horizon from five to eight years. EU-ETS also tightened standards for the electricity sector, planned for incorporation of airlines, and set new regulations to decrease emissions from automobiles. These improvements, he qualified, were part of the status quo; the EU driving the carbon market. He predicted a large shift if the US becomes involved.
- Liam Salter, Business Development Director of RESET (HK) discussed both the international negotiations and effects on the carbon markets and Hong Kong. Mr. Salter emphasized that Poznań was a working meeting, which presented many tasks with many opportunities for derailment and little media and scrutiny to ensure everything stays on track. While Poznań avoided major derailments, he observed that schedules are slipping and work is accumulating. He also saw a new rhetoric enter the international arena with small island states discussing survival and calling for a limit to 1.5 degrees Celsius target. Also at Poznań, Mr. Salter noticed that China was more engaged and informed while Mexico was much more proactive, having set a long-term emission reductions goal. Both examples, he said, convey a change in developing country’s approaches to climate change. On the developed end, Mr. Salter noticed that the EU had not made decisions before Poznań but was instead meeting simultaneously, betraying a slip in EU leadership. Meanwhile, Japan, New Zealand, Canada, and Australia are preparing defensive positions while the US was conspicuously uninvolved. In his microanalysis, Mr. Salter explained that changes in the carbon markets and project development have brought a few reforms to the CDM executive board, generating some increased uniformity in project approval. For Hong Kong, Mr. Salter maintained that the emissions reduction drivers remained local, noting the government’s guidelines for buildings, tools being developed by local NGOs, and certifications and recognition schemes that will incentivize companies to act. However, he feared that the recession will stymie innovation and that the choice between innovation and returning to basics will define the local business response to climate change.
For more information of the Post Poznan Conference, please visit the CCBF website or contact its Project Director, Ms Ciara Shanon at T (852) 2784 3935.