Cancun Calling: Rorts and all

Don’t pay too much attention to the emission abatement targets coming out of Cancun at the end of the week. They may not mean what they say.

When Australia's climate change Minister Greg Combet joins the high level round of talks that kick off this week, one of his key briefs will be to play his part in one the biggest negotiating stings since the Kyoto Protocol numbers were agreed to in 1997.

He will not be alone. While then environment minister Robert Hill had the element of surprise when he pulled one of the great negotiating coups by getting avoided land clearing included in Australia’s Kyoto numbers, Combet will enjoy an air of complicity: Other rich nations are looking to employ similar accounting gymnastics – if you scratch my back, I’ll scratch yours.

This is no secret. The UN Environment Program issued a detailed report last week that said accounting rorts from “hot air” from eastern Europe and land use rules could add up to more than two billion tonnes by 2020. The EU has complained they could undermine the entirety of their emission reductions since 1990.

A study by Simon Terry, the executive director of the New Zealand Sustainability Council, goes further. Terry says that by adding in aviation and shipping – which are not accounted for under the Copenhagen Accord – the pledges may turn out to produce an increase in global emissions of 3 per cent from 1990 levels, rather than an advertised fall of up to 18 per cent.

This compares to IPCC estimates that if nations were serious about producing a 2°C target, they would need to cut emissions by 25 to 40 per cent. “The implications of the nature and scale of the loopholes is extraordinary,” Terry says. “It shows they are not serious about meeting conditions required to avoid dangerous climate change.” Greenpeace campaigner Paul Winn agrees. “It’s all about meeting targets.”

One of the key negotiating points for Combet will be to protect the so-called Australia clause – article 3.7 in the Kyoto Protocol – which gave Australia an effective mandate to increase its emissions by 28 per cent through to 2012 (something it has had no problem achieving) and ensure it carries over into the second commitment period.

Retaining this clause will add to considerably to the Labor government’s ability to either meet its 5 per cent unconditional target, or even be more ambitious. Some say this and other loopholes being sought by Australia could account for up to one third of the emission reductions required for a 25 per cent target.

To help achieve this, Australia will not rock the boat over the issue of “hot air”, the estimated 1.3 billion surplus credits created by the huge overestimation of economic growth in Russia, Ukraine and other eastern Europe countries.

Australia – along with New Zealand, Canada, Russia, Norway and several well-treed EU countries – is also at the heart of highly contentious negotiations on land use and forestry in a mechanism called LuLuCF. This seeks to define accounting rules for complex issues such as forest and rangeland management, droughts and bushfires.

But the controversy here stems from proposed “reference baselines,” which allow a country to set its own forestry targets and then claim credits for doing less. UNEP estimates such “lenient” accounting in LuLuCF alone could undermine the Copenhagen pledges by up to 800 million tonnes of CO2e.

Poor countries have been outraged, but the opposition of some has been muted by suggestions that a similar loophole could be afforded the REDD+ mechanism, which applies to forests in developing countries. The opposition of groups such as AOSIS (the Association of Small Island States) – which is fighting for a 1.5°C target – has been fractured by reported promises to invest in carbon capture and storage in some nations if CCS is included in the Clean Development Mechanism.

It seems that in the spirit of “compromise” and a “balanced outcome” that is the ambition of the Cancun talks, deals are being struck everywhere. The justification for this is that if agreement on several building blocks can be achieved, then the process can stay alive, hopefully with greater integrity in the future.

Green groups are trying desperately to limit the damage through intensive lobbying of negotiators, but there is a fall back position. Under the insistence of the UN – which clearly recognises the problem – the texts to be negotiated in the coming week by ministers will allow for a review of the Copenhagen pledges between 2013 and 2015.

This is significant. If retained, it will allow the review to not just take into account the latest science that will roll out from the IPCCC during that time, but also what UNEP describes as “gigatonne gap” – the difference between what the parties have aimed for (2°C) and agreed to do (3-5°C) and the impact of hot air and LuLuCF – heading towards 6°C and 7°C. There is also an agreement to consider aiming for a target below 2°C.

The priority, however, is the need to obtain an agreement to continue meeting – hence the importance of a “positive” Cancun outcome.

Hot air and land use

Simon Terry says that one of the problems dealing with complex issues such as LuLuCF is that so very few people – and only a handful of negotiators – fully understand them. Forest industry lobbyists – who understand enough to know they can potentially make windfall gains for the industry – are thick on the ground in Cancun.

“If countries are allowed to not only cherry pick which land use activities they will account for beyond forestry, but also set their own baseline for forestry accounting, it provides far too much scope for parties to game their accounts to mop up excess fossil fuel emissions,” he says. So much so, Terry says, that the emission reductions achieved from fossil fuels could simply be overwhelmed.

The final agreements on hot air and land use are yet to be agreed upon, but Terry says that rather than the 12-18 per cent range touted by the Copenhagen Accord, the end result could be 3 per cent at best, or even a 3 per cent rise.

This cherry picking includes the failure to recognise the emissions generated by draining peatlands for crops or other uses. The Wilderness Society estimates that this accounts for 500 million tonnes of emissions each year in rich nations alone, none of which is accounted for. A further 800 million comes from draining peatlands in developing countries, some so that biofuels crops can be grown so that credits can be generated when they are used in developed nations.

Other perverse outcomes are the use of wood pellets as a replacement for coal in power utilities, which is happening a lot in the UK because of soaring coal prices. Even though wood emits about as much as coal, companies are getting credits for using a “carbon neutral” fuel. The problem is, the neutrality is not occurring because the liability of chopping down the trees is not being accounted for.

The CDM mechanism is also under scrutiny. Many green groups are not satisfied over the apparent “resolution” of the controversy over credits issued for HFCs used in refrigeration plants. Having suspended the issuing of such credits while investigating claims that the rules were being gamed, the UN promptly allowed the credits to go ahead even after concluding that some of the activities might have been dodgy.

The CDM now looks like extending to carbon capture and storage, partly as bait to win over the recalcitrant Saudis, who are reluctant to agree to anything that might result in less oil consumption. Oil and gas companies have a particular interest in this, which may explain their strong presence here, as new rules being developed could allow them to claim credits for reinjecting CO2 to assist in the recovery of oil and gas reserves – an activity they already undertake.

It could mean that LNG tankers that return empty from Asian destinations may instead bring back millions of tonnes of CO2 from China and Japan to sequester in depleted gas basins, generating huge credits to the LNG industry. But that may also mean they have less claim for compensation under an Australian carbon price.

Two by two

Mexico, meanwhile, is being careful to avoid the mistakes of last year and has promised no hidden text and an open process as the talks head into the final week. COP 16 president Patricia Espinosa abandoned the usual practice of closing the venue on Sunday by convening a special plenary session to outline how she expected to avoid the disastrous result of Copenhagen, which was produced behind closed doors by only a handful of countries.  “There is no hidden text and no secret negotiations,” she said.

 Ministers from developed and developing countries have been paired to help resolve outstanding differences before the high level talks on Tuesday. Combet, at his first climate change talks, is working with his counterpart from Bangladesh to work through finance (still tricky over who gets to run the funds), technology (crucial to China) and capacity building. The key issues of mitigation and transparency have been handed to New Zealand and Indonesia. Brazil and the UK are looking after Kyoto Protocol issues, including article 3.7.

Party, party, party

Once the texts were presented and the first week of negotiations came to an end, it was time to party. The Mexicans hosted some 60 ministers at a lavish (there is no other type) dinner at the Moon Palace, while BiNGOs (business types) retreated to various functions scattered across some of the more salubrious venues on the hotel strip, and the NGOs crammed in huge numbers into Señor Frog’s, a party venue of some repute – even for Cancun.

The basic idea is to drink as much tequila as you possibly can, dance, and take the water slide from the back of the main bar, over the dancefloor, past the balcony, and into the lagoon. Then hope that somebody will save you. Some Australian types were set to attack this task with considerable gusto and aim for the 5am closing time, until an advisory came just before midnight from an office-bound flunky that Combet would give them an audience at 10am the next morning. Recovery plans were hastily implemented, but even the water costs $3 a glass.

Fossil of the Day

Saudi Arabia returned to the podium as Fossil of the Day on Friday for complaining about the number of representatives from “civil society”, which it said were a distraction to the talks. “Is there a pressing need to spend time with engaging these people,” its representatives are said to have argued. Saudi Arabia has also been pleading a special needs case, which some countries suspect may lead to claims of compensation if climate change policies result in the consumption of less oil.

The UNFCCC is also wary of the NGOs, and their habit of upping the ante with their protests in the final week of negotiations. So on Friday, the UN declared that NGOs now had to give 48 hours notice of a protest instead of 24. NGOs complained that was hardly conducive to spontaneity and their ability to respond to the issues of the day.

*Giles Parkinson will be filing daily from COP16 in Cancun for the duration of the conference. To read the previous dispatch, click here.