Kari Kankaanpää
Posted by: Kari Kankaanpää

The Peruvian capital of Lima waCOP_entrances subject to the world’s eyes during the last two weeks. The magic word in the city was COP — the Conference of the Parties. With that, you had access to everywhere in the city of 10 million, and you received special treatment – and even special (inflated) prices.

Business-as-usual outcome

The good news was that there was no bad news. So the Peruvian COP was a step forward, albeit a small hop rather than a giant leap. In the international climate policy arena, you are used to not expecting too much. Most important, the negotiators ultimately achieved a common understanding, although the outcome represents the lowest common denominator. They also acknowledged having put off the most difficult decisions for later. The show must and will go on.

Lima had two main deliverables going into the talks. The first was to finalise the scope and format of the pledges (officially called Intended Nationally Determined Contributions, INDCs), which countries will present during the first quarter of 2015. The second was to compile the elements of the Paris Agreement. Both of these were ultimately achieved after long hours of negotiations and with a significant watering down of earlier iterations of the text. Countries will be allowed to pick and choose the type of information they wish to communicate on their INDCs regarding mitigation, adaptation and financing. Pledges are applicable to those countries able to do so, and there will be no review to compare each nation’s pledges.

The final document, called Lima Call for Climate Action, comprises a 5-page conclusion and a 38-page annex on the elements of the upcoming climate agreement. Though much hard work remains, the Lima COP brings a global climate agreement in Paris within reach.

Does everybody need to be heard?
COPvenueFrom time to time, I would honestly ask whether this is the way to solve the global climate challenge. Do we need this annual “circus” with more than 10,000 people travelling around the world? The answer is not straightforward. In terms of climate mitigation, solutions could most likely be found much more effectively and efficiently in a smaller group of countries. G20 countries already represent 85% of global emissions; even G7 might be representative enough. On the other hand, since UN is the only truly global organisation that can act as a legitimate instrument in policy making, this still might be in practice the best approach.

Regarding adaptation, we face another situation. All nations have to adapt to the changing climate and therefore all voices have to be heard. The poorest countries are most vulnerable to climate change.

Climate financing is a major issue that crosses the climate talks, and everything ultimately culminates around it.

The question of fairness and solidarity is tricky. In Lima, acknowledgement of loss and damages was key for small island states, while some other countries were concerned about the opening up of a whole new category of financial obligation. In order to discuss financing, we certainly need all parties, i.e. the United Nations.

Markets matter
Market mechanisms and carbon pricing were extensively discussed in the side events and business forums – and there was overwhelming support for markets to be at the core of the future agreement. The business community is calling on governments to establish a framework that allows the building of market links between various carbon trading and pricing systems around the world. It has also reaffirmed the need for carbon pricing as a means to redirect investments and drive low-carbon solutions. Without markets and private sector capital, decarbonisation goals will not be achieved.

The role of the markets in the future agreement was not clarified in Lima, but the annex of the Lima Call for Climate Action includes many promising market “hooks”. Those have to be translated into proper provisions of the agreement on the way to Paris.

The positive momentum for carbon markets has to be maintained and strengthened.

The 2015 climate agreement only needs to an enabler of global carbon markets; the market itself will take care of all the other stuff.



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