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.
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.
As regular readers will know, I’ve been banging on for a long time about the need for a comprehensive database that tells us exactly how exposed international trade is to peak oil – or, for that matter, to the maritime sector being brought into the international climate regime and made subject to really severe emission controls.
After all, the bunker fuels used to power container ships and bulk carriers are much less easily substitutable than other kinds of fossil fuels. You can replace coal-fired power stations with renewables or nuclear; you can replace petrol-fuelled cars with ones that run on electricity or hydrogen. But ships? That’s another story. As a UK government study published just before Copenhagen found, for instance, “it will be extremely challenging, and expensive, to reduce emissions of carbon dioxide from shipping and aviation … there are a number of options available in each sector, but currently most of these are not economically viable”.
But if we don’t have readily available substitutes for marine bunker fuels, then what happens to maritime trade – to globalisation itself, in other words – if oil costs start really soaring again, or governments start to get serious about carbon pricing?
In particular, as I asked in The Feeding of the Nine Billion, what happens to the import bills of countries that depend on food imports from overseas (like most of the fragile states in West Africa, for example)? And what does it mean for China – whose advantages on wage costs could easily end up offset by increased transport costs, as actually happened when oil costs went into triple digits?
Although a number of analysts have been asking that question ever since the oil price spiked in 2008 (most notably Jeff Rubin – see the link above and also this), what we’ve all lacked is a really serious database that works out the costs of maritime trade, and how exposed these are to energy prices. Until now.
For it turns out that the OECD have been compiling a large new Maritime Transport Costs database. Although they didn’t make a lot of noise about it, they also posted a working paper (pdf) on their website a few months back – which confirms the significance of the issue (emphasis added):
Maritime transport costs represent a high proportion of the imported value of agricultural products — 10% on average, which is a similar level of magnitude as agricultural tariffs. This study shows that a doubling in the cost of shipping is associated with a 42% drop in trade on average in agricultural goods overall. The tendency to source imports from countries with low transport costs is therefore strong. Trade in some products is particularly affected by changes in maritime transport costs, in particular cereals and oilseeds, which are shipped in bulk.
Most valuably of all, the database goes into massive levels of detail on fuel costs in particular – making it a truly indispensable part of the toolkit for working out what happens to globalisation in a world of emission controls and peak oil. So, where can you access the database?
Answer: you can’t. For news reaches me that its publication is being blocked, by one OECD member state alone – namely, the United States. For, it is said, reasons of national security. How do you like them apples? (Locally grown, I suppose.)
A small but potentially rather significant exchange in the UN Secretary-General’s spokesman’s press briefing on Thursday last week:
Question: India has said that it’s put forward a candidate to replace Mr. [Yvo] de Boer on the UNFCCC [United Nations Framework Convention on Climate Change]. It’s named the individual, and said that it has the support of China and other BRIC nations. I just wondered, first, can you confirm that names have been received by the Secretary-General for that post? How many names and what’s the process for selection?
Spokesperson: I can’t confirm whether specific names have been given or not. Clearly, there is a process that’s under way. This is an appointment that is indeed made by the Secretary-General in consultation with the Board of the United Nations Framework Convention on Climate Change. There is still a way to go in that selection process, and I don’t want to get into details here
So who might India’s candidate be? Over to wire coverage a day earlier from Indo Asian News Service (which seems to have been barely noticed outside India):
Environment Minister Jairam Ramesh has written to the United Nations backing the candidature of Vijai Sharma, secretary with the ministry, for the post of executive secretary of UN Framework Convention on Climate Change (UNFCCC). The minister said here Wednesday that China has already supported the move.
‘Vijai Sharma is our official candidate for UNFCCC executive secretary. I have written to the United Nations Monday and have also written to BASIC (Brazil, South Africa, India, China) countries seeking their support. We have got support from China already for his candidature and we will get support from other BASIC countries,’ Ramesh said at an interaction at the Indian Women’s Press Corps.
Ramesh said the time has come for the post to go to a developing country. ‘The first three secretaries have all been from developed countries and Vijai Sharma has long years of experience with UNFCCC. He was chief spokesperson for G77 for Kyoto negotiations. I am pursuing it. I am not sure as European countries and the US will prefer somebody from a smaller country and India is unarguably at a different profile but I would like to see him there,’ the minister said.
Sharma – a career bureacrat – is well-respected inside the UNFCCC process as far as I can make out. But I wonder whether India’s making a tactical error in equating “developing country” interests with those of the BASIC grouping of emerging economies. At Copenhagen, BASIC’s hardline position was conspicuously not in the interests of the least developed countries who stand most to lose from climate change. It’ll be interesting to see whether an alternative developing country candidate comes forward – one from the ‘survival’ rather than the ‘growth’ faction of the G77.
Mark Lynas in today’s Guardian:
The truth is this: China wrecked the talks, intentionally humiliated Barack Obama, and insisted on an awful “deal” so western leaders would walk away carrying the blame. How do I know this? Because I was in the room and saw it happen.
China’s strategy was simple: block the open negotiations for two weeks, and then ensure that the closed-door deal made it look as if the west had failed the world’s poor once again. And sure enough, the aid agencies, civil society movements and environmental groups all took the bait. The failure was “the inevitable result of rich countries refusing adequately and fairly to shoulder their overwhelming responsibility”, said Christian Aid. “Rich countries have bullied developing nations,” fumed Friends of the Earth International.
All very predictable, but the complete opposite of the truth. Even George Monbiot, writing in yesterday’s Guardian, made the mistake of singly blaming Obama. But I saw Obama fighting desperately to salvage a deal, and the Chinese delegate saying “no”, over and over again. Monbiot even approvingly quoted the Sudanese delegate Lumumba Di-Aping, who denounced the Copenhagen accord as “a suicide pact, an incineration pact, in order to maintain the economic dominance of a few countries”.
Sudan behaves at the talks as a puppet of China; one of a number of countries that relieves the Chinese delegation of having to fight its battles in open sessions. It was a perfect stitch-up. China gutted the deal behind the scenes, and then left its proxies to savage it in public.
Meanwhile, the FT observes, cracks are starting to appear among the emerging economies:
Cracks emerged on Tuesday in the alliance on climate change formed at the Copenhagen conference last week, with leading developing countries criticising the resulting accord.The so-called Basic countries – Brazil, South Africa, India and China – backed the accord in a meeting with the US on Friday night, and it was also supported by almost all other nations at the talks, including all of the biggest emitters.
But on Tuesday the Brazilian government labelled the accord “disappointing” and complained that the financial assistance it contained from rich to poor countries was insufficient. South Africa also raised objections: Buyelwa Sonjica, the environment minister, called the failure to produce a legally binding agreement “unacceptable”. She said her government had considered leaving the meeting. “We are not defending this, as I have indicated, for us it is not acceptable, it is definitely not acceptable,” she said.