Deforestation agreement

Consensus on a draft deforestation text closes another controversial item on the Bali agenda. Parties reached agreement late last night, announced Greenpeace representative Marcelo Furtado on Friday morning.

EU environment commissioner Stavros Dimas confirmed the deal in his morning statement to the press, calling it a “good balance”.

Deforestation has been a key issue for several major developing countries here, including hosts Indonesia, India, and Brazil. It accounts for a fifth of all global greenhouse gas emissions. Like the technology transfer agreement, this deal moves the UN one step closer to a comprehensive road map for a post-2012 climate treaty.

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The agreement removes reference to considering deforestation and forest conservation under the wider theme of “land use”, said Mr Furtado. This term, pushed by the US, is very broad and would have introduced a host of fresh complexities . The text also introduces a clear separation between reducing emissions from deforestation and land degradation (REDD) on the one hand and promoting sustainable forest management and conservation on the other, he added.

The text recommends introducing specific policies and incentives to tackle the former, while subjecting the latter to further investigation. These incentives could include issuing carbon credits for REDD.

Carbon finance manager at the World Bank Joelle Chassard told ENDS she welcomed the agreement. Earlier this week the World Bank launched a forest carbon fund that will pilot financial incentive mechanisms to reduce deforestation and land degradation.

Ms Chassard said the World Bank recognises forest conservation may be something that should be rewarded. “It’s something we want to look at,” she said. She also said it makes sense to first focus on deforestation and degradation, since the accounting methodology for conservation-type activities is much more complicated.

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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.

Let’s talk

Everybody is talking about climate change these days. My grandmother was saying something about everyone having to switch all their lights off on the phone to me yesterday. “Why?” I asked, only half-listening. “You know, climate change,” she replied.

As the media has taken climate change and thrust it into our lives, it has become the topic of conversation not only for coffee tables but also for policymakers and businessmen. The latest scientific report leaves no room for doubt: the world is headed for catastrophe if we do not start doing something about it, now.

Yesterday marked the start of a two-week marathon of UN talks on climate change to do just that. Up to 15,000 people are estimated to be flocking to the island resort of Bali, Indonesia, to discuss a successor to the Kyoto protocol. The goal is to agree to start talking, when to finish taking, and what to talk about.

I will be flying out to Bali on Saturday (offset provider yet to be determined) to get a handle on this conversation. Well, myriad of conversations. Because policymakers, business and civil society will all be there to present their case. My inbox count has doubled in the run-up to Bali.

What can we expect? On the big things, it would be very surprising if there was no agreement to start talks or to aim to finish them by 2009. The problem is their content. It looks like the UN has taken the pragmatic decision to side-step the controversial issue of targets for now however, and to focus on tools instead.

When everyone agrees what’s in the toolbox, then we can talk about what those tools can achieve, UNFCCC chief Yvo de Boer said recently. One major tool that will dominate discussions is the carbon market. The US may insist it doesn’t like it, but it’s worth billions and in no hurry to go away.

Almost everyone agrees that any post-2012 agreement must include China and the US. Of course the danger of keeping it all as vague as possible to get everyone on board is that in the end we may settle on very little. But that shouldn’t concern us, yet. For now, the focus must be on getting a conversation going.

We’ll talk again next week.