Post-2012 Climate Agreement

Post-2012 Climate Agreement

Negotiations on a new agreement to replace the Kyoto Protocol are ongoing. Under the Bali Roadmap of 2007, a new global agreement was due to be reached at the end of 2009 in Copenhagen. Instead, the negotiations resulted in the 'Copenhagen Accord', which allows both developed and developing countries to make non-legally binding commitments for 2020. Negotiations on an official post-2012 agreement will continue throughout this year, with the next large scale UN conference scheduled for Mexico City in December.

The World Coal Institute has outlined key elements it believes should form part of the post-2012 framework. WCI supports the ultimate objective of the United Nations Framework Convention on Climate Change (UNFCCC):

“Stabilisation of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner”.

It is essential that the negotiation process should systematically and regularly test progress against this objective.

Essential Elements of a Post-2012 Regime

Sustainable Policy - The post-2012 regime should ensure that greenhouse gas reductions can be achieved alongside the priorities of energy affordability, energy security, energy availability and sustainable economic development.

The goal is not one-dimensional. For any solution to be durable, a balance has to be found between energy affordability, energy security, energy availability and the preservation and enhancement of the quality of human life through sustainable economic development and reduction of greenhouse gases. This balancing issue has been at the core of the international debate for a long time and well before the UNFCCC was negotiated.

Sectorally Comprehensive - The post-2012 regime should address GHG emissions reduction opportunities in all sectors of the global economy.

GHG emissions arise either directly or indirectly from almost all human activity. Significantly reducing GHG emissions will require action across all sectors of society. Failure to reduce emissions in one sector places a greater burden on the remaining sectors, increasing the total cost of emissions reduction and spreading that cost inequitably. According to Claude Mandil, former Executive Director of the IEA, energy efficiency is the single largest contributor to CO₂ reductions – and is cost-effective. End use efficiency alone has the potential to reduce emissions by 45% by 2050 (10% from industry, 18% in buildings and 17% in transport). Further, deforestation accounts for 20% of global GHG emissions and offers opportunities for low cost emissions reduction through avoided deforestation.

Improving the Efficiency of Coal-fired Power Plants Reduces CO₂ Emissions

Global Differentiated Participation - The post-2012 regime should make provision for global differentiated participation to ensure all emitters are engaged.

Reducing global GHG emissions will be most efficient and effective when all nations are engaged. However the willingness and capacity of nations to reduce emissions is variable. Developing nations that are focused on the alleviation of poverty and the provision of affordable, reliable energy to their people will have less capacity to reduce emissions than developed nations. But the reality is that without action to reduce emissions by developing countries, in addition to developed countries, it will not be possible to stabilise atmospheric GHG concentrations. In the absence of new policies to curb emissions, developing countries will increase their emissions by 250% between 2003 and 2050, well exceeding emissions from developed economies.

The post-2012 regime should make provision for differentiated participation that allows for phased implementation of emission reduction targets by developing nations according to defined criteria or timelines, and the adoption of complementary policies in developing nations in the interim. Examples of complementary policies could include:

• emission intensity reductions for specific sectors of their economies
• energy/fuel efficiency standards
• energy efficiency standards for buildings (covering heating, ventilation and air conditioning and lighting)
• reduced deforestation
• other low cost or net negative cost measures designed to reduce emissions compared to “Business as Usual”.

Voluntary measures and policies to reduce emissions should also be encouraged.

This approach would slow the rate of growth of emissions in developing countries and allow them to work towards stabilisation and eventual reduction of their emissions.

Clear Emissions Reduction Trajectory - The post-2012 regime should incorporate a clear emissions reduction trajectory comprised of mandatory short term milestones and longer term targets.

Whilst governments are accountable for implementing the policies that drive sustainable reductions in GHG emissions, it is the private sector that will actually deliver those reductions. Business requires greater certainty of the risks and liabilities associated with making commercial investments in zero and low emission technology. Understanding the constraints that will apply to GHG emissions in the future is fundamental to estimating future demand for zero and low emission technologies.

If developed with appropriate analytical rigour, Short Term Milestones should be mandatory to drive long-term emissions reductions. A Short Term Milestone is one where the pathway to meeting it is known in advance with acceptable uncertainty. Once set, it should not be possible to amend a Short Term Milestone. A Long Term Target is one where the pathway to meeting it is not yet known with acceptable uncertainty. Long Term Targets may be amended in light of technological, climate science or economic developments and must extend at least 50 years into the future. The emissions reduction trajectory established by the Short Term Milestones and Long Term Targets provides the business community with information vital for making investments in assets that may have an operational life of 50 years or more.

The principle being applied in setting the milestones is that their effect on economies and societies should be predictable, within the limits of economic modelling, such that they can be set in a manner that optimises sustainable economic development and the quality of human life. All models deliver results with uncertainties attached. Those uncertainties should be clearly presented with the output of the model upon which Short Term Milestones and Long Term Targets are based to assist the business community in making informed decisions about future investments. In the case of Short Term Milestones, which should be mandatory, the emissions reduction target is set and the uncertainty applies to the projected economic impacts of meeting the milestone. In the case of Long Term Targets, which should be aspirational, the uncertainty applies to both the target itself (i.e. size of the emission reduction target) and the projected economic impact of meeting it.

Adaptation - The post-2012 regime should include measures that build the capacity of all countries to adapt to climate change.

There is general scientific consensus that historical and future GHG emissions will cause changes in the global climate system. If GHG emissions are not reduced and the worst impacts of climate change predicted by climate modelling eventuate, many people will be displaced from their homes or from employment in industries that are no longer viable. The post-2012 regime should include measures that build the capacity of all countries, especially developing countries, to adapt to climate change.

Analytical Rigour - The post-2012 regime should be based on rigorous scientific, technological and economic analysis with defined processes and time-gates for review.

Predicting the effects of policy options on future GHG emissions requires a sound understanding of the global economy, the technologies and processes that emit or have the capacity to reduce emissions, and the interrelationships that exist between them. The target for emissions reductions should be informed by climate modelling with due consideration of the uncertainties in that modelling, and the predicted impacts of climate change on the environment, the global economy, and ultimately the quality of human life. Rigorous analysis of this complex system, using integrated assessment models and fully audited life-cycle emissions data for all energy sources, is absolutely essential for the design and operation of a post-2012 regime that successfully meets the objective.

The post-2012 regime should recognise that science, technology and economics are not static. The new regime should include transparent and defined processes to review and incorporate developments and improvements in integrated assessment modelling techniques, climate science, new technology and actual emissions reduction performance, into the global response to reduce emissions.

Transparency, Accountability and Equity - The post-2012 regime should operate transparently with appropriate accountability mechanisms designed to ensure equity in its implementation.

The long term sustainability of an international mechanism that imposes costs on sovereign states depends upon the international community’s confidence in its governance and belief that costs are distributed in an equitable manner. Transparency of process and emissions reduction performance and appropriate accountability provisions for failures to comply with requirements are necessary to underpin international confidence in the governance and equity of the post-2012 regime.

International Technology Strategy - The post-2012 regime should incorporate an International Technology Strategy to accelerate the development and commercial deployment of carbon capture and storage and other near-zero and low emission technologies at the required rate and scale.

To reduce GHG emissions against a background of rising global population and wealth requires the development and deployment of zero and low emission technologies at an unprecedented rate to transform the way energy is produced and used. The abundance, affordability and availability of coal ensures that it will remain an important primary energy source for decades to come. Carbon capture and storage is the key enabling technology to address the carbon emissions from the continued use of fossil fuels.

Even with a moderate price on carbon, the formidable regulatory, technological and commercial barriers to entry into the energy market for low emission technologies will prevent their deployment at the rate necessary to stabilise atmospheric concentrations of greenhouse gases without active facilitation from governments. To illustrate, in addition to emissions abatement achieved by other strategies, stabilising the atmospheric concentration of CO₂ at 550ppm requires that more than 60 x 500MW coal-fired power stations with CCS be operating by 2020, more than 500 by 2050 and more than 5500 by 2090.

An International Technology Strategy is required to systematically identify and overcome the barriers in deregulated energy markets for CCS and other near-zero and low emission technologies. The International Technology Strategy must include direct government financial support for first of a kind commercial scale plants and infrastructure to accelerate the reduction in cost of the technology and ensure it is available in time for global deployment.

The International Technology Strategy should also account for the energy security imperatives of sovereign states. A broad portfolio of near-zero and low emission technologies, including coal and gas with CCS, renewables, and nuclear energy, is required not only to provide emissions reduction at least cost, but also to provide energy security.

Incentivise all Emissions Abatement Measures - The post-2012 regime should incentivise all emissions abatement measures, including carbon capture and storage.

Stabilising atmospheric concentrations of greenhouse gases requires the deployment of a portfolio of zero and low emission and energy efficiency technologies. A broader range of options will deliver greater emissions reductions at lower cost whilst meeting energy security imperatives. All emissions abatement measures, including CCS, should be incentivised by the post- 2012 regime. The current exclusion of CCS from the Clean Development Mechanism of the Kyoto Protocol should be discontinued immediately.