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As the annual UN climate summit opens in Madrid, who will pay how much for greenhouse gas emissions remains the main stumbling block, leaving developing countries without resources

National flags at the Madrid climate summit venue (Photo by UNFCCC)

The annual summit of the UN Framework Convention on Climate Change (UNFCCC) starts just a few weeks before the 2015 Paris Climate Agreement comes into effect on January 1, 2020. Almost four years of negotiations have failed to resolve how rich nations will pay for the greenhouse gas (GHG) emissions saved by poor nations. The December 2-13 Madrid summit will be the last chance; or the Paris agreement will be hobbled from the very start in the race against runaway climate change.

Shifted from Santiago due to unrest in Chile, the 2019 summit comes in the wake of a record number of storms, floods, heat waves and wildfires around the world, all faithfully following scientists’ predictions in a warming world. It accompanies the steady rise of GHG emissions – mainly of carbon dioxide – that are warming the world. All of this at the time that US President Donald Trump’s withdrawal from the Paris agreement is about to take effect, China and India have shifted focus due to economic problems, and Saudi Arabia has vetoed the use of the IPCC 1.5 special report in UNFCCC negotiations.

This year, the IPCC (intergovernmental Panel on Climate Change) has brought out two more special reports – one on land and the other on oceans and mountains – both showing the crucial and urgent need to move away from fossil fuels. Still, the stock price of oil giant Saudi Aramco has reached the stratosphere, making it the world’s most profitable company.

The stalled negotiations over money – essentially the price global stock markets are willing to pay for a ton of carbon emissions into the atmosphere – reflect this widening gulf between business-as-usual and business-as-needed. The 29,000-odd government negotiators and observers gathering in Madrid know this stalled section as Article 6 of the Paris agreement.

This Article offers national governments three ways to cooperate, two of them based on market mechanisms. All three have been agreed in principle, but the modalities are holding up everything.

The first method is bilateral or multilateral ways for rich nations to pay poor nations that undertake a project to reduce GHG emissions – setting up a solar plant or planting trees are examples. The fight is over the extent to which each such project reduces emissions, who is to monitor that, and who gets to take credit at the UNFCCC.

In the second method, the UNFCCC issues emission reduction credits, and then governments can buy and sell these credit certificates. As with the first method, there is no agreement on the rules, modalities, and procedures for this mechanism.

The third method, which relies on non-market approaches, has not even made it to the negotiating table at any level of seriousness. It awaits success in the other two arenas.

It gets worse. Emission reduction certificates have been a part of the UNFCCC systems for well over a decade. But the price of carbon emissions collapsed in 2012, so countries have not sold these certificates, and many developing countries are sitting on huge piles that will become so much useless paper unless they can be taken forward under the Paris agreement, something that rich nations have refused to allow. C.K. Mishra, India’s Environment Secretary, said as he was embarking for Madrid that the Indian delegation would press hard to keep the value of these certificates alive.

And all this when Article 6 can play a key role in emission reduction by shifting global finance flows towards low-carbon and climate resilient development. But if an international agreement on Article 6 is not achieved at this summit, the already prolonged period of uncertainty about the future of international carbon markets will continue, adversely impacting the ability of poor nations to fight climate change.

Nearly four years of negotiations have made it clear that the problems in Article 6 cannot be resolved unless most governments are willing to compromise. NGOs that have been pushing for more climate action do not expect all details to be worked out by this December 13. But they are hoping that governments will agree on principles that can guide the implementation process later.

It’s always about the money

Apart from market based mechanisms, there is a promise from rich nations – dating back to 2009 – to give poor nations USD 100 billion per year from 2020 to help combat climate change. Industrialised countries are so far from this target that nobody is even talking much about it any longer. However, Mishra said he would press the point in Madrid. He would also ask rich nations to account for what they have done so far, again something that many governments want wiped off the summit agenda.

Teresa Ribera, Minister for Ecological Transition in the summit’s host nation Spain, pointed out that national pledges made for the Paris agreement are nowhere near enough to prevent average temperatures from rising more than two degrees Celsius from pre-industrial times as vowed in the agreement, leave alone sticking to the 1.5-degree ceiling that the scientists recommend. “The important thing in this new phase is to activate action by all levels of government and by all social and economic stakeholders. We cannot delay climate action any longer.”

Ribera added, “It is important that COP25 (the summit) moves forward on the pending technical aspects of the regulatory agenda, such as Article 6 of the Paris agreement on carbon markets. However, such pending aspects should not prevent anyone from implementing the Paris agreement right now and in full.”

Loss and damage

It is now clear that impacts of climate change are causing loss and damage around the world, to an extent that cannot be handled through adaptation. In this scenario, an important piece of work at the Madrid summit will be to determine that future of the Warsaw International Mechanism (WIM) on loss and damage, the way in which the UN system is trying to deal with this issue.

Led by the US, rich nations have consistently blocked WIM, since they are especially afraid of facing compensation lawsuits from affected countries and individuals. Members of WIM have been forced to drop all talk of compensation. The US delegation is expected to be very active at this summit – the country remains a UNFCCC member despite pulling out of the Paris agreement. Given that, developing countries and NGOs are still looking to make WIM meaningful, and it remains to be seen what they come up with.

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