Posted by: Kari Kankaanpää
The Silesian capital of Katowice was an international hotspot for past two weeks. It wasn’t because of its coal smog that lingered in the air, instead it was due to the global climate community convening there to debate the future of the climate policy framework.
Results meet the expectations
The single aim of the COP24 was to make the Paris Agreement operational by adopting the rulebook of the treaty. COP24 also finished the so-called Talanoa Dialogue – a year-long process taking stock of what countries have done since the adoption of the Paris Agreement in 2015.
Expectations for the meeting under the Polish COP presidency were quite modest. By the middle of the second week, the prospects for the outcome were still as foggy as the weather in Katowice. Believe it or not, the negotiators had not even been able to agree on the simple and evident issue of how to assess the recent IPCC 1.5 degree report: to “welcome” or “note” it. Climate diplomacy is sometimes hard to understand…
The Katowice Rulebook was finally approved late Saturday night and the Paris Agreement will become operational as planned at the beginning of 2020. The Rulebook is not inclusive, and the most controversial issues were postponed to the future. However, the rules include a robust monitoring and reporting system for greenhouse gas emissions and financing of climate action. Rules also specify how countries have to submit new commitments in the global stocktakes starting in 2023.
What is in the deal for us in the energy sector?
The Katowice Rulebook gives predictability that the global climate policy framework will be the basis also for increasing the ambition. Climate mitigation and adaptation require new knowhow and innovations in climate-neutral technologies, in developing carbon sinks and in the circular economy. This in turn increases demand for low-carbon business solutions. The Nordic countries have increasingly more knowledge and experience in these fields for export to the rest of the world.
Business plays a key role in energy transition, as it has both solutions and financing. Business and industry are increasingly better acknowledged in the process and in climate action. However, ambitious climate targets and a market-based policy framework are needed in order to make the low-carbon transition possible.
Carbon market cooperation stalled in the negotiations
The biggest disappointment was that decisions on the use of cooperative approaches (in other words, market mechanisms) were postponed to COP25 in 2019. These would allow countries to meet a part of their domestic mitigation goals through climate action in other countries. The market mechanisms were opposed, especially by Brazil, and the key dispute was the double counting of emission reductions.
Carbon pricing and, for example, the linking of regional pricing schemes is not visible in the Katowice Rulebook. However, the Paris Agreement allows countries to link carbon markets “consistent with” UN guidance. In the absence of such guidance, countries are free to set up market systems that link together to meet targets and accelerate action at a lower cost.
Fortum highlights the role of a strong carbon price and market that deliver meaningful pricing of GHG emissions and where also the removal of carbon dioxide is rewarded. In our view, carbon pricing is the most cost efficient, flexible and technology neutral tool to deliver emission reductions. The scope of carbon pricing should be extended both geographically and to new sectors.
Changing dynamics of countries in the negotiations
COP24 can be considered as a victory of multilateralism, because all the countries except the US remain onboard in the Paris Agreement. The EU together with China were in the forefront of negotiations in Katowice. China wanted to promote the establishment of common rules and used its power to persuade the most reluctant countries. Despite the official US position, the US delegation was constructive and rational in the negotiations.
India and Russia kept a low profile in COP24. There was one new coalition of countries: ABU countries (Argentina, Brazil, Uruguay). Brazil was strongly against the rules of the market mechanisms and succeeded in postponing this to the next COP meeting. A number of countries led by Saudi-Arabia didn’t want to recognise the scientific IPCC report.
A just transition requires a political eye game
Recent events in France were highly visible in the talks. They raised questions about the costs of climate action and how to keep everybody onboard in the transition to a low-carbon future. Processes and policies need to be inclusive, citizens and consumers need to be engaged in the discussions, and nobody should be left behind in the low-carbon transition.
COP24 under the Polish presidency met the expectations. It was not a success story, but had a happy end. Santa Claus finally came to town and brought the Katowice Rulebook as an early Christmas gift for the shattered negotiators of COP24. Stay tuned, however. The saga is already scheduled to continue in Chile in late 2019.
Kari Kankaanpää is Fortum’s Senior Manager, Climate Affairs. He represented Fortum in the COP24 in the delegation of the International Emissions Trading Association (IETA). Fortum was also partnering with one of the business side events, World Climate Summit, during the COP24.