22 Dec 2010

Stand and deliver: What Cancun did - and didn't - achieve

by Fleur Newman, Honor Irvine, Brendan Bateman

The big winner from COP 16 is the United Nations Framework Convention on Climate Change process itself

Unlike the bitter aftermath of COP 15 in Copenhagen in 2009, the sentiment following COP 16 in Cancun in 2010 appears to be, in the main, cautiously optimistic with regards to the modest gains achieved in some of the key aspects of the UNFCCC negotiations.

But without a doubt, the big winner from COP 16 is the UNFCCC process itself. After a near-death experience at Copenhagen, the UNFCCC process was brought back from the brink by some deft diplomacy on the part of the host nation. The Mexican Government's collaborative, transparent and confidence-building approach to the negotiations in the lead-up to and during COP 16 is widely credited with restoring trust, fundamental to the success of any multilateral treaty process, which was critically damaged during, and in the months following, COP 15.

So what progress was made and what is still to be done?

What was not achieved

A number of significant and politically troublesome aspects of the negotiations were not resolved. In particular, Cancun did not deliver:

  • new emission reduction commitments from Annex I (developed) countries, legally binding or voluntary, which would, according to current science, be sufficient to meet the target of holding the rise in global temperatures above pre-industrial levels to below 2 degrees;
  • agreement on the form of a future legally binding agreement, "Kyoto 2" or otherwise;
  • agreement to address bunker fuel in the international shipping and aviation sectors (although some progress was expected, none was achieved);
  • certainty as to the funding sources for Reducing Emissions from Deforestation and Forest Degradation (REDD+); or
  • decisions in relation to land-use, land-use change and forestry (LULUCF), including critical technical issues such as accounting for harvested wood products and forest management baselines.

What was achieved

But the "Cancun Agreements" did deliver on some significant aspects:

REDD+: a much-anticipated package with almost all the elements necessary to enliven REDD+.
The decision recognises three phases of REDD+:

  • Phase 1 – development of national strategies and action plans on reducing emission from deforestation and degradation, conservation of existing forest carbon stocks, sustainable management of forests, and enhancement of forest carbon stocks;
  • Phase 2 – implementation of national policies, strategies and action plans; and
  • Phase 3 – results-based actions that are fully measured, reported and verified, which could be funded by, amongst other things, "payment-for-performance" mechanisms.

The decision requires that parties carry out REDD+ activities in accordance with the guidelines annexed to the decision, including a requirement to respect the rights of indigenous peoples and members of local communities, referring in particular to the UN Declaration on the Rights of Indigenous Peoples. This recognises the critical role that indigenous peoples and local communities play in the success or failure of REDD+ activities.

But, as noted above, the framework fails to provide certainty as to sources and methods of funding for REDD+. A decision in relation to financing options has been deferred to COP 17 in Durban in 2011. Hotly contested by Bolivia is the use of market-based mechanisms as a source of REDD+ funding.

Green Climate Fund: the legal architecture necessary to enable the funds promised under the Copenhagen Accord to flow. The Green Climate Fund (GCF) will manage the $30 billion "fast-start" funding and $100 billion per annum by 2020 originally pledged by Annex I parties under the Copenhagen Accord to assist the developing countries in mitigating and adapting to climate change.

The GCF includes some innovative features aimed at ensuring the effective delivery of the funds to appropriate recipients, including:

  • a GCF Board of 24 with equal representation from developing countries and developed countries;
  • a "Transitional Committee" which is tasked with developing rules and procedures by COP 17 to, amongst other things, ensure transparency, accountability, evaluation of and enable stakeholder input and participation in the GCF;
  • the World Bank as interim trustee (to be reviewed in three years). Unlike other UNFCCC funds, the World Bank as trustee is accountable to the GCF Board for the performance of its fiduciary duties.

MRV: linked to the delivery of funds from developed countries to developing countries, and a previous significant point of contention between the US and China, agreement was reached on strengthening monitoring, reporting and verification of both developed and developing country mitigation and adaptation actions.

Carbon Capture and Storage in the Clean Development Mechanism (CDM): a significant step towards the financing of CCS technology through the CDM. Assuming that the CDM continues post-2012, this decision allows CCS to be included as an eligible project activity under the CDM, subject to satisfaction of certain conditions relating to safety and the environment which are to be reported on at COP 17.

Kyoto Protocol "no gap" negotiations: an agreement that the parties to the Kyoto Protocol continue to negotiate with the aim of ensuring that there is no gap between the first and second commitment periods under the treaty. Although not an agreement to establish the second commitment period, the agreement does keep alive the prospect of a second commitment period under the Kyoto Protocol.

Restoration of the two-track negotiating process: pledges for both emission reductions and financing commitments made under the Copenhagen Accord have now been captured within the decisions of the Ad-hoc Working Group on Long Term Co-operative Action (AWG-LCA) – one of the two negotiating tracks (the other being the Ad-hoc Working Group on further commitments under the Kyoto Protocol (AWG-KP)) which developed out of the Bali Action Plan in 2007. In no small way, this action evidences the return of confidence of the parties in the UNFCCC process.

Cancun Adaptation Framework: established to substantially improve the planning and implementation of adaptation projects in developing countries, particularly those most exposed to the impacts of climate change. This is to be achieved through increased financial and technical support.

The road to Durban

“This is not the end, but it is a new beginning. It is not what is ultimately required but it is the essential foundation on which to build greater, collective ambition” – Christiana Figueres, UNFCCC Executive Secretary, Cancun, 11 December 2010.

As noted above, many of the politically difficult decisions under the UNFCCC negotiations were either not addressed or were deferred to COP 17 in Durban in 2011. The truth of the Executive Secretary's statement that the Cancun Agreements are a "new beginning" will soon be tested when the first of numerous UNFCCC and Kyoto Protocol negotiating sessions begin again early in 2011 in the lead-up to COP 17 in Durban.

It remains to be seen if the modest successes at Cancun can support the development of "greater collective ambition" at Durban in 2011.

What does it all mean for Australia?

On the domestic front, the Australian Government has signalled that the absence of a legally binding international framework is not a deterrent to its climate change policy reform agenda. It seems that even modest progress in the international arena is sufficient to maintain the Government's momentum and 2011 will see the release of numerous discussion papers, reports and outcomes from multi-party working groups and industry and community roundtables, all aimed at building consensus and delivering a domestic price on carbon.


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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.