I thank Rangita de Silva de Alwis and her colleagues for this invitation.
At the outset, I want to acknowledge the shocking events in Paris over the weekend.
I know everyone here will join me in extending our sympathy to those whose lives were taken; to those who have suffered injury and trauma; and to those who have lost loved ones.
These shocking events came just days after a tragic attack in Beirut.
It is important for the people of France and Lebanon to know that the world stands with them as they recover and as they bring those responsible to justice.
Paris is in the headlines today for all the wrong reasons.
Next month, we hope it will be in the headlines for more positive reasons, as the city hosting the next major international climate change conference.
Today I want to look to the possibility of success at the Paris Conference on Climate Change and discuss some key lessons from the conference in Copenhagen.
Whilst these are not definitive, they are to a certain extent the sine qua non, the indispensable conditions, for a successful outcome for the Paris conference.
These key lessons are an understanding of the limits of multilateralism and the imperative of economic development.
My most vivid memory of the Copenhagen Climate Change Conference in December 2009 is of a crowded and airless room.
I sat behind Australias Prime Minister Kevin Rudd.
Opposite us were President Obama and Secretary of State Hillary Clinton.
Spread around the room were Presidents Lula, Sarkozy, Zuma and Calderon; Prime Ministers Brown and Reinfeldt; Chancellor Merkel; Chinas chief climate negotiator He Yafei; Indias Environment Minister Jairam Ramesh, amongst others.
I remember thinking to myself: This room could do anything.
The political, economic and strategic power assembled there could deliver transformational change.
But it failed to do so.
Among these leaders, dispute deepened and ambition deteriorated.
The Copenhagen conference dissolved in recriminations and disappointment, its outcome falling well short of what was needed.
Since that time, the world has made some progress.
But we are still to achieve a sufficient response to climate change.
In fact, the gap between what we need to do and what we are doing is widening.
Without additional efforts to reduce emissions of greenhouse gases, the world faces high risks of severe, widespread, and irreversible climate change impacts by the end of this century.[i]
Next month the world will try again to achieve an international agreement that effectively responds to climate change.
The Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) will meet in Paris.
It will seek a new international agreement on emissions reductions after 2020, when the Kyoto Protocols second commitment period comes to an end.
Greenhouse gas emissions from human activities such as burning of fossil fuels and deforestation have risen in lock-step with industrialisation and economic development.
This means that the climate change problem in both its genesis and mitigation has significant implications for equity.
Put simply, the worlds richest countries caused the bulk of the problem and now they are asking the worlds poorest countries to contribute to the emissions reductions needed to avoid dangerous climate change.
In the eyes of developing countries, they are being asked to curtail the economic growth that is lifting their people out of poverty.
That perceived inequity was one of the reasons for the breakdown at Copenhagen.
Yet another failure to act will also have fundamentally inequitable impacts.
If Paris fails to establish a path that enables us to hold temperature increases to 2C above pre-industrial levels, climate impacts will be devastating, and for many unmanageable.[ii]
The impact of climate change will be particularly severe on the worlds poorest people from the small island states of the Pacific and the Caribbean to countries like Bangladesh where millions of people are susceptible to rising sea levels and more frequent storm surges and flooding.
As Australias Andrew Charlton has written, the global challenges of poverty and the environment are the twin imperatives of the twenty-first century: One ravages billions of people alive today; the other threatens billions yet unborn. [iii]
So, ahead of the Paris Climate Change Conference, it is worth asking:
- Why have international and domestic political institutions struggled to implement solutions commensurate with the scale of the environmental challenge?
- What can be done to achieve an effective global agreement at COP21?
Today I want to canvass the limits of multilateralism and the importance of national economic imperatives and the related need to finance a low-carbon future.
THE LIMITS OF MULTILATERALISM
The UNFCCC was adopted at the Rio Earth Summit in 1992 and came into force in 1994.
Today it has near universal membership with 195 parties.
Decision-making is by consensus, with all parties having to agree.
The limitations of the Convention, along with the progression of scientific and political understanding, have led to a myriad of complementary agreements and decisions.[iv]
Over the past two decades there have been innumerable meetings; reams of draft text; hours, days, weeks, and months of negotiation; engagement from political leaders; and, most importantly, consistently worsening scientific evidence on the risk of climate change.
Yet we still do not have an international agreement with the capacity to deliver a 2C outcome.
It is important to distinguish between multilateral climate governance and what has been called aggregate climate governance.
Multilateral climate governance to date has been based on a top-down model of international treaties with near-universal coverage and legally-binding commitments.
By contrast, aggregate climate governance is the sum of all the parts of regional, national, sub-national, and local policies; intergovernmental cooperation and agreement; and the actions of businesses, households, and civil society.[v]
The UNFCCC is limited by constraints similar to those that have impaired the capacity of the World Trade Organization to make progress in multilateral trade negotiations in recent years.[vi]
Nothing is agreed until everything is agreed and everyone must agree with everything.
In the context of a contested and complex challenge like climate change, the consensus-based approach risks creating insufficient space to build an agreement.
In addition, it exacerbates the risk of disruption by a small number of actors.
So, as with global trade negotiationswhere the multilateral process is in danger of stagnatingthere may be greater potential for progress at the plurilateral, regional, and bilateral levels.
Additional negotiating forums have the potential to augment the UNFCCC negotiations.
They must respect, and be widely perceived as respecting, the primacy of the UN process.
Although bilateral and plurilateral processes will not resolve all the roadblocks, they have the potential to create a constructive space for agreement.
The Major Economies Forum, comprising the worlds largest emitters, both developing and developed nations, should remain a priority for such negotiations.[vii]
In addition, bilateral engagement between parties whose positions are critical for the multilateral negotiations is essential.
In this context, the November 2014 joint announcement by China and the United States has been very important as we head towards COP21.
In this announcement, President Obama pledged that the US would cut emissions by 26 to 28 percent below 2005 levels by 2025 a significant undertaking that would ramp up emissions reductions by the worlds largest economy.
Chinas President Xi Jinping simultaneously committed his country to achieving a peak in its greenhouse gas emissions by 2030 and to making its best efforts to achieve a peak earlier than 2030.[viii]
As the worlds largest emitter, Chinas actions are critical.
The joint approach by Washington and Beijing has also helped to ameliorate the developeddeveloping country divide that has bedeviled international climate negotiations.
Research has shown that if China pursues an economic and emissions growth pathway comparable to that of Germany, its emissions can peak at a level and time that will help limit global temperature increases.[ix]
Fei Teng and Frank Jotzo make the case that a scenario in which Chinas emissions peak in the 2020s would not only be in the worlds environmental interests but would also be in Chinas economic interests.
This is because investment by China in energy efficiency, low carbon energy, and economic restructuring away from heavy industries can bring productivity gains and benefits for air pollution and energy security.[x]
One issue that can act as an impediment to multilateral agreement is the question of the legal form of any agreement.
This recognition lay behind Australias proposal for national schedules in the lead-up to Copenhagen an approach designed to set aside arguments about legal form and focus on substantive action.
This thinking has progressed to the current framework where, in the lead-up to Paris, nations are submitting Intended Nationally Determined Contributions or INDCs.
These are national commitments on emissions reductions and other actions to avoid dangerous climate change.
The legal form of the agreement should not distract us from the simple fact that it is the scale of domestic actions that will drive the global emissions trajectory.
Rather than debating degrees of legal bindingness, we should recognise that international undertakings have a significant effect on national behavior, whether through normative or simply reputational impacts.
Accordingly, a Paris Agreement should prioritise the widest possible participation of members, lifting the level of ambition and promoting stronger emissions reduction commitments in coming years.
These priorities imply:
- a decentralised approach, consistent with the current framework;
- a dynamic agreement that provides an incentive to update national contributions in identified timeframes, and;
- a focus on accountability, in particular, measurement, reporting and verification to use the UNFCCC parlance.[xi]
Whilst such obligations would be legally distinct from the INDCs themselves being binding, for practical and political purposes such obligations would enable significant international accountability.
Accountability may not equate to ambition, but it can be a precursor to it.
NATIONAL ECONOMIC IMPERATIVES
The politics of international climate change negotiations are fundamentally defined by global inequality and by the economic burden of reducing greenhouse gas emissions.
Discussions about mitigation objectives, emissions reduction commitments, adaptation, and finance repeatedly revert to a debate about past and present economic justice.
The presumption that higher carbon intensity equates to economic development drives the positions of nation states, and the problem is constructed as one of burden sharing.
These are understandable assumptions given humanitys experience of economic development.
However as long as they endure, we will struggle to achieve an effective global response.
For agreement to be achieved, the frame underpinning the negotiations must be shifted.
This is not a new proposition.
Environmental groups and the UNFCCC itself have advanced a green growth agenda: making the case for fostering environmentally-sustainable economic growth.
But shifting this frame is not a purely rhetorical or political task.
It is a substantive one.
Vague assertions about green jobs do not suffice when political leaders are confronted with the realities of poverty, employment, housing, and health needs.
Credible research is needed to show how investments in renewable energy, low emissions technologies, and energy efficiency can reduce emissions while
maintaining growth.
This work needs to assess the impact on growth, incomes, and employment of moving to a low-carbon economy, and to evaluate policies to bring forward investment and to assist communities affected by the economic transition.
Ultimately, achieving an effective global agreement requires more than political will.
It requires a tangible pathway for low-carbon development.
If decision-makers from both developed and developing countries cannot conceive such a pathway, they will not take the decisions the world needs.
The work of the Global Commission on the Economy and Climate has demonstrated what can be achieved.
The Commissions brief is to show governments, businesses and society how to achieve economic prosperity while also addressing climate change.[xiii]
Its Better Growth Better Climate report contains detailed studies of three key systems land use, cities, and energy which bring together experience and theoretical possibility.
The report also emphasises the unexpectedly rapid falls in the costs of renewable energy as a result of technological innovation and large-scale deployment.
This trend offers the prospect of larger and more cost-effective emissions reductions than previously considered feasible.[xiv]
How can insights like these contribute to an effective global climate agreement?
The routine approach of proselytizing among policy-makers will yield some return, but the key to change is operationalising policy.
Enabling decision-makers to collaborate, to understand relevant models of reform, and to support projects that deliver low-carbon development outcomes is critical.
Such collaboration will not only achieve specific outcomes but also has the potential to prompt further action.
It can do this by enabling political leaders and decision-makers to own vital policy solutions.
Global cooperation on climate change will not arise if policy outcomes are perceived or constructed as external impositions.
In an environment where multilateral negotiations can struggle to achieve breakthroughs, identifying opportunities where emissions reductions are in the national economic interest is a promising approach.
For example, the New Climate Economy project has demonstrated how low-carbon development would be in Chinas interests through stimulating technological innovation and productivity.[xv]
Multilateral institutions and voluntary initiatives have highlighted such cooperation.
The UNFCCC, UN Environment Program and the World Bank have provided resources.[xvi]
There are also initiatives such as the Deep Decarbonization Pathways Project and the C40 Climate Cities Leadership Group.[xvii]
However, there remains a risk that these initiatives have insufficient influence on the UNFCCC negotiations, whether through lack of scale or engagement with key decision makers.
FINANCING A LOW-CARBON FUTURE
Climate finance is a key link between the multilateral framework and national economic imperatives.
The financing of mitigation and adaptation initiatives has been a point of contention in the international negotiations for years.
At Copenhagen, developed countries committed to mobilising $US100 billion a year in climate finance for developing countries by 2020.[xviii]
The OECD has estimated that the amount of funds mobilised reached $US62 billion in 2014 with around 70 per cent coming from public sources.[xix]
As part of this effort, the UNFCCCs Green Climate Fund has garnered $10.2 billion in pledges of public finance.[xx]
The public component of climate finance is vital.
So is the role of the multilateral development institutions.
But the scale of economic transformation that is needed is beyond the capacity of governments alone to fund.
It will require private finance on a larger scale than we have seen to date.
What governments and an international framework can do, in addition to providing public finance, is to establish incentives to direct private finance toward a low-carbon transition.
The Global Commission on the Economy and Climate estimates that population and demographic change will require around $89 trillion of global infrastructure investment through to 2030.
Moving the world to a low-carbon growth pathway will require additional investment and a shift in the composition of investments, especially in the energy sector.
However, the Commissions estimates suggest the additional costs of making this low-carbon transition could be just $4.1 trillion, an increase of less than 5 percent on baseline investment levels.[xxi]
Reform models that reduce financing costs and tackle market failures in financing low-carbon investments can play an important role.
For example, Australias Clean Energy Finance Corporation utilises public funds but operates as a largely market-based financier.[xxii]
It works with the private sector to invest in renewable energy, clean energy technology, and energy efficiency projects.
In the CEFCs first two years, each dollar of public investment has been matched by $1.80 in private investment.
These investments are delivering both environmental benefits and healthy financial returns.[xxiii]
Other examples include new investment vehicles, climate bonds, and the role of national development institutions such as the China Development Bank.
Enabling access to finance for low-carbon investments is critical to building an effective global climate agreement.
It is a tangible answer to a familiar problem for decision-makers.
Demonstrating this pathway would not only benefit particular projects or particular nations it could also positively impact the international negotiations.
One of the challenges here is achieving better cooperation between the negotiating personnel, whose expertise is typically in environmental policy and international law, and those with expertise in financial flows and economic policy.
The scale of climate risk and the need for a global response compel us to consider how we can strengthen the international norms that drive climate action.
The likely framework for an agreement at the Paris COP, with its emphasis on Intended Nationally Determined Contributions, represents an opportunity and a risk.
The risk is that low levels of ambition prevail.
Around 150 countries have submitted INDCs in the lead up to COP21.
The UNFCCCs estimates show that these commitments mean global greenhouse gas emissions will still be 40 per cent higher in 2030 than they were in 2000.
However, the rate of growth in greenhouse gas emissions will slow.
And, on a per capita basis, emissions will decline by five per cent between 2010 and 2030.
Global emissions in 2030 will be 3.6 gigatonnes, or six per cent, lower under the INDCs than without these commitments.
Yet emissions will still be around 30 per cent higher in 2030 than the levels required to hold temperature rises to 2 Celsius. [xxiv]
However, the new approach to climate governance that the INDCs embody an approach which blends top-down international negotiations with bottom-up domestic policies represents an opportunity.
It is an opportunity to ensure international climate action is more strongly rooted in domestic policies and economic imperatives than it has been in the past.[xxv]
And it is an opportunity to move from a one-off negotiation to a more dynamic, self-reinforcing framework that enables continued upward revision of commitments in the future.
Our efforts at COP21, and beyond, must be directed at delivering both the mitigation of climate risk and the opportunity of economic advancement.
It is often said that failure is not an option when it comes to climate change.
Regrettably, the experience in that crowded room in Copenhagen demonstrated that failure is all too real a prospect.
That would be outcome humankind would rue for generations and it is an outcome we can choose to avoid.
As President Obama has said: We are the first generation to feel the impact of climate change, and the last generation that can do something about it. [xxvi]
[i] Intergovernmental Panel on Climate Change, Climate Change 2014: Synthesis Report, (draft report issued by Intergovernmental Panel on Climate Change, 2014), 18, http://www.ipcc.ch/pdf/assessment-report/ar5/syr/SYR_AR5_LONGERREPORT_Corr2.pdf.
[ii] Intergovernmental Panel on Climate Change, 2014 Summary for Policymakers, in Climate Change 2014: Impacts, Adaptation and Vulnerability. Part A: Global and Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, ed. Christopher B. Field et al. (Cambridge, UK and New York: Cambridge University Press, 2014), 1214.
[iii] Andrew Charlton, Man-Made World: Choosing Between Progress and Planet, Quarterly Essay 44 (2011): 7.
[iv] These include the Kyoto Protocol (1997), the Bali Road Map (2007), the Copenhagen Accord (2009), the Cancun Agreements (2010), the Durban Platform for Enhanced Action (2011), the Doha Climate Gateway (2012), the Warsaw Outcomes (2013), and the Lima Call for Climate Action (2014).
[v]Matthew J. Hoffmann, Climate Governance at the Crossroads: Experimenting with a Global Response after Kyoto (Oxford: Oxford University Press, 2011).
[vi] For a discussion of challenges facing the multilateral trading system and proposed reforms to the WTO, see: World Trade Organization, World Trade Report 2013: Factors Shaping the Future of World Trade, (Geneva: World Trade Organization, 2013), 27986.
[vii] Marco Grasso and J. Timmons Roberts, A Compromise to Break the Climate Impasse, Nature Climate Change 4 (2014): 5439 at 544.
[viii] The White House, Office of the Press Secretary, US-China Joint Announcement on Climate Change, November 12, 2014, http://www.whitehouse.gov/the-press-office/2014/11/11/us-china-joint-announcement-climate-change.
[ix] Libo Wu, Chinas Emissions: Glimpsing the Peak, Global Change 83 (2014): 1619.
[x] Fei Teng and Frank Jotzo, Reaping the Economic Benefits of Decarbonisation for China, China & World Economy 22, no. 5 (2014): 3754.
[xi] Nicholas Stern, Growth, Climate and Collaboration: Towards Agreement in Paris 2015, Policy Paper (London: Centre for Climate Change Economics and Policy/Grantham Research institute on Climate Change and the Environment, December 2014); ibid., 1921.
[xii]Daniel Bodansky and Lavanya Rajamani Key Legal Issues in the 2015 Climate Negotiations, Center for Climate and Energy Solutions, 2015, http://www.c2es.org/publications/key-legal-issues-2015-climate-agreement
[xiii] Global Commission on the Economy and Climate, Better Growth Better Climate: The New Climate Economy Report, Global Report, (Washington DC: Global Commission on the Economy and Climate, 2014), 2.
[xiv] Global Commission, Better Growth Better Climate, 42, 131, 1412. This is a point also made by Liebreich: Technological development, the economics of experience curves and financial innovation are doing more each month to reduce emissions than the UNFCCC has achieved in 20 years, in Michael Liebreich, Climate Change Talks the Rocky Road to Paris, Bloomberg New Energy Finance, August 26, 2014, http://about.bnef.com/blog/liebreich-climate-change-talks-rocky-road-paris.
[xv] Global Commission on the Economy and Climate and Tsinghua University, China and the New Climate Economy: The New Climate Economy Report. China Case StudyExecutive Summary. I am indebted to Associate Professor Frank Jotzo for the observation about the importance of identifying national self-interest.
[xvi] Clean Energy, United Nations Framework Convention on Climate Change, http://newsroom.unfccc.int/clean-energy; UNEP-Coordinated Coalition Aims to Support Climate Change Fight through Measuring Emission Reductions from Energy Efficiency, Renewable Energy Projects, December 10, 2014, http://www.unep.org/newscentre/Default.aspx?DocumentID=2814&ArticleID=11106&l=en; Climate Change Knowledge Portal,; The World Bank, http://sdwebx.worldbank.org/climateportal/.
[xvii] Pathways to Deep Decarbonization, Deep Decarbonization Pathways Project, http://unsdsn.org/what-we-do/deep-decarbonization-pathways/. C40 Cities Climate Leadership Group, http:/www.c40.org. For further examples of cooperative initiatives, see: Global Commission, Better Growth Better Climate, 286.
[xviii] UN Framework Convention on Climate Change, Report of the Conference of the Parties at its fifteenth session, Addendum, Part Two: Action taken by the Conference of the Parties at its fifteenth session, March 30, 2010, 7, http://unfccc.int/resource/docs/2009/cop15/eng/11a01.pdf.
[xix] OECD, 2015, Climate Finance in 2013-14 and the USD 100 billion goal, A report by the OECD in collaboration with Climate Policy Initiative, http://www.oecd.org/environment/cc/Climate-Finance-in-2013-14-and-the-USD-billion-goal.pdf
[xx] Green Climate Fund, Status of Pledges and Contributions made to the Green Climate Fund, 2 November 2015, http://www.greenclimate.fund/documents/20182/24868/Status+of+Pledges+%282015.11.2%29.pdf/d2f4b2b2-667b-4915-a72e-78894dad4db3
[xxi] Ibid., 210-12. Global Commission on the Economy and Climate, New Climate Economy Technical Note: Infrastructure Investment Needs of a Low-Carbon Scenario, (Washington, DC: Global Commission on the Economy and Climate, 2014).
[xxii] The mandate of the CEFC is directed at investment in renewable energy, energy efficiency and low emissions technologies. See: What We Do, Clean Energy Finance Corporation, http://www.cleanenergyfinancecorp.com.au/what-we-do.aspx.
[xxiii] The anticipated lifetime yield of the CEFCs investments is 6.1 per cent, well above the Australian Governments prevailing cost of funds: Clean Energy Finance Corporation, Annual Report, 2014-15, p 3. http://www.cleanenergyfinancecorp.com.au/media/releases-and-announcements/files/cefc-investments-lower-costs-for-business-and-improve-energy-productivity.aspx.
[xxiv] UNFCCC, 2015, Synthesis report on the aggregate effect of the intended nationally determined contributions, http://unfccc.int/resource/docs/2015/cop21/eng/07.pdf
[xxv] Levin, Kelly, Taryn Fransen and David Waskow (2015), What Effect Will National Climate Plans (INDCs) Have on Global Emissions, World Resources Institute, http://www.wri.org/blog/2015/10/what-effect-will-national-climate-plans-indcs-have-global-emissions-5-things-know
[xxvi] https://www.whitehouse.gov/the-press-office/2014/09/23/remarks-president-un-climate-change-summit
