Sustainability and Climate Change: Doha

Mark

Hello and welcome to PwC’s round up of the Doha Climate Change Summit. My name is Mark Nicholls and I’m editor of the Environmental Finance magazine and I’m joined by three of PwC’s sustainability and climate change team who were at the talks in Doha. Jonathan, perhaps we could start with you. Could you summarise what was agreed at the negotiations?

Jonathan

Mark, Doha wasn’t a landmark climate change summit but it achieved a number of useful outcomes which will help move the process forward. First, and most importantly, countries signed up to a second commitment period of the Kyoto protocol. It was adopted by all parties but those that take on targets include Europe, Australia and a number of others representing about 15% of global emissions. Secondly, the discussions of the Durban platform continued. This is the process which will result in an agreement in 2015 and negotiators were able to discuss principles and how to increase ambition in those Durban platform negotiations. And finally, Doha was useful in that it tied up a number of the institutional processes that had been ongoing that have really made observing and following the process very complicated for both negotiators and observers. So, they wrapped up the work of the Long Term Co-Operative Action group and they wrapped up the Kyoto Protocol group, as well. So, as the negotiations move forward they’ll be slightly simpler to follow.

Mark

As always, the negotiations overran. They were very acrimonious towards the end. Richard, you were there until he finish. How was the process run in the end?

Richard

The whole process was really quite difficult and exhausting. You have three or four long nights of negotiations and ministerial meetings. Slightly chaotic on the last day when it turned out that many of the delegates did not have the necessary paper work to enable KP2 to be approved. But ultimately, the decisions were all gabbled through at breakneck speed by the Qatari president of the COP. And that in itself, I think, is quite a significant thing. A few years ago, you would not have imagined a leading APEC country driving forward climate change negotiations. So, in many respects this is a very important step on the road to 2015 and hopefully a global deal. But, I think what it also demonstrated is how difficult it is going to be to get that global deal in place in that timeframe. And certainly difficult to get it there with the scale of ambition that is required on emission reductions and on finance.

Mark

One of the surprising outcomes, it seemed to observers, was the introduction of some language around loss and damage whereby developing countries will be compensated for the effects of climate change. Celine, what was your response to that?

Celine

I would say I wasn’t that surprised that there was mention of the loss and damage principle within the text this year. It was something that was supposed to be put towards the conference of parties this year after a work programme last year. It’s the principle itself that is interesting, that developed countries for the first time have accepted responsibility for potential future damages around climate change. So, it’s not just adaptation finances, it’s that aspect of responsibility. However, I think there has been a lot of misunderstanding, both during the climate talks by some of the objectors and since, perhaps by some of the coverage in the media.

The critical issue is this is not new finance for loss and damage. This is not about signing up to potentially unlimited liability whenever a natural catastrophe event occurs and you can blame it on climate change. That’s not what it is. What this is about is a coordinated international approach to managing climate disasters, both pre event in terms of international efforts to get better information, better risk modelling and risk assessment, better risk management decisions and planning. And post event, in terms of thinking about more innovative approaches to help vulnerable communities manage against disasters, including climate insurance mechanisms so that you can get fast payout post disasters and make sure there is not such economic volatility that often keeps the most vulnerable communities in poverty traps due to climate disasters.

Mark

Going into the talks, climate finance was a big issue. Limited progress in Doha, in terms of new money. Is that how you see it?

Celine

Yes, it was always going to be a critical issue and it is one that very much came out at the end of the talks. The fast start period ends in a couple of weeks, at the end of 2012. A few countries obviously turned up at Doha and made some pledges for new funding but that was never really going to be enough. What we got to keep the process going was a decision, or an agreement, for countries to at least maintain their fast start level of funding commitments for developed countries to do that until 20125. And also, to arrive next year at the next conference of parties with plans about how they can reach that $100bn a year target in 2020. But really, I think we’ve just got enough to get the process through this year. What we are going to have next year, there are going to be more demands for actual practical ways of scaling up finance commitments over the next eight years, until 2020, because we are really a long way short of that $100bn a year at the moment.

Mark

Sure. Jonathan, maybe we can talk about carbon markets. As we discussed before, the carbon crisis is on the floor, pretty much. Did Doha give any cheer to carbon traders?

Jonathan

Well, I think it’s too early to tell. There were lots of aspects of the carbon markets that were discussed in Doha such as eligibility of the use of credits, the carryover of surplus hot air, and it’s too early to tell whether or not that will have an impact on the market. Probably the most important outcome from Doha for the carbon market was the fact that Europe continued with its 20% target. I think the only thing that would really have given a boost to the carbon market is if Europe had moved to 30%. As it was, they have agreed to implement a number of institutional reforms to the CDM which will make the process slightly less bureaucratic, which is a step forwards. They also agreed on the use of hot air, so countries like Russia and the Ukraine who were very strongly committed to keeping their surplus credits left over from the first commitment period, they are allowed to keep those credits but at the same time a number of countries agreed that they would not buy those from them. So, the Russians and the Ukrainians get to keep those credits but they won’t work their way into the market.

Mark

So, that’s a neat way of both addressing the desire to hold on to these aims and address the environmental integrity problem of letting them back into the system.

Richard, the Doha talks were seen very much as housekeeping cops that would keep the show on the road. Where do we go from here?

Richard

I think the key thing, going forward, is to ratchet up not just the level of ambition in emission production targets, but I think also, leverage up the political commitment to climate action. Ban Ki-moon has called for a meeting of world leaders in 2014, and that will put climate change really on the political agenda again. It’s slipped down the political agenda because of the economic crisis, but it’s got to be pushed up. We’ve got to move from a situation of political will, I think, to a situation of political leadership. And that’s got to happen at the international level. But, it also needs to happen at the national and regional level.

I think the other thing that has got to be sorted out in the next two years is the role of the private sector on climate action. The level of funding that’s required is not going to come from governments alone. The level of commitment is not going to come from governments alone. Private sector has got to be brought into this process. There are already good moves happening towards that in relation to the Green Climate Fund with the private sector facility. Private sector being actively involved in the plans for that. I think we’re going to see some really interesting developments both in the negotiations and in the private sector over the next two years.

Mark

Richard, you mentioned the private sector – a lot of people in the business community, Jonathan, will be looking on at the whole UN climate process with a sense of bafflement - what can they take away from all this?

Jonathan

It is difficult to understand, but it’s very important for policy implications and for climate implications. Business has to learn to deal with both policy shocks and climate shocks. These could impact on supply chains. They could impact on their employees. They could impact on commodity prices and they could impact on their investments. So, business will have to learn to be resilient and learn to raise its ambition.

Mark

Celine, there was a lot of talk about trust between developing countries and the developed world before Doha. Did the developing countries get what they hoped for?

Celine

I think quite telling was the final speech on the final day by one of the small island state’s negotiators. He said it’s not about how comfortable your people are. It’s about whether our people live. And I think that has to be the focus, going forward. The level of finance that was put on the table this year wasn’t enough.  The level of ambition as expected is not enough. And both of those things really need to ramp up towards 2015.

Mark

So Richard, what are you expecting for 2013?

Richard

Well, certainly more progress in the UN process, but also progress outside of that. And I think the two key areas there are the Green Client Fund, the private sector facility in that.  And the second area is aviation where ICAO will be trying to bring forward a global deal on aviation.

Mark

And Jonathan, the show is still on the road after Doha? What are the chances for a big deal in 2015?

Jonathan

Well, I think the summit in Doha showed just how difficult it would be to achieve that deal in 2015. No-one wants to derail the process, but the question is really now, how ambitious that deal in 20125 will be.

Mark

Well, plenty to think about and digest and obviously, a lot to look forward to in the years to come. So, if I could just thank the panel and thank you for watching.

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