With several issues still unresolved after the first week, it will be a steep climb to compromise in the second week of summit
The COP26 in Glasgow began last week with a bang, with several world leaders making headline-grabbing announcements. The many declarations of urgency and ambition, however, have not translated into much in terms of actual negotiations. Following the slew of announcements at the World Leaders’ Summit, progress in discussions among party delegates from around the world have been scuppered, and this was painfully clear at the stock-taking exercise that commenced in the second week of the conference, which is also the ministerial segment where countries will bat for political compromises to tie up the many issues that remain unresolved after the first week of technical negotiations. Unsurprisingly, many of the matters that need to be resolved this week had been flagged as sticking points for the implementation of the Paris Agreement in the run up to the conference.
Finance, Finance, Finance
The dismal record with regards to the delivery of the $100 billion per year by 2020 committed by the developed world to help developing countries adapt to climate impacts and scale up mitigation has left a deep indent on proceedings in Glasgow. The disaffection from the unmet target has been written clearly in the negotiation stance of developing country groups, many of which have been calling for an urgent and steep scaling up of the $100 billion commitment.
The delegate from Guinea, speaking on behalf of negotiating group G77+China, made it clear at the stock-taking exercise that none of the actions being spoken about at the COP would see any progress unless finance is secured. “Developing countries cannot be expected to update their NDCs or deliver on climate action without the assurance of reliable finance,” the Guinean delegate emphasised in his statement.
The strongest of these demands has come from the African Group of Nations (AGN), which asked for a delivery plan of $1.3 trillion per year by 2030. A key issue in finance has also been the lack of a standard definition, which developed countries believe is antithetical to the spirit of the Paris Agreement. But without a standard definition, the “mobilisation” of finance involves various financial instruments such as loans, concessional lines of credits and investment vehicles, other than grants. The AGN proposal has called for the entire amount to be in the form of grants that are split 50-50 for adaptation and mitigation.
The issue of securing long-term finance beyond 2030 has also suffered from a major lack of convergence between developing and developed country blocs. While developing countries have been calling for greater flows of funds and commitments in order to fund adaptation and mitigation action, developed countries have attempted to mothball these discussions, claiming that this would be an improper forum to reach decisions on long-term finance commitments.
“It is disappointing that developed nations are unwilling to discuss long-term finance, which means that the current goal of $100 billion cannot even be assessed by the COP or under the convention. This shows the reality that this is an empty commitment. The developing world has submitted multiple proposals for new climate finance, whereas only one submission has come from the developed world,” remarked the statement from G77+China.
In response, Switzerland, speaking on behalf of the developed countries’ Environmental Integrity Group, said, “Initiation of deliberations on post-2025 finance goals is one of the key tasks at this COP, but discussions on long-term finance must be concluded under the COP so that duplications are avoided on the subject.”
Discussions on how loss and damage due to climate change (L&D) should be compensated for have also remained unresolved. The operationalisation of the Santiago Network under the Warsaw International Mechanism, which is supposed to facilitate technical and financial support to developing countries facing adverse climate impacts, has also stalled over the past week, with recommendations from the subsidiary bodies now forwarded for political consideration. Several developing countries have called for the creation of a separate financial instrument, independent from adaptation and mitigation, to deal with L&D.
Bolivia, speaking on behalf of the Like Minded Developing Countries (LMDC) group, echoed the sentiment of other developing nations while stating, “Developed countries don’t want to define finance, don’t want a separate decision on global goals for adaptation, don’t want to engage on L&D. There is a history of unfulfilled commitments and broken promises, which has a strong bearing on the current situation.” The LMDC, including India, which put forth a statement on behalf of the BASIC group of countries, emphasised that the issues of equity and Common but Differentiated Responsibilities (CBDR) remained non-negotiable for any progress in operationalising the Paris Agreement.
There has also been a worrying lack of progress on adaptation finance, the development of national adaptation plans, and the formulation of a global goal of adaptation, which includes a roadmap to mobilise financial flows catering to adaptation.
“Finance remains a missing rung in negotiations. It is also a failure to strike balance for adaptation finance, which should immediately be doubled and brought on par with mitigation finance,” said the delegate from Antigua and Barbuda, on behalf of the Alliance of Small Island States.
Crunch time on market mechanisms
Article 6 of the Paris Agreement deals with market-based mechanisms and non-market approaches to emissions reductions. The issue has long been hotly contested, and among the most difficult to build consensus around, particularly given the failure of a prior attempt at creating a carbon trading regime to facilitate the offset of emissions in one part of the world with reductions in another.
The previous regime quickly ran into trouble as carbon credits (CERs) that were generated through clean development projects flooded the market, while also being counted in domestic emissions inventories, leading to a double accounting of emissions reductions and ultimately a collapse of the market structure. Despite several rounds of negotiations on the matter, there is still no consensus on whether and how past CERs will be carried forward, and little clarity on what any bridging mechanism might look like.
“Responsibility, as mentioned in climate finance, should be respected and provided by the developed world, without an undue reliance on cheap offsets to maintain their unsustainable lifestyles. Towards this end, BASIC supports markets that are credible and have high environmental integrity and strong non-market approaches,” said India’s delegate, speaking on behalf of BASIC.
Article 6 negotiations have thus had to deal with legacy issues of credits accumulated in the previous regime, as well as formulating a mechanism that avoids the issues that contributed to its collapse. How these reductions will be adjusted with emissions reductions within and outside country specific reductions from NDCs has remained a major point of divergence between developed country parties and developing countries.
Apart from this issue, there is also no agreement on what share of proceeds from the market structure would go towards funding adaptation needs in developing countries—with anywhere between 2-5% being discussed. But there is anything but convergence on the matter, even among developing parties. The delegate from Bhutan, speaking on behalf of the Least Developed Countries (LDCs), remarked on their concern regarding the reluctance to finalise this share of proceeds from the market mechanisms. This, however, was countered by the delegate from Papua New Guinea, speaking on behalf of the Coalition of Rainforest Nations (CfRN), who said, “Adaptation is a critical issue for developing countries, but relying on markets for SOP is reckless. The goal of the market mechanism is to reach zero, so why do we want to hitch adaptation finance to this? We have to focus on atmospheric integrity and we need to send a signal that voluntary markets need to begin exiting the climate space.”
Divergences abound on common time frames and transparency mechanisms
When the Paris Agreement was born, the challenge was to bring the whole world onto a common instrument of climate action, as per each country’s individual capacity. It resulted in differentiated timeframes on which action would be taken by the nations. This issue was expected to be resolved with the adoption of a common timeframe in time for the operationalisation of the Paris Agreement, originally planned for 2020.
Six years after parties to the Paris Agreement first submitted their NDCs, there is still little clarity on the timelines that will be adopted for the implementation of the NDCs, their reporting and updation, despite four years of deliberations on the issue. The technical negotiation session at COP26 failed to break the impasse on deciding common timeframes for the implementation of national commitments and the schedule for updation post 2030. The challenge has been to build consensus among parties, all of whom are on different developmental trajectories and situations, on how long it will take to meet commitments already made. Other challenges include scheduling future updates and scaling up of ambition, particularly climate ambition in the developing world, which is hitched to the availability of finance. There are currently nine different options that have emerged from the technical deliberations that have been forwarded for further discussion to the ministerial segment of the COP.
A similar chokepoint persists around the creation of mechanisms that will enhance transparency in the implementation of the Paris Agreement rule book. This has linkages with other key areas of negotiations, particularly finance and technology. The SBSTA chair at the stock-taking plenary mentioned three unresolved issues, namely, the application of flexibility, the reporting of structured summary, and a programme for sustained support. Developing countries have indicated that no package on transparency can be reached unless there is progress on the programme of support and capacity building under Article 13 of the Paris Agreement.
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