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Australia – Warsaw COP: Small But Important Steps Forward.

28 November, 2013

 

Legal News & Analysis – Asia Pacific – Australia – Environment 

 

WHAT YOU NEED TO KNOW

 

  • The UN climate change meeting held in Warsaw concluded on 23 November where important decisions were taken, such as a roadmap towards a new international climate agreement and a historic framework on Reduced Emissions from Deforestation and Degradation (REDD+).
  • Key issues remain to be determined including the legal form of a new agreement, climate finance commitments and the structure of new market mechanisms.
  • Australia will be under increased international pressure over the next two years to justify its 5% emission reduction commitment by 2020 and to explain its domestic action on climate change.

Warsaw COP Wraps Up


The UNFCCC Conference of the Parties (COP) concluded on Saturday 23 November after a dramatic two weeks of negotiations. The COP commenced just after the devastating super-typhoon hit the Philippines and the climate envoy for the Philippines announced he was on a hunger strike. Meanwhile, the COP host country, Poland, a major coal exporting state, hosted the World Coal Association meeting on the sidelines of the COP leading to significant anti-coal rallies taking place. Despite the tensions, key agreements were reached in the final stages of the meeting.


What Was Agreed?


The key decisions reached at the COP include:

 

  • A roadmap towards reaching agreement on a new climate agreement in 2015;
  • A Loss and Damage mechanism agreed;
  • Warsaw framework for Reduced Emissions for Deforestation and Degradation (REDD+) agreed; and
  • $100 million pledged to Adaptation Fund.

Roadmap Towards A 2015 Agreement


The Parties agreed to further advance the Durban Platform by calling on countries to “initiate or intensify domestic preparations for their nationally determined contributions” and for those nations to table proposed contributions by April 2015. The United States played a pivotal role in calling for a timetable to be agreed leading up to the Paris COP in 2015. This text was weakened however from its initial version as the word “contributions” replaced “commitments”, which was considered too contentious by countries such as China which has long pushed back on making a legally binding commitment at the international level, despite taking strong domestic action on climate change.


Governments also agreed that the use of the Clean Development Mechanism (CDM) should be encouraged to increase reduction efforts ahead of the new agreement being struck in 2015 and should play a role in a new international agreement.


A Framework On REDD+


A historic agreement was struck on financing for projects that reduce emissions from deforestation and degradation, which was backed by $280 million of contributions from the UK, Norway and the United States. The deal will see the funds distributed once developing countries provide information on safeguards for local communities. The agreement provides investors with clarity on the rules for REDD+ projects (including on monitoring, reporting and verification and accounting) and provides local communities with protections to preserve livelihoods and biodiversity.


A Loss And Damage Mechanism

 

Small-island states and other particularly vulnerable developing countries have long pressed for greater attention to be paid to “loss and damage” resulting from extreme events and slow on-set events such as sea level rise. While these Parties pushed for a compensation vehicle, ultimately this was diluted (and opposed particularly by the US) and the COP agreed to establish the “Warsaw mechanism for loss and damage associated with climate change impacts” to share information and best practices, explore strategies to address loss and damage and provide technical support to vulnerable countries.


Further Funding To Adaptation Fund


The COP also agreed to top-up the existing Adaptation Fund by $100 million.


Implications For Business In Australia


In recent years, the Australian Government has been a productive and progressive player in the UN negotiations. However, with the change of Government in September 2013, Australia was reported as adopting an obstructive and negative stance in the talks. During the COP, the Government also signalled that it would change Australia’s previously bi-partisan range of 2020 emission reduction targets. Environment Minister Hunt noted that Australia will review its minimum 5% commitment in 2015, and will only increase the target if there is “genuine, comparable and binding commitments by other countries”. It is as yet unclear whether Australia will make this change formally through the negotiations. It is also to be seen whether Australia will take the steps to implement the second commitment to the Kyoto Protocol which also previously enjoyed bi-partisan support.


While the COP has a number of implications for Australia, we will outline two below that are particularly relevant to business.


International Pressure Will Increase


While a roadmap was agreed formally, there were also a number of other high level meetings arranged over 2014 and 2015 where countries will be called on to declare their reduction commitments and the actions they are taking nationally to meet their commitments. For instance, in June 2014, a ministerial meeting has been set for Kyoto countries to consider and implement increased commitments. In September 2014, a world leaders meeting at the UN hosted by the UN Executive Secretary with the specific purpose of increasing ambition on climate action and inviting countries to put forward pre and post 2020 targets. Australia will also host the G20 meeting in 2014,where its actions on climate change will be in the spotlight.


Therefore, in the next two years Australia will be under increased international pressure to justify its minimum 5% reduction commitment, when other countries such as the United States and China, have adopted (and are on track to meet) stronger national targets. This will be against the backdrop of the Climate Change Authority’s report due out in February 2014 which is expected to recommend that Australia is in a position to adopt at least a 15% 2020 target.


The Focus Is On National Action, Not Binding Commitments


The Warsaw meeting made clear that a more accurate measure of whether a country is acting on climate change is the national actions it is taking, rather than its “binding international commitments”. A wide range of countries are implementing ambitious national actions ranging from trading schemes to substantial investments in renewable energy, but these national actions are not necessarily reflected through binding international legal commitments. By focusing on “binding commitments” as a pre-requisite for Australia moving beyond 5%, this may be a misleading gauge for Australia to judge whether there is sufficient evidence for it to adopt a more ambitious target and it may lead to Australia lagging behind the rest of the world in its efforts to address climate change.


Australia’s Access To International Carbon Markets


The Government has reversed the previous Government’s position on the use of international carbon markets to assist Australia to meet its 2020 target and beyond. It’s current position is to meet Australia’s 5% commitment through domestic action alone. While theoretically this is a credible position, it may also cost the taxpayer and business significantly more than if Australia were to use some international abatement.


There are increasing calls from business in Australia for the Government to purchase some international abatement in order to reduce the costs of Australia reducing its emissions. Whether Australia has access to international markets will depend on (i) it implementing its commitment to adopt a second commitment period of the Kyoto Protocol (to secure access to the CDM); (ii) it maintaining linking arrangements with regions such as the EU and (iii) it playing a key role in the establishment of new market mechanisms such as the REDD+ mechanism. The fact that Australia did not provide any funding to this mechanism at Warsaw is a worrying early signal. The development and implementation of new market mechanisms and linkages between systems will be an area of development in the next two years and how Australia positions itself will be critical.

 

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For further information, please contact:

 

Katherine Lake, Ashurst
[email protected]


Tony Hill, Partner, Ashurst
[email protected]

 
Ashurst Environment Practice Profile in Australia 

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