Ozone-Depletion
p. 1053 (5th edition): The success of the Montreal Protocol in phasing out substances that deplete the ozone layer is reflected in Figure 11.1. FIGURE 11.1 
SOURCE: United Nations, The Millennium Development Goals Report 24 (2008) In 2007 critical use exceptions for methyl bromide were reduced by 42% overall and the U.S. was granted a methyl bromide allowance 20% less than it had requested. The 19th meeting of the Parties in Montreal in September 2007 was a celebration of the unique success of the Montreal Protocol, which has not only largely achieved its goals of eliminating the primary sources of ozone depletion but in the process has done far more to reduce emissions of greenhouse gases than the climate convention. Best estimates are that as the CFCs and other ozone depleting substances are mostly also greenhouse gases (GHGs), the Protocol has avoided emissions equivalent to 135 billion tons of CO2 and delayed climate forcing by up to 12 years. UNEP, Ozonaction, Special Issue Dedicated to HCFC Phaseout: Convenient Opportunity to Safeguard the Ozone Layer and Climate (Sept. 2008). The parties agreed to accelerate the HCFC production and consumption phaseout by ten years (from 2030 to 2020 for developed countries and from 2040 to 2030 for developing countries). At the 20th meeting of the parties in Qatar in November 2008, the potential and importance of linking the phaseout of ozone-depleting substances with the reduction of GHGs was a major focus. In the past, substitutes for CFCs were sometimes greenhouse gases like hydrofluorocabons (HFCs) regulated under the climate convention. The Protocol is now looking at ways to assure that transition substitutes are climate friendly as well as non-ozone depleting – a sensible if unusual degree of coordination between two different legal agreements. The ability to pursue these objectives was enhanced by a related decision approving $490 million in replenishment of the Multilateral Ozone Fund, a dedicated source of financing for implementation of developing country agreements to comply with the Protocol. The Fund has successfully used a form of performance contracting in which a country agrees to a specific plan for phasing out use of specified chemicals in specified sectors/uses, and an amount of supporting funds for that purpose is made available. Earth Negotiation Bulletin, Summary of the Twentieth Meeting of the Parties to the Montreal Protocol and Eighth Meeting of the Conference of the Parties to the Vienna Convention, 16-20 November 2008. www.issd.ca/ozone/mop20. Science and the “Greenhouse Effect”
p. 1036 (5th edition): The "greenhouse effect" at the root of global warming is not a new concept. It actually was hypothesized by chemists in the early 19th century. Now it has become a significant part of the evolution of climate and life on Earth. Carbon dioxide (CO2) is known to have been present in the atmosphere at a concentration of about 280 ppm in the mid-eighteenth century prior to the industrial revolution. By 1997 its concentration had increased by about 30 percent to approximately 360 ppm. Roughly half of that increase occurred after1970. Council on Environmental Quality, Environmental Quality—1997 Report 194 (1999). The atmospheric building of greenhouse gases (GHGs) has continued rapidly since then. Carbon dioxide, CFCs, and methane are the most significant gases that have an effect crudely comparable to that of the glass in a greenhouse—they allow visible light to pass through the atmosphere. Heat radiated from the Earth is transmitted in a different form, as infrared rays, and much of it is trapped by these gases, resulting in a net warming effect. The 2007 and 2008 IPCC Reports
p. 1061 (5th edition): In 2007 the IPCC released its Fourth Assessment Report (FAR). An excerpt of some of the report's key conclusions follows. Intergovernmental Panel on Climate Change, Climate Change 2007: Synthesis Report Warming of the climate system is unequivocal, as is now evident from observations of increases in global average air and ocean temperatures, widespread melting of snow .and ice and rising global average sea level (Figure [11.2]}. FIGURE 11.2 
. . . Observational evidence from all continents and most oceans shows that many natural systems are being affected by regional climate changes, particularly temperature increases.
. . . Global GHG emissions due to human activities have grown since pre-industrial times, with an increase of 70% between 1970 and 2004 (Figure [11.3]). FIGURE 11.3 
Carbon dioxide (CO 2) is the most important anthropogenic GHG. Its annual emissions have grown between 1970 and 2004 by about 80%, from 21 to 38 gigatonnes (Gt), and represented 77% of total anthropogenic GHG emissions in 2004 (Figure [11.3]). The rate of growth of CO2-eq emissions was much higher during the recent 10-year period of 1995-2004 (0.92 GtCO2-eq per year) than during the previous period of 1970-1994 (0.43 GtCO2-eq per year). The largest growth in GHG emissions between 1970 and 2004 has come from energy supply, transport and industry, while residential and commercial buildings, forestry (including deforestation) and agriculture sectors have been growing at a lower rate. The sectoral sources of GHGs in 2004 are considered in Figure [11.3c]. The effect on global emissions of the decrease in global energy intensity (-33%) during 1970 to 2004 has been smaller than the combined effect of global income growth (77%) and global population
growth (69%); both drivers of increasing energy-related CO2 emissions. The long-term trend of declining CO2 emissions per unit of energy supplied reversed after 2000. Differences in per capita income, per capita emissions and energy intensity among countries remain significant. In 2004, UNFCCC Annex I countries held a 20% share in world population, produced 57% of the world’s Gross Domestic Product based on Purchasing Power Parity (GDP PPP) and accounted for 46% of global GHG emissions (Figure [11.4]).
FIGURE 11.4
. . . Global atmospheric concentrations of CO2, CH4 and N2O have increased markedly as a result of human activities since 1750 and now far exceed pre-industrial values determined from ice cores spanning many thousands of years (Figure [11.5]). The atmospheric concentrations of CO2 and CH4 in 2005 exceed by far the natural range over the last 650,000 years. Global increases in CO2 concentrations are due primarily to fossil fuel use, with land-use change providing another significant but smaller contribution. FIGURE 11.5 
10,000 5,000 0 Time (before 2005) Most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic GHG concentrations. This is an advance since the TAR’s conclusion that “most of the observed warming over the last 50 years is likely to have been due to the increase in GHG concentrations”. . . . Some systems, sectors and regions are likely to be especially affected by climate change. The systems and sectors are some ecosystems (tundra, boreal forest, mountain, mediterranean-type, mangroves, salt marshes, coral reefs and the sea-ice biome), low-lying coasts, water resources in some dry regions at mid-latitudes and in the dry topics and in areas dependent on snow and ice melt, agriculture in low-latitude regions, and human health in areas with low adaptive capacity. The regions are the Arctic, Africa, small islands and Asian and African megadeltas. Within other regions, even those with high incomes, some people, areas and activities can be particularly at risk. Impacts are very likely to increase due to increased frequencies and intensities of some extreme weather events. Recent events have demonstrated the vulnerability of some sectors and regions, including in developed countries, to heat waves, tropical cyclones, floods and drought, providing stronger reasons for concern as compared to the findings of the TAR.
NOTES AND QUESTIONS 1. In 2007 the IPCC and former Vice President Al Gore, whose documentary film "An Inconvenient Truth" has been publicizing the climate change problem, won the Nobel Peace Prize ""for their efforts to build up and disseminate greater knowledge about man-made climate change, and to lay the foundations for the measures that are needed to counteract such change." 2. The next IPCC Assessment Report is scheduled to be released in 2014. . In the interim, the scientific debate on the causes and risks associated with the ongoing buildup of greenhouse gas emissions continues. In 2005, prior to the release of the latest IPCC report, the intense skepticism of climate change in some circles was captured in a novel by Michael Crichton, State of Fear, in which the villains are eco-terrorists seeking to create the appearance of natural disasters in order to enhance public belief in climate change. (The novel also includes extensive footnotes to scientific journals, a lengthy annotated bibliography, and a summary of the author’s views in an effort to add credibility to its aggressive skepticism toward climate change.) Although not a scientist, Crichton was given opportunities to express his views before the Senate Environment and Public Works Committee as well as on national television. The concern that public discussion of climate change might be biased by politically motivated interventions was fueled by reports in 2005 showing that a Bush administration official with a background in the petroleum industry had edited a summary report on climate change to emphasize doubts. Revkin, Bush Aide Edited Climate Reports, N.Y. Times, June 8, 2005, at 1. The journalistic tendency to report both sides of every issue without noting the extent to which one "side" is actually the vast majority of scientific opinion led one group of climate scientists to establish a website with the purpose of presenting neutral scientific information: www.realclimate.org. 3. In the wake of Hurricane Katrina's devastation of New Orleans in 2005, concerns grew about the impact of climate change on the intensity of storms. As hurricanes derive their energy from ocean temperatures, this linkage has some logic but as yet is not agreed upon by scientists. Research by Kerry Emanuel, an atmospheric physicist at MIT, concludes that the total power released by storms has increased dramatically in recent decades. This is consistent with warming in the tropical oceans, although not proof of cause and effect. R. Monastersky, "Stronger Hurricanes? Researchers Debate Whether Global Warming Will Make Storms More Destructive," Chronicle of Higher Education, Sept. 8, 2005. For a review of research on this topic, see the website of the Pew Climate Center, www.pewclimate.org. Other recent research found a striking parallel between the pattern of ocean warming with actual measurements since the 1960s, a development they argue cannot be explained by any natural temperature variations. R. Monastersky, "Researchers Present What They Call Conclusive Evidence of Global Warming from Greenhouse Gases," Chronicle of Higher Education, Feb. 18, 2005. Insurance companies are often cited as being particularly at risk from climate change, particularly reinsurers who exist to spread the risks assumed by the entire insurance industry. The insured losses from a major climate disaster can be enormous – more than $43 billion from Hurricane Katrina – and the number of claims has been rising. Clark, Bytes of Note – Climate Policy’s Quiet Giants, Environment, July/Aug 2008 According to the insurance company Munich Re, the average number of disasters increased from 400 throughout the 1980s to 630 in the 1990s and to 730 in the past ten years. The highest recorded number of natural disasters, 960, occurred in 2007. Block, Natural disasters becoming more frequent, Environmental Network News, July 14, 2008. Not all natural disasters are climate related – earthquakes and tsunamis are examples – but the largest source of insurance claims are severe storms. On the other hand the rise in weather related insurance claims is also attributable to development patterns and building decisions (locating in coastal areas, the use of wind resistant roof designs, landscaping and materials to reduce fire risks). Insurance companies can affect climate risks in several ways including incentives in the form of lower premiums for adaptive behaviors; the introduction of weather derivatives (insurance products triggered by specific weather events rather than by proof of losses) and other products to help spread climate risks; and investment of their assets in clean energy technologies. See generally “Insurance in a climate of change”, resources compiled by Evan Mills, Lawrence Berkeley National Laboratory, available on-line at insurance.lbl.gov. 4. Another striking empirical development supporting climate change has been a precipitous decline in summer Arctic sea ice, much faster than anticipated even in the IPCC's 2007 report. Gautam Naik, Polar Ice Cap Shrinks Further and Thins, Wall St. J., April 7, 2009.The magnitude of changes in the Arctic already had been of particular scientific concern as summarized in an 1800-page international consensus report "Impacts of a Warming Arctic," released in November 2004. 6. In March 2009 the University of Copenhagen hosted an International Scientific Congress on "Climate Change: Global Risks, Challenges & Decisions" to review evidence that had accumulated since the 2007 IPCC report. Approximately 2,500 scientists from nearly 80 countries participated in the conference, whose organizers released the following summary of its conclusion: "Recent observations confirm that, given high rates of observed emissions, the worst-case IPCC scenario trajectories (or even worse) are being realised. For many key parameters, the climate system is already moving beyond the patterns of natural variability within which our society and economy have developed and thrived. These parameters include global mean surface temperature, sea-level rise, ocean and ice sheet dynamics, ocean acidification, and extreme climatic events. There is a significant risk that many of the trends will accelerate, leading to an increasing risk of abrupt or irreversible climatic shifts." A Climate Change Crisis? The 2007 IPCC report and subsequent analysis by the International Energy Agency imply that efforts to reduce the buildup of GHG emissions must begin very soon. The reductions in global emissions will require an unprecedented degree of international cooperation between the industrialized countries and the largest, most rapidly growing developing countries – particularly China and India, both of which are heavily dependent on coal as a locally available, low cost fuel for electricity. However, these sources are most often interpreted as allowing for some period of further increase in the range of one to three decades before global emissions reach their maximum and then decline steadily. This transition period is seen as critical to allow for research, development and deployment of energy efficiency, renewable energy, and perhaps carbon sequestration technologies to capture and store carbon in order to allow continued use of fossil fuels. FIGURE 11.6 
SOURCE: Stern Review Report on the Economics of Climate Change (2006) Figure 11.6 illustrates the importance and linkage between the date at which global reductions begin (peak emissions) and the rate at which cuts take place. The later the peak, the more significant reductions must be to stay within a given concentration level. A more detailed analysis by an IPCC lead author shows that to stay within a 2.1 degree C rise in global mean temperature requires emission reductions at a rate of 2 percent per year if begun in 2015; if emissions are allowed to rise another decade until 2025 the rate of reductions required increases to 4 percent, and by 2035 substantially higher and de facto implausible. Parry, Lowe, and Janson, “The Consequences of Delayed Action on Climate Change” (www3.imperial.ac.uk/climatechange). The acceptability of this transition period presumes that atmospheric concentrations of CO2 and other GHGs can increase from current levels of about 385 ppm to perhaps 450 ppm or higher without resulting in “dangerous anthropogenic interference with the climate system”. A key underlying scientific issue is the relationship between a given level of increase in concentrations and the warming expected to result from the increased retention of energy and numerous positive feedbacks (e.g., when snow and ice are replaced by water, the result is darker surface absorbing additional heat). The range of variables involved in this critical assumption is sufficiently complex and dynamic to allow for continued disagreement and debate. This discussion entered a new phase in 2008 – after the completion of the latest IPCC report -- with the publication of a paper by a group of ten scientists led by James Hansen of Columbia arguing that existing atmospheric concentrations of GHGs are already above acceptable levels. Hansen and his co-authors summarize a range of factors that while relatively slow-acting will gradually and with potentially catastrophic effects accelerate the impact of human emissions: “Paleoclimate data and ongoing global changes indicate that ‘slow’ climate feedback processes not included in most climate models, such as ice sheet disintegration, vegetation migration, and GHG release from soils, tundra or ocean sediments, may begin to come into play on time scales as short as centuries or less. Rapid on-going climate changes and realization that Earth is out of energy balance, implying that more warming is ‘in the pipeline’, add urgency to investigation of the dangerous level of GHGs.” [footnotes omitted] J. Hansen et al, Target Atmospheric CO2: Where Should Humanity Aim? The Open Atmospheric Science Journal, 2008, 2, 217-31. Hansen’s views are important for several reasons. In addition to his status as a senior scientist at a leading institution in the field of climate change, his June 1988 testimony is often regarded as the first significant scientific statement that climate change due to human activity was underway – an accomplishment widely acknowledged and honored 20 years later. See, e.g., 20th Anniversary of the “Hansen Hearing”, Worldwatch Institute, http://www.worldwatch.org/events/hansenhearing. Although primarily funded by NASA and other federal agencies, Hansen has also repeatedly resisted censorship in expressing his opinions about the seriousness of climate change in Congressional hearings as celebrated in the film “An Inconvenient Truth.” If Hansen’s latest assessment proves to be well-founded the implications are stunning. In order to keep GHG concentrations within an acceptable range, Hansen’s paper argues, within the next several years, there will be a moratorium on construction of coal-fired power plants that do not capture and store CO2, and . . .CO2 emissions from existing power plants will be phased out by 2030. This coal emissions phase out is the sine qua non for stabilizing and reducing atmospheric CO2. If the sine qua non of coal emissions phase-out is achieved, atmospheric CO2 can be kept to a peak amount ~400-425 ppm, depending upon the magnitude of oil and gas reserves. Hansen argues that clean alternatives to coal are adequately developed and available today to allow his proposed moratorium on new coal-fired power plants to proceed without significant economic dislocation. However given the daunting challenges involved in making such sudden, dramatic changes in basic infrastructure worldwide, some experts are beginning to ask what other options might we have? One possibility is to identify ways of reducing GHG concentrations in a relatively short period of time. Remember that this is not possible with CO2 emissions because this gas has an atmospheric lifetime measured in centuries – like a very slow draining bathtub, the concentration of CO2 will decline very slowly even after emissions cease. Some potentially fast-acting alternatives have been identified. One idea is to focus on shorter-lived greenhouse gases which can be reduced relatively quickly. A recent focus of research is black carbon or soot produced by combustion of fossil fuels, wood, and dung. Recent estimates are that the effect of these substances may be equivalent to 50 percent or more of CO2. Carmichael and Ramanathan, “Global and regional climate changes due to black carbon,” Nature Geoscience, March 23, 2008. Unlike CO2, reducing black carbon has immediate benefits due to its adverse effects on human health, and as its lifetime in the atmosphere is measured at most in weeks substantial reductions could be achieved quickly. Another opportunity is to focus on methane emitted from rice farming, cattle, landfills, and some underground coal fields. Methane has an atmospheric half-life of about 20 years and thus its concentration can be reduced much more quickly than CO2. Recent research indicates that the presence of methane may also result in an increase in tropospheric ozone, another GHG. “Methane’s impact on climate change may be twice previous estimates,” GISS Research News, July 18, 2005. An entirely different proposed strategy is to promote new forms of carbon sequestration. Large scale planting of trees (afforestation) is possible but the initial challenge is to reverse the existing trend toward the net loss of forests. Another proposed approach is the large-scale production and use of a substance called bio-char, a fine-grained charcoal produced from pyrolysis of plant and waste material and useful as a soil amendment. Production of bio-char is carbon negative – it results in a net reduction in atmospheric CO2 by turning waste into fertilizers and soil enhancements. A bio-char research program was included in the Food and Energy Security Act of 2008 approved by Congress. See generally the website of the International Biochar Initiative, www.biochar-international.org.Kyoto Protocol Update
p. 1070 (5th edition): During the 2000 U.S. presidential election campaign, candidate George W. Bush acknowledged that climate change was a significant problem and he pledged to support new legislation to establish legally binding controls on U.S. emissions of CO2 if elected. However, shortly after taking office as president, he repudiated that promise on March 13, 2001, and announced that he no longer would support such legislation. This greatly embarassed his new EPA Administrator Christie Todd Whitman, who had just returned from a global meeting of environment ministers in Trieste where she had emphasized that while Bush did not support the Kyoto Protocol, he was committed controlling U.S. emissions of CO2. The Protocol became effective on February 16, 2005, as a result of ratification by the Russian Federation and without the United States. Australia was the only other developed country that initially rejected the Kyoto Protocol, though it subsequently reversed course and ratified it in 2007 after Kevin Rudd was elected Prime Minister. Legal and Policy Responses to Global Warming and Climate Change
K. Capoor and P. Ambrosi, State and Trends of the Carbon Market (World Bank, 2008) THE GROWTH OF THE CARBON MARKET The carbon market is the most visible result of early regulatory efforts to mitigate climate change. Regulation constraining carbon emissions has spawned an emerging carbon market that was valued at US$64 billion (€47 billion) in 2007 (see Table 1). Its biggest success so far has been to send market signals for the price of mitigating carbon emissions. This, in turn, has stimulated innovation and carbon abatement worldwide, as motivated individuals, communities, companies and governments have cooperated to reduce emissions. Allowance Markets The EU ETS market has been successful in its mission of reducing emissions through internal abatement at home,1 and of stimulating emission reductions abroad. The European Commission, learning from the experience of Phase I, has strengthened several important design elements for EU ETS Phase II. Along with recent EU proposals for Phase III,2 these improvements include tighter emission targets, stronger flexibility provisions for compliance (at least for EU Allowances, or EUA, although not for project-based credits, see below), more attention to internal EU harmonization and, most importantly, longer-term visibility for action to reduce emissions until 2020. These proposed reforms create confidence in emissions trading as a credible and cost-effective tool of carbon mitigation. In 2007, US$50 billion (€37 billion), almost entirely in Phase II allowances and derivative contracts were traded over-the counter, bilaterally, and, increasingly on exchange platforms that publish transparent data about price formation in the markets. CDM MARKET FACES CHALLENGES Procedural delays in the CDM In spite of its success, or perhaps even because of it,7 the carbon market came under close publicscrutiny in 2007. The success of the CDM is threatened by a creaking infrastructure that, despite some efforts to streamline, is struggling to process the overwhelming response from project developers worldwide in a timely manner. Procedural inefficiencies and regulatory bottlenecks have strained the capacity of the CDM infrastructure to deliver CERs on schedule, as too many projects await registration and issuance
- Out of 3,188 projects in the currently pipeline, 2,022 are at validation stage. - Market participants report that it is currently taking them up to six months to engage a Designated Operational Entity (DOE), causing large backlogs of projects even before they reach the CDM pipeline.
- Projects face an average wait of 80 days to go from registration request to actual registration.The Executive Board has requested a review of several projects received for registration, has rejected some of them, and has asked project developers to re-submit their projects using newly revised methodologies. There is a very short grace period allowed to grandfather the older methodology, and the additional work adds to delays and backlogs.
- Projects are currently taking an average of 1-2 years to be issued from the time they enter the pipeline. Over 70% of issued CERs come from industrial gas projects, with the vast majority of energy efficiency and renewable energy projects remaining stuck somewhere in the pipeline Private companies and commercial risks There is a troubling tendency of some companies in the market to point a finger at the CDM and to hold its procedural delays to be solely responsible for the poor performance of their companies. In a market where the “production” of the asset or commodity is not in the control of market players, but rather in the hand of a regulator, the risk of regulatory delay must be treated as a core element of commercial risk. Some companies clearly made incorrect and imprudent commercial decisions, for example, by taking on excessive risk or burning too much cash, or guaranteeing too many CERs for delivery by a certain date against penalties without adequate risk management. Their commercial contracts should balance the risks and rewards of various parties. While the carbon regulatory infrastructure clearly needs urgent reform, it is simply wrong to blame the regulator for all problems. Companies also have to examine at the appropriateness of their commercial and business decisions. OUTLOOK Carbon market momentum is strong for now After some growing pains in its first phase, the EU ETS has created a robust structure to cost-effectively reduce greenhouse gas emissions. Created by regulation, the carbon market’s biggest risk is caused, perversely, by the absence of market continuity beyond 2012 and this can only be provided by policymakers and regulators. This will require increased efforts well beyond what is envisaged by the current policies of major world emitters.
The CDM is at a crossroads The European Commission’s post-2012 proposal, which strengthened several design elements of the EU ETS, however, did not provide much comfort for the project-based market, which, after its strongest year yet, finds itself at a significant crossroad. By linking additional EU ETS demand for CDM and JI credits to the success of post-2012 global climate change negotiations, the European Commission proposal has the risk, surely unintended, of slowing the momentum for the project-based mechanisms. Under the proposal, the issued CERs and the Emission Reductions Units (ERUs) would be less flexible and less fungible, limiting their risk management and compliance utility vis-à-vis the EUA. The EUA spread over the secondary CER widened to nearly €10 at the time of this writing, and even higher for most primary CER contracts. The key challenge, in our view, is not how to reduce the success of the CDM, but rather how to raise the ambition of the world, including the EU, to set science-based emission reduction targets and meet them cost-effectively. Time to re-think the CDM The CDM’s biggest strength has been its ability to bring developing and developed countries and the public and private sectors together to reduce emissions cost-effectively. In the years ahead, all countries will want to scale up their efforts to reduce emissions while growing their economies in a sustainable manner. As the world considers scaling up serious action to combat climate change, it would be desirable to re-think the CDM as a helpful tool for the challenges ahead. The forest for the trees In its next phase, the CDM needs to move up the learning curve and evolve toward approaches and methodologies that conservatively estimate emission reduction trends on the aggregate level, and away from the current focus on trying to account for every last ton reduced or removed from the atmosphere. The next generation CDM should focus on catalyzing step changes in emission trends, and on creating incentives for large-scale, transformative investment programs. Built to last Several jurisdictions, including various states, regions, and countries are considering whether and how to link up with international opportunities for reducing emissions. It would be helpful to find ways for them to learn together from and build on the CDM experience so far, with the goal of encouraging efficiency, reducing transaction costs, avoiding unnecessary duplication and creating, from the start, compatible infrastructure with strong linkages and inter-operability. Global cooperation on climate change Given enough incentive and a long lead time, developing countries can deliver large volumes of cost-effective emission reductions which can help meet science-based emission reduction targets. This puts a special responsibility on countries to cooperate under the Bali Action Plan to reach an ambitious international agreement to reduce emissions. It also makes it important for the EU, the U.S. and other major emitters to find ways, even before 2009, to encourage the continued engagement of developing countries in mitigation activities. International negotiators (and regulators of domestic programs) should consider providing incentives for early action with sufficient lead time to develop emission reduction programs and projects. Solving the problem of climate change will need ingenuity to encourage a scaling up of action to reduce or avoid emissions as early and efficiently and in as many sectors and countries as possible. Long-term policy signals about intended carbon constraint policies and well-designed regulatory systems and infrastructure will send the appropriate signals to investors. The experience of the carbon market so far shows that the private sector is capable and willing to cooperate in solving the problem, provided that policies are predictable, consistent and transparent and regulations are efficient. NOTES AND QUESTIONS 1. The role and effectiveness of the carbon market continues to be among the most controversial features of the climate regime. This is for several reasons. First there are differing expectations about program purposes and outcomes; for investors and carbon brokers, its about defining a tradable commodity, for climate change advocates its about maximizing emission reductions, and for the broader environmental community it’s a means of promoting sustainable development. All of these objectives are possible, but not necessarily in every transaction and with equal emphasis. Some GHG reduction investments have arguably been lacking in broader social and environmental benefits, in particular the elimination of HFCs produced as a byproduct in production of HCFCs—ironically as substitutes for CFCs. See UNEP, A Reformed CDM – Including New Mechanisms for Sustainable Development (2008). 2. One of the more interesting and controversial features of the CDM is the role of the Executive Board as an entity within the Convention but operating essentially as a commodity regulator. Many of the persons appointed to the Board have been country delegates without private sector experience, much less knowledge of commodity regulation. Given the politics of the Convention, would you expect them to err more on the side of assuring environmental integrity or promoting the growth of a market with as much liquidity (ease of trading) as possible? 3. The EU Emission Trading System (EU ETS) is the larges share of the carbon market because of the scope and effectiveness of EU regulatory requirements adopted as part of compliance with the Kyoto Protocol. As the Trends report explains, the EU ETS had a significant period of volatility in its first phase. This is sometimes reported as a failure when it had much more to do with the inability to predict a market in advance of regulatory requirements (why?) and a resultant discovery that allowances had been oversupplied. Why might regulators have erred on the side of allowing an oversupply? While this was an initial period of experimentation and discovery, there were winners and losers with some private banks betting on higher prices and consequently losing substantial sums. 4. The design and role of the carbon market post-Kyoto is one of the most important issues to be resolved in the climate negotiations. As the end of the commitment period approaches, the potential for new CDM projects will disappear until a new agreement is reached. What happens if there is no short term agreement, or less likely, Kyoto is allowed to expire without a new agreement in place? How might an international market evolve given multiple regional and national carbon trading programs? Climate Policy Post-Kyoto Even as the Bush administration refused to support any binding controls on emissions of greenhouse gases, several states acted to establish their own GHG control programs. In September 2006 California enacted the "Global Warming Solutions Act" that requires the emissions of GHGs in the state to be reduced to 1990 levels by the year 2020, approximtely a 25% reduction. Two years earlier California had adopted the first controls on GHG emissions from motor vehicles. Because California is the largest market for motor vehicles in the United States, with nearly 1.7 million new cars and light trucks being purchased every year, the regulation was enormously significant. Roughly one-third of all carbon dioxide emissions in the United States (and 56 percent in California) come from the transportation sector. Although the Bush administration EPA denied California's request for approval of these emission standards in December 2007, in January 2009 President Barack Obama directed EPA to reconsider this denial. A group of ten northeastern and mid-Atlantic states—New York, New Jersey, Delaware, Connecticut, Rhode Island, Maryland, Massachusetts, Vermont, New Hampshire, and Maine—formed the Regional Greenhouse Gas Initiative (RGGI). Through a mandatory cap-and-trade program they plan to reduce greenhouse gas emissions by 10% by 2018. The Climate Stewardship Act proposed by Senators McCain and Lieberman was defeated by the margin of 43-55 in October 2003 in the first Senate debate on global warming since 1998. The bill was modeled on the acid rain trading program and would have required a reduction in carbon dioxide levels to 2000 levels (as opposed to the much lower 1990 baseline used in the Kyoto Protocol) by 2010. The proposal would apply to the electricity generation, transportation, industrial, and commercial sectors, estimated to account for about 85 percent of U.S. emissions. To reduce the costs of compliance, a central feature was proposed reliance on a system of allowances and trading comparable to the acid rain program but considerably more complex reflecting the larger number of emitters, the potential for international trading, and provision for sequestration. Global attention has turned to the question of what happens after 2012, the final year covered by the Kyoto Protocol. Bringing both the United States and major developing countries into any future control regime is a high priority. In December 2007 the 13th Conference of the Parties (COP-13) to the UN Framework Convention on CLimate Change (UNFCC) was held in Bali. On the first day of the conference, newly-elected Australian Prime Minister Kevin Rudd completed the process of his nation ratifying the Kyoto Protocol, leaving the U.S. as the only developed country that is not party to the protocol. After sometimes contentious debate, all participants in the conference, including the United States, agreed upon a "Bali Action Plan" for negotiating a post-Kyoto regime to control global GHG emissions. The Bali Action Plan provides for an ambitious schedule of negotiations with the aim of an agreement by the Fifteenth Conference of the Parties (COP-15), to be held in Copenhagen in December 2009. The significance of a goal by end 2009 was to allow for sufficient time for governments to ratify and prepare for a new regime to begin at the end of the Kyoto commitment period in 2012. By that time presumably new funding commitments, trading rules, technology programs, etc. could be in place consistent with any agreement. A dedicated working group was established to focus on the elements of such an agreement. In June 2008, the U.S. Senate voted on whether to end debate on a comprehensive GHG cap and trade program to reduce US GHG emissions. The primary bill was the Lieberman-Warner Climate Security Act, although the cloture vote was addressed to a substitute amendment (the Boxer substitute). The vote was 48 yes, 36 no, and thus short of the 60 required for cloture. Six absent senators indicated they would have voted for the bill, although 9 Democratic senators voting for cloture separately wrote to the Majority leader, Senator Reid, stating their opposition to the bill and outlining corrections they thought were needed. The common feature of these bills was a national cap and trade program; the main distinction was the distribution of allowances. The Lieberman-Warner version would have allocated 100 percent of allowances in an effort to accommodate the widest possible range of political interests, including 23% to consumers, 12% for deficit reduction, 16% for technology programs, and 16% for state programs. With the election of President Barack Obama in November 2008, the U.S. government now supports a binding post-Kyoto regime of controls on GHG emissions and will participate actively in the negotiations at Copenhagen. This was signaled by President Obama in his Inaugural Adress on January 20, 2009, where he pledged to "work tirelesssly" to "roll back the specter of a warming planet." Six days later, President Obama issued executive memoranda directing his new EPA Administrator Lisa Jackson to reconsider the agency's disapproval of California's GHG emissions standards for motor vehicles and his new Secretary of Transportation Ray LaHood to increase fuel efficiency standards. The President appointed former EPA Administrator Carol Browner to be his "climate czar" and he told congressional leaders that he wants legislation adopted to establish a comprehensive GHG emission control regime before the Copenhagen conference in December 2009. Mark Peters, White House Seeks Bill on Climate by December, Wall St. J., April 13, 2009. On March 10, 2009, EPA Administrator Lisa Jackson issued a proposed rule to require large sources of GHGs to report their emissions to EPA. 74 Fed. Reg. 16448 (2009). While rule will not require companies to reduce their emissions, it will provide EPA with crucial information for implementing any future controls. On April 17, 2009, EPA issued a proposed finding, in response to the Supreme Court's Massachusetts v. EPA decision, that emissions of GHGs endanger the public health and welfare of present and future generations within the meaning of the Clean Air Act. 74 Fed Reg. 18885 (2009). This sets the stage for the agency to regulate GHG emissions under the Clean Air Act if Congress is unable to agree on new legislation to establish a national program of GHG controls. On May 19, 2009, President Obama announced an agreement between major U.S. automakers, federal officials, and the state of California, to establish new and more stringent fuel economy standards for motor vehicles. By mandating an increase in fuel economy from the current 25 mpg standard to 35.5 mpg by 2016, the standard should achieve a 30% reduction in emissions of GHGs from motor vehicles. The agreement will accelerate an increase in fuel economy standards that had been mandated by Congress in legislation adopted in December 2007, which had required the standard to be increased to 35 mpg by the year 2020. On May 21, 2009, the House Energy and Commerce Committee approved The American Clean Energy and Security Act of 2009, comprehensive legislation to establish binding controls on emissions of GHGs. The legislation would establish a cap-and-trade program designed to reduce total U.S. emissions of GHGs by 15% below 2005 levels by the year 2020 and 75% below 2005 levels by 2050. Emissions sources covered by the legislation would be required to make emissions reductions of 18% by 2020 and 83% by 2050. When additional reductions from the use of international offsets for compliance are factored in, potential emission reductions could be as great as 33% below 2005 levels by 2020 and up to 81% below 2005 levels by 2050, depending on the amount of offsets used. Rather than auctioning off all emissions allowances, as President Obama has advocated, the bill would distribute more than 80% of the allowances for free to various groups in order to ease the financial burden of compliance. Electric power companies would receive 35% of the allowances under the legislation. This legislation sets the stage for vigorous debate on the House floor and later the Senate prior to the Copenhagen Conference in December 2009. A key issue in Copenhagen will be whether developing countries whose GHG emissions are increasing rapidly will agree to join a post-Kyoto regime of mandatory controls. In 2007 China passed the United States as the largest emitter of GHGs. In June 2008 the Netherlands Environmental Assessment Agency announced that Chinese emissions grew by 8 percent in 2007, accounting for two-thirds of the growth in global GHG emissions that year. Elisabeth Rosenthal, China Clearly Overtakes U.S. as Leading Emitter of Climate-Warming Gases, N.Y. Times, June 14, 2008. Chinese GHG emissions in 2007 were 14% greater than those of the U.S. In historical terms, the contribution of GHGs from U.S. sources since the year 1750 is still more than three times larger than China's. In per capita terms, U.S. emissions are nearly 4 times greater than China's, though this gap has been closing rapidly (U.S. per capita emissions were 7-1/2 times greater than China's in the year 2000). Because Chinese emissions are now nearly one-quarter of all global emissions, it is essential that the Chinese government agree to be included in any new regime of global controls on GHG emissions. In March 2009, Li Gao, China's top climate negotiator expressed the view that China should not have to control its emissions to the extent that they are generated by the production of goods for export. "As one of the developing countries, we are at the low end of the production line for the global economy. We produce products, and these products are consumed by other countries. . . This share of emissions should be taken by the consumers, but not the producers." AP, China Hopes Climate Deal Omits Exports, March 17, 2009. Responding to the this claim, EU negotiator Artur Runge-Metzger, stated that it would be a "logistical nightmare" to attempt to implement such a proposal. If importers have to be responsible for the emissions, he stated, "we would also like them to have jurisdiction and legislation powers in order to control and limit" them. The EU countries "take full responsibility and we regulate all emissions that come from our territory," he stated. During the Bush administration the U.S., China and India all opposed proposals to negotiate a treaty to set binding limits on emissions of mercury, despite the global nature of this transboundary pollution problem (see pp. 24-26). After President Obama took office, the U.S. changed its position and agreed to support negotiation of a global treaty to limit mercury emissions. China and India then also withdrew their opposition and in February 2009, 140 nations meeting in Nairobi unanimously agreed to begin negotiations on such a treaty. UNEP, "Historic Treaty to Tackle Toxic Heavy Metal Mercury Gets Green Light," Feb. 20, 2009. Now that the Obama administration also has reversed U.S. opposition to binding global controls on GHG emissions, it reamins to be seen what effect, if any, that will have on the positions of China and India. PROBLEM EXERCISE: DESIGNING A POST-KYOTO REGIME OF
CONTROLS ON GHG EMISSIONS Assume that the shares of total global emissions of greenhouse gases (GHGs) in 2007 by country are the following: China 24%, the United States 21%, the European Union 12%, India 8%, Russia 6%, and all other countries 29%. Assume that each group's share of historical emissions (total global GHG emissions between the years 1750 and 2005) is as follows: the European Union 31%, United States 28%, China 8%, Russia 7%, India 2%, and all other countries 24%. Assume that per capita emissions for each of these groups are as follows: United States 19 tons/person, Russia 12 tons/person, European Union 9 tons per person, China 5 tons per person, and India 2 tons per person. QUESTION ONE: How would you design a post-Kyoto regime to control GHG emissions during the period after 2012? Should percentage reductions in absolute emissions be required? Should a limit on per capita emissions be adopted instead? How would you factor in historical emissions? What process would you use to try to reach international consensus on what each country's emissions limit should be? QUESTION TWO: Should developing countries be required to limit their emissions of GHGs? The initial idea behind the Kyoto Protocol was that because developed countries had caused most of the climate change problem through their historic emissions, that they would be the first to adopt controls with developing countries phased in later. However, the United States, the largest emitter of GHGs at the time the Kyoto Protocol was adopted, used its failure to require controls on emissions from developing countries as an excuse to reject the Protocol. Without controls on emissions from China and other rapidly growing developing countries, any reductions achieved by developed countries in a post-Kyoto control regime are likely to be more than offset by increases from other countries. QUESTION THREE: How would you respond to China's proposal to exempt emissions generated by the production of goods for export? It is estimated that such emissions constitute between 15 and 25 percent of all Chinese emissions. Does this proposal fly in the face of the "polluter pays" principle (Principle 16 of the Rio Declaration)? QUESTION FOUR: What impact should the current global economic crisis have on the shape of any post-Kyoto regime of controls on GHG emissions? Will the reductions in GHG emissions produced by the economic downturn make it easier to comply with whatever limits are adopted, particularly if the baseline year is one before the downturn? Due to the economic downturn the prices of carbon allowances in the EU have plunged from more than 30 euros/ton in July 2008 to only 10 euros/ton in March 2009. Does that mean that it will be less costly to comply? Energy-related emissions of GHGs in the United States actually declined by 2.8% in 2008. Energy Information Administration, U.S. Carbon Dioxide Emissions from Energy Sources 2008 Flash Estimate (May 2009). QUESTION FIVE: How should any post-Kyoto regime of GHG controls be enforced? Through normal diplomacy and moral suasion among countries? Through trade sanctions or carbon tariffs on countries that fail to comply? Responding to the Consequences of Climate Change: Adaptation and Compensation As climate change has come to be viewed as an ongoing and more serious problem, much more attention is being given to dealing with the consequences. Experts note that some climate change is inevitable and its impacts are perhaps already being felt; focusing entirely on mitigation is no longer an option. The poorest and most vulnerable are also likely to be affected the most, creating further concerns about the unfairness associated with emissions that have come primarily from industrialized countries impacting those least responsible. This changing perception is reflected in the politics of the climate convention and the governance of international financial institutions. Whereas the Kyoto Protocol only references adaptation in two paragraphs, the Bali Action Plan treats mitigation and adaptation as equals including balanced references in sections on technology transfer and financing. Despite this political pressure, the adaptation agenda remains much less well defined for several reasons. First, there is an attribution problem identifying the cause for any particular climate event; climate change affects the probability of certain events, but can’t be specifically blamed for any specific hurricane or storm. (The relationship between climate change and hurricanes is a particularly contentious issue within the scientific community as documented in the book Storm World (2007) by Chris Mooney.) Second, climate modeling evolved to study global trends and has gradually been refined to allow more specificity for broadly defined regions. The confidence in forecasts of climate change lessens with smaller geographic areas closer in time. Predictions applicable to larger geographic areas such as watersheds are likely to be more robust than those applicable to smaller areas. Third, the economic appropriateness of specific adaptation measures is partly a function of rates of change as well as magnitude, which will in turn be determined by the effectiveness of mitigation measures as well as climate sensitivity. Consistent with these multiple sources of uncertainty, much of the adaptation efforts to date have been vulnerability studies, capacity building to enhance government knowledge and expertise, and “no regrets” measures such as efforts to reduce inefficient irrigation and other forms of “maladaptation”. As the Stern Report states, “Much of what governments should do in relation to adaptation is what they should be doing anyway – that is, implementing good development practice. . . .Climate change concerns simply lend greater urgency to these core tasks of government and . . . the role of the international community in supporting adaptation in developing countries.” (Stern, The Economics of Climate Change, p. 432) What are adaptation measures? Just as with mitigation efforts, the range of potential actions is extremely diverse ranging from the removal of bad policies (subsidies that encourage the inefficient use of water, insurance that induces building of homes in floodplains) to modest changes in building design (attaching roofs in ways that reduce the chances of being blown off) to major investments in infrastructure (sea walls and reservoirs). The focus of adaptation efforts has so far been largely on the public sector, although groups like Oxfam argue that most adaptive responses in poor countries will be community-based. The role of insurance companies and the private sector is also likely to be primary in some sectors and countries as discussed below. An important conceptual distinction should be made between adaptation and potential claims for compensation ¬¬– ex post payment for damages after they occur, as opposed to ex ante efforts to mute impacts. The two concepts are obviously related insofar as effective adaptation measures may significantly reduce the impacts of climate change and therefore the potential basis for any claim to adaptation. Several different theories have been proposed to support potential claims for compensation including fundamental concepts of justice and public international law principles that prevent countries from inflicting harm on others. See W. Adger et al, Fairness in Adaptaiton to Climate Change (2006); Tol and Verheyen, State responsibility and compensation for climate change damages – a legal and economic assessment. Energy Policy, 32, 1109 (2004)). Compensation claims are already being advocated. The State of California filed a lawsuit in 2006 against automobile manufacturers seeking monetary damages based on several alleged impacts of climate change including increased costs for water supply and management, increased risks of forest fires, and the need for state study and planning. Farber, Basic compensation for the victims of climate change, 2006. Prospects for compensation claims have spawned a growing literature exploring numerous issues including the feasibility of assigning responsibility for specific weather events (Allen, Liability for climate change, 2003. Nature, 421, 891, 2003); the potential role for specific remedies, e.g., immigration from inundated low-lying coastal states to developed nations (Byravan and Rajan, Immigration could ease climate-change impact. Nature, 434, 435 2005); methods for calculating and allocating cumulative responsibility for climate-related damages (Tol and Verheyen 2004); and precedents for administrative schemes awarding damages after major catastrophic events such as the 9/11 Fund, UN Claims Commission for claims against Iraq for war-related damages, and funds compensating for oil spills and other sources of damage to natural resources (Daniel A. Farber, Basic Compensation for Victims of Climate Change, 38 Env. L. Rep. 10521 (2008)). Adaptation intersects with and is sometimes confused with disaster risk reduction and relief efforts, insofar as many disasters are climate related and preparing for disasters can be part of an adaptive response. The communities that deal with the two issues, however, have largely been separate and discussion of opportunities for synergies have only recently begun. Tearfund, Linking climate change adaptation and disaster risk reduction (2008). NOTES AND QUESTIONS 1. The potential for damage suits based on climate change is the subject of increasing interest and speculation, although as yet with little imminent prospect of success. ‘”Climate-change litigation is so new that legal experts have little idea how to handi¬cap it; in unexplored areas of tort law, cases become pivotal only in hindsight. Some legal scholars are skeptical of the merits of the Kivalina case, but many others are looking on with interest. The cultural and political winds are certainly blowing in a favorable direction—and these winds often affect courts and juries. That factor, along with the very deep pockets of Big Oil, is likely to keep the lawsuits coming, testing different theories and different arguments. “It’s sort of like when infantry used to charge the machine guns,” says Joseph Wayne Smith, an Australian lawyer and the author of Climate Change Litigation. “A lot of them would get mowed down, but eventually a wave would get through and take out the pillbox.” Faris, Climate Change Litigation is Heating Up, Atlantic, June 2008. 2. The Convention provides funding through the Global Environment Facility (GEF) for the “incremental costs” of developing country projects to achieve global environmental benefits. In the context of developing country mitigation efforts, the incremental cost is the difference between what a country would normally do on the basis of least-cost (e.g. a coal-fired power plant) and some more climate friendly alternative (e.g., a wind farm). Is there an identifiable “incremental cost” for adaptation measures? Numerous studies have attempted to estimate a global cost for adaptation measures, which has obvious political significance. Estimates range from several billions of dollars to $86 billion per year by 2016. Bapna and McGray, Financing Adaptation: Opportunities for Innovation and Experimentation, WRI Conference Paper (2008). 3. Several dedicated sources of funding have so far been created to assist developing countries with the costs of adaptation. Bapna and McGray. Prior to 2008 the only funds were voluntary donor-programs administered by the GEF and amounting to about $300 million. Two new significant sources of funding became available in 2008, the Adaptation Fund and the Strategic Climate Fund. The former is funded by a two percent levy on revenues generated by the Clean Development Mechanism and thus its size will depend on the volume of CDM transactions; best estimates are US$300 to $500 million by 2012, with future revenues dependent on the future of the Kyoto Protocol. The latter is part of a three-year donor commitment announced at the July 2008 G8 meeting to provide about $6 billion for climate-related purposes. About US$500 to $600 million is planned for an adaptation “pilot” program. For updated information see go.worldbank.org/58OVAGT860. 4. According to an analysis by the UNFCCC Secretariat, the private sector will be the primary source of investments to address climate change in the future; this applies to adaptation as well as mitigation. UNFCCC, Investment and Financial Flows to Address Climate Change, 2007. For example, farmers will incur most of the cost associated with the impact of climate change on agriculture, and building owners will be most at risk from storms. The uncertainties associated with short-term, localized predictions of climate change are particularly severe for private firms few of whom have as yet made serious efforts to understand how they may be affected by climate change. See generally R. Connell, A. Miller, and V. Stenek, Evaluating the Private Sector Perspective on the Financial Risks of Climate Change, Hastings West-Northwest J Env’tal L&P 2008. International Trade and the Environment
p. 1072 (5th edition): The global financial crisis is expected to produce a dramatic decline in global trade. In March 2009 the World Trade Organization (WTO) estimated that global trade would decline by 9 percent in 2008, an estimate that actually may understate the true magnitude of the decline. Despite this downturn, trend toward a global economy has become one of the most noted developments of the past decade. A Greener WTO?
p. 1087 (5th edition): WTO Director-General Pascal Lamy, in a speech on October 27, 2007, declared that the environmentalists' fear that the WTO would become a "GATTZILLA" had proven unfounded. He noted that the "Shrimp-Turtle" decision pushed WTO members toward greater environmental collaboration, including a cooperative solution between the parties to the conflict that was reflected in a Memorandum of Understanding on the Conservation and Management of Marine Turtles and their Habitats in the Indian Ocean. He also cited WTO's upholding of France's asbestos ban. Lamy noted that public hearings are now being held in many cases to increase transparency of the WTO dispute settlement process and that the "WTO has consulted environmental experts in nearly all of the environmental disputes that were brought to it for settlement since its creation." The linkage between trade and environmental services has been of increasing interest in the context of climate change. A World Bank study found that removal of tariff and non-tariff trade barriers can increase the diffusion of clean technologies significantly, trade gains of up to 13 percent in 18 of the highest GHG emitting developing countries. This is one of the potential outcomes of the Doha round of trade negotiations. However, the report also notes that the use of trade barriers to restrict imports of products from countries without carbon regulations could run afoul of GATT rules. World Bank, International Trade and Climate Change (2008). Saro-wiwa Alient Tort Statute Litigation
p. 1105 (5th edition): In June 2009, Shell Oil Company agreed to pay $15.5 million to settle a lawsuit about to go to trial under the Alien Tort Claims Act alleging the Company collaborated in human rights abuses against the Ogoni people in Nigeria to counter their protests of environmental destruction caused by oil development. Plaintiffs included the survivors of environmental activist Ken Saro-wiwa who was executed by the Nigerian military in 1995. The suit had been dismissed by a district court but the Court of Appeals for the Second Circuit reversed and allowed the case to go forward. The settlement ends a 13-year legal battle. Shell Settles with Nigerian Tribe, LA Times, June 13, 2009. Financing and the Global Environment Facility
p. 1112 (5th edition): The GEF is funded (“replenished”) by donors on a four-year cycle. Prior to negotiating their contributions an independent overall performance study has been prepared to inform donor discussions. The Third Overall Performance Study was released in 2005; a fourth is to be done in 2009.
Some key findings: • As the largest public source of funding for biodiversity conservation in developing countries, the GEF has significantly expanded protected areas – almost 17 percent of the total land area protected globally.
• With respect to climate change, the GEF role is “relatively minor in slowing worldwide climate change”. However, the GEF has played “an important catalytic role” in transforming markets for clean energy in developing countries.
• The GEF has had some notable success in its other focal areas, including water pollution projects in the Danube and Lake Victoria, ozone depletion projects in the Former Soviet Union countries, less clearly with respect to land degradation and persistent organic pollutants
• An effort to achieve strategic direction has produced mixed results, with so much guidance in some areas that any direction can be justified while little guidance exists in other fields. With respect to climate change, a key issue is the absence of linkages to carbon finance and insufficient guidance on adaptation.
• An overall issue is the need for measurable, transparent results indicators to judge quality and impact. An exception is the area of ozone depletion, where the Montreal Protocol notably agreed on systems for measuring and reporting results.
• Key recommendations included to clarify strategic direction; define track and report impacts more specifically; cultivate a stronger country program focus
• Track sustainability and catalytic efforts; strengthen communication with the Convention Secretariats; establish a formal information management function; and launch a private sector initiative GEF Evaluation Office, OPS3: Progressing Toward Environmental Results, Third Overall Performance Study of the Global Environment Facility (2005). The Fourth GEF Replenishment was announced in August 2006 and amounted to $3.13 billion. As a condition for its continued financial support, the United States successfully pushed for the adoption of a Resource Allocation Framework (RAF), a system of allocating funds to countries based on expected impact and some measure of prior performance. Initially the RAF applies only to climate change and biodiversity projects, although the intent is to gradually extend it to all GEF focal areas. The key result is that the bulk of funds are allocated to a relatively small subset of countries – in the case of climate change, fewer than 20 – essentially the largest GHG emitters. The rest are able to apply for less than a total of a few million dollars over four years, barely enough to do a single meaningful project. A more popular feature of the RAF has been to vest greater authority in country focal points, who are now given a sense of the total amount they will receive over four years and the power to prioritize and approve how the funds are used. (This too has a downside, which is that private sector initiated projects have much less chance of obtaining approval.) Experience under the RAF is the subject of a Mid-Term Review initiated in 2008 and available at the GEF website. http://www.thegef.org/gefevaluation.aspx?id=22712. The first Board approved World Bank approach to addressing climate change was approved in October 2008, Development and Climate Change: a Strategic Framework for the World Bank Group. Some of the measures discussed include measuring and reporting the carbon footprint of investments; supporting climate vulnerability studies as a basis for climate proofing investments; and developing a program to support the commercialization of new clean energy technologies applicable to developing countries. At their July 2008 meeting the G8 leaders also announced their commitment to create a new Climate Investment Fund to be managed by the World Bank but available to support projects by other regional banks and UN agencies as well. (Query: how does this structure differ from the GEF?) In September 2008 ten donors pledged a total of $6.1 billion dollars, to be fully committed within three years consistent with the expiration of the Kyoto Protocol. About $5 billion is for a Clean Technology Fund with the remainder mainly for adaptation and forestry activities. The Fund will be extended only if approved by Climate Convention. www.worldbank.org/cif. Export Credit Agencies
p. 1115 (5th edition): In an article in the January 2009 issue of the Environmental Forum (“A Test Case for Export Finance”), Bruce Rich sharply criticizing the involvement of export credit agencies (ECAs) in the financing of the Ilisu Dam project. The dam, which would be built on the Tigris River in southeastern Turkey, would forcibly displace nearly 65,000 ethnic Kurds while flooding archeological treasures in Anatolia. An effort by a consortium of companies in Germany, Switzerland and the United Kingdom to obtain financing for the project collapsed in 2002 after an international outcry. However, the project later was revived when ECAs from Austria. Germany, and Switzerland approved nearly $600 million in loan guarantees for the project. Arguing that this represents an important test of the OECD’s “Common Approaches on Environment” for export credit agencies, Rich notes that the three ECAs involved in the project required the Turkish government to meet 153 conditions dealing with the environment, resettlement and cultural heritage. After independent monitoring committees determined in March and August 2008 that the Turkish government had failed to meet these conditions, the ECAs in October 2008 sent an official Environmental Failure Notice. This notice gave the Turkish government 60 days to remedy these deficiencies or face withdrawal of ECA support. On December 23, 2998, the three ECAs ordered work on the project suspended for 180 days due to the failure to live up to the environmental conditions. In February 2009 a landmark settlement was announced of a National Environmental Policy Act (NEPA) lawsuit brought by Friends of the Earth (FOE), Greenpeace, Boulder, Colorado and three California cities against U.S. Export-Import Bank and the Overseas Private Investment Corporation (OPIC). The lawsuit charged that these ECAs had failed to consider the impact on global warming and climate change of their actions financing fossil fuel power projects in violation of NEPA. In the settlement, the agencies agreed to provide $500 million in financing for renewable energy projects over the next 10 years. The Export-Import Bank agreed to develop, in consultation with plaintiffs, a carbon policy that will include financing incentives for reducing greenhouse gas (GHG) emissions. It also agreed to evaluate GHG emissions when assessing fossil fuel project investments. OPIC agreed to set a goal of reducing by 20 percent the GHG emissions associated with the projects it funds over the next 10 years. It also agreed to include climate change impacts in the environmental assessment it performs of any projects it funds that emit more than 100,000 tons of carbon dioxide equivalents per year. |
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