Towards Cancun…21 September 2010Dr Jeanne NgDirector – Group Environmental AffairsCLP Holdings Limited
Beyond The Science… Experts consensus (over 2000 scientists from around the world who advise governments are on the IPCC) Governments may/will legislate in accordance with scientific opinion and/or political agendas Potential liabilities from regulations…regardless of whether the science is right or not… 2
2004 1998 1992 2008 2007 1997 2002 1991 2006 1995 2001 9 years 2005 2009 1979 1994 2000 1990 1988 COP 10 (Buenos Aires, Argentina) Buenos Aires Program of Work On Adaptation & Response Measures First World Climate Conference (WCC) Convention enters Into force after Russia’s signature (>55% emissions) COP 6 (The Hague, Netherlands) Talks based on Plan breakdown COP 14 & CMP4 (Poznan, Poland) COP 15 & CMP5 (Copenhagen, Denmark) Copenhagen Accord Intergovernmental Panel on Climate Change (IPCC) Conference of Parties (COP) 1 (Berlin, Germany) Berlin Mandate IPCC 3rd Assessment Report published Kyoto Protocol enters into force / COP11 & COP/MOP1 (Montreal, Canada) Montreal Action Plan COP 13 & CMP3 (Bali, Indonesia) Bali Action Plan COP12 & COP/MOP2 (Nairobi, Kenya) Nairobi Work Program on Adaptation IPCC & 2nd WCC call for global treaty on climate change COP 8 (New Delhi, India) Delhi Declaration COP 3 Kyoto, Japan Kyoto Protocol adopted 1st Meeting Of the Intergovernmental Negotiating Committee (INC) COP 6 resumes (Bonn, Germany) Bonn Agreements COP 4 Buenos Aires, Argentina Buenos Aires Plan of Action INC adopts UNFCCC text & Convention open For signature at Earth Summit in Rio COP 7 (Marrakesh, Morocco) Marrakesh Accords UNFCCC Timeline
What Is The Kyoto Protocol? • The United Framework Convention on Climate Change (UNFCCC) is framework for international government efforts. • The Kyoto Protocol helps implement the UNFCCC. • The Protocol calls for average of 5% reduction in emissions relative to 1990 applicable: • 2008 through 2012 only; • developed countries only; • developing countries have no reduction targets. First international environmental-related agreement of this kind.
What Is CDM? • Clean Development Mechanism (CDM) - mechanism under Kyoto Protocol by which clean energy projects in developing countries can sell carbon credits to developed countries. CDM project pipeline: > 4200, of which 1539 are registered
What Would It Cost? Global Climate Impact Abatement Map, Vattenfall, McKinsey chart Some measures will pay for themselves, but many are still not commercially viable today
COP15 Aftermath – Copenhagen Accord General • was ‘noted’ as opposed to ‘adopted’ by the COP 15 • developed and agreed to by 5 countries • Brazil, China, India, South Africa and USA • circulated for adoption but received mixed reactions from different countries but mostly supportive as a way forward Elements of the Copenhagen Accord include: • Continuation of the AWG-LCA and AWG-KP working Groups • Requiring submission to the UNFCCC Secretariat before 1 February 2010 • From developed countries – reduction targets for 2020 • From developing countries – nationally appropriate mitigation actions (NAMAs) • Developed countries to deliver new funding to developing countries: • total of USD 30 billion between 2010 – 2012 for adaptation and mitigation • USD 100 billion a year by 2020 for mitigation (and adaptation)
COP15 Aftermath – Copenhagen Accord • Additional mechanisms • For REDD (including REDD-plus) • Copenhagen Green Climate Fund as operating entity for the financial mechanism and High Level Panel to investigate contributions of other possible sources of funding • Technology Mechanism to facilitate technology development and transfer • Improved representation of developing countries in governance structure for adaptation fund • Complete assessment of the implementation of the Accord by 2015 • Jun 2010: UNFCCC received submissions from 76 countries (37 industrialised, 39 developing) • 2 – 6 August 2010: Negotiating meetings in Bonn, Germany • 29 Nov – 10 Dec 2010: COP16 in Mexico
Implications for COP16 in Cancun • More likely a weaker politically-oriented agreement will be reached by the end of 2010 at COP16 in Mexico (the minimal commitment that each country is comfortable with) • Developing countries desire the continuation of mechanisms under the Kyoto Protocol to continue • Developed countries refuse to use ‘Kyoto Protocol’ term and refer only to Copenhagen Accord • Whether strong agreement or weak one, it will be the local policies and regulations developed by and within each country that will impact business as it is business that will implement emissions reductions Potential liabilities from local regulations and potential physical impacts…regardless of whether an agreement is reached or not…
Towards Cancun & Beyond… Businesses will need to engage local governments in the development and implementation of new policies and regulations that reflect local priorities, realities and means for: • A clear strategy on how the committed long term carbon emissions reduction pathway will be achieved • Appropriately timed policies that can link up with economic investment decisions to avoid capital destruction • Incorporating the cost of carbon or climate change into goods and services • Provide incentives for the research and development of clean energy; • Valuing low carbon investments positively so as to provide a more level playing field • Educating the public on the costs and benefits of reducing carbon emissions and how this can be achieved in a fair and realistic way.
Mexican Public-Private Sector Dialogues Mexican Government decided to host public-private sector dialogues in the run up to Cancun in December Launch event in July in Mexico City 1st Dialogue on Financing in early September in Geneva 2nd Dialogue on Carbon Markets in late September in Paris 3rd Dialogue on Technology likely in November in India On 17 May 2010, Christiana Figueres (Costa Rica negotiator) appointed as new UNFCCC Executive Secretary, to replace Yvo de Boer in July 11
Beyond Copenhagen – CLP’s Position • 1. The Copenhagen Accord includes an emphasis on Nationally Appropriate Mitigation Actions (NAMAs) in reducing global emissions. This is aligned with CLP's experience and practice …and in light of the uncertainty about the future of the CDM, following Copenhagen, this remains a prudent and appropriate approach.
Beyond Copenhagen – CLP’s Position • 2. Since the Bali Declaration of December 2007, CLP's investment in renewable energy grew very substantially, in line with that increase in national support. • If such support continues, or even increases, following Copenhagen, then we would expect CLP's investments in clean energy to continue on their upwards trajectory. • In that respect, we note that none of the developing countries, including India and China in which CLP has substantial renewable energy businesses, has indicated any intention to cut back on such support following Copenhagen. • However, if dissatisfaction with the Copenhagen Accord leads to a slowdown or pause in the strength of national policy support to clean energy investments or the project, then the growth in CLP's own investments and projects will likely slowdown or pause in synchronisation.
Beyond Copenhagen – CLP’s Position • 3. A broad-based, credible carbon price plays a critical role in any successful policy on climate change. Without clear emissions reduction targets for 2020 or a framework for the carbon market, the Accord failed to provide a price signal for carbon. • CLP has not based its investments in clean energy on assumptions about the continuation of the CDM or the large scale of the financial transfers that it might bring. • Nonetheless, a stable carbon price would kick-start much needed investments in clean energy. • CLP will continue to wait for clarifications on emission liabilities and international abatement mechanisms as they affect clean energy innovation on a global scale. We urge leaders to design national policies that… allow for a “smooth transition” to a low-carbon economy in a cost-effective and efficient manner…
Beyond CopenhagenDeveloping National Policies • COP15 should not strive for a “one size fits all” solution – need to allow for ‘common but differentiated responsibilities’ • Policies and initiatives that support accelerated deployment of clean energy infrastructure and technology should include: • Economic viability and sustainability • The availability of capital • Supporting infrastructure • Governance and regulatory stability • Recognising the demarcation between the responsibilities of governments and those of the private sector • Governments should engage the private sector in their development and implementation of local climate-related policies and regulations
Beyond CopenhagenDeveloping National Policies • Governments should engage the private sector in their development and implementation of local climate-related policies and regulations that: • Establish a clear strategy on how long-term carbon emissions reduction will be achieved; • Factor economic investment decisions, capital stock, and the preservation of energy security into consideration; • Incorporate the cost of carbon or climate change into goods and services; • Provide incentives for the research and development of clean energy; • Value low carbon investments positively so as to provide a more levelled playing field; and, • Educate the public on the costs and benefits of reducing carbon emissions and how this can be achieved in a fair and realistic way.
Slow Progress Comes Down To… • The low or no carbon technologies that we need still hundreds of billions of $$$ away – so much $$$ that not any one company or even one country can bear the cost • Given the current financial downturn: • Developed countries • will find it difficult to justify sponsoring clean development in developing countries • that need to renew their infrastructure anyway could make the decision to invest domestically on new low carbon infrastructure or lock themselves into new cheap carbon intensive infrastructure • Developing countries • will receive less “aid” from UNFCCC, etc • that are emerging may receive more private funding and investment and such funding could be directed to new low carbon infrastructure or lock themselves into cheap carbon intensive infrastructure
Add Global Financial Crisis… Impacts Government decisions Less political will for financial aid to poor countries • Governments of • Developed Countries • Political pressure to • Increase domestic funding • Decrease external funding • Governments of • Poor Developing Countries • Potential • Increase domestic exports • Decrease foreign funding Constrained resources • Potential • Decrease in carbon intensive energy development • Increase in low carbon energy development • Potential • Increase in carbon intensive energy development • Decrease in low carbon energy development No /little development • Potential • Increase in carbon intensive energy development • Decrease in low carbon energy development OR OR Contribution to climate change 18
Global Financial Crisis Could Benefit Climate Change… If an individual/organisation moves towards… Increasing efficiency – producing the same or more with less Decreasing consumption – changing lifestyle Changing decision-making to achieve the above Purchasing only what is ‘necessary’ Deliberate planning of less consumption Purchasing more efficient/multi-use goods/appliances Better planning of resource use (e.g. $$, time, etc.) We tend to change habits only in a crisis…so this is the time for change! 19