TWN Info Service on Intellectual Property Issues (Dec07/02)

5 December 2007


BALI CLIMATE TALKS TO DECIDE FATE OF KYOTO PROTOCOL

Please find below, TWN Climate Briefings No. 2

Best Wishes
Sangeeta Shashikant
Third World Network
email: ssangeeta@myjaring.net

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BALI CLIMATE TALKS TO DECIDE FATE OF KYOTO PROTOCOL

By Martin Khor, Third World Network


The Bali meetings on climate are the most important for many years. They may well determine the fate and the shape of the UN Convention on Climate Change (UNFCCC) and its Kyoto Protocol.

There are also high expectations from the public, particularly environmental groups, as reports on the dangers of climate change have been continuously highlighted in the media, particularly due to the four reports of the Inter-governmental Panel on Climate Change (IPCC) that were issued this year.

It is now increasingly believed that climate change is the greatest threat to the future of humanity and survival of the Earth. The UN Secretary General Mr. Ban Ki-moon has made climate change top of his agenda at the UN, holding a one-day “high-level event” in September in New York at which many heads of governments and states took part.

There are actually two related events in Bali on 3-14 December: the 13th conference of parties of the UNFCCC and the 3rd meeting of parties of the Kyoto Protocol.

A high level segment towards the end of the meeting will bring together Ministers, heads of international agencies, and a few government heads. The recently elected new Australian Prime Minister Kevin Rudd has said he will come to Bali, where he announce his country’s acceptance of the Kyoto Protocol, leaving only the United States as the only industrial country out of the protocol.

Despite the emergence of consensus among governments about the seriousness of the crisis and the need to take more urgent action, the Bali meetings are likely to be contentious. There are many complex issues in which there are deep divisions, and which will be difficult to resolve.

Perhaps the most important issue for Bali to decide on is the fate and future of the Kyoto Protocol. As the Bali meetings approached, there has been a steadily increasing reference by many political leaders, institutions and the media to the need of a new “comprehensive” negotiation and post-2012 agreement on climate change.

According to many reports, including in reputable newspapers, the Kyoto Protocol expires in 2012, and Bali needs to establish a new protocol or agreement to replace it.

This is misleading. The Kyoto Protocol was not created to last only a few years. Nor is there any agreement among the members that it has served its purpose and must now expire, to be replaced by something else.

The Kyoto Protocol was established in 1997 under the UN Convention on Climate Change (which itself was adopted in 1992). Under Kyoto, the developed countries have to undertake two major commitments – to reduce their Greenhouse Gas emissions, and to provide finance and technology to developing countries to assist them in undertaking climate-related responsibilities.

Under Kyoto, developed-country members (listed in Annex I of UNFCCC and which have ratified Kyoto) are legally required to cut their greenhouse gas emissions. They agreed to cut emissions collectively by 5.2% between 1990 and the end of the first commitment period, which is 2008 to 2012. Each country has its own specified target, and the targets are all listed in an annex of the Kyoto protocol.

The developed countries are also obliged to provide financial resources and technology transfer to developing countries. Article 11 of Kyoto says developed countries shall provide new and additional financial resources to meet the agreed full costs of developing countries in implementing commitments (for reporting on information) and provide financial resources (including technology transfer) to meet the agreed full incremental costs needed by developing countries to implement their commitments (which include formulating and implementing national/regional programmes for mitigation and adaptation.).

Developing countries are not required under the UNFCCC to commit to emission reductions, because of their lower development level, and as they contributed little to the historical build up of carbon dioxide in the atmosphere.

However the developing countries, like the developed countries, did undertake commitments under Article 4 (1) of UNFCCC to collect and submit data; and to formulate and implement mitigation and adaptation measures, plus other measures.
It was also agreed that the developing countries’ efforts would depend on whether the developed countries meet their commitments on providing finance and technology to developing countries.

The important Article 4 (7) of UNFCCC says that the extent to which developing countries implement their commitments under the Convention will depend on the effective implementation by developed countries of their commitments related to financial resources and technology transfer, and will take fully into account that economic and social development and poverty eradication are the first and overriding priorities of developing countries.

There are thus some important “development provisions” in the UNFCCC and in Kyoto.

The importance of the year 2012 is simply because the first commitment period of the developed countries ends then. The Protocol has a mandate for further commitment periods. The second commitment period starts in 2013.

Article 3(7) of the protocol establishes the first commitment period of 2008-2012 for emission reduction for developed (Annex 1) countries. Article 3(9) says commitments for subsequent periods for Annex 1 parties shall be established by amending Annex B of the Kyoto Protocol (which contains specific reduction commitments of each developed-country party).

Thus Kyoto’s first commitment period will end in 2012 and a second commitment period is scheduled to start in 2013. Kyoto mandates further commitment periods after the second period is completed.

Nowhere in the protocol is it stated that it will last only for the duration of the 2008-2012 period, nor that it will automatically expire in 2012. On the contrary, the expectation of the drafters and founders was that the protocol would last a long time.

By the start of 2013 the developed countries must have an agreed legally binding set of targets for further reducing their emissions. However, developed countries’ officials say that by 2009 the targets for this next period must already be set to enable a smooth transition from periods 1 to 2.

Thus, what is in the books is a negotiation for a second set of commitments of the developed countries for the post-2012 period. In fact such a negotiation has already been taking place, in an Ad hoc working group that last met in Vienna in August. The group will meet again in Bali.

It is thus wrong to claim that the Kyoto Protocol expires in 2012. Only the first commitment period ends then, and a second period should begin in 2013.

Why then the publicity about the need for a “comprehensive post-2012 Treaty”, which Bali is supposed to launch, as a benchmark for its success? There are probably at least three reasons.

First, the developed countries are no longer satisfied with the Kyoto Protocol’s exemption of developing countries from binding emission cuts. Nor are they happy that the implementation of existing commitments of developing countries has been made conditional on the developed countries providing them with financial and technology transfers.

It appears that they are now placing new conditions before setting emission targets for themselves. And the main condition seems to be that developing countries begin to take on more commitments. At least they are targeting highly populated countries like China and India and possibly more industrialized and big countries such as South Korea, Brazil, Mexico, South Africa and Indonesia.

The call for a “new post-2012 treaty” and for “comprehensive negotiations” is thus a code for pulling in developing countries into making more commitments as well as more binding commitments, with different levels or types of commitments for different developing countries. The differentiation of developing countries and their commitments is one plank of the developed countries’ strategy.

Since it is very controversial to place this demand so directly, there has been the orchestration of publicity of the need for a “comprehensive agreement”, to replace the Kyoto protocol which supposedly is “expiring.”

Secondly, there is the problem of the opting out of the US and Australia of the protocol, though both are members of the Convention. With Australia soon coming on board, the US is the lone industrial country outside Kyoto’s fold.

But it is a formidable loner, as it is the world’s largest emitting country. Moreover, other industrial countries especially the Europeans feel “cheated” in that they have to spend to become more environmentally efficient, while the US gets a “free ride”, and their competitiveness may be affected as US firms do not have to spend so much to change their technology.

The European countries are determined to get the US involved in the next phase of commitments. The US’ well-known argument for staying out is that the large developing countries do not have to commit. Thus Europe and Japan are doubly keen to get the developing countries to make commitments – because they themselves desire this, and because the US requires it.

Several European countries, having woken up to the realities of climate science, desperately want the US to be part of a post-2012 set of targets for emission cuts, and to somehow also pull in some developing countries either to commit to cut their emissions or to undertake some semi-hard commitments.
Third, the developed countries are lagging behind in meeting their emission reduction commitments and have failed very badly in fulfilling their finance and technology transfer commitments. In their next phase of commitments, they want a “comprehensive” agreement in which developing countries have to make some payment, in order for they themselves to be ready to commit again.

Bringing in developing countries and pressurizing them to commit in a “comprehensive agreement” can help the developed countries to reduce their embarrassment of not having fulfilled their first-period commitments, and reduce the pressure on them in negotiations for the second-period emission-reduction commitments.

The developed countries would then have something to “trade off” – to have an agenda that includes new and more binding commitments of the developing countries, to balance off the new commitments of developed countries, while the latter also hold up as carrot the promise of finance and technology transfer (which they are supposed to provide anyway, which they have not provided satisfactorily, and which they will once again use as an “incentive”).

If this seems familiar, it may be because there is an analogy with the recent history of developed countries’ behaviour in the trade arena. Developed countries had agriculture exempted from GATT rules for many decades because they could not compete freely. In effect the developing countries were providing concessions and special and differential treatment to the developed countries.

In exchange for putting agriculture back in the trading system GATT-WTO, the developed countries initiated a comprehensive negotiation – the Uruguay Round – in which they got the developing countries to accept new treaties (in services, intellectual property, investment measures) in exchange for doing what they should have done anyway.

The developing countries succeeded in having the Uruguay Round agreements to mandate another round of negotiations on agriculture. This is similar to the Kyoto protocol having a second-commitment period.

Indeed, a second agriculture round in the built-in agenda after the Uruguay Round was seen as necessary as the developed countries in effect did not liberalise their agriculture as their tariffs were set very high on key products and they could continue their subsidies due to the nature of the subsidy “boxes” or categories (Amber, Blue and Green) in the agriculture agreement.

While another agriculture negotiation was already on the table, the EU and US pressured developing countries to enter a new comprehensive negotiation under the Doha Work Programme by promising developing countries some development gains while actually putting new market access issues into the negotiations – investment, competition, government procurement, and a new round of industrial tariff cuts.
In the broad and complex negotiations that followed, the developed countries could work on trade offs and put pressure on the developing countries while shielding their agriculture sector once again.

In the climate negotiations, the developed countries have not inspired much confidence, largely because they have not fulfilled their two major commitments.

They have not made enough progress in meeting their reduction targets so far. The UNFCCC’s Greenhouse Gas Data 2006 report exposed “worrying” upward trends in the 2000-2004 period.

Although overall emissions by developed-country parties overall dropped 3.3% in 1990-2004, this most mostly due to a 36.8% decrease by countries in transition (Eastern and Central Europe or EITs) because of their sharp economic contraction.

Most worrying was that other industrialized countries registered a 11% increase. An additional concern is that the EITs are now increasing their emissions (up 4% in 2000-2004). According to UNEP’s Geodata, CO2 emissions rose from 1990 to 2003 in Western Europe from 3.5 to 3.6 billion metric tons and in North America from 5.5 to 6.4 tons.

Meeting the first-commitment period targets should thus be a top priority of the next years (to 2012).

The developed countries have also failed in providing enough financial resources to developing countries, and they have completely failed in setting technology transfer into motion.

In Bali, most of the developed countries will seek to change the agenda and even to change the structure of the Kyoto Protocol and perhaps also of UNFCCC, through proposing a comprehensive negotiation, and the setting up of an overall negotiating group, that will cover a wide range of issues.

But many developing countries are not yet ready to undertake legally binding or semi-binding commitments. For a start, the developed countries have not yet lived up to their two major commitments.

Second, the developing countries are likely to argue that what is important is not the total emissions put out by a country, but its per capita emissions. And most developing countries’ emissions per person are still low compared to developed countries’ levels.

Third, they are concerned that if they have to curb their emissions, their economic and social development will be affected. There are recent studies showing that growth will be hardly affected (only reduced by 0.12% a year) if the required deep emission cuts are done in a proper way.

But there are hardly any comprehensive studies showing what the new “development pathways” are, nor any successful model on which to base the new development models.

Thus a major battle on the fate of the Kyoto Protocol and on the nature of the negotiating process and agenda is likely to take place in Bali.

It is premature to declare an end to the Kyoto Protocol or to predict a decision to create a “new post-2012 climate treaty”.