The road to UNFCCC COP 18 and beyond - Energy and Climate Change Contents

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19. If the success of the UNFCCC is measured simply in terms of reducing greenhouse gas emissions, it has been a failure. The Committee heard from Sir David King that the UNFCCC process has become a "culture within a culture" and the officials involved seem to have lost sight of the overall objective.[25]

20. The importance of other processes such as the GLOBE World Summit of Legislators, working at a national level to translate international commitments into national legislation, should be recognised. The convention track needs to have a complementary process of engagement by national legislators to frame national law and scrutinise governments' delivery at the national level.

21. However, the UNFCCC continues to be an essential instrument for bringing all the concerned parties together. DECC said that Durban showed the UNFCCC process "can work and deliver results" and the Government remains committed to it as the "primary vehicle for delivering a legally binding international treaty".[26] They added that the UNFCCC process is the "least worst" option.[27]

22. UNICEF also said that the UNFCCC remained the "best forum" in which to negotiate a global legally binding emissions treaty.[28] WWF-UK asserted that only the UNFCCC has the "universality, legitimacy, and evolving procedures" to achieve a fair global agreement on climate change.[29] Christian Aid stated that the UNFCCC remains "a central decision making forum where a global solution for the global common problem can be found [and there is] presently no alternative venue where all countries can negotiate for a global comprehensive agreement".[30]

23. Reaching a single agreement among almost two-hundred nations will be extremely difficult, but the UK should still concentrate on doing this. Voluntary commitments like those achieved in Copenhagen are a valuable first step to achieving a single agreement with all Parties.[31]

Near negotiations

24. Near negotiations are informal negotiating forums—outside the UNFCCC—that can be used to unblock areas of disagreement, and bring developing and developed countries closer together. Forums such as these where heads of state meet—such as the BASIC group, G8, G8+4, G20, G77— help to overcome the process culture within the UNFCCC and are sometimes able to achieve more. The Association of Small Island States is having an impact far beyond the population size they represent simply by combining forces on the single issue of rising sea levels. The European Union also creates a common policy around climate change issues that brings together all 27 nations.[32]

25. DECC supports using other forums outside the UNFCCC to "deliver vital practical action in specific sectors", such as the Montreal Protocol (on Substances that Deplete the Ozone Layer), the International Maritime Organisation (IMO), and the International Civil Aviation Organisation (ICAO).[33] WWF-UK suggested moving hydroflurocarbons (HFCs) into the Montreal Protocol.[34] HFCs are CFC substitutes—therefore they do not deplete the ozone layer—that are also powerful greenhouse gases.[35] Several witnesses suggested that aviation and shipping emissions should be dealt with in alternative forums such as the IMO, ICAO or the World Trade Organisation. Dr. Falkner stated that taking aviation and shipping emissions out of a global agreement "will make it easier to negotiate an agreement".[36]

26. But these other forums are not a substitute for the UNFCCC itself, which provides a space for vulnerable countries to have their say.[37] WWF-UK noted that some non-UNFCCC forums tended to involve only "wealthy, powerful countries", which made their processes "lopsided" and they called into question their global "legitimacy".[38]

27. Dr Falkner noted that "none of these forums have provided a platform for actual negotiations of mitigation commitments" and that they were "unlikely to offer a realistic and practical alternative to [the UNFCCC]".[39] He added that "we need to conceive of international climate policy as an ongoing process of political engagement rather than a one-off treaty negotiation."[40]

28. The other forums such as the G8, G20 and the Major Economies Forum have no institutional framework underpinning them, so even though they are useful in enabling agreement to be reached eventually, the only means of implementing an agreement now, and in time, is the UNFCCC. Dr. Falkner called attention to the fact that "while we have alternatives for political debate, we have no institutional framework to deliver. If the UNFCCC is criticised for not delivering fast enough, no alternative is in place or could be built in the timeframe that is required to replace it." [41]

29. We agree with DECC that "there is no other forum [than the UNFCCC] that offers a better opportunity to secure agreement."[42] We recommend that the UK and the EU continue to use this process to promote further global action to combat climate change.

30. We recommend that the Department should advocate moving HFCs into the Montreal Protocol.

Global Cap-and-trade

31. In July 2011 Sir David King was the lead author of a report which proposed a global cap and trade system based on a per capita emissions target:

[The] principle describes a trajectory whereby the overall emission level is reduced over time whilst the per capita emissions rates of different countries converge on a low value aimed at meeting the 2°C objective.

This allows developing countries to maintain some emissions growth in the intermediate phase, which is made up for by a decrease in developed country emissions. The overall amount emitted should not be more than will cumulatively push temperature increases over 2 °C. In the global cap and trade system we propose here, emissions are traded based on a per capita allocation of CO2 trading permits at some future date (2050 is favoured by many).

The per capita system functions by setting a forward trajectory for CO2 emissions per head per nation, this amount being the same for all countries by the target date.[43]

32. Taking into account projected population growth, the emissions that will allow temperature increase to be 2 degrees or less are calculated to be 2 tonnes per capita by 2050. The scheme would issue CO2 trading permits at 2 tonnes per person, and excess permits could be sold off.[44]

33. The EU-ETS has shown that carbon dioxide can be made into a tradable commodity. China is also piloting cap-and-trade systems. Different carbon markets with different mechanisms around the world will lead to different carbon prices, which is not optimal for a single, tradable commodity. As Sir David pointed out, "There is the natural pressure behind a global cap-and-trade, evolving from regional cap-and-trade into a much more natural process towards global trading." [45] In theory at least all the regional schemes could evolve and eventually join up to become one global scheme.

34. If China develops a full scale domestic cap-and-trade system, there could be scope for eventually linking it to the EU-ETS. This would create two very large blocs with potentially unstoppable momentum. As we pointed out in our report EU Emissions Trading System, the EU and China could together reach a critical mass of key emitters involved in emissions trading. [46]

35. However, we also heard from witnesses who were sceptical about the feasibility of this approach. Other countries such as Korea and Australia have announced their intention to introduce their own cap-and-trade schemes, and China is about to pilot one, even against the backdrop of the over-allocated EU-ETS. Oversupply of EU-ETS credits, combined with recession, has caused the price to fall to about €8 in July 2012 which is far too low to drive long-term low carbon investment decisions.[47] Linking schemes between countries will be extremely difficult.[48] Dr. Falkner said it would require "a massive effort to build up institutions, because what you are doing is effectively creating global property."[49]

36. The solution proposed by Sir David would be an equitable one, as all nations would have to reach the same emissions per capita by 2050. This is the basis on which the UK's 80% reduction by 2050 was calculated, but we note that is unlikely to achieve the equitable goal of approximately 2 tonnes per capita. As developing countries' economies grow those whose per capita emissions are currently very low could increase emissions in the short term and then return to the agreed objective by mid-Century.[50] A dynamic cap would need to be established for each country, enabling a developing country with a cap in excess of its normal emissions to trade in the surplus for cash on the market. Establishing this dynamic cap would involve complex discussions around the principles underlying equity. As each nation joined this cap-and-trade mechanism, governance and compliance measures would also have to be negotiated. [51]

37. The Minister noted that "a global cap-and-trade system is what we all aim for".[52] We see considerable merit in the system that Sir David advocates, but there are also enormous challenges that may make it impracticable.

Sectoral trading

38. The Committee heard from industry of their concerns about the effect of emissions reduction targets on industrial sectors in developed countries. In some developing countries some of these sectors are already developed (for example steel) and compete with the same sectors from developed countries,. In terms of emissions trading, if the developing country was treated as a homogeneous unit and provided with emissions credits, its developed industrial sectors might not have an incentive to reduce their emissions and increase efficiency, so they would have an advantage over the same sector in a developed country. One solution may be to set up sectoral global trading schemes, which would drive emissions down in a particular industry while ensuring there was a level playing field.[53]

39. We recommend that DECC cooperates with industrial sectors and other interested stakeholders to identify the obstacles to and benefits of a sectoral trading scheme with a view to including it in an international agreement.

25   Q 85 Back

26   Ev 62 Back

27   Q 170 Back

28   Ev 69 Back

29   Ev 77 Back

30   Ev 82  Back

31   Q 85 Back

32   Q 86 Back

33   Ev 62 Back

34   Q 9 Back

35   Q 132 [Prof. Michael Jacobs] Back

36   Q 144 Back

37   Q 51 Back

38   Ev 62 Back

39   Ev 90 Back

40   Ev 89 Back

41   Q 126 Back

42   Q 169 Back

43   Smith School for Enterprise and the Environment, Climate change negotiations: key lessons & next steps, July 2011, p 31 Back

44   Smith School for Enterprise and the Environment, Climate change negotiations: key lessons & next steps, July 2011, p 32 Back

45   Q 87 Back

46   Energy and Climate Change Select Committee, EU Emissions Trading System, January 2012, HC 1476, p 23 Back

47   Energy and Climate Change Select Committee, Tenth Report of Session 2010-12, EU Emissions Trading System, January 2012, HC 1476, para 20-21 Back

48   Q 130 Back

49   Q 150 Back

50   Q 95 Back

51   Q 87 Back

52   Q 174 Back

53   Q 59 Back

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© Parliamentary copyright 2012
Prepared 25 July 2012