Examination of Witnesses (Questions 80-99)
MS JENNIFER
MORGAN, PROFESSOR
TOM BURKE
AND DR
BENITO MU
LLER
4 MARCH 2008
Q80 Mr Stuart: Is the picture you
have painted compatible with the IPCC recommendation that we are
going to peak globally in 2015 if we are going to meet the 2 degrees?
It does not sound like it is, basically with the developing countries
not signing up to any binding commitments and what is likely from
India and China collectively. Basically we are going to sail through
2015, if not quite with business as usual but—
Professor Burke: If I have understood
the discourse right, I think that making a shibboleth out of binding
commitments as a way of slowing things down rather than speeding
things up is not that that is an important part of the mix but
you have to see it in a series of dynamics moving forward through
several phases and what is appropriate where. All of that needs
to take place inside the context of there being a much more articulated
prosperity narrative. If I came down rather strongly on contract
and convergence it is because I think it plays into a misunderstanding
by well-meaning people about what is actually going to move this
forward. What concerns the Chinese Government is not the poor
people in Africa; it is not the wealthy people so much in China;
it is the next 400 million people in China that are going to go
where the 300 million have gone. It is the same in India.
Q81 Mr Stuart: Can I just go back
and take on board the point you are making, that you think the
methodology is better away from fixed targets, is it your view
that we have any chance of staying within—
Professor Burke: If there is the
political will there and that is the issue. Is it technically
economically possible to do this? Yes, of course it is. Are the
political conditions there to do it? No.
Q82 Mr Caton: In your written submission,
E3G recommend grouping developing countries. Do developing countries
agree that they should be differentiated in this way?
Dr Muller: I can give you
a very concrete example. At this workshop we had, there were people
from the government on the panel. I was sitting in the audience
and I was asked to put something controversial. If you remember
in Bali, it was Bangladesh that tried to insert differentiated
treatment into the article, which came out completely. I asked
how the panel felt about differentiating treatment within the
G77. A gentleman from the Foreign Office who was a main leader
in the negotiations stood up and bombasted the Bangladeshi gentleman
who actually was in favour of it and said, "We are not going
to divide G77 because of differentiated treatment". It is
a very sensitive point. There were other voices, like that of
South Africa, which said, "We do not have to get rid of the
unity of G77 by having differentiated treatment", but the
way we do that is extremely important. We have to let them come
to the conclusion it may be better to have differentiated treatment,
not us imposing it, because otherwise it is doomed.
Ms Morgan: I think that we are
moving in that direction. I do not think the G77 in China has
a position on this. AOSIS, the small island nations, have already
come out and said that the larger developed counties should take
on significant commitment, including potentially national targets.
When you get into the dynamics of the negotiations of course they
will kick and scream but what we have to do in the next two years—and
this is where the European Union can play a good role—is
to work with them. Brazil understands that; South Africa understand
that; AOSIS understand that; China I think even gets it. But the
question is: can you make the other elements of the deal sweet
enough that they are going to jump with confidence on it? That
was in some ways the big deal about Bali. You now have a negotiation
about differentiation, but it is not called that. It is sometimes
very important in these negotiations not to call things certain
things.
Q83 Mr Caton: We do not seem to have
a roadmap on how to reach even these groupings. How do you see
this taking off if there is the sort of resistance that Dr Muller
has referred to?
Ms Morgan: Technically, the way
that we need to organise the negotiations over the next two years
is that we need a series of working groups on the key issues.
For example, on the mitigation issue, you will have, hopefully,
a group that has submissions of governments; the Mexicans will
come and put a position on the table that they are ready to take
a sectoral commitment. The South Africans will come and put a
proposal on the table that they are ready to do policies and measures
of a certain level. Through that process you will indeed split
the G77. So you would need to do it on the basis of substance
in the context of a working group on negotiations that needs to
make recommendations by the end of 2009 of who is going to do
what. You need to have a process that brings a level of fairness.
At the end of the day, it is how does everybody feel that what
they are doing is fair in comparison to everyone else?
Q84 Mr Caton: I can see that: you
have different groupings and you have agreed different mitigation
actions for different groupings. How do you make sure that every
country in that particular group goes along with that sort of
level of mitigation?
Ms Morgan: There are two things.
That is deeply linked to the domestic politics. It is not just
for developing countries; it is for developed countries. You can
look at the Clinton-Gore Administration that signed up to something
in Kyoto and did not do any work to build ratification support
for that, nor an implementation plan to achieve that, which is
why I think the other part of the strategy at this point in time
needs to be building the infrastructure in key countries so that
they can actually implement and meet their targets. At the end
of the day, there will be a consensus decision. Maybe there will
not be four groupings but three different groupings of that sort.
Procedurally they will all have to agree but whether they meet
them or not and whether they do it or not will have a lot more
to do with their domestic politics and their capacity to do it.
Dr Muller: We are again
in the paradigm of every country takes on a commitment. As I said,
for developing countries, particularly for the large developing
countries, we are not going to ask anything of the LDCs. For the
major economies in the developing world the key to them is that
we have binding partnerships. How are we going to address these
commitments which we both take on? That is the way they see it.
We have not just to promise to help and create funds which remain
empty, but speak up and do what we said we would do, otherwise
it will not work. The paradigm of how will they fulfil their commitment
is the wrong one. How will we jointly come up with the goods is
the only way forward.
Professor Burke: I do not think
people are ever going to go to war with each other because they
failed to meet their emission targets, at least not in the traditional
sense. One of the definitions of this problem is that there are
no hard power solutions to the problem of climate change, though
there might well be hard power consequences to failing to solve
the problem. That is why the role of diplomacy is far more important
on this issue than I think we have become accustomed to. We can
only achieve our objectives by diplomacy. That is a hard message
to get across. At the end of the day, in those key countries what
really matters is that you create a thrust in terms of the way
you build a low carbon economy that draws in the others; it draws
them in through the opportunities side rather than the constraints
side. At the end of the day, we are not going to have somebody
policing out there some relatively small country, saying, "You
failed to do your commitments and holding the whole process up
because you failed to do it". The real thrust is getting
people moving in the right direction and accelerate that movement.
That is where what we do at home plays such an important part.
The more people think that we are seriously going in a direction
of a low carbon economy, the more the internal pressures will
want to confirm and align with that.
Q85 Mr Caton: Say we have got the
groupings. Economies change and they will change relatively. How
often would there need to be a re-evaluation and how would that
revaluation tie in with the need to get those carbon targets met?
Ms Morgan: If you are doing this
in your optimal fashion, you would be looking ahead of two or
three commitment periods and there would be what is called a graduation
mechanism, so that you do get to the point where everyone has
a national target at the end of the day, but you do it in a step-by-step
fashion. So there are two ways you could do this. You could either
create an automatic mechanism of graduation when you hit a certain
threshold of capacity capability emissions, that type of thing,
or you could include a scientific review every three to five years.
You need to do both actually.
Professor Burke: In the real world
what will happen is that events will occur and events will create
panic reactions which will not always be sensible or wise, but
in the real world things will happen that will impel the thing
forward, just like Katrina happened and made a big difference
to the way this issue was seen domestically in the United States.
You cannot argue that Katrina was caused by climate change but
people made that linkage in a way that had real political effect
on the climate debate. There will be more of those kinds of events.
Whatever process you set in motion, and Jennifer has described
some of the kinds of processes you could set in motion, there
will still be events that will move things on in ways it is hard
to predict at this stage.
Q86 Mr Chaytor: Just following the
point about events, to what extent is the EU Emissions Trading
Scheme and the capacity buy in credits from developing countries
with a very generous cap going to be one of those events?
Professor Burke: I think the EU
Emissions Trading Scheme is absolutely essential. This debate
about the extent to which EU countries can, in a sense, create
a sort of approved leakage through buying in credits needs to
be very carefully watched. I think the Commission is right to
say it should not be an unconstrained opportunity.
Q87 Mr Liddell-Grainger: You have
talked about flexible mechanisms and the way the countries meet
their commitments. You have heard that the Committee has recently
been in China and visited a CDM project. One of the problems I
think is that there is an abuse or a potential abuse of the system.
What do you see as the future of CDM if there is a problem, and,
if there is a problem, where do we go from here? Is there a better
way forward?
Dr Muller: I can tell you
that I do not as yet know the answer, but I am involved in a project
which is just starting with the Indian Government and with the
Chinese Government in looking precisely at what they think the
future of the CDM will be and in particular about policy and sectoral
versions of that mechanism which are going to be quite different.
From my point of view, it is extremely important not to come up
with our own solutions and then tell them to take it. What do
they think? The CDM as a mechanism has been proposed by the Indian
Government as a way to fulfil what they think is the way to go
forward. It is also been said by Ambassador (Scoopter) that one
of the key points about the sectoral CDM for example, or a policy
CDM in particular, is that instead of having just the ministry
of environment involved, signing a little document that they like
the project, this would have to involve the whole government and
the mainstream ministries. Through a sectoral and policy approach
in CDM, we actually are mainstreaming climate change mitigation
into the whole of government, which is also important from their
point of view. I think the CDM is going to stay with us and it
is going to continue to have projects. I do not think that is
going to stop simply because industry would prefer to do some
projects where there is money to be made. There is also going
to be a second leg, which is more general, which will have to
be done through government financing. The private sector is not
going to go into any of these countries and reform the whole private
sector, the whole utility sector. There we may have to come up
with some new innovative ways of helping. I talked about the issue
of helping to manage the price risk which these governments will
have to take on. After all, if you have to pay yourself, these
large scale CDM activities are going to be unilateral. It is going
to be domestic money which is invested, domestic taxpayers' money.
What happens if the CDM price collapses at some point? There is
a risk of that. We can help by instruments such as put options,
which are used regularly in the financial world. We can help these
governments to budget and to plan these activities. Again, it
is a partnership in that respect. There are many ways in which
we can go forward. As I said, the CDM is one of the instruments
which I really believe will help us in the next couple of commitment
periods to bring them in and to have a significant effect on their
emissions. Particularly if we decide to take some of the CERs
out of circulation, to retire them I think the term is, then we
would really be getting somewhere.
Q88 Mr Liddell-Grainger: Do you think
there is widespread abuse of it or not?
Dr Muller: There is going
to be abuse with any mechanism. What we should not do is jump
to conclusions and say that we have found abuse in certain projects.
I am not an expert in how CDM projects work. I know that the industry
thinks that the CDM board are extremely difficult in approving
projects. People have tried to put it past them and they are not
very well liked in the industry, I can tell you that, but this
is because they have been very stringent about the rules. In that
respect, I think the system works. There have been people who
have tried to pull a fast one at different levels. The projects
which have been approved so far I would suggest are mostly not
for fraud.
Professor Burke: Mr Challen's
earlier question is quite important. All markets get `gamed' by
people; not everybody who participates in the market shares the
goal and one would be very foolish not to be alert and awake to
that possibility. I have no doubt that at some point there will
be an Enron in carbon markets.
Ms Morgan: I think the value of
the CDM has been to put CO2 on the map in developing countries,
very basically. I am of the view that we have to transform it
quite fundamentally into something much larger and much more ambitious
which needs to be matched with a very deep level of ambition on
developed country targets as well and move into the sectors and
the policies. On the flex mix, I think we need to be thinking
about the ETS as a mechanism not only to put a cap but to generate
revenue to re-invest into a low carbon future in the north and
in the south.
Q89 Mr Liddell-Grainger: Dr Muller,
I think you argued about CDM being reward based on policy. How
would that work?
Dr Muller: That is one thing
which we are trying to find out in the project.
Q90 Mr Liddell-Grainger: I see. It
is very early days.
Dr Muller: In September
I shall send you an invitation to our presentation.
Q91 Mr Chaytor: I have one further
point on CDM. What is your view about carbon capture being eligible
for CDM?
Dr Muller: I personally
do not think it is a proven technology as of now. Re-injection
in existing oil fields for enhanced oil recovery has been proven
and has been done successfully. I am not an expert on this. Intrinsically,
I am cautious about it. Perhaps my colleagues know more about
where we are at the moment with this technology.
Professor Burke: We have to have
CCS. It is not an option; it is an imperative. The coal is going
to be burnt and if it is burned in the way it is currently burned.
There is no prospect of staying even inside 3 degrees let alone
below 2. So we have to make it work. To that extent we have to
have the option of including it in the CDM, just like we have
to have the other options for it, but it is by far and away the
single most important technology to take forward. The reason for
that is simply the geological distribution of coal and the fact
you cannot achieve climate security independently from energy
security.
Q92 Mr Chaytor: But, given the scale
of coal burning that is likely to take place in China and India,
let alone Australia, carbon capture could take up the whole of
the CDM budget without the impact on Africa.
Professor Burke: There are going
to be lots of mechanisms but the quicker we get on to doing the
demonstration, the better. Benito is right; it is not so much
that the technology is not demonstrated; it is that this particular
application where you put it all together is far from being commercially
available.
Ms Morgan: I just do not think
the CDM is the right mechanism. I do not think that is what is
going to make CCS happen, and I do not think it is what the policy
says either.
Dr Muller: Do not forget
that the CDM actually is not globally reducing any emissions.
We are just creating permits to be used somewhere else in general.
My view about CCS is also in terms of bilateral, large scale collaboration
outside the CDM where we then actually reduce emissions.
Q93 Mr Hurd: Moving on to deforestation,
this may be linked. We need some time in order to find out how
we burn coal cleanly. The emphasis now is on policies that buy
us some time and in this context deforestation and climate are
significantly up the political agenda and there seems to be a
growing consensus around the need to give it priority and the
need to structure some financial incentives for conservation.
The debate now seems to be about how. The Committee would very
much appreciate your views as to whether deforestation should
be tackled with a stand-alone mechanism or whether the political
effort should be focused on trying to structure something that
fits into existing mechanisms, such as the CDM, EU and ETS being
the obvious candidates.
Professor Burke: Deforestation
is an issue that is much wider simply than climate change. It
obviously has a central role in climate change but you have a
whole bunch of other issues around the question of deforestation,
or indeed reforestation. So I am not sure that there is a single
answer to the question you put; in other words, there has to be
a role in the climate change negotiations to create revenue flows
in particular that will help, first of all to avoid more deforestation,
and then in a sense start to think about how you might create
more forests, but that is not going to be as simple as some people
think in terms of saying, "You can have carbon offsets and
you pay for the carbon offsets and that will finance it".
It is a lot more complicated than that. As you possibly know,
the Prince of Wales now has a large scale project looking at this
and indeed there are a number of others going on. One of the early
understandings of that literature is that it is new to climate
change for people but not quite so new for people who have been
dealing with forestry over longer periods and that it is a lot
more complicated than simply thinking there is an easy way to
get the revenues in to the forests. You have put your finger on
the key point: it is how to get enough revenue flows in to the
forest in order that they have an economic value as standing forests
and not by being torn up. When you look at that interaction with
both the intensity of pressure now for more land for food and
more land for biofuels, however badly we think this problem has
been up until now, it seems to me that there are major economic
forces threatening to make it a lot worse. It is urgently important
that we address the problem, but I do not think we should look
at the climate change negotiations as the only place through which
to address that problem. There are other people doing forestry
issues. What is important is to align the efforts so that they
reinforce each other and do not get in the way of each other.
Ms Morgan: I think this debate
has moved forward in a positive fashion inside the negotiations.
We have moved away from thinking about projects to avoid deforestation
where leakage could never really be a concern into actually looking
at the sectoral reducing emissions from deforestation and turned
it into a mitigation debate for those tropical deforesting countries.
Having worked at WWF you can imagine I have spent a lot of time
thinking about these issues, and I have been quite taken with
the proposal that I included in my written evidence that Greenpeace
has put forward.[19]
I think that we have to address it—that is clear; but I
have yet to see really solid economic analysis of how you integrate
it into a carbon market where it is fully fungible and achieve
your energy goals at the same time without crashing the carbon
price. The thought of requiring developed countries to meet a
certain percentage of their targets through investing in reducing
emissions from deforestation in a separate stand-alone stock-based
kind of agreement I think is very useful for debates. I think
it is a preferable way than doing it through the full fungibility.
The issues of land tenure and all of those are national issues
that have to work with the countries which have a lot more experience
obviously in trying to figure out how you implement it; but I
would keep them separate.
Q94 Mr Hurd: Do you agree with that,
that we should be thinking of a stand-alone mechanism?
Dr Muller: Yes. There is
a debate between: is it a fund or a mechanism tied to Kyoto or
CDM? Astonishingly, if it were a mechanism of some kind it is
quite clear that there is going to be the big forested countries
who are the winners—like in the CDM there were China and
India—and in that case it would be the Congo Basin, Brazil
and Indonesia. Why is Brazil against the mechanism, because they
would be one of the winners? As far as I understand, they are
afraid that by potentially diluting the CDM and collapsing the
price every desirable energy-based CDM project would be killed
off. We are basically postponing development which we actually
need to advance, namely transformation of the energy sector to
a low carbon economy by introducing these forest-based CDM permits.
That was the danger which the Brazilians saw, which is why they
rejected the idea of a trading mechanism.
Q95 Mr Hurd: Is anyone then seriously
arguing for it to be integrated within the market?
Dr Muller: Yes. Papua New
Guinea and the whole alliance: it is the Congo Basin countries
which are thinking of profiting. Brazil is the only large country
in favour of the fund idea.
Q96 Mr Hurd: This touches on some
questions which Graham Stuart was asking earlier about trying
to put your finger on what we mean by technology transfer. I did
not go on the trip but I got a sense that actually what was needed
was skills transfer, capacity transfer, rather than hard technology.
The Committee is interested on your views on that.
Dr Muller: First of all,
I think it is clear that technology transfer is a euphemism which
can be used by both sides to talk to each other thinking that
they actually agree; but usually in the north we mean exports
and in the south we mean gifts. If you call it technology transfer
we continue to talk. The first thing is we basically become real
about what we are talking about. Secondly, I think it is unhelpful
to have technology transfer as if it is an instrument on its own.
For example, CDM could, should and will involve technology transfer.
Other mechanisms can do the same. It has been treated as if it
is an instrument of its own technology transfer. I think that
is one of the mistakes. It will happen under different collaborative
efforts in these joint ventures which are bilateral, but it is
not something which we should look at in isolation as a single
entity. That is my view. As far as what it actually means: a)
I do not know; but b) let the people who are asking for technology
transfer tell us what they mean. Sometimes it is actually not
even a problem. They see bottlenecks where there probably are
not any, or where we could actually collaborate and have joint
ventures; after all joint ventures are a win-win situation. No-one
enters a joint venture if one side loses out, okay. In that context,
technology transfer may be something which arises naturally for
carrot reasons as opposed to stick reasons. I think that is the
only way forward. Ask the Chinese, ask the Indians, ask the Brazilians
when they say they need more technology transfer, "What do
you actually mean?" as opposed to having academics like us
in our ivory towers thinking about it.
Professor Burke: When you ask,
"What technology are you talking about?" it gets down
to a very limited range. Wind technology, as was already pointed
out, is being deployed fast; coal technology has already been
trapped. Lots of the technology has already been transferred.
A lot of things, like where are the photovoltaics going to be
made, they are going to be made in China and India; they are not
going to be necessarily made in Europe for the same reason that
other things are made there, because labour costs are lower and
so on. When you get down to it the only technology I can think
of where there is a serious issue is the one that we would be
most sceptical about transferring, for other reasons, and that
is nuclear technology; where there is the old-fashioned idea of
various technologies that we have that they want that we should
somehow make that available on preferential rates. There are all
kinds of good reasons why we might be a bit cautious about that
which are nothing to do with climate change.
Q97 Mr Hurd: Could I suggest another
softer technology that might fit into the EU bilateral agreement
which is around energy efficiency and the design and architecture
of buildings. We spent a weekend visiting and talking to the Chinese
and they are going to be moving 400 million people from the country
into the cities over the next 25 years. They are going to be building
half the new buildings in the world over that time period and
their buildings are three times less energy efficient than those
in Europe. Yet I never hear governments talking about this opportunity
to export what we do know about it, which is how to design good
buildings?
Professor Burke: It is not what
people are thinking about. Those software things are actually
part of the good governance agenda, and we have not talked about
adaptation yet. If you are really thinking about what is it you
can transfer in terms of adaptation other than money, it is not
much point transferring the money if the money cannot then actually
be applied to the adapt of measures that need to be taken. You
have got to connect it to good governance. All that software thing
is really part of the good governance agenda.
Q98 Mr Chaytor: How do we really
get this idea that it is design skills as much as technical skills
that could be the solution to China's problems? Over my two visits
to China in the last two years I have just been astonished at
the sheer awfulness of many of the new cities they have built
and the complete car dependency, quite apart from the appalling
nature of some of their buildings and the lack of energy efficiency.
It is not just the design of buildings, it is the whole issue
of urban design for sustainability.
Professor Burke: I do not know
that we have as much to offer as we think we have!
Q99 Mr Chaytor: I suspect there is
some thinking in the European Union that maybe yet has not really
taken off in China. Are there ways you can think of where some
of the best examples of design in the European Union could be
projected into China?
Professor Burke: One of the ways
to do that is actually in terms of how you create the linkages
between the service sectors. In other words, when you think about
building that trade and investment relationship between the EU
and China you do not just think about hardware; you are also thinking
about how do we make better partnerships between Chinese environmental
consultancies and European environmental consultancies? We can
be passive and hope there arises an opportunity to drive them,
or we can become very aggressive and put some real effort into
building and making those partnerships happen. I do not think
we are doing that yet. That is my sense. It is not: how do you
put this into an international agreement, which you are going
to text; it is actually how do you, on the ground, start creating
those partnership programmes that really drive that forward? There
is a great desire, but I suspect the learning will be both ways.
You look at what has happened, and I forget the name of the Chinese
city, but the Chinese are likely to have in south China an eco-city
long before we have one in Europe, and there is a serious design
effort to do that and build that. How good is the mechanism to
get the rest of China to learn from that? I do not know the answer
to that question.
Ms Morgan: The suggestion I made
earlier, looking at economic zones in China, you need to go beyond
cities and we actually need to go into zones and we need to go
into places where they are starting to build. Being based in Berlin
and seeing Germany trying to do a 40% reduction commitment in
efficiency know-how, and observing that almost every Member State
has some separate little initiative with China rather than having
a joint approach of Europe into China—I think if we could
get two zones going, because there are two Chinas at least if
not many, many Chinas, but at least one in a poorer region to
deal perhaps with some of the adaptation technologies and the
services, and one in a richer area and bring in some of the trade
issues which are just not possible at the present time.
Professor Burke: Also the example
we can set, we are going to build three million houses and if
you want a carbon-neutral energy system you cannot have hundreds
of millions of gas boilers; so we ought to build those houses
without gas in them; showing that that could be done, would be
a real way of showing what green design means.
19 See Ev PK07 Back
| 
