the paris agreement and trade- related sustainable...
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The Paris Agreement and Trade-related Sustainable Development Goals VIII ECLAC International Seminar-International Trade and Climate Change: Environmental Sustainability of Exports
Santiago, Chile 6-7 December 2016 -Mahesh Sugathan
The Paris Agreement: Some Major Takeaways • Landmark Agreement concluded in Dec 2015 at UNFCCCC 21st
Conference of Parties (COP-21) in Paris and signed on 22 April 2016 and entered into force on 4 Nov 2016 after EU’s ratification. Parties pledge to limit global warming to well below 2 C and pursue efforts to limit it to 1.5C.
• Of date ratified by 114 out of 197 UNFCCC signatory parties • Nationally Determined Contributions (NDCs): Individual “bottom-
up” country climate plans to be implemented from 2020 and expected to be scaled up over time. Estimated to cover 95 percent of global emissions.
• Key modalities i.e. the ‘Paris rule-book’ to be developed in the coming years through an “Ad Hoc Working Group on the Paris Agreement” (AWGPA) Source: ICTSD reporting , UNFCCC, and WRI
The Paris Agreement: Some Major Takeaways • Global Stock-take and Guidance for Climate Action: Provides a
process for countries to increase the ambition of NDCs every five years starting 2023 through a ‘global-stocktake’ of countries’ emission reductions in order to achieve the long-term goals of the Agreement. Stocktake will also review all aspects of Agreement implementation, including mitigation, adaptation, finance and support. Parties will then submit new NDCs every five years, informed by these Global Stock-takes. First stock-stake scheduled for 2018.
• Financing: All parties will before 2025 decide on a new collective quantified financing goal from a floor of US$100 billion per year. PA strongly encourages developed countries to scale up climate finance and commits to several other processes for boosting interim mitigation and adaptation efforts.
The Paris Agreement: Some Major Takeaways • Technology Framework: The PA includes a decision to strengthen the
Technology Mechanism (TM) and also establishes a new technology framework to provide overarching guidance for this work.
• Recognises “voluntary-co-operation” : as a means to implement NDCs including through. Where this involves the international transfer of mitigation outcomes (ITMOs), parties should promote sustainable development, environmental integrity and transparency, apply robust accounting, and avoid double counting, following guidance adopted by the first Paris Agreement COP as elaborated in the interim by UNFCCC subsidiary bodies.
• Establishes a mechanism to contribute to the mitigation of emissions and support sustainable development under the Paris Agreement COP for use on a voluntary basis.
The Paris Agreement: Some Major Takeaways • Establishes Transparency Framework: to track countries progress on
commitments. Rules for operation of this framework needs to be developed. APA must develop transparency mechanism consisting of common rules, procedures and guidelines including those for accounting to enhance the UNFCCC’s current Monitoring, Reporting and Verification (MRV) system by 2018. While emission-targets not “legally binding” reporting and verification requirements are.
• Establishes “capacity-building initiative for transparency”: in order to help developing countries meet transparency requirements as defined under Agreement Article 13.
• Another notable initiative: Establishment of the International Solar Alliance as common platform of co-operation among sun rich countries to scale-up solar energy.
The Paris Agreement: Some Major Takeaways • Principle of “common but differentiated responsibilities and respective
capabilities” (CBDR-RC) :is enshrined in the Convention’s opening paragraphs and refers to the idea that parties have different responsibilities and capacities for climate action as defined by national economic circumstances. CBDR reflected in flexibility, timelines, capacity-building, and means of implementation.
• Paris Committee on Capacity-building” also set up, with the aim to address capacity gaps along with current and emerging needs for developing countries. A work plan for the period 2016-2020 is defined and further terms of reference as well as membership will be worked out in due course.
• Response measures: Preamble acknowledges the specific needs and concerns of developing countries arising from the impact of the implementation of “response measures” – a technical term for climate action impacts on third parties – and decides that a “forum” focused on this issue will now continue after its previous mandate expired in 2013.
The Road to COP22 in Marrakech: Other UN-led sector mitigation initiatives
• Aviation In Oct 2016, ICAO members agreed on Carbon Offsetting and
Reduction Scheme for International Aviation,” (CORSIA) a market-based mechanism that will address any annual increase in carbon dioxide emissions above 2020 levels taking into account special circumstances and respective capabilities. As of 12 October 2016, 66 States, representing more than 86.5% of
international aviation activity including EU, US, Canada, China and Japan, intend to voluntarily participate in the global MBM scheme from its outset. Some bigger economies like Brazil, India, Russia and Chile have not yet participated
The Road to COP22 in Marrakech: Other UN-led sector mitigation initiatives • Maritime Shipping
From 24-28 October negotiators of the International Maritime Organization’s
(IMO) Marine Environment Protection Committee (MEPC), met in London aiming to take steps that would help tackle the climate-warming risks from a growing demand in the maritime sector. Agreement to cap the level of global sulphur in marine fuel – set at 0.5 percent
mass/mass (m/m) –to take effect at the beginning of 2020. Exceptions in case of life-threatening situations at sea; ship safety; or damaged equipment Limits are in addition to those in the above-mentioned “Emission Control Areas”
(ECAs), in place and caps sulphur limits in various designated areas at 0.10 percent m/m. Agreement on a mandatory data collection system on fuel oil consumption,
which would apply to all ships that are of at least 5,000 gross tonnage and will take effect from 1 January 2018. Vessels of this size together produce 85 percent of shipping-related carbon emissions.
The Road to COP22 in Marrakech: Other UN-led sector mitigation initiatives • Hydrochloroflurocarbons (HCFCs) Nearly 200 countries agreed to phase down global climate-warming
hydrofluorocarbon (HFC) emissions on Saturday, during the Twenty-Eighth Meeting of the Parties to the Montreal Protocol (MOP28) held in Kigali, Rwanda from 10-14 October 2016. Agreement amends mends the Montreal Protocol on Substances that Deplete the
Ozone Layer, envisaging cuts in HFC use starting in 2019 for wealthier countries and all nations reigning in consumption by late 2040s. Final outcome entails two options for developed and two options for developing
economies (Article 5 parties). Takes into account differences in ambient temperatures, economy-wide costs and growth rates.
• Deal will come into force on 1 January 2019, provided that at least 20 countries have ratified by that point, and if not on the 90th day after this condition has been fulfilled.
• Kigali amendment foresees parties putting in place trade restrictions on HFCs with non-parties by 2030, provided that at least 70 countries have ratified the deal.
What happened at COP 22 in Marrakech? • First meeting of the Parties to the Paris Agreement (CMA1 for short) was
held in conjunction with UNFCCC Conference of Parties (COP-22). Took place in Marrakech, Morocco, from 7-18 November, 2016.
• CMA is the Paris Agreement’s governing body with primary authority over implementation functions.
• Overall objectives at Marrakech was to (i) fine-tune the operation of various PA components; (ii) Prepare the 2018 review of the NDCs in detail and (iii) examine advances being made for securing the US$100 billion needed yearly in climate finance from 2020.
• Marrakech Action Proclamation for Climate and Sustainable Development calls among others for rapidly building on momentum by governments, science, business and “global action of all types at all levels “ moving forward purposefully to reduce greenhouse gas emissions and to foster adaptation efforts thereby benefiting and supporting the 2030 Agenda for Sustainable Development and its Sustainable Development Goals (SDGs).”
Specific Developments at COP22-Marrakech • Work on developing the Paris Agreement ‘rule-book’ through the Ad Hoc
Working Group on the Paris Agreement (APA) to continue APA tasked with preparing for the deal’s entry into force and the first
convening of its governing body. Items discussed included further guidance on countries’ NDCs; adaptation
communication; the transparency framework; the global stocktakes on collective progress; and the committee to facilitate implementation and promote compliance. Progress made but work still remaining. Parties agreed to finish work on the Paris rulebook by 2018 at latest, while
reviewing progress in one year. A decision further invites the APA to continue consideration of other implementation issues not yet addressed. Parties agreed that the Kyoto Protocol Adaptation Fund should serve the
Paris Agreement, with institutional decisions to be taken in 2018.
Source: ICTSD reporting
Specific developments at COP22-Marrakech • Climate Finance: Pledges maintained; Momentum needs to be increased Climate finance flows from public and private actors have shown some
promising advances, though still well below necessary levels, according to a biennial report by the UNFCCC’s Standing Committee on Finance. Global climate finance flows averaged per year at US$714 billion in 2013-
2014, an improvement but still fraction of overall investment required. Mitigation finance greater than adaptation. Report identifies difficulties in obtaining and analysing the relevant data,
given the range of funding sources; the varying definitions of “climate finance;” and other related limitations for reporting and tracking. Developed countries reaffirmed in Marrakech their US$100 billion goal.
Moroccan Presidency has pledged to devote 2017 to raising this momentum, including with private sector participation. Source: ICTSD reporting; UNFCC -2016 Biennial Assessment and Overview of Climate Finance Flows (BA) of the Standing Committee on Finance, 7 November 2016. www.unfccc.int
Specific developments at COP22-Marrakech • Technology Framework: Work to develop the details will continue Parties agreed that the Paris deal’s technology framework should be
“short, concise, balanced and comprehensive and allow flexibility to respond to changes over time,” Initial key themes of Technology framework identified as innovation;
implementation; enabling environments and capacity-building; collaboration and stakeholder engagement; and support. . Parties agreed to note the Climate Technology Centres and Networks
(CTCN’s) challenges of sustainable funding and the need for further support. CTCN subsequently received a funding boost of over US$23 million, with
contributions coming from Canada, Denmark, the EU, Germany, Italy, Japan, Korea, Switzerland, and the US. Source: ICTSD reporting
Specific developments at COP22-Marrakech • Co-operative Approaches: Carbon Markets Governance Still
Contentious Only procedural progress in "cooperative approaches” in
implementing parties’ NDCs under Article 6 of the Paris Agreement due to disagreements on how to govern carbon markets. No clear decision on the role of the Clean Development Mechanism
(CDM) in the post-2020 context.
Source: ICTSD reporting
Specific developments at COP22-Marrakech Response Measures: Further Technical Work Still Lies Ahead • Delegations considered report of October 2016 Doha workshop on its
two work programme items: economic diversification and transformation; as well as just transition of the workforce and the creation of decent work and quality jobs.
• The report explicitly refers to trade emphasising trade’s positive role for climate action and relevance for economic diversification. But inclusion of trade and identification of priority areas at the present stage was not supported by all parties. They have agreed that an ad-hoc technical expert group will meet next May to advance the forum’s technical efforts on the work programme, within the context of “sustainable development.”
• Parties also considered submissions and exchanged views on the future forum’s modalities, work programme, and functions. They have agreed on requesting the chairs of the subsidiary bodies (SBs) to prepare a “reflections note” to help further discussions next May. Source: ICTSD reporting
Other Developments at Marrakech • Along with NDCs, the Paris Agreement asks countries to table long-term
climate plans. Canada, Germany, Mexico, and the US were the first to publish their mid-century climate strategies in November 2016.
• An alliance of almost 50 developing countries, known as the Climate Vulnerable Forum, also pledged to rapidly transition to 100 percent renewable energy, along with submitting updated NDCs and producing mid-century, long-term climate plans before 2020.
• The 2050 platform pathways platform was released. The Platform aims to support collective action in developing “deep decarbonisation strategies” for the coming decades. Over 20 countries have signed on, together with various sub-national and private sector actors.
Questions and implications for Environmental Foot-printing Schemes from Paris Agreement and Related Developments for further discussion • Relevance of Paris ‘rule-book’ for environmental particularly carbon-
foot-printing initiatives. For eg: The rules on carbon-accounting that will be developed.
• Relevance of Climate Finance and Technology Framework initiatives and the CTCNs
• Lessons from differentiation and reflection of CBDR in Paris Agreement and sectoral mitigation initiatives (aviation, shipping, HCFCs) for footprinting schemes.
• Relevance of technical assistance and capacity-building frameworks under Paris Agreement towards sustainable development initiatives.
¼ of emissions embedded in international trade
Source: Copyright Global Carbon Atlas, www.globalcarbonatlas.org
Net exporters of carbon emissions
Net importers of carbon emissions
How Trade Initiatives on environmental goods and services Could Positively Impact Product footprints and facilitate market access
Liberalisation of Environmental Goods and
Services
Lowering cost of access to technology and services inputs that can positively
enhance the environmental footprint of a product. E.g Technologies that minimise
water or fossil-fuel use
Enable market access for products with lower
environmental footprints as an ‘Environmental Good’-e.g.
biodegradable or remanufactured products. More
challenging due to PPMs
However definitions have challenged trade negotiators: Traditional Goods vs Environmentally Preferable Products
20
Traditional Goods
To address an environmental problem. Eg:
Carbon capture technologies
EPPs
Main purpose
Other uses Main purpose
But environment
al benefits arise during
Production
E.g. Zero CO2 emitting steel
Consumption/UseE.g. Solar
cars/panels
Disposal
E.g. Jute Bags
Please note:
For every EPP there exists a substitute or ‘like product’ with a similar use that is not as environmentally friendly
Source: ICTSD (2007)
Example of Labelling Scheme: Wind-Made
Source: www.windmade.org
Implemented, Active and Dormant Trade-liberalisation initiatives affecting Trade in Environmental Goods
• IMPLEMENTED-APEC Voluntary initiative by 21 member economies to reduce applied tariffs to no more than 5 percent. Status: IMPLEMENTED. Members have identified domestic tariff lines to liberalise under 54 HS sub-headings
• ACTIVE-Environmental Goods Agreement (EGA)-Plurilateral initiative by 17 economies to
liberalise tariffs on environmental goods. Status: ONGOING. List of 300 products being discussed. Final coverage and modalities not determined but possibility of ‘staging’ of tariff liberalisation under consideration. Tariff-reduction/elimination benefits to be extended on MFN basis to all WTO members (including non-participating ones). Temporary setback in Geneva due to differences between EU,US, others vs China.
• DORMANT-Para 31 (iii) of WTO Doha Ministerial Mandate: “ reduction or, as appropriate, elimination of tariffs and non-tariff barriers on environmental goods and services”. Stalled due to lack of progress in Doha round of talks.
• DORMANT-Trans-Pacific Partnership (TPP): Reference to elimination all customs duties upon entry into force of Agreement on a wide range of environmental goods and ..’as soon as possible on all other environmental goods’ by each Party consistent with ‘national circumstances.’ Awaiting ratification by TPP members.
Environmental Goods Trade and Sustainable Development Lowers cost of addressing environmental challenges including action (SDG
13) by addressing tariffs and non-tariff barriers impeding ‘green’ technologies. Can also facilitate access to clean water and sanitation (SDG 6), access to affordable clean energy (SDG 7).Can improve health and mortality indicators by addressing air-pollution. NTBs can include subsidies, conformity assessment measures, procurement
and services restrictions and local-content measures However policy-makers often need to balance multiple interests including
creating local jobs in specific value-chain segments Together with right complementary policies such as skills and training,
finance and access to technologies, trade can facilitate integration of countries into ‘green-technology’ value-chains
Example of Environmental Goods with a Positive Environmental Impact: The Case of Energy Efficiency Products
Technology Type Characteristics Examples
I. Energy-Efficient Products More efficient in terms of performance relative to similar products with same end-use.
Not usually visually identifiable as an energy-efficient product-requires certification/labelling
Energy-efficient TV sets Energy-efficient Air-conditioners Energy-efficient Motors/Pumps
II. Energy-saving Products Leads to reduced energy-consumption when deployed either individually or as part of an ‘integrated system’
Usually identifiable more or less clearly for trade-purposes
Could have other applications in a non-energy efficiency context
LEDs and LED Light-fittings Plug-in hybrid electric cars Smart electricity meters Lighting sensors Insulation Material
Contribution of Sectors and Technologies to Annual Emission Reductions for transitioning from 6 degree to 2 degree global warming scenario-IEA Estimates
Source: International Energy Agency (2014), Energy Technology Perspectives 2014, OECD/IEA, Paris.
There are ‘sweet-spots’ for EE technology deployment in reducing energy consumption and GHGs
Example 1: LEDs
Lighting accounts for 19 percent of global electricity production acc to IEA. Worldwide, the switch to LED lighting could save energy consumption for lighting by 40%.
Example 2: Energy-efficient Motors
Motor-driven equipment accounts for about 54% of electricity-use in manufacturing. The use of more efficient electric motors and drives alone is estimated to save 20 - 30 per cent of
global electric motor demand (i.e. 10 per cent of all global electricity consumption)
Environmental Goods and Services liberalisation: Additional Challenges and Considerations from a Environmental Product Footprint Perspective • EGA negotiators discussing a list of around 300 products under various
environmental categories such as Renewable Energy, Environmentally Preferable products, Air-pollution control, environmentally preferable products etc. Some of these will be critical inputs into improving ‘environmental product footprints.’
• These could include clean energy and energy-efficiency technologies as well as various types of environmental monitoring equipment relevant to measuring environmental impacts.
• Focus so far mainly on Environmental Goods and Tariffs. Scope needs to expand to cover non-tariff barriers (NTMs) and environmental services.
• So far agricultural products excluded from negotiations on environmental goods. Scope for including biodegradable products such as jute and bamboo.
• Current EGA list includes energy-efficient motors of IEC-Type IV under consideration. Could this set a precedent for preferential tariffs on labelled products based on internationally accepted standards (including footprint standards)?
