Quadruple or Quits – managing the links between the four 2015 agendas of trade, climate, SDGs, and finance for development

Talk given by Alex Evans to a UK government cross-Whitehall session on the four key multilateral processes culminating in 2015: trade, climate, Sustainable Development Goals, and finance for development. (May 2012)

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A high ambition coalition of the willing on climate change

As the Center for Global Development’s Owen Barder and Alice Lepissier noted in their post from the COP19 climate summit in Warsaw last month, there was “lots of cloud and not much silver lining” in evidence there, what with Japan’s announcement of reduced emissions targets and the further diluting of the already dubious ‘pledge and review’ approach.

For me, though, the most depressing thing of all was the deafening silence among governments attending the COP about the issue of global carbon budgets. It’s a deep irony that, just as the IPCC publishes by far its most unequivocal analysis to date about the need to define (and then stay within) a safe global carbon budget, governments are less willing than ever to talk about the issue.

Part of the problem is that governments and other UNFCCC process hacks assume that a carbon budget is just too difficult to talk about. Not just because countries would have to agree on a way to share it out, but also, even more fundamentally, because of a sense that agreeing a carbon budget would depend on a ‘big bang’ moment at which all countries agreed on an allocation mechanism – and good luck with that.

This set Owen, Alice, and I thinking about whether there’s a way for some countries to go ahead with a carbon budget-based approach, but without all governments having to be on board at the outset: a high ambition coalition of the willing, in other words. Continue reading

US sets out big statement of global climate policy. Don’t hold your breath

US Special Envoy for Climate Change Todd Stern’s speech at Chatham House a couple of days ago is worth a look if you follow climate change. But don’t expect it to cheer you up.

It’s a thoughtful piece that clearly sets out where the US is coming from with regard to a new international agreement. But here’s the key part – which comes right after he acknowledges developing countries’ concerns about retaining space to develop as “entirely legitimate”:

The nationally determined structure of commitments we have already discussed should satisfy this pragmatic purpose, since countries would make their own decisions about what kind of mitigation commitments were appropriate given their own circumstances and capabilities.

Sigh – here we are once again with the same old pledge-and-review crap of countries doing whatever they figure they can manage, and then hoping it will somehow magically add up to the right global outcome. As though the atmosphere will award ‘marks for effort’.

And if you’re wondering where this kind of approach leads us, well, this year’s IEA World Energy Outlook  – published next month but extract available here – estimates that the net effect of commitments under the Copenhagen Accord will be 3.6-5.3 degrees Celsius of long term warming, most of it before the end of this century.

Oh, and despite the comprehensive nature of Stern’s speech, there’s one thing he conspicuously didn’t mention – the global target of limiting warming to 2 degrees Celsius. Go figure.

Someone explain to me again how the Obama Administration’s global climate policy is different from that of the Bush Administration?

Emerging economies’ dangerous game on the post-2015 development agenda

The internal dynamics of the G77 group of developing countries are shifting rapidly on both climate change and the post-2015 international development agenda, as the interests of least developed countries increasingly diverge from those of emerging economies – with pretty far-reaching implications.

Least developed countries (LDCs) are continuing to prioritise adaptation financing in the climate context, but they’re increasingly also focused on the need for higher levels of ambition on the mitigation side of the equation – not just from developed countries, but also from emerging economies, given the proportion of global emissions that they now account for. This has already contributed to a sharp decline in G77 cohesion in the UNFCCC process.

In the development context, meanwhile, different LDCs have different priorities. Most of them continue to regard ODA levels as their key priority – ideally increasing them towards 0.7, and at a minimum stemming the real terms decline seen over the last couple of years. But this is not true of all countries: for governments such as Bangladesh, Zambia, and Malawi, ODA is arguably less important than a successful conclusion to the Doha trade round, together with opportunities in investment, migration, and remittances.  Still, across both development and climate, it is clear that equity remains a key lens through which LDCs view the world.

The key emerging economies, meanwhile – China, Brazil, India, and South Africa – are among the principal demandeurs for a pledge-and-review based approach in the climate context, hence the tensions with LDCs, as well as small island states, over levels of ambition. (Admittedly, some emerging economies – and especially China – are pursuing much more ambitious strategies at national level than their scepticism of global monitoring, reporting, and verification might suggest; but the fact remains that their and others’ voluntary pledges under the Copenhagen Accord imply long term warming of 3.6 – 5.3 degrees Celsius, rather than the globally agreed target of 2 degrees.)

But while it is clear that emerging economies regard global climate policy as a matter of fundamental national interest, it is by no means obvious that the same applies with the post-2015 development agenda. Emerging economies are less reliant than ever on ODA levels, and while many of them are now becoming aid donors in their own right, they show little interest in multilateral coordination of their efforts with those of OECD donors.

This potential lack of emerging economy interest in the post-2015 agenda creates a significant political risk. With emerging economies’ interests increasingly diverging from those of LDCs in the climate context (as well as on several trade issues), they have every reason to try to direct LDCs’ political and moral suasion towards developed countries, and away from themselves.

This in turn gives them a powerful incentive to play up a ‘North versus South’ narrative in the post-2015 context, and to aim for the idea of common but differentiated responsibilities to be as central a concept in development as it already is in climate – something that is now happening rapidly in post-2015 debates in New York, where the tone of discussions is becoming increasingly polarised.

The risk of such an approach, of course, is that it could lead to the post-2015 agenda becoming seriously bogged down amid a mood of mutual recrimination. But it is not clear that this would come at a significant opportunity cost to emerging economies, given that there appears to be little that they want from the agenda. On the other hand, as noted, it might help to ease LDC pressure on them to shift positions on climate or trade. Cynical? Sure – though no more so than the US’s earnest talk about food security while continuing to keep ethanol mandates in place, or EU farm support policy. And smart, too – at least in terms of narrow self-interest.

Why Greenpeace is part of the problem on global climate policy

On Twitter a couple of days ago, Greenpeace International’s executive director Kumi Naidoo penned an appeal for people to become Greenpeace members. I threw off a series of tweets in reply saying that Greenpeace was part of the problem rather than part of the solution on global climate policy and that there was no way I would ever join Greenpeace given its current position – prompting a few people (including Kumi himself) to ask what I meant, and why I was on such a downer on Greenpeace. Here’s my answer. Continue reading

Is the EU about to stuff it up on international climate change (again)?

So near, and yet so far – as so often in EU climate policy. Back in December of last year, at the Durban climate summit, it looked as though the EU was finally getting on the front foot and managing to set the agenda for once on international climate policy.

Where the 2009 Copenhagen climate summit had seen the EU and its partners badly outflanked by a low ambition consensus of the US and the BASIC countries (leading to a voluntary pledge-and-review approach rather than the binding targets-and-timetables approach that the EU wanted), it appeared at the 2011 Durban summit that a new dynamic might be emerging – based on a partnership between the EU and low income countries who were not only increasingly focusing on global mitigation scenarios, but also increasingly prepared to break ranks with the G77 and speak out about the need for emerging economies to do more to reduce their own emissions.

The surprising spectacle of the EU managing to gets its act together will have made many US and emerging economy policymakers sit up and take notice. But all of them will also have been wondering whether the EU and its partners would manage to build on this initial success and turn it in to an inflection point on the global climate agenda, with the new alliance not only maintaining political momentum, but also converting it into design principles for future climate policy.

Alas, the signs now emerging are not good if this Reuters piece today is to be believed:

The European Union recommitted to providing 7.2 billion euros ($9.4 billion) for the Green Climate Fund over 2010-12, according to draft conclusions seen by Reuters ahead of a meeting of EU finance ministers next week. But after that, how much cash will flow is unclear as the text, drafted against the backdrop of acute economic crisis in the euro zone, states the need to “scale up climate finance from 2013 to 2020”, but does not specify how.

The article goes on to detail that EU ministers are arguing over how much of the money should come from public and how much from private sources – needless to say, many ministers would find it a lot easier to exhort the private sector to do more than to do pony up the cash themselves.

Although the article doesn’t name names on which countries are causing the problems, it’s a fair bet that Poland figures prominently among them, especially given that Poland vetoed plans for the EU to adopt a 30% (rather than merely 20%) emissions reduction target by 2020. In the background, there’s the further problem that Italy and Spain – two countries who in the past tended to side with calls for more ambitious action – are likely to fall away as their economies implode.

Although the Green Climate Fund is far from being the biggest issue on the climate negotiating table, it matters a lot to many low income countries. If the EU looks like it can’t be trusted to stick with them on the issues they really mind about most, then it’s hard to see an EU-low income country alliance setting the pace on the larger global climate agenda over the next couple of years – and we can look forward to lots of crowing from emerging economies made gleeful by the opportunity to argue that this is what happens when G77 solidarity is allowed to fracture.

When’s the next oil price spike?

Back in 2008, just as the oil price started to plummet after hitting its all-time high of $147 a barrel, I did a post pondering whether the drop was “the start of a long decline, or just a brief pause to draw breath before a resumption of the relentless upward march of recent years”. I argued that oil prices would stay low as long as the credit crunch lasted, but that

once we’re through the crunch, we may be back to a game of cat and mouse between oil supply and economic growth. Demand falls, oil price falls; demand picks up, oil price goes back up too – but never for long enough to give investors a clear signal to pump cash into new oil supply infrastructure

Over at the Energy Bulletin, Dave Cohen’s just published a post thinking about the same question – and wondering when the next oil spike is due. His take is that the next crunch will likely be in 2013, give or take a year, as his graph below illustrates:

As Dave notes, this graph is not a forecast on oil prices, but rather a schematic illustrating that a) demand surges cause oil price shocks [i.e. the peaks on his graph]; b) oil price shocks cause recesssions and force reductions in demand [the troughs]; and c) the average price of oil goes up over time [the straight line]. Informally, he notes, “we can say there’s been an oil price shock when the real (inflation-adjusted) price goes over $100 per barrel and stays there for at least 2 months”.

His whole post is worth reading (n.b. especially his emphasis on the key variable in all this, namely prospects for Chinese growth) – and leaves the reader wondering: how do we break out of the cycle?

As I argued back in 08, one answer could be massive new investment in oil production – remember the IEA’s consistent warnings throughout the downturn about how under-investment in new oil production is setting the stage for a new supply crunch. But there are two problems with that option. One: we’re into diminishing returns territory. With the age of easy oil over, production increases from now depend on unpalatable options like tar sands, oil shales and, ahem, a lot more deepwater drilling (which is projected to account for 40% of global oil demand by 2020). Two: this approach does nothing to solve climate change.

So, I concluded 2 years ago, “it looks like the only way through is for policymakers to agree a global climate policy framework that’s both global in scope and sufficiently long term to provide investors with an unequivocal signal of where to put their cash: this is the only way of squaring energy security with climate change”.

I still think that’s right – but obviously, prospects for that have dimmed considerably since Copenhagen. So where does that leave us? That leaves us, alas, stuck in the yo-yo world depicted in Dave’s graph (which looks a lot like the Multilateral Zombie climate policy scenario that David and I described in our 2009 report for the UK government on global climate architecture – see page 7 onwards).

Oh – and it also leaves us on track for 3 degrees plus of global warming.