Weather Report from COP7: Calm Before the Storm

by Yin Shao Loong, Third World Network

IN THE YEARS between 1876 and 1902 a wave of famines swept across the Southern Hemisphere leaving an estimated sixty million dead in China, India and Brazil. Dramatic El Niño oscillations unleashed a seemingly unbreakable cycle of drought, crop failure and eventually famine. It was not merely the weather that was responsible for this devastation, the fatal equation was completed by the absence of socio-economic safeguards under the rule of unsympathetic imperial regimes - administered by a deadly combination of Malthusians and free market fundamentalists.

While India was producing mountains of grain for export its people were starving. Railroads, the high technology of the time, had been hailed as a means to alleviate any potential famine but were instead shuttling grain to the ports. The elimination of price controls in favour of the wisdom of market pricing meant that grain was well beyond the reach of the starving peasant. Food security had already declined as gram was replaced by cotton cash-crops. Like latter day Nero’s the British Raj fiddled whilst India burned.

In Late Victorian Holocausts Mike Davis argues that the mass famines of the nineteenth century paved the way for the creation of the Third World. [1] He ponders ‘the fate of tropical humanity at the precise moment when its labour and products were being dynamically conscripted into a London-centred world economy.’ In the case of China he outlines a deadly matrix of the erosion of state capacity and popular welfare that ‘seemed to follow in lockstep with the empire’s forced “opening” to modernity by Britain and the other Powers.’

As we look back on a momentous November week that saw both the accession of China to the World Trade Organisation and the inauguration of a new market in greenhouse gases following multilateral agreement on the Kyoto Protocol there is a question of whether history will be repeated in new and perhaps more devastating ways.

Although operating under different conditions from the nineteenth century, inequalities of power and wealth between the North and South still persist today. The formerly colonised peoples of the present arguably have greater chances to lay claim to their future than their forebears. They are not alone in this endeavour as the concern over climate change cuts across all geographical boundaries. However, as in the WTO, the situation of developing countries is the least encouraging in the operationalisation of the Kyoto Protocol to the United Nations Framework Convention on Climate Change.

As we look from the South at the UNFCCC process and attempt to assess the outcomes we should ask if we can stand to be pauperised again. Several outcomes of the Marrakesh Accords and the nature of the Kyoto Protocol itself serve to entrench and in fact extend North-South inequalities whilst disproportionately heightening risk for developing countries.

Rather than jump straight to the outcomes of Marrakesh, which are relatively unintelligible to all but specialists, this report will first frame the climate change issue from the Southern perspective and the historical build-up of political battles that paved the way for the compromises of the Marrakesh Accords. [2]

1    Aristocrats and paupers

The objective of the Kyoto Protocol is to stave off the adverse effects of climate change through reductions in the greenhouse gas emissions of industrialised countries. The Protocol takes the principle problem of climate change to be global warming induced by  rising atmospheric concentrations of greenhouse gas emissions rather than a mutually influential matrix of socio-economic inequality and adverse climatic events on top of which global warming sits as an additional exacerbating factor.

Limited as it is, the Protocol’s approach is exceedingly technocratic and unstintingly timid in its challenges to the institutional and power imbalances that serve to exacerbate the fallout of climate change.

The UN body charged with assessing scientific evidence on climate change, the Intergovernmental Panel on Climate Change (IPCC), has already stated that ‘[t]he impacts of climate change will fall disproportionately upon developing countries and the poor persons within all countries.’ [3] Since the largest emitters of greenhouse gases are the fossil fuel-intensive developed countries it would seem that the climatic fate of the developing world is in the former’s hands, insofar as global warming is the principal problem.

Whilst the Protocol appears to uphold the mother Convention’s principle of ‘common but differentiated responsibilities’ for developed and developing countries by putting the onus for change on the former, the weak reduction targets set so far promise to have little impact on the greenhouse gas-induced temperature rise predicted by climate scientists. Present scientific estimates call for a 60 to 80% reduction in order to stabilise greenhouse gas concentrations at one-and-a-half times present levels (or twice pre-industrial levels). The Protocol allows the rich nations of Europe, Japan, Canada and Russia to continue emitting greenhouse gases between 92 to 100% of their 1990 levels. Australia is even permitted an 8% increase.

Outrageous political concessions were granted to the former-Soviet economies of Russia and Ukraine. Under the Kyoto Protocol they secured the right to stabilise domestic emissions at 1990 levels by 2012. Following the collapse of their economies after 1990 their emissions sank well below those levels. Thus, they are technically allowed to increase their emissions from this reduced level by 50% and 120% respectively to achieve ‘stabilisation’. Because their industries will be hard pressed to spew forth even this much carbon dioxide, much of this ‘hot air’ will be available for sale to other developed countries through emissions trading (see below).

Those countries too poor or under-resourced to adapt stand to suffer the most. Countries like Honduras, Nicaragua, Mozambique and Bangladesh have already been devastated several times over in the last century by adverse climatic events. And this is prior to the predicted changes in climate for the next century. Many of the most vulnerable countries are veterans of structural adjustment programmes, unfavourable terms of trade, uneven North-South resource flows and Northern-instigated wars. They are also, with respect to the “developed” baseline set by the North, under-consumers of energy.

US consumption of energy is about 20 times greater per capita than China or India. Even though China and India are quite large in terms of gross emissions they are still dwarfed by the US, and it must also be borne in mind that a quarter of the world’s population resides in the former two countries. Recent US complaints about the exemption of developing countries from emissions cuts must be considered in this context.

In order to enter into force the Protocol requires the ratification of at least 55 countries. Out of these, developed countries who account for at least 55% of global greenhouse gas emissions in 1990 must also ratify. Thus, the treaty’s effectiveness is also its weakness, industrialised Parties are essential to its success, consequently considerable bargaining power is in their hands.

By enshrining historically high emitters of greenhouse gases and thus penalising low emitters the Protocol and its Marrakesh Accords offer a distribution of global climate power little different from the late Victorian period. By permitting the high emitters such a generous political space the Protocol is fundamentally aristocratic.

Defenders of the Protocol may argue that its purpose is not to set the whole world to rights but at best to provide a framework upon which greater future achievements may be built and the world’s environmental future be saved. But, recalling the climatic devastation of the nineteenth century, a period in which famine all but disappeared in Western Europe but expanded voraciously throughout the colonial world, we might ask: “For whom will the climate be saved?”

If the international community truly aims to address the adverse effects of climate change it must be willing to challenge the claims to aristocracy of developed nations and the pauperisation which is its foundation. This same pauperisation leaves many poor nations ill-prepared to deal with climate change.

2    The road to the Marrakesh Accords

Despite its technocratic nature any outcome of the Kyoto Protocol process is a product of politics first and science a distant second. Behind every figure, formulation and mechanism must be heard the distant roar of heated negotiation, roughshod bullying by developed countries and ideological dogmatism pursued to the point of idiocy.

The negotiations in Marrakesh were to be the concluding round to a lengthy series of political battles dating from the controversial Kyoto Protocol of 1997. Parties had met in Buenos Aires in 1998 to set out a plan of action to operationalise the Protocol. This Buenos Aires Plan of Action (BAPA) set the sixth conference of the Parties to the UNFCCC (COP6) as the deadline for agreement on a package of issues. However, the Protocol seemed near collapse at the end of COP6 in the Hague in November 2000. [4]

No agreement had been reached on several key Protocol issues including:

·        the rules concerning the market-based ‘flexible mechanisms’ for Northern countries seeking to avoid or delay reducing their greenhouse gas emissions;

·        a legally-binding compliance regime and penalties for non-compliance, as well as matters of accounting, reporting and review; and

·        the definition and available quantities of ‘carbon sinks’ which permit the avoidance of domestic emission reduction and defers a shift away from the fossil fuel economy.

The root causes of the greenhouse gas problem stand disguised by the seemingly politically bland list above. The flexible mechanisms which the US had demanded so strenuously at Kyoto allow the perpetuation of the carbon-intensive fossil fuel economy. Such fossil fuel reliance exacts a huge social, environmental and economic cost from the developing world where much oil is sourced. (As US Vice-President Dick Cheney remarked: “The good Lord didn’t see fit to put oil and gas only where there are democratic regimes friendly to the United States.”) The three mechanisms themselves are riddled with loopholes and potential pitfalls for developing countries (see sidebar: Flexible Mechanisms).

Flexible Mechanisms

At COP4 in Kyoto the US stridently protested that it would not participate unless there was some market-based flexibility to ease greenhouse gas reductions. Three mechanisms were proposed - a trading regime, and two means to earn emissions credits by sponsoring projects in developed or developing countries:

1.   Emissions trading - an industrialised country that is subject to emissions reductions targets under the Kyoto Protocol (an Annex 1 country) may buy ‘unused’ emissions from another Annex 1 country.

2.   Joint Implementation (JI) - an Annex 1 country is able to claim credit for reduction measures implemented in another Annex 1 country, such as a forestry project for ‘carbon sequestration.’

3.   Clean Development Mechanism (CDM) - in its early formulations the CDM was designed as an addition to the general commitment of developed countries to transfer environmentally sound technologies to developing countries. Emissions reduction credits could be earned as an incentive for such transfer.

The ‘flex-mex’ are problematic for a number of reasons, not least of which is their inability to really reduce greenhouse gas emissions due to the enormous loopholes built in (see below: Outcomes of COP7). Presence of the Russian ‘hot air’ in the market allows a net increase in emissions in the short term.

In the post-Marrakesh scenario a reversal has occurred where CDM credits are seen as the basis for such clean technology transfer rather than an addition. Japan and Canada were hotly opposed to texts which said that CDM projects should not divert existing official development assistance (ODA). In a ‘cart before the donkey’ scenario, technology transfer is increasingly being forced to be conditional on CDM participation.

The tradability of CDM credits now means that they are seen as more troublesome than the more easily-obtained JI or cheap emissions trading credits (ballooned by ‘hot air’).

An additional complication is the ideological mask underpinning the rationale for mechanisms. Nodding its head at the prevailing political economy of the times, the mechanisms are supposed to work the “magic of markets” and somehow smooth the way towards a low-carbon future.

Taking the mechanisms as benign or at the very least an unpleasant means towards a worthy environmental end (as some NGOs do) misses the problems with large market-based “solutions”.

First, the dynamics in any such market are not naturally given and in practice require a great deal of forcing: witness the bitter political struggles from COP4 onwards over the mechanisms. The outcome of this is that those with most market power - the aristocrats - will seize the high ground of this uneven playing field by threatening unilateral walkouts.

Second, the loophole concessions secured at COP7 serve to make the market viable whilst grossly distorting it (i.e., eroding environmental integrity whilst allocating market power). This is no paradox; the big players will only enter if they are assured of success, high returns and little impact on domestic industrial interests. Contrast the US demands for law and policy ‘harmonisation’ in the international trade arena. Trading ‘partners’ are pushed to adopt a regime which US companies are already harmonised with.

When developing countries adopt reduction commitments and enter the emissions trading market they will be facing fully-armed and heavily stockpiled trading partners.

Furthermore, there were outstanding issues relating to strengthening the implementation of the UNFCCC itself:

·        financing for developing country adaptation, capacity-building and technology-transfer towards sustainable development (i.e. poverty eradication and clean energy use).

With little progress made in the first week of the Hague talks, COP6-President Jan Pronk, environment minister of the Netherlands, proposed that negotiations be split off into smaller groups focused on the ‘crunch issues’ above. This was initially met with opposition from the Group of 77 developing nations (G77) and China who were concerned about a lack of transparency and opportunities for full participation by all Parties. Although they agreed on the condition that no more than two groups met at anyone time, a trend was set until COP7 in Marrakesh that favoured countries able to field large delegations (generally the developed countries) over smaller developing countries that could sometimes send only one or two delegates to cover the entire negotiations. [5]

Controversy was fuelled when Pronk circulated a draft President’s text that he claimed was the result of his ‘own political judgement’ but highly favoured the carbon aristocrats. It was perhaps too much to expect that a substantive challenge would be mounted from within the ranks of developed countries. No agreement was reached and Parties agreed to resume negotiations in Bonn the next year.

In the interim the US, under George W. Bush, officially withdrew from the Protocol process, declaring it ‘fatally flawed’ as it would damage the US economy and failed to force developing countries to comply to emissions reductions. (Technically however, the Kyoto Protocol is strictly a programme for developed countries. Developing country commitments would require another protocol.)

COP6 resumed in July 2001 in Bonn. Parties struggled to reach a ‘political’ decision over the key issues and Pronk once again issued a President’s draft text mid-session. No agreement seemed in sight after a sleepless weekend. Japan resolutely held onto a hardline position on compliance. Eventually, the EU with the aid of the G77 and China was able to broker an eleventh hour deal with Japan.

A package of draft decisions, the Bonn Agreements on the Buenos Aires Plan of Action, were agreed with a revised section on compliance. Although the text pleased almost no-one, Parties indicated that they would be prepared to accept the text although compliance issues remained a major sticking point.

Essentially, developed countries wished to have free access to mechanisms such as emissions trading to offset greenhouse gas reduction commitments without having binding emissions reductions targets. Thus the way was opened for lucrative market in greenhouse gas trading - ‘carbon trading’ - which was de-linked from the initial imperative for its establishment: mitigating global warming. [6]

Although environmental NGOs had fought against many of the concessions granted to the Umbrella Group the resistance of Japan and its allies produced a shift in the NGOs understanding of what was politically possible (see sidebar: Troubling concessions). Such was the case that despite the enormous blows to environmental integrity and equity, when the final deal was struck most NGOs rejoiced. Galling as it was to do so, they would have to defend the Bonn Agreement from then on.

By the end of COP6bis, as it was known, drafting work remained uncompleted on flexible mechanisms, compliance, reporting and accounting, and sinks, these were forwarded to COP7 for conclusion and adoption.

Troubling concessions: the case of carbon ‘sinks’

Several crucial concessions had been granted in COP6bis to the ‘Umbrella Group’ of Canada, Japan, Russia, New Zealand, Norway and Australia. In particular the inclusion of sinks in the CDM and the generous allowance for developed country carbon ‘offsets’ via such sinks threatens to seriously undermine the effectiveness of the Kyoto Protocol.

It is problematic for a number of reasons:

First, it takes a simplistic view of the capacity of trees to reliably absorb and retain carbon dioxide. In fact, a study published by the science journal Nature on November 7, 2001 stated that, “although carbon sinks have a role to play in absorbing excess CO2, it is possible that the net global terrestrial carbon sink may disappear altogether in the future.” [7] In addition, the majority of sinks research has been conducted in temperate regions, tropical sinks remain largely under-documented. Even then there is a lack of data to establish rigorous carbon accounting and verification procedures.

The lack of scientific rigour in the political process reflects, in this instance, the vested interest of the Northern forestry industry and a generous concession to relatively large tracts of forests in the North (which have grown or been maintained at the expense of Southern forests). [8]

Second, the inclusion of sinks in the CDM potentially allows the Northern Parties to annex large tracts of developing country land in order to ‘fix’ carbon dioxide in tree plantations rather than focus on realising ‘carbon credits’ from encouraging clean technology transfer and sound energy projects in developing countries. Such a concession not only raises the spectre of land rights issues for indigenous peoples, biodiversity loss, and meagre development projects that subsidise developed country consumption patterns with developing countries’ land, it also leaves developing countries in the lurch with respect to global warming. This ‘carbon colonialism’ lets large emitters off the hook and leaves vulnerable developing countries to deal with any impacts of global warming.

Third, the emergent trend to tie all development assistance and technology-transfer commitments on climate change to the CDM channel could mean that developing countries end up with technology-thin mono-crop plantations rather than renewable energy or cleaner fossil fuel generating capacity.

Prior to Bonn, the EU had suggested the imposition of a 50% cap on the use of flexible mechanisms, in order to give some balance to domestic reduction efforts. AOSIS and developing countries were in favour of higher caps. Any caps at all were opposed by the US and the rest of the Umbrella Group. This suggestion was buried at Bonn allowing developed countries unrestrained use of the flexible mechanisms.

In the closing days of COP6bis Russia tabled an outrageous demand to raise its domestic forest management credits from 17 million tonnes of carbon dioxide to 33 million tonnes per annum. (This was in addition to the ‘hot air’ concessions). One immediate consequence of this is that such oversupply will cause the effective price of carbon credits to drop which would be detrimental to both Russia’s financial ambitions and the prospects for carbon credits realised from CDM projects to fetch an attractive price on the market. Although unresolved at the resumed session this concession was key to Russia’s agreement to the COP7 deal. Once again a carbon aristocrat profited (even at a marginal loss) at the expense of developing countries. [9]

It must be noted that this excessive use of sinks is limited to the first commitment period (2008-2012) but it is likely that this will produce a disproportionate investment in sinks projects, a ‘sinks rush’ if you like for cheap carbon credits. This would mean the weak start of the CDM and consequently a longer teething period for its institutions. With the scientific question marks around sinks the sinks rush may also mean that much money, effort and land will be tied up in what may prove to be ultimately environmentally worthless.

3    The Marrakesh Accords

Negotiators and observers arrived in Marrakesh expecting to complete the ‘historic’ Bonn Agreements and swiftly proceed towards ratification of the Protocol. The Bonn Agreements had secured a political decision from the Umbrella Group although many fine details remained to be settled. As it turned out, the devil was in the detail.

Several days into COP7 it rapidly became clear in all three negotiating groups - on mechanisms, compliance and reporting and accounting of greenhouse gas inventories - that the Umbrella Group were attempting to stretch or break the political agreements of Bonn.

Japan and Canada in particular mounted the most vociferous attacks on the environmental and legal integrity of the Bonn Agreement texts. All manner of safeguards for public accountability, review and environmental assessment were being dismantled, deleted or rendered impotent in the name of ‘investor certainty’ or ‘reducing investor risk.’

In the mechanisms negotiating session the Umbrella Group would mount a multi-pronged attack on the draft texts with Japan or Canada leading the way and Australia, Russia and sometimes Norway or New Zealand providing backup. Very often it was left to China, India or Samoa acting for the G77 and China to defend opportunities for public participation and legal integrity. The EU rarely applied its political weight since the emissions market was already shaping up to its satisfaction.

At times Umbrella Group demands verged on the ideological or the idiotic. Almost as if it was wielding a mallet at the fairground Canada visibly twitched at the mention of granting the Executive Board of the CDM any executive power, or allowing anything like more than 30 days for public review of a CDM. Several times the co-chairs of the mechanism group - Chow Kok Kee of Malaysia and Raul Estrada of Argentina - attempted to restrain Canadian hammering in order to preserve the integrity of the Protocol and the political agreements made at Bonn. Canadian and Japanese efforts on behalf of the private sector soon began to lend fuel to the corridor whisperings of the ‘Kyoto Trade Organisation.’

Kyoto Protocol to Emissions Industry: “Signed, sealed, delivered - I’m yours.”

Unsurprisingly, outside the doors of the mechanisms negotiating room was the stall of the Emissions Marketing Association (EMA). The cover of their Fall 2001 Summary Report boasted an interview with Canada’s chief negotiator at COP7, Paul Fauteux, Director General of the Climate Change Bureau of Environment Canada (the state environment agency). It expressed his pleasure at the lack of caps on emissions trading, and that ‘eligibility to participate’ in the mechanisms was limited to compliance in maintaining national greenhouse gas inventories.

Fauteux also raised two issues that were to haunt COP7 negotiations:

A major ‘inconsistency’ was present in the Bonn Agreement because the original draft stipulated that a country with a binding emissions reduction target cannot participate in the mechanisms if it has not agreed to ‘binding consequences’, i.e. penalties, for non-compliance. Japan, Russia and Australia had pushed for the insertion of an inconsistency with a demand that the question of ‘binding consequences’ would be deferred until after the ratification and entry into force of the Kyoto Protocol. These would furthermore be subject to ratification of an amendment to Protocol Article 18.

Second, he noted that under the Bonn Agreement a statement that Parties buying credits under emissions trading ‘should’ maintain a reserve of 90% of their assigned amount of emissions was not legally binding because the word ‘shall’ was not used instead of ‘should.’ He warned of conflict between Parties in Marrakesh over ‘should’ or ‘shall’.

During negotiations it became increasingly apparent that Fauteux and his colleagues were not negotiating on behalf of Canadian or global environmental interests but rather for the interests of the emissions trading industry and the preservation of Canada’s carbon aristocracy. The EMA’s choice of cover personality was spot on.

4    How to be a climate negotiator (advice for carbon aristocrats) [10]

Lesson 1: Linguistic gymnastics

Negotiating sessions for the mechanisms were filled with the Umbrella Group roaring ‘should’ and the G77 and China and Samoa demanding ‘shall,’ and the EU somewhat noncommittal with a tendency to favour the developing country position. There were also debates over ‘systemic’ or ‘systematic,’ ‘elaboration’ or ‘calculation,’ ‘sound/strict/strong,’ ‘30 days/45 days/60 days,’ or ‘one fourth/one third/two thirds/three/four/six.’ Discussions would stretch on for hours on the choice of some words to the considerable frustration of the co-chairs who at one point resorted to calling upon a digital thesaurus to silence niggling Canadian quibbles.

Lesson 2: Ignore unsatisfactory prior negotiations...Push for more!

However, these were not always frivolous discussions. A frequent strategy of Japan and Canada was to make demand for an un-bracketed portion of text (i.e. previously agreed in negotiations) to be amended. This played on the discontinuity between past negotiating sessions and Marrakesh and capitalised on opponents forgetting an old debate in order to insert fresh demands into negotiated texts. This sets a poor record of precedents for international negotiations and the spirit of multilateralism. Nonetheless, this was standard practice in Marrakesh as it is in other forums such as the WTO. When insubstantive Canadian interventions in negotiations were not entertained by the co-chairmen chief negotiator Fauteux did not hesitate to frame his complaints as a diplomatic issue during COP plenaries.

For example, in the texts on JI projects and the CDM there are stipulations for the timeframe in which complaints regarding the formal acceptance of a validated project can be raised. This formal acceptance, or registration, is the prerequisite for the issuance of carbon credits from a particular project, which are then available for trading. In prior negotiations, after much argument, a figure of 60 days had been agreed in which a review of a CDM project can be called.

Lesson 3: Fiddle the numbers

During the Marrakesh negotiations Canada called for this to be reduced to 45 days (it had already managed to whittle down the JI review time to 45 days from 60 days). The EU objected stating that the workload for the CDM was ‘very different’ than JI and that the figure was already the product of ‘many hours of negotiation.’ The United Kingdom also added that the CDM workload would be far greater than JI (since it theoretically involves considerations of technology transfer and contributions to the sustainable development of the host country) and thus more time was needed. Canada retorted that if it couldn’t get 45 days for CDM then it wanted 30 days for JI review!

When one considers that the Umbrella Group had already pushed for forestry projects, in the form of sinks, to be included in CDM there is a strong case for a reasonable review period during which complaints can be raised.

As the Nature article suggests, there is no certainty about the absorption capacity of forest sinks nor is there any guarantee that they will not ‘leak’ carbon at a later stage. There is therefore a reasonable basis for challenges to sink-based projects on a scientific basis. Then there are the physical and social impacts of such projects.

Lesson 4: Safeguard investor interests - stamp out public participation

Take the hypothetical situation where a forest-dwelling community is informed some days after project registration, perhaps by an NGO or activist, that their home is about to become a carbon dioxide absorbing plantation or be ‘retired’ to make room for one. Honoured as they might be to aid developed countries in preserving their fossil fuel lifestyle and perhaps counteract global warming, they may still have some objections. There needs to be time to draw up a complaint, contact the CDM Executive Board or (hopefully) sympathetic members of their government, arrange for a meeting of the board, perhaps travel in person to present their case, and await the board’s decision. All this might conceivably take up to 60 days and might certainly be difficult or impossible within 45. But for eager investors this is all too long.

Then there is also the question number of board members required to request a review of a CDM project. No surprises then when Japan decided to open up for debate a compromise figure granted to them in exchange for excluding stakeholders and observers from the review. That the agreement of at least one fourth of the ten-member board would be needed to call for a review was deemed too risky since ‘for investors, certainty is important.’ After much haranguing Switzerland interjected with a plea that Parties must not ‘look at the Executive Board as some kind of enemy.’ Negotiators finally agreed on the Chair’s suggestion of a minimum of three members rather than a fraction.

Lesson 5: If you can get what you want, take your time...

It was in a manner such as this that limited negotiating time was consumed. Japan and Canada were not the only ones to haggle over minutiae, Norway was exemplary in this regard and sometimes China lost sight of broader objectives. Issues that could not be agreed upon in negotiating sessions or closed drafting groups were forwarded to the high-level ministerial segment for adoption and political negotiation later in the week. The co-chairs were not afraid to shame pedantic negotiators with a threat: ‘Do you really want your minister to have to choose a number between three and five? Aren’t you a negotiator?’

In actual fact the major issues were settled before the COP7 deadline. Sensing that there was “spare time” the Umbrella Group decided to seize the opportunity to gain more concessions. The pullout of the US put pressure on supporters of Kyoto to bring the other developed country groups into the pact. The upshot of this was that without the US countries like Russia, Japan, Australia, Canada, and New Zealand gained enormous bargaining power. Kyoto’s ratification and entry into force depended on their participation to fulfil the requirement that signatories must comprise at least 55% of industrialised country emissions. Despite any claims of a triumph of multilateralism, unilateralism is a determining force in the Kyoto process.

5    Outcomes of COP7

The final hours of negotiation revolved around three issues: the legally-binding nature of a compliance regime; the doubling of Russia’s domestic forestry credits; and the ‘fungibility,’ ‘laundering’ and ‘banking’ of emissions units. Russia, Japan and Canada were the key countries to face off. Australia had already refused to send its minister to Marrakesh since national elections were being held, so it had forsaken much negotiating capacity.

Lesson 6: Fudge compliance without looking like you are doing so

Well before COP7 the hardline position on compliance had already been outlined by Paul Fauteux in the EMA Summary Report. This objective was pursued to the end. It seemed unlikely that Russia or Japan would concede on this issue either. Several hours passed whilst delegates and observers waited for the opportunity to make a morning phone call to Prime Minister Junichiro Koizumi. Unfortunately for the EU and G77 and China Koizumi’s morning news also included the announcement that Japan was entering the worst dip in its long recession.

Although a set of penalties had been drawn up for non-compliance - a penalty of 130% for failing to meet an emissions reduction target, suspension of eligibility to sell credits and the development of a compliance action plan - the decision on the legal nature of the compliance regime was deferred until the first meeting of the Parties to the Kyoto Protocol (the COP/MOP) following the treaty’s entry into force.

Anyone who still holds hope that a legally binding environmental treaty may come into force might as well give up now. As mentioned above, Protocol Article 18 deals with ‘binding consequences’ of non-compliance by stating that these shall be resolved by an amendment to the Protocol.

A country can ratify Kyoto, let it come into force and yet still refuse to ratify the amendment, claiming that it is party to one and not the other. A Party may then still trade carbon credits and yet be in a legal limbo as far as ‘binding consequences’ of compliance are concerned. There is also the question of when the first COP/MOP will actually happen. Those quick to hail the Kyoto Protocol after Marrakesh as the ‘most legally-binding environmental agreement yet’ need to look again.

Fungibility, laundering and banking

The G77 and China had proposed a new mechanisms unit called the ‘removal unit’ or RMU in order to stop the abuse of sinks credits generated in industrialised countries. The RMU would prevent sinks credits being carried over - i.e. ‘banked’ - to subsequent commitment periods since RMU’s would be retired at the end of an accounting period. It would have gone some way towards ensuring that sinks and the emissions trading system would not be abused, i.e. a convenient way to avoid domestic action (bearing in mind that caps to trading were removed in Bonn). This RMU was accepted in Marrakesh (but see below).

Additionally, G77 and China wanted detailed accounting of emissions reductions generated by various activities. This would not recognise the equivalence of different units realised under the flexible mechanisms. Each flexible mechanism produces a specific unit. Parties are assigned units up to their emissions allowance which they may trade - the ‘assigned amount unit’ (AAU). An emissions reduction unit (ERU) generated under JI would remain an ERU, a certified emissions reduction (CER) from CDM would remain a CER. This would serve to restrict the fluidity of the mechanisms market and would act to deny Umbrella Group parties full enjoyment of this US-instigated loophole.

In a coup for the emissions traders, full convertibility between units - known as ‘fungibility’ - was eventually granted. CDM-generated CER’s would enter the emissions trading market by being fungible with AAUs. This also meant that the RMU was also effectively worthless since it could be easily ‘reborn’ as another unit without any restrictions (such as the domestic AAU). This process of reincarnation is known as ‘laundering.’ The potential for schizophrenic emissions units with past lives is now limitless.

Banking of remaining or excess emission credits beyond those needed to fulfil commitment targets was also granted with the proviso that banking of credits generated under CDM or JI would be limited to 2.5% of the target. With fungibility this limit is effectively meaningless (a CER or ERU becomes an AAU with no banking restrictions) and the consequence will be that developed countries can stockpile credits for future commitment periods. When, not if, developing countries are eventually brought into the regime they will be facing a group of carbon credit-wealthy aristocrats.

Lesson 7: If someone needs your vote, you can probably get what you like from them

The Russian negotiator tabled his demand for a 33 million ton sink allowance by stating that the Duma ‘would accept not one ton less’ than that figure. Russian ratification would be conditional upon this re-negotiated amount which has no scientific basis to substantiate its remarkable doubling. In the early hours of the morning of 10 November there was little resistance. Disappointingly, the G77 and China failed to seize gains for developing countries whilst such handouts were being distributed to Russia, Canada and Japan.

6    Further outcomes - a poor deal for the South

The Umbrella Group hardliners got what they wanted and the South got...almost nothing. A special experts group for least developed countries under the Convention was “bracketed” by the US and only approved in exchange for a stipulation that this would not set a precedent for the special consideration of other groups.

Some experts argue that calls for dramatic emissions reductions need to be contextualised with any adaptation efforts since what is a safe target depends on the adaptive measures taken. The adaptation fund trumpeted at Bonn by the EU, Canada, New Zealand, Norway and Switzerland amounts to a mere $410 million every year by 2005, with a funding review in 2008. Without even taking in mind the context of declining official development assistance (ODA) the damage unleashed by Hurricane Mitch on Honduras and Nicaragua amounted to some six billion dollars in just one event. The poorer developing countries will need more than this ‘hot air.’

In all likelihood the CDM is unlikely to ever take off despite calls for a ‘prompt start’ and several projects in the pipeline including a swathe of eucalyptus plantations in Brazil. Now that CERs are fungible with other carbon credits and not merely an additional incentive for technology transfer it will have little value as the market will be flooded with cheap Russian credits. Also, the JI process is far more streamlined - i.e. conducive to investors - than the CDM’s. Additionally, the countries most desperate for CDM, the African states, are the countries that investors such as Japan are least interested in. There is a fundamental lack of mutuality in the interests around CDM.

According to a Japanese economics think-tank present at Marrakesh, Japan is most interested in countries such as China, India and South Korea, countries that already have considerable domestic capacity and are already the recipients of considerable development funding.

A spokesman for oil giant BP was more frank. ‘The CDM will not make a non-viable project viable,’ he said. Despite the money and pilot projects already committed, a company such BP would be bound by the bottom line. While the conditionalities of CDM are a ‘barrier to entry’ renewable energy is hardly accelerating in BP’s hands. Oil industry researchers Greg Muttitt and James Marriott of PLATFORM estimate that it will take 1,250 years for BP’s renewable energy production to overtake its oil and gas production.

Advanced as they were for their age, the railroads of the nineteenth century did little to help the victims of famine. CDM was touted as a means of delivering the high technology of today in order to alleviate poverty and combat climate change. Like the early railroads safe and sound clean technology is inaccessible to the developing world and it is making little impact on global warming. But things could always change.

7    Preparing for the Storm: Mutual self-help

While the launch of a new trade round at the WTO apparently saved civilisation for homo economicus, the Marrakech accords appeared to do little other than preserve the privileges of the Northern strain of that apparently beleaguered species.

The clearest outcome of the UNFCCC process is not a multilateralism where states will join forces in order to ward off common troubles (we may have to look at the international coalition against terrorism for a more likely, and less wholesome, candidate). Instead the process shows just how deeply entrenched the hierarchy of nations is.

In their attempts to use the very law deployed by states against those states Kyoto also demonstrates the inability of many non-state actors to fully get to grips with the complex terrain of power that cuts through international negotiations. The climate change issue is not narrowly environmental, it cuts through and across the geopolitical dynamics of modern states.

The IPCC dates the start of the greenhouse gas problem to the birth of the industrial revolution one hundred and fifty years ago. In reality, there is a second root to the problem which arises long before in the colonial age. What was then a world cut in two, coloniser and colonised, is preserved today between the developed and developing worlds.

Should millions die from adverse climate change perhaps the finger will be pointed at the energy-hungry billions of China and India rather than the excessive consumption and inaction by the largest emitters of greenhouse gases. Mike Davis wryly observes that meteorologists of the Raj tried to explain that it was sunspots ‘not imperialism’ that killed millions in the Deccan. Ultimately, it is a lethal combination of nature and imperialism as well as the historical pauperisation that leaves many modern states ill-prepared to save their people from the most adverse effects of climate change.

The conclusions of Davis’ study should be taken to heart. If indeed the climatic/imperial El Niño famines of the nineteenth century paved the way for the formation of the Third World in the twentieth century then there is a social and political imperative to prevent a similar outcome and reverse the situation for our century. The IPCC has stated that El Niño events have become ‘more frequent, persistent, and intense during the last 20 to 30 years compared to the previous 100 years.’ [11]

Perhaps the answer for developing countries is that what is needed is mutual self-help. Northern demands for the opening of markets and the construction of the South as an object in need of salvation by the North have been developing for several centuries. We should be wise to this by now.

The developing world is an uneven one riddled by much disagreement, but we must help ourselves because we know that the North will not do it for us. As Noam Chomsky has recently remarked, ‘hundreds of years of imperial violence have [had] an enormous impact on the intellectual and moral culture.’ Nonetheless we must also recognise what is of value and what is offered out of honest friendship from the North.

The G77 and China has had an unprecedentedly cohesive year in the climate negotiations under the chairmanship of Iran. As Iranian ambassador Bagher Asadi remarked, ‘There is now a strong foundation to build on.’

This is good news for there is a greater divide to bridge than the many that lie between developing countries. Aristocracy is not easily relinquished, the French Revolution taught us that. But it also taught us that new opportunities for democracy emerge from the demise of aristocracy.


1.   Davis, Mike. Late Victorian Holocausts: El Niño Famines and the Making of the Third World, London: Verso, 2001.

2.   At the time of writing a draft version of the Marrakesh Accords is available online at:

3    IPCC. Climate Change 2001: Synthesis Report, pre-publication draft, 2001, p. 12.

4    For more detailed accounts of pre-COP7 negotiations visit: and

5    Only limited copies of key drafting texts, such as mechanisms, were made available during negotiating sessions. For negotiators the situation is simple: if you don’t turn up, you don’t get a draft. Although the G77 and China cover some 130 countries and help ensure that all sessions are ‘covered’, that body does not represent the interests of all its component groups. Thus, Saudi Arabia for example will usually represent itself in negotiations since it is often at odds with the broader G77 and China policy on climate change. Members of the Africa Group are interested but at the same time quite under-staffed and thus have to rely on the G77 and China designated negotiators.

6    For more analysis see: Lohmann, Larry. ‘Carbocracy or Democracy? Intellectual corruption and the future of the climate debate’, The Cornerhouse, 24, 2001 [ ] ; and, , Corporate Europe Observatory, ‘Greenhouse Market Mania - UN Climate Talks Corrupted by Corporate Pseudo-solutions’, November 2000 [ ].

7    Schimel, D. S., et al. ‘Recent patterns and mechanisms of carbon exchange by terrestrial ecosystems,’ Nature, 414, 2001, pp. 169-172.

8    For an in-depth look at the problems with sinks, in particular carbon ‘offset’ forestry see Lohmann, Larry. ‘The Dyson Effect: Carbon “Offset” Forestry and the Privatisation of the Atmosphere.’, The Cornerhouse, 15, 1999 [ ].

9    One COP7 participant remarked that he could only imagine ‘psychological reasons’ for Russia’s excessive demands. Beyond this the COP6 to COP7 process has shown demonstrable re-establishment of Russia’s international negotiating power.

10  Readers may be interested in a guide to the climate negotiations from a developing country perspective: Gupta, Joyeeta. “On Behalf of My Delegation,...”: A Survival Guide for Developing Country Climate Negotiators, Washington: Centre for Sustainable Development of the Americas / Winnipeg: International Institute for Sustainable Development, 2000.

11  IPCC. op. cit., p. 6.