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Climate Change, Development and Trade: A Long Walk to Mitigation

Discussions

Climate Change, Development and Trade: A Long Walk to Mitigation

Gavin van der Nest, tralac Researcher, discusses recent global developments in the fight against climate change

The most recent report from the Intergovernmental Panel on Climate Change (IPCC) which is the third report forming part of the Fifth Assessment Report (IPCC WGIII AR5) was published on the 14th April, 2014 (available here). The impact of, adaptation to, vulnerability to and mitigation of climate change is again in the spotlight. This report shows that governments have not met their previous commitments formalised in 2010 to stem the rise of mean surface temperatures and are indeed lagging further behind.

The IPCC WG III AR5 states that to achieve sustainable development and equity along with the eradication of poverty the effects of climate change need to be limited. International cooperation is of paramount importance since climate change is a global issue with greenhouse gases (GHGs) accumulating over time and throughout the atmosphere. Greater international cooperation and trade in climate change mitigation technologies could play an important role in the development, diffusion and transfer of knowledge and environmentally friendly technologies. This is especially true of green technologies developed and supported by developed countries which may then be made accessible to developing and least developed nations which are most vulnerable to changes in climate.

To prevent temperatures rising more than the critical 2 degrees Celsius GHG emissions need to be cut by between 30 – 60 % of their 2010 levels by 2050. It has been shown (IPCC WGIII AR5) that the energy supply sector accounts for the largest proportion of GHG emissions. However, GHG emissions are still rising and as such, the IPCC has predicted that there will be only a 33-66% chance of achieving the 2 degrees Celsius target if the status quo remains. The latest report from the IPCC places considerable weight on increasing the share of low-carbon energy sources (which include solar, wind and nuclear energy) in the generation of electricity, to about 80%, to achieve their 2050 emissions target. This would require significant investment in the energy sector and some opponents to this strategy note the considerable strain that this would place on public coffers particularly when the world economy is still seeking to escape the financial turmoil of the last few years.

Of particular interest in the mitigation of climate change is the replacement of coal-fired power plants with modern and efficient natural gas combined-cycle power plants (combined heat and power). However, this is only feasible if natural gas is available and if the emissions from extracting and the supply thereof can be shown to be sustainably low. There is definite scope for the trade and support of such technologies between countries to aid sustainable development.

Another sector of considerable concern is the transport sector which according to the IPCC already contributes 27% of final energy use and carbon dioxide emissions from this sector are predicted to double by 2050 due to increasing global passenger and freight activity. This sector, in the mitigation of climate change, calls for smarter development particularly of infrastructure and fuel efficiency, urban planning and in transport networks which all feature prominently in global value chains. Focused strategies here have the potential to reduce carbon intensities but the choice of transport mitigation options are regionally constrained through various institutional, legal, financial and cultural barriers. This is particularly true when infrastructure is already in place and it becomes increasingly prohibitive to shift modes of transport i.e. from road to rail (which is less carbon intensive).

With the rising prominence of climate change on the global development agenda there has been a considerable increase in national and sub-national climate change mitigation plans. According to the IPCC in 2012, 67% of GHG emissions were subject to national legislation and/or strategies when compared to the 45% in 2007. It has been pointed out that this is still in the early stages of implementation and as a consequence it is difficult to gauge its impact.

Cap and trade systems for GHG emissions have been adopted in a number of countries and regions since the previous IPCC report was published. However, it has been found that the short-run positive environmental effects of such systems has been limited partly as a result of loosely applied caps or caps in themselves not being particularly constraining upon the affected parties. However, the IPCC states that in principle the cap and trade systems can achieve climate change mitigation in cost-effective ways but depends on national circumstances and the parties’ commitment to change. Earlier cap and trade systems relied almost solely on the free allocation of permits (which essentially rapidly drove carbon prices downwards) but the closed auctioning of permits have become increasingly popular. The money raised from the auctioning of such permits should be allocated to investments of high social return and/or reduce the tax and debt burden.

In line with climate concerns and the development of a green economy a recent initiative has been established by the United Nations (UN). It is referred to as the “Decade of Sustainable Energy for All (2014-2024)” and its three main objectives are as follows:

  1. Ensuring universal access to modern energy services

  2. Doubling the global rate of improvement in energy efficiency; and

  3. Sharing renewable energy globally

The third point is particularly interesting from a trade perspective. How would such trade be facilitated? What framework does the UN envisage for the trade of renewable energy and would there be a specific body facilitating and ensuring fair trade practice? What would constitute environmentally fair trade practice?

The key driver of these objectives would be the private sector as mentioned by Kandeh Yumkella, the Secretary-General’s Special Representative on the Sustainable Energy for All Initiative. It has also been announced that the first annual Sustainable Energy for All forum is scheduled to take place at the UN Headquarters in New York on 4-6 June, 2014. There will be close cooperation with the World Bank, government, the private sector, civil society and international organizations to evaluate progress made on sustainable energy, research and development, to set new targets and commitments and to facilitate greater action on this pressing issue.

In the contemporary world almost one out of five people live without access to electricity (UN News Centre, 16th April 2014) with almost 40 per cent utilizing carbon intensive products (wood, coal, charcoal and animal waste) for their energy, heat and living requirements. There is thus a great opportunity and the time is ripe for addressing this energy poverty by finding alternative and sustainable methods for energy provision. If one is not able to adequately make provision for the creation of energy for this large group of the population the climate consequences could be catastrophic.

It is the UN Secretary-General Ban Ki-moon’s (UN News Centre, 16th April 2014) view that energy is the conduit that connects economic growth to increased social equity and a healthy environment and has further said that sustainable development is not possible without sustainable energy. It is this that has motivated the creation of the Sustainable Energy for All initiative.

It is encouraging to note that renewable energy’s share of global electricity generation is steadily increasing, spurred on by government policy and greater climate change awareness, but much remains to be done. However, if it was not for the larger share of renewable energy in global electricity production there would be a 12 per cent gap between where carbon dioxide emissions should be and would be by 2020 to arrest the 2 degrees Celsius rise in average global temperatures (UN News Centre, 16th April 2014).

Now, to consider the concerns of climate change on the African agenda one may be drawn to the EU-Africa Summit held in Brussels on 2-3 April, 2014. European Council President Herman Van Rompuy has said that it is time to shift from development cooperation between Europe and Africa to a “partnership of equals with trade and investment playing a key role”. A roadmap has been drawn up to give guidance on their cooperation over the next three years with five clusters of priority actions; peace and security, democracy, governance and human rights, human development, sustainable and inclusive development, and integration and global emerging issues. Of particular interest from a climate change perspective is the “sustainable and inclusive development” cluster.

Also on the agenda was climate change and environmental cooperation within the context of an ongoing UN process hoping to establish a post-2015 agenda for development. During the summit it was determined that the EU and Africa would adopt a “fair, balanced, equitable and ambitious legally binding agreement under the UNFCCC  (United Nations Framework Convention on Climate Change)” in Paris in 2015 . The need for the implementation of existing commitments made under the UNFCCC and Kyoto Protocol on the mitigation, adaptation, provision of finance, technology and capacity building support to developing countries was also acknowledged. The urgent need for nationally determined contributions was addressed with leaders from both regions committing to a first quarter 2015 deadline in order to be prepared for the Paris 2015 talks. Europe has specifically committed to helping Africa overcome its specific challenges and to aid in the mitigation, adaptation, finance, technology development and transfer, transparency of action and support and capacity building through the provision of adequate financial resources for Africa.

The comprehensive Africa-wide Adaptation Programme was also welcomed at the summit which seeks to build the resilience of the continent around common climate risks shared by the majority of countries and to strengthening the adaptation funding as well as greater cooperation in order to increase funding from all sources. Additionally, the EU and Africa reiterated their commitment to additional, predictable and adequate funding to developing countries that are at greatest risk to the adverse effects of climate change. The EU has also committed US$ 100 billion per year specifically for climate finance to aid in the mitigation and implementation of climate relevant policy and spending. It is also particularly interesting to note that 20% of the EU’s 2014-2020 development budget would be spent in a climate-relevant way. The EU and Africa also reaffirmed their commitment to and cooperation with the Great Green Wall for the Sahara and Sahel, Clim-Dev, disaster-risk reduction, Sustainable Energy for All, the FAO-EU Partnership on Climate Smart Agriculture and the African Climate Policy Centre. There is thus definitely a great willingness to cooperate with each other in the mitigation of climate change.

A closing statement of the EU-Africa summit press release reads as follows, “We confirm that action on climate change is a central area of the Africa-EU Partnership and that we will do all that is in our power to convince other partners of the need for a fair, balanced, equitable and ambitious legally binding agreement to be adopted by the end of 2015, and of the need to raise global pre-2020 ambitions”. Climate change will feature prominently in the agenda going forward and will in all likelihood drive development ambitions and partnerships for the foreseeable future.

Climate change is definitely a hot topic. It will take great investment, international cooperation and perseverance to mitigate it. However, many strong institutions have been established to combat it and to encourage global cooperation in this matter. How this story ends depends solely on the willingness of nations to work together towards a less carbon intensive global economy.

.


References:

“UN launches decade-long initiative to promote sustainable energy for all”, UN News Centre, Accessed 16th April 2014, Available at: http://www.un.org/apps/news/story.asp?NewsID=47537#.VFeFhvmUeSo

“EU-Africa Summit Eyes Increased Trade, Investment Ties”, Bridges Weekly Trade News Digest, Vol 18, Number 13, Accessed 16th April 2014, Available at: http://ictsd.org/i/news/bridgesweekly/188271/

“EU-Africa Ministerial Statement on Climate Change”, Accessed 19th April 2014, Available at: http://europa.eu/rapid/press-release_STATEMENT-14-97_en.htm

“The multilateral trading system and climate change”, Accessed 21st April 2014, Available at: http://www.wto.org/english/tratop_e/envir_e/climate_intro_e.htm

Discussions

Climate Change, Development and Trade: A Long Walk to Mitigation

Climate Change, Development and Trade: A Long Walk to Mitigation

23 Apr 2014

Gavin van der Nest, tralac Researcher, discusses recent global developments in the fight against climate change

The most recent report from the Intergovernmental Panel on Climate Change (IPCC) which is the third report forming part of the Fifth Assessment Report (IPCC WGIII AR5) was published on the 14th April, 2014 (available here). The impact of, adaptation to, vulnerability to and mitigation of climate change is again in the spotlight. This report shows that governments have not met their previous commitments formalised in 2010 to stem the rise of mean surface temperatures and are indeed lagging further behind.

The IPCC WG III AR5 states that to achieve sustainable development and equity along with the eradication of poverty the effects of climate change need to be limited. International cooperation is of paramount importance since climate change is a global issue with greenhouse gases (GHGs) accumulating over time and throughout the atmosphere. Greater international cooperation and trade in climate change mitigation technologies could play an important role in the development, diffusion and transfer of knowledge and environmentally friendly technologies. This is especially true of green technologies developed and supported by developed countries which may then be made accessible to developing and least developed nations which are most vulnerable to changes in climate.

To prevent temperatures rising more than the critical 2 degrees Celsius GHG emissions need to be cut by between 30 – 60 % of their 2010 levels by 2050. It has been shown (IPCC WGIII AR5) that the energy supply sector accounts for the largest proportion of GHG emissions. However, GHG emissions are still rising and as such, the IPCC has predicted that there will be only a 33-66% chance of achieving the 2 degrees Celsius target if the status quo remains. The latest report from the IPCC places considerable weight on increasing the share of low-carbon energy sources (which include solar, wind and nuclear energy) in the generation of electricity, to about 80%, to achieve their 2050 emissions target. This would require significant investment in the energy sector and some opponents to this strategy note the considerable strain that this would place on public coffers particularly when the world economy is still seeking to escape the financial turmoil of the last few years.

Of particular interest in the mitigation of climate change is the replacement of coal-fired power plants with modern and efficient natural gas combined-cycle power plants (combined heat and power). However, this is only feasible if natural gas is available and if the emissions from extracting and the supply thereof can be shown to be sustainably low. There is definite scope for the trade and support of such technologies between countries to aid sustainable development.

Another sector of considerable concern is the transport sector which according to the IPCC already contributes 27% of final energy use and carbon dioxide emissions from this sector are predicted to double by 2050 due to increasing global passenger and freight activity. This sector, in the mitigation of climate change, calls for smarter development particularly of infrastructure and fuel efficiency, urban planning and in transport networks which all feature prominently in global value chains. Focused strategies here have the potential to reduce carbon intensities but the choice of transport mitigation options are regionally constrained through various institutional, legal, financial and cultural barriers. This is particularly true when infrastructure is already in place and it becomes increasingly prohibitive to shift modes of transport i.e. from road to rail (which is less carbon intensive).

With the rising prominence of climate change on the global development agenda there has been a considerable increase in national and sub-national climate change mitigation plans. According to the IPCC in 2012, 67% of GHG emissions were subject to national legislation and/or strategies when compared to the 45% in 2007. It has been pointed out that this is still in the early stages of implementation and as a consequence it is difficult to gauge its impact.

Cap and trade systems for GHG emissions have been adopted in a number of countries and regions since the previous IPCC report was published. However, it has been found that the short-run positive environmental effects of such systems has been limited partly as a result of loosely applied caps or caps in themselves not being particularly constraining upon the affected parties. However, the IPCC states that in principle the cap and trade systems can achieve climate change mitigation in cost-effective ways but depends on national circumstances and the parties’ commitment to change. Earlier cap and trade systems relied almost solely on the free allocation of permits (which essentially rapidly drove carbon prices downwards) but the closed auctioning of permits have become increasingly popular. The money raised from the auctioning of such permits should be allocated to investments of high social return and/or reduce the tax and debt burden.

In line with climate concerns and the development of a green economy a recent initiative has been established by the United Nations (UN). It is referred to as the “Decade of Sustainable Energy for All (2014-2024)” and its three main objectives are as follows:

  1. Ensuring universal access to modern energy services

  2. Doubling the global rate of improvement in energy efficiency; and

  3. Sharing renewable energy globally

The third point is particularly interesting from a trade perspective. How would such trade be facilitated? What framework does the UN envisage for the trade of renewable energy and would there be a specific body facilitating and ensuring fair trade practice? What would constitute environmentally fair trade practice?

The key driver of these objectives would be the private sector as mentioned by Kandeh Yumkella, the Secretary-General’s Special Representative on the Sustainable Energy for All Initiative. It has also been announced that the first annual Sustainable Energy for All forum is scheduled to take place at the UN Headquarters in New York on 4-6 June, 2014. There will be close cooperation with the World Bank, government, the private sector, civil society and international organizations to evaluate progress made on sustainable energy, research and development, to set new targets and commitments and to facilitate greater action on this pressing issue.

In the contemporary world almost one out of five people live without access to electricity (UN News Centre, 16th April 2014) with almost 40 per cent utilizing carbon intensive products (wood, coal, charcoal and animal waste) for their energy, heat and living requirements. There is thus a great opportunity and the time is ripe for addressing this energy poverty by finding alternative and sustainable methods for energy provision. If one is not able to adequately make provision for the creation of energy for this large group of the population the climate consequences could be catastrophic.

It is the UN Secretary-General Ban Ki-moon’s (UN News Centre, 16th April 2014) view that energy is the conduit that connects economic growth to increased social equity and a healthy environment and has further said that sustainable development is not possible without sustainable energy. It is this that has motivated the creation of the Sustainable Energy for All initiative.

It is encouraging to note that renewable energy’s share of global electricity generation is steadily increasing, spurred on by government policy and greater climate change awareness, but much remains to be done. However, if it was not for the larger share of renewable energy in global electricity production there would be a 12 per cent gap between where carbon dioxide emissions should be and would be by 2020 to arrest the 2 degrees Celsius rise in average global temperatures (UN News Centre, 16th April 2014).

Now, to consider the concerns of climate change on the African agenda one may be drawn to the EU-Africa Summit held in Brussels on 2-3 April, 2014. European Council President Herman Van Rompuy has said that it is time to shift from development cooperation between Europe and Africa to a “partnership of equals with trade and investment playing a key role”. A roadmap has been drawn up to give guidance on their cooperation over the next three years with five clusters of priority actions; peace and security, democracy, governance and human rights, human development, sustainable and inclusive development, and integration and global emerging issues. Of particular interest from a climate change perspective is the “sustainable and inclusive development” cluster.

Also on the agenda was climate change and environmental cooperation within the context of an ongoing UN process hoping to establish a post-2015 agenda for development. During the summit it was determined that the EU and Africa would adopt a “fair, balanced, equitable and ambitious legally binding agreement under the UNFCCC  (United Nations Framework Convention on Climate Change)” in Paris in 2015 . The need for the implementation of existing commitments made under the UNFCCC and Kyoto Protocol on the mitigation, adaptation, provision of finance, technology and capacity building support to developing countries was also acknowledged. The urgent need for nationally determined contributions was addressed with leaders from both regions committing to a first quarter 2015 deadline in order to be prepared for the Paris 2015 talks. Europe has specifically committed to helping Africa overcome its specific challenges and to aid in the mitigation, adaptation, finance, technology development and transfer, transparency of action and support and capacity building through the provision of adequate financial resources for Africa.

The comprehensive Africa-wide Adaptation Programme was also welcomed at the summit which seeks to build the resilience of the continent around common climate risks shared by the majority of countries and to strengthening the adaptation funding as well as greater cooperation in order to increase funding from all sources. Additionally, the EU and Africa reiterated their commitment to additional, predictable and adequate funding to developing countries that are at greatest risk to the adverse effects of climate change. The EU has also committed US$ 100 billion per year specifically for climate finance to aid in the mitigation and implementation of climate relevant policy and spending. It is also particularly interesting to note that 20% of the EU’s 2014-2020 development budget would be spent in a climate-relevant way. The EU and Africa also reaffirmed their commitment to and cooperation with the Great Green Wall for the Sahara and Sahel, Clim-Dev, disaster-risk reduction, Sustainable Energy for All, the FAO-EU Partnership on Climate Smart Agriculture and the African Climate Policy Centre. There is thus definitely a great willingness to cooperate with each other in the mitigation of climate change.

A closing statement of the EU-Africa summit press release reads as follows, “We confirm that action on climate change is a central area of the Africa-EU Partnership and that we will do all that is in our power to convince other partners of the need for a fair, balanced, equitable and ambitious legally binding agreement to be adopted by the end of 2015, and of the need to raise global pre-2020 ambitions”. Climate change will feature prominently in the agenda going forward and will in all likelihood drive development ambitions and partnerships for the foreseeable future.

Climate change is definitely a hot topic. It will take great investment, international cooperation and perseverance to mitigate it. However, many strong institutions have been established to combat it and to encourage global cooperation in this matter. How this story ends depends solely on the willingness of nations to work together towards a less carbon intensive global economy.

.


References:

“UN launches decade-long initiative to promote sustainable energy for all”, UN News Centre, Accessed 16th April 2014, Available at: http://www.un.org/apps/news/story.asp?NewsID=47537#.VFeFhvmUeSo

“EU-Africa Summit Eyes Increased Trade, Investment Ties”, Bridges Weekly Trade News Digest, Vol 18, Number 13, Accessed 16th April 2014, Available at: http://ictsd.org/i/news/bridgesweekly/188271/

“EU-Africa Ministerial Statement on Climate Change”, Accessed 19th April 2014, Available at: http://europa.eu/rapid/press-release_STATEMENT-14-97_en.htm

“The multilateral trading system and climate change”, Accessed 21st April 2014, Available at: http://www.wto.org/english/tratop_e/envir_e/climate_intro_e.htm

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