“I had low expectations,” said one environmentalist at the conclusion of the UN climate change conference in the Mexican resort of Cancun at the weekend, “and they’ve been fully met.” It’s a reaction that’s been widely shared over the past few days. Enough to save the UN process, observed Greenpeace, but not enough to save the planet. Yet the downbeat assessment stood in stark contrast to the cheering, foot-stomping euphoria of the delegates themselves as the chair of the conference, the Mexican foreign minister Patricia Espinosa, brought down her gavel on a wide-ranging set of agreements in the early hours of last Saturday morning.

Why the difference in reaction? Well for the delegates it was no doubt relief that, at the very last minute (in fact, beyond it — the conference was due to close on Friday), consensus had been snatched from the jaws of the failure that looked much more likely until just hours earlier. But it also represented a fundamental difference in understanding of the political economy of climate change — for Cancun has performed the remarkable feat of simultaneously changing nothing, and changing a great deal.

It changes nothing, because the commitments countries have made to reduce their emissions, and to provide finance to help poorer countries, are exactly the same as they made in the Copenhagen Accord, the agreement that failed to get UN approval this time last year. On the surface, all Cancun does is to bring countries’ existing targets under the formalities of the United Nations. It adds nothing to Copenhagen’s financial commitments, which remain at “approaching $30 billion” of mostly reallocated (not new) aid up to 2012, with $100 billion per annum from as yet unidentified sources as the goal for 2020.

Meanwhile, the new features in the Cancun Agreements are largely institutional rather than substantive: a Green Climate Fund to channel assistance to poor countries, new rules on measuring and supporting rainforest protection, new processes of monitoring emissions, a committee to promote technology transfer, and another on adaptation, which is at last to get a fairer share of political priority and finance. None of these elements in themselves cut emissions, or help poorer countries cope with climate impacts now: indeed, none of them are final agreements at all. They will all require a huge amount of further negotiation over the next few years before they become operational.

And yet Cancun is still a very significant moment. Why? Because it will restore confidence among  governments and businesses that action on climate change is going to occur. And, in turn, that makes it more likely that such action will occur. That circularity is a critical feature of the way decision making on climate change works, one too little recognised by NGO and media critics.

Climate change presents a classic case of the prisoner’s dilemma. Every country will benefit if all countries take action to combat climate change. But it’s only in my interest to take action if I know others are doing so too; and if I think they’re not, it’s in my interest not to. For businesses, a future world in which emissions are curbed and clean technologies are incentivised makes it worthwhile investing in low carbon systems now. There are huge advantages in being first in the market with green solutions. But if that world isn’t going to happen, such investments could prove to be expensive mistakes.

Since Copenhagen that’s been the fear. The sense that the world was not going to come to an agreement on climate change, that the differences between the United States and China were irreconcilable, that new markets for low carbon goods could not be guaranteed, has had a chilling effect on developed countries’ commitments and on business investment. In the United States and Australia, public support for action on climate went into reverse. Buckling under the weight of its financial crisis, Europe lost its appetite for climate leadership. Investors have put new low carbon energy projects on hold. And into the damp pool of uncertainty have swarmed the climate sceptics and those — oil and coal companies and others — with a vested interest in stagnation.

Cancun reverses that downward spiral. It has the chance of restoring belief that countries will indeed be taking action, and that the low carbon economy will therefore happen. For governments, it re-establishes the crucial norm of international cooperation: very few countries, including the United States and China, will wish to stand outside that. Already there is sense of renewed momentum. In Europe there are calls for the EU to move to its 30% emissions reduction target for 2020; with the recession having pulled current emissions down to 17% below 1990 levels, it’s not now such a stretch. In every country it will bolster the forces seeking a faster transition to the low carbon economy and weaken those looking to hold it up.

*Read the rest of this post at Inside Story

Peter Fray

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