The Legal 500

The 2007 Conference of Parties to the United Nations Framework Convention on Climate Change (UNFCCC), which also served as the Meeting of Parties to the Kyoto Protocol, was held in Bali, Indonesia from 3-14 December 2007. Two weeks of intensive negotiations resulted in an agreement, known as the ‘Bali roadmap’, which signed up both developed and developing countries to a timetable for negotiations on a climate change treaty to apply beyond 2012. The roadmap sets the agenda for negotiations ending in 2009, and links into the work of the Intergovernmental Panel on Climate Change (IPCC).

The Secretary of State for Environment, Food and Rural Affairs, Hilary Benn, led the UK delegation in Bali and described the agreement as the most significant since the signing of the Kyoto Protocol itself in 1997, declaring that:

‘This is an historic breakthrough and a huge step forward. For the first time ever all the world’s nations have agreed to negotiate on a deal to tackle dangerous climate change concluding in 2009.

‘It was the compelling clarity of the science and the strength of the case for urgent action that has made this agreement possible. But it was political leadership that made it happen. Our changing climate has changed our politics, because we knew that we could not let people down.

‘We came here saying we wanted a roadmap that included every country and covered emission reductions from developed countries and fair and equitable contributions from developing countries.We leave here with all of this and more – a groundbreaking agreement on deforestation, and others on adaptation and technology. And against predictions these negotiations will be guided by ambitious goals for emission reductions.

‘What we have achieved here has never been done before. Less than a year ago, many would have said this agreement was impossible. Now we must make it work, and in the next two years agree the detail of a comprehensive global climate deal that will take us beyond 2012.’

The Bali roadmap does not itself include a formal commitment for developed countries to cut their emissions (the EU had argued for commitments by developed countries to cut their emissions by 25-40% by 2020 and for global cuts in emissions by 2050). The US, Canada, Japan and Russia opposed such clear commitments, and at one point it looked as though the Bali talks would founder on this issue, as well as the corresponding refusal by the US and others to accept binding commitments to reduce their own emissions without corresponding commitments from developing countries. As China is moving to become the world’s leading emitter, this issue has continued to grow in importance.

However, the final Bali text includes a mandate to negotiate new binding objectives for developed countries (perhaps looking to a post-Bush US administration), and calls for ‘measurable, reportable, and verifiable nationally appropriate mitigation actions’ from developing countries. At a late stage in the process, Russia, Canada and Japan signed up to this wording, and in the end the US delegation did so too. Meanwhile, the Kyoto Protocol signatories, now including the new Australian administration of Kevin Rudd, agreed to aim for 25-40% cuts by developed countries and a global cut in emissions below half of 2000 levels by 2050.

The talks also resulted in agreements on deforestation, adaptation, technology, finance and the carbon markets. These will form part of the roadmap to a future agreement.

DEFORESTATION

In a separate agreement on deforestation made in Bali, Defra’s summary considers that this will pave the way for incentives to reduce emissions from tropical deforestation, including both overall deforestation and more gradual damage short of total deforestation. Defra considers that this will set the rules for projects to reduce deforestation, including allowing projects to be developed to a common, UN-approved standard. The guidance is heavily based upon approaches at a national level and national baselines, so there is still much room for individual interpretation.

Clearly at least some of the main participants in the Bali negotiations felt that important progress had been made in an area that had caused enormous difficulty to climate change negotiations for many years. It is very difficult to judge this from the language of the deforestation agreement itself, which is couched in the cautious wording of international diplomacy, with its many exhortations to ‘do the right thing’. What is rather more specific is the encouragement to parties to rely on the Good Practice Guidance for Land Use, Land-Use Change and Forestry (a programme of work by the IPCC’s subsidiary body for scientific and technological advice) and the demanding timetable for future action. In a decision under Article 3, paragraphs 3 and 4, of the Kyoto Protocol, the Bali Conference decided that, for reporting information, parties should use tables to be included in an annex to the national inventory report. These would show information on greenhouse gas emissions by sources, removals by sinks from land use, land-use change and forestry activities in revised form. This will be of practical significance in the way in which forestry is handled and as a means of promoting forestry as a form of acceptable emission reduction under the clean development mechanism (CDM) (see box, right). Brazil, India and Indonesia pressed for progress in this area, perhaps in the expectation that it may eventually result in countries with major forests being paid to protect them.

TECHNOLOGY TRANSFER

In one of the most important parts of the Bali agreements, the decision on technology transfer was to agree to scale up an ambitious work programme on mitigation and adaptation to climate change, as well as investment in technology, going beyond the carbon markets. An enhanced and strengthened expert group was commissioned to examine ways and means for building up technology development and transfer, with mechanisms to feed into the Bali roadmap itself. Non-annex 1 countries (that is, developing countries) are urged to use the United Nations Development Programme handbook Conducting Technology Needs Assessments for Climate Change when undertaking their technology needs assessments. Revisions are proposed to the Global Environment Facility (GEF) to provide financial support for technology transfer frameworks.

The Bali agreements appear to commit various bodies involved to carry out more systematic technology needs assessments, particularly in non-annex 1 countries, to put the transfer of relevant emissions reduction technology on a more systematic and better-financed basis. This would increase capacity building for technology transfer and communications, and develop innovative options for financing the development and transfer of technologies.

The enhanced expert group on technology transfer will propose a two-year rolling programme of work for endorsement by the main conference bodies.

FOURTH ASSESSMENT REPORT OF THE IPCC

The fourth assessment report of the IPCC, also known as ‘Climate Change 2007’, was released on 17 November 2007. In one of the more formal but no less significant decisions at Bali, the conference recognised that:

‘… the fourth assessment report represents the most comprehensive and authoritative assessment of climate change to date, providing an integrated scientific, technical and socio-economic perspective on relevant issues.’

The importance of this kind of assessment should not be underestimated. After long years of fairly sterile debate about whether climate change is actually happening, the reports of the IPCC have been hugely important in achieving scientific consensus around the world as to the effects and seriousness of climate change. The one-page decision on the fourth assessment report arrived at in Bali represents political acceptance of the scientific consensus. It does not mean that all the parties to the UNFCCC will automatically co-operate or achieve the results that they aim for, but it does at least mean that they have a common view and understanding of the scientific seriousness of the issue with which they are dealing. This in itself is progress.

REVIEW OF FINANCIAL MECHANISMS

The Bali conference also committed the parties to a detailed and substantive review of the financial mechanisms of the UN Framework on Climate Change. Detailed technical work on this review will begin after March 2008. Further guidance was issued to the GEF, which will be a very important part of the financial review.

GLOBAL OBSERVING SYSTEMS FOR CLIMATE CHANGE

The Bali conference adopted revised UNFCCC reporting guidelines on global climate change observing systems, and applied them with immediate effect. It sought to define a systematic approach to climate observation and networks of monitoring and scientific observation, with a view to achieving the highest and most accurate level of scientific data on atmospheric pollution. The detailed scientific guidance covers, for example, the networks of ocean-monitoring stations and upperair observations, aerosol networks, wind and other forms of atmospheric monitoring.

ADAPTATION FUND

A decision was reached on the governance of the adaptation fund, which supports adaptation in developing countries and is funded by a levy on CDM projects. The parties in Bali agreed to review and revise the composition of the adaption fund board, and further changes were made to how the fund will be run.

FURTHER GUIDANCE ON THE CDM

It was noted that by the date of the Bali conference, some 825 CDM project activities had been registered. This had resulted in the issuance of 85,049,697 million certified emission reductions, the accreditation and designation of 18 operational entities, the approval of 32 baseline and monitoring methodologies and the adoption of new and revised tools, manuals and clarifications to assist project participants.

The Bali conference congratulated the executive board of the CDM on its achievements to date, and made decisions about streamlining its work and issuing further guidance for its future development. Changes were made that will facilitate recognition of carbon capture and storage in CDM projects, as well as smaller-scale technologies.

CARBON MARKETS

Defra notes that parties at Bali:

‘… decided to abolish registration fees and levies on the CDM projects in the least developed countries, agreed guidance aimed at improving the way in which the CDM and its board functions, and approved use of non-renewable biomass CDM.’

This means that small projects – such as those encouraging the use of more fuel-efficient cooking stoves rather than open fires – are now possible through the CDM.

BUDGETS

The Bali conference approved budgets for the programme of work from 2008 to 2009, which recognised a substantial stepping-up of the scale and pace of the work required.

CALENDAR OF FUTURE MEETINGS

It was agreed at Bali that the fourteenth session of the conference of parties and fourth meeting of parties would be held at Poznan, Poland, from 1- 12 December 2008.

It was agreed that the fifteenth session of the conference of parties and the fifth session of the meeting of parties would be held at Copenhagen, Denmark, from 30 November to 11 December 2009. It is this fifteenth session of the conference of parties that is the target date for conclusion of all the substantive work on re-negotiation envisaged by the Bali roadmap.

SUMMARY

There are no guarantees that the progress promised will be delivered and achieved – the real value of the Bali conference will emerge over the next two years.

What has been achieved is a better common understanding of the scientific consensus, and the setting of a demanding two-year timetable for the conclusion of substantive negotiations on the actions that the world’s countries are prepared to take to address climate change. There is much less dispute about whether the issue of climate change is real and happening, and a very wide acceptance of the fourth assessment report of the IPCC as the best available scientific consensus. There is much less argument as to whether anything should be done by developing countries, and a wider acceptance around the world that all countries will have to contribute to addressing climate change. There is also a wider acceptance that funding mechanisms will need to be overhauled, and technology transfer made real and stepped up greatly if the scale of the problem is to be addressed. Big changes are to be expected in the way in which the CDM and carbon markets operate as negotiations progress over the next two years.

Ultimately, everything depends upon national and international political understanding of the science and sustained commitment to address the problems that it identifies.

Those outside the Bali negotiating process only have the dry words of the diplomatic agreements on which to rely for interpretation of what was achieved. But the participants seem to agree that breakthroughs were achieved, and sometimes the process itself is critically important. Everyone has to hope that Bali marked the point at which the world started to engage in all seriousness with what its climate scientists had been saying.

By William Wilson, barrister, Burges Salmon LLP.

E-mail: william.wilson@burges-salmon.com.

For more information please visit www.burges-salmon.com.