Where things stand

Wednesday morning at 10am the high level segment of the Bali talks kicks off. Over the next three days, ministers from about 155 countries will take over from the more junior officials who have been negotiating so far. This is crunch time.

Between now and Friday night we will find out whether governments will agree to launch negotiations on a post-2012 climate treaty, to finish these by 2009, and to agree a detailed work plan for the next two years.

What can we expect? Whoever you ask will tell you the most significant questions won’t be resolved until the early hours of Saturday morning.

Nonetheless, certain things can be said now. Before I say them, a warning: because this post attempts to provide a full update on where things are at, it’s unusually long. Hopefully the sub-headings will help.

Everyone agrees that negotiations must be launched on a post-2012 climate treaty. For the US, this is an about-turn from its stance only a year ago, when George Bush was still questioning the science behind climate change.

Virtually everyone agrees that negotiations must end by 2009 – China has been the sole exception, advocating a 2010 deadline, but I wonder whether it will stick to its guns in the face of broad consensus. There are more important things for it to spend its bargaining chips on.

The really tricky issue is the work plan. This is the most controversial element of the talks. How much detail should it include and what should it say? Yesterday US chief negotiator Harlan Watson said he favoured something “short, to-the-point, and balanced”.

“We want the essential building blocks [of a post-2012 climate agreement] identified… mitigation, adaptation, technology and financing,” he said, “there has to be a little specification below that level but without prejudging what might come out at the end.”

Reduction ambitions

Any concrete numbers suggesting what emission reductions developed countries should commit to, or what we should try to limit a temperature rise to, could prejudice the final outcome of an agreement, according to Dr Watson. The US has received support from Japan, Australia and Canada.

The EU and UN climate chief Yvo de Boer have consistently maintained these specifics must be included. A draft text that emerged on Saturday said developed countries must commit to cut emissions by 25-40 per cent by 2020, relative to 1990 levels, global emissions must peak in the next 10-15 years, and global emissions must be cut by at least half by 2050.

It’s the 25-40 per cent that has attracted most media attention. The latest rumours are that it’s been cut from the draft text, but this could change again. Whatever version officials settle on tonight, it will be passed on to ministers for debate tomorrow. And I can guarantee this is one of those questions they will debate until 4am on Saturday.

Yet I think we can say that even on this seemingly impossible question, consensus may yet be reached. The EU and UNFCCC appear to be making an unprecedented effort to reach out to the US.

EU environment commissioner Stavros Dimas today again set forth his clear support for the commitments detailed above. But other EU sources described the 25-40 per cent as “preferable” rather than “essential”.

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When asked whether he would consider a Bali roadmap without the 25-40 per cent wording a failure, Yvo de Boer said, “No, specific targets you should discuss at the end”. This comes remarkably close to Dr Watson’s position. Mr de Boer emphasised too that the 25-40 figures were intended in any case as “guidance” not “targets”.

There are a million ways in which ministers can phrase the level of ambition in the Bali roadmap they sign off – which they choose will also depend on how other building blocks are written into the plan. For example, perhaps the EU would be prepared to change the wording on ambition in return for more explicit support for the carbon market.

Targets and mitigation are issues that concern primarily the developed world. What about the developing world? We reported earlier this week that emission caps for developing countries seemed about to fall off the table and indeed there has been no further mention of them. Sectoral commitments by industry sector look like the most likely commitment we can expect from developing countries. Details of these too will have to be worked out by ministers.

Adaptation

Adaptation, deforestation, technology, and financing are the main priorities for developing nations. And they scored victories today on the first two. The final structure and operation of an adaptation fund was finally agreed by officials. This is therefore one item ministers will not have to debate but can simply rubber-stamp.

I had wondered how important the set up of the fund was when recent reports have suggested the fundamental problem with adaptation is that rich nations aren’t paying up. Only about 15 per cent of US$1.2bn  (€0.81bn) promised to the developing world by the EU and other states in 2001 has materialised, said UK newspaper the Guardian just before Bali.

All the money in this particular fund however, will come from a two per cent levy on transactions under Kyoto’s Clean development mechanism (CDM), rather than donations. If operational tomorrow, it would contain about US$36m, hardly the US$50bn the World Bank forecasts is needed, but Mr de Boer notes there is a huge CDM pipeline.

Deforestation

On deforestation, World Bank president Robert Zoellick today in Bali launched a new fund to help developing countries reduce emissions from deforestation and land degradation. The fund, which is expected to be worth US$300m, will among other things offer countries carbon credits in return for reducing deforestation.

Not everyone applauded the fund. NGO Friends of the Earth said it would not help combat change because it simply offered industrialised countries another way to avoid reducing their own emissions. The US has not decided whether to support it, reports Bloomberg, but it notes President Bush opposes putting a price on carbon.

Negotiators came close to finalising a draft text on deforestation, which begins to set out accounting standards for forestry carbon reduction projects and doubles the size limit for forestry projects that qualify as “small-scale” under the CDM. Such projects face simplified requirements. Mr de Boer said the move would not only expand the geographical scope of the carbon market, but also help countries without strong energy sectors profit more from the CDM.

The only outstanding controversial element in the deforestation text, which will therefore have to be taken up by ministers tomorrow, is how forest conservation fits into the picture.

Technology transfer

On the other two issues of concern to developing countries, technology and financing, the latter is a horizontal issue that cuts across everything from the carbon market to the adaptation fund. Subject to a dedicated international finance ministers’ meeting here in Bali today, I’ll report on that separately.

Technology transfer continues to generate heated discussion and will undoubtedly go to ministers for debate.

One proposal on the table is to monitor technology transfer – as for adaptation, the developing world does not feel it has benefited as it should from this mechanism. Also under consideration is a technology leveraging facility that would help turn a country’s assessment of its technology needs into project proposals that meet the criteria of international financial institutions. The idea is to combine soft loans with much larger commercial investments to bring technologies to new markets.

Other issues

On other issues, UN officials agreed for the first time to consider carbon capture and storage projects for inclusion in the CDM. But they could not agree on how to tackle a potentially perverse incentive to up production of the greenhouse gas HFC-22 to earn carbon credits from reducing its by-product HFC-23. Support for including aviation and maritime emissions in a post-2012 agreement continues to look very iffy.

The aim at these UN meetings has always been to get as much as possible sorted before the ministers arrive so they can devote themselves to the tricky stuff. Despite progress in some areas, there is quite a plateful awaiting them after breakfast tomorrow. The language on and mix of ambition, emission reduction commitments, technology transfer and deforestation will somehow have to please them all.

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