Australia’s ratification of Kyoto takes force today, but is it really that significant? And how important a part can we play in future negotiations as a small nation? Carbon and Environment Daily spoke to UN climate chief Yvo de Boer:

How significant was Australia’s ratification of Kyoto, both in terms of giving impetus to the Bali negotiations and in terms of subsequent developments?

Very significant, I think. It helped to create a very positive mood in Bali that Australia had decided to ratify the protocol and engage in the full range of negotiations. So that I think was very much welcomed by the international community.

And at the same time that created a lot of possibilities for members of the Australian delegation to engage much more than they might have been able to do in the past.

For example, in Bali Penny Wong was absolutely instrumental in co-chairing a small group that then led to the text that the president presented on the final day. So you are also seeing much more political level engagement from Australia which I think is very constructive.

Almost three months have passed since the Bali negotiations, which agreed a two year timeframe for a new agreement. Are you satisfied with progress? What do you want to see emerge from the upcoming Bangkok talks?

What worries me a bit personally is that although we have two years until Copenhagen actually our first meeting in Bangkok which has to agree the work program is happening in early April.

So that means the first three months of those two years are gone. And secondly, to be able to sign off on something in Copenhagen, it presumably needs to be available on paper some time before.

So the actual amount of time that we have available is considerably less than a full two years. So that makes me a little nervous. That in turn implies that the Bangkok meeting is really going to have to do what it is supposed to do which is map out the program of work that is going to make a Copenhagen agreement possible. And that in turn means identifying which items will be discussed when. It means identifying the issues that need further clarification, a better understanding.

For example, the Bali language talks about real, measurable and verifiable action by rich and poor countries alike. One question is ‘who is going to be doing the measuring and who is going to be doing the verifying?’ The Bali language talks about comparable effort on the part of rich countries. How do you determine what is comparable effort? So [Bangkok] has to: one, map out the work program, what has to happen when; secondly, [decide] what issues need to be clarified.

A third important bit of the Bali language is that it says that the process shall be informed by intergovernmental organisations, the private sector and civil society. So Bangkok, I think, also has to identify where do governments want input from those organisations, on what topics exactly.

And [fourthly], that’s maybe a bit parochial, but I hope Bangkok is also going to identify where further inputs are needed from our secretariat in order to serve the process in the best way possible. So there is quite a lot of work that has to be done in that one week in Bangkok.

Is there a draft work plan to be presented at the Bangkok meeting at this stage?

There are two processes happening in Bangkok. One is taking the Bali action plan forward towards Copenhagen. The other aspect is that under the Kyoto Protocol we already had a process in place that has an agreed work program for the next two years.

That Kyoto work program in Bangkok is going to be looking very much at what do we need to improve the Kyoto architecture going into the future. For example how do we need to improve the Kyoto flexibility instruments, like the Clean Development Mechanism. And there is an annotated agenda for that part of the agenda in Bangkok.

For [the other process] the post-Bali discussion [on work towards a Copenhagen agreement] there is a sort of general annotation which describes the ground that needs to be covered. But then during the opening session in Bangkok the chair of the Bali process will map out how he intends to organise that work during the week in Bangkok.

At the Bali finance ministerial, Norway suggested that a portion of permit auction revenue go towards funding activities developing countries. Should this be regarded as an essential element of developed country trading schemes?

[It has to be] broader than that, I think. The Bali action plan talks about developing countries taking real, measurable and verifiable action to address their emissions provided that real, measurable and verifiable resources are provided by rich countries.

Now that, I think, is not something that you can rely on the carbon market alone for. At the same time, there is I think a shared reluctance to divert official development assistance, which is intended for poverty eradication, and spend that on climate change. So that begs the question, where is the real, measurable and verifiable money going to come from?

And that, I think, is a very essential part of the challenge that we face. And there, I think it will be very important for rich countries, including Australia, to begin thinking about how can resources be mobilised in a way that makes sense. And if you talk about the [permit] auctioning, there is already a decision in Germany to auction emission rights and use part of the proceeds for international cooperation on both mitigation, reducing emissions, and on adaptation. So I think it is interesting for other countries to consider whether that makes sense in their context.

Secondly, we have at the moment a levy on the Clean Development Mechanism. That levy is used to pay for adaptation in developing countries. Do we need to think about extending levies to other mechanisms as well, for example to [the Kyoto Protocol’s] joint implementation [mechanism] and to emissions trading.

A third option would be to think about how can you mobilise resources for research and development. I think, for example, it would be very interesting to see how the Asia Pacific Partnership, which Australia is very much engaged in, can be used to foster cooperation with developing countries that leads to real, measurable and verifiable action to reduce emissions, possibly through things like sectoral approaches. So, in other words, I think an important part of the thinking over the coming year and a half how are rich countries going to generate the real measurable and verifiable money that is needed to catalyse real, measurable and verifiable action in developing countries.

This issue of the financial architecture has been a theme in your recent speeches. For example, at the major economies meeting in Hawaii you talked about the need for a climate change Marshall Plan and a comprehensive financial architecture to support it. I was keen to get you to elaborate on that. Are you talking there just of Joint Implementation revenue and maybe siphoning of a portion of permit revenue or are their broader financial mechanisms that need to be brought into play here?

“I think it is a matter of developing a menu of options, and then for rich countries to decide which of the options appeal to them. For example, some rich countries have fiscal policies that allow you, if you make a clean energy investment in a developing country, to write-off that investment in the first year of your tax returns.

Another option is to look at how you can use export credit agencies to push technologies into new markets and to push in new technologies by guaranteeing the export and making the technology investor more certain that the investment is going to be safe. Thirdly, there are whole international mechanisms for loan guarantees and to provide softer loans or loans that have a longer pay-back period.

And then you get to the notion of auctioning emission rights, extending levies…. The Europeans are talking about a tax on aviation, where is that tax revenue going to go? So I think it is a matter of considering a whole menu of potential options and then I think different rich countries will want to pick different options from that menu to come to their real, measurable and verifiable package that they are willing to put on the table. And I do think that will differ from country to country.

To convince developing countries that the menu is adequate there will need to be some process of hammering out a common view on the design and scale and the elements of the package. In which forums will this be hammered out? Will it be through the Major Economies Meeting process? Or through the UN process?…

I think that … the major economies process can very usefully address the question of how can that group of countries be more ambitious by working together. But I think that the question of the menu of financial and technological options that connects the real, measurable and verifiable money to the real, measurable and verifiable action will have to be negotiated through the UN process.

And there I think in terms of connecting the two – connecting the real, measurable and verifiable money to the real, measurable and verifiable action – there is really a menu of mechanisms also that you can use. We already have the Clean Development Mechanism, which allows for project-based cooperation between rich and poor countries. A second avenue that’s emerging is the notion of sectoral approaches, so across economies trying to address the steel sector, or cement, or pulp and paper, or whatever.

A third and maybe most challenging question is how are you going to shape government-to-government cooperation north-south on this issue. Because although the bulk of the investment challenge will be met by the private sector, the private sector in and of itself will not automatically respond to the kinds of policy initiatives that are politically essential. And that means that you are going to have to create financial mechanisms for government-to-government cooperation – that’s maybe the most challenging part.

If I could ask you now about deforestation. This was a significant issue at Bali. Profess Garnaut has suggested that Australia consider a regional trading scheme involving PNG initially and also possibly also Indonesia. And he said there are massive emissions resulting from emissions there, there is the chance to slow these and also for Australia to get a cheap source of abatement and also there is the chance to demonstrate cooperative action between developed and developing countries. How crucial is it that we look for regional initiatives like this in an effort to tackle deforestation?

First of all it is clear that the issue of deforestation has to be addressed, because it accounts for about 20% of global emissions. At the same time, it’s still a big question of how you can do that in a way that is scientifically and environmentally sound and then how do you integrate that into the rules of either the convention or the Kyoto Protocol? And that’s an element that’s very much on the agenda for the next year and a half, to develop an understanding of how that could work.

In the meantime, I think that any effort to begin to experiment with ways of addressing deforestation are very useful. The World Bank has just come out with a proposal for a deforestation facility that would begin to experiment with some of these approaches. Norway has indicated it is willing to put very substantial amounts of money on the table to address the question of deforestation and, you know, regional approaches are a good way of learning on the way to designing a global regime.

I wanted to ask you about two countries that you have recently visited. One was India and one was Japan. First up India. Anecdotally people often seem to say China gets it, China is fully engaged in this, China is responding. But people say that in India there seems to be less movement. The issue seems to have less traction. Is that your perception? Do you think that’s changing?

One of the things that strikes me when I visit India is that they are pretty sick of being lumped into the same basket as China, because actually their situation is quite different in the sense that the poverty eradiation challenge in China is big, but it’s much, much bigger in India.

In China you’ve had quite extensive programs of rural electrification in the past, in India you’ve got 400 million people that don’t even have access to electricity at the moment. So I think first of all that the Indian case, the Indian situation, is very different from that of the Chinese, or the Brazilians or the South Africans.

My sense, having visited India, is that … the Indian government and Indian institutions are very seriously concerned about how climate change is going to impact India. I mean just think about the disappearance of Himalayan glaciers and how many people in India rely on drinking water from glaciers and glacial lakes. Secondly, how storms have been impacting India, how temperature change has been affecting agricultural crops. In other words, India is seeing the impacts of climate change already and India is working on a very serious strategy to come to grips with the impacts of climate change.

At the same time, I know from a brief discussion with the Prime Minister that there is a real interest in addressing the efficiency of the economy, in ways of improving the efficiency of the economy and in that context what the win-wins are in relation to climate change as well. I mean Indian politicians in the past have said our primary responsibility is to grow the economy and eradicate poverty, and we are willing to act on climate change to the extent that it can be matched with the priority of economic growth and poverty eradication. But [they say] if we are to go beyond that we need international cooperation in order to explore measures that are in and of themselves not economically viable for us, given those economic growth and poverty eradication goals.

And in addition to developing the adaptation strategy I know that India is also looking at emissions in different parts of the economy and the types of actions that could be taken to reduce those emissions – for reasons that relate to energy security and energy prices, for reasons of public health that relate to air quality, and for reasons of climate change. And that strategy, the Prime Minister indicated, is supposed to be, in all probability, to be ready in June.

And the other country I wanted to ask you about was Japan, which is now I think either committed to or has said its investigating an emissions trading scheme. Could you briefly outline of how things seem to have shifted there over the last month or so, based on your recent visit?

In Japan, with the G8, since it now has the G8 presidency and will have a G8 summit which is slated to discuss the question of climate change, Japan is very keen to move the climate agenda forward. So Japan is thinking about what that G8 summit could say in terms of a long-term goal, in terms of when global emissions need to peak if we are going to achieve the kinds of stabilisation scenarios that the scientists are telling us we need.

I also hope that the G8 summit is going to focus on the much more difficult bit in between, which is in which range do rich nations want to reduce their emissions by 2020. A commitment by the middle of the century, when our grandchildren will be running the place, is in a way a little easier than making a commitment of where you want to be in 2020.

Is there an indication that they will do that?

I don’t know, that’s a little difficult. In the Kyoto process that I referred to earlier on, the countries that are party to the Kyoto Protocol indicated that the negotiations should be guided by an industrialised country emissions reduction range of between minus 25% and 40% by 2020, and that is a sort of guiding range that Australia has also committed to.

Part of the tricky question then [is] is that indeed achievable for the group as a whole, and secondly, how would the different countries be positioned in that? That’s actually, that individual positioning, is probably something that you can only address later down the line once you know what is in the toolbox. But I think that kind of a 2020 signal is also very important for the private sector, which is basically crying out for a sense of direction.

What I experienced recently in Japan is that both the government and the private sector are very seriously thinking about ways of moving forward that make sense. And there I was very struck by the fact that the private sector is now saying; ‘well, maybe voluntary approaches in and of themselves are not enough. Perhaps we also need to be thinking about emissions trading since that is the direction in which the world is moving’. And that would require more than just voluntary approaches but also caps for different sectors of the economy. So that struck me as Japan thinking about new ways of moving forward.
March 11 is the big day, when the protocol comes into force. What words do you for Australia on that occasion?

My words would be that Australia’s ratification has really been embraced by the international community. That Australia has moved beyond that by showing real political leadership and importantly contributing to the successful outcome of Bali. And that we are really going to need further engagement of that kind in order to meet the very challenging deadline of reaching an agreement in Copenhagen.

Peter Fray

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