Why did COP 25 Fail?

Background

The “can do” attitude that emerged in COP 21, 2015, popularly known as the Paris Agreement, appeared as a distant thought in COP 25, Madrid, Spain. The 12-day long summit, which eventually got extended by two additional days, was earlier scheduled to take place in Santiago, Chile. However, due to certain unforeseen circumstances, mainly ascended owing to the violent anti-government protests, led the Chilean president, Sebastian Piñera, to shift the summit to Spain. However, the summit’s presidency was still retained by Chile.

The aim of the summit was to provide a concrete framework to some of the technicalities of the Paris Agreement, including a chance to revisit their Nationally Determined Contributions (NDCs). COP 25 was the penultimate summit to COP 26, 2020, where all countries need to submit their revised emissions target, if they want to limit global warming to 1.5 degrees C. However, presently it appears that all of this has been pushed for COP 26, Glasgow, UK, which is to be scheduled next year. COP 25 even failed to deliver on its promises of providing a “Financial Support Mechanism” to the initially agreed theme at COP 19, Warsaw, Poland.

Amidst the shades of darkness, there were some glimmers of hope that lead the COP 25 conclusion slightly better than what many were anticipating it to be:

• The European Union agreed to continue its battle against climate change by becoming the net-zero carbon emission region by 2050.
• ~177 companies decided to reach net-zero emissions by no later than 2050; this is double the number of companies that pledged similar initiatives in the UN Climate Action Summit, September 2019, New York.
• The UN also stated that >70 countries are expected to submit revised (stronger) plans to curb carbon emissions before the Glasgow summit in 2020.

What exactly went wrong?

COP 25 was expected to deliver on its promises around two major themes, which were:

1. To achieve consensus around Article 6 that deals with the core issues of carbon trading and carbon markets
2. To create a robust financial mechanism that deals with the “loss and damage“ resulting from climate change

Article 6

Article 6 traces its origin from the Paris accord, which deals with establishing a global carbon market system, eventually, helping countries decarbonize their economies. Under this, both governments, as well as the private sector, can freely trade carbon credits depending upon how one achieves its targets. In simple terms, the one who over-achieves its targets can sell carbon credits to the one who underachieves it. It entails three core components:

• Article 6.2: Countries can forge agreements bilaterally and voluntarily to trade carbon credits (e.g. European Union Emissions Trading System (EUETS)). However, it does not intend to create a bilateral or a mini-multi lateral market; rather, it regulates the dealing of such markets by linking the carbon credits generated to the NDCs. It also warrants applying robust accounting measures to avoid double counting.This issue still remains unresolved due to the non-consensus of many parties involved.
• Article 6.4: Establishes a Sustainable Development Mechanism (SDM) that replaces the Clean Development Mechanism (CDM) established under the Kyoto Protocol. Under the SDM, countries and the private sector can trade emissions through a centralized governance system. Further, SDM warrants all parties to contribute in reducing their emissions levels, along with a progressive plan for further reduction, and still keeping sustainable development at the top of their agenda.
• Article 6.8: Helps in creating a mechanism where countries can mutually cooperate to reduce their emissions outside the boundaries of established market mechanisms; this could be in the form of aid.

While, on paper, these rules appear well-thought-out, but the ground reality, which was also a contentious issue in COP 25, is much different due to its real implementation potential. Carbon experts worldwide believe that setting-up carbon markets may prove to be a disguise for many who in reality, may want to achieve less on-ground.

Some of the key issues associated with Article 6 were related to:

• Trading of CDM credits under the new SDM mechanism, specially raised by countries, such as Brazil, India, and China
• Avoiding double counting of emissions by countries that made them and those that bought the offsetting credit; some developing nations were against this
• Common consensus on transferring of emissions reduction across borders without generating additional cuts, as somewhat referred in Article 6.4; more progressive countries favored this, but, a common ground seems to be missing with developing and underdeveloped countries not agreeing to this

Loss and Damage

Loss and damage refer to the irreversible loss that climate change has caused, where mitigation and adaption are not possible. Under the Warsaw International Mechanism (WIM) on loss and damage, set-up in 2013, financial support to the vulnerable was one of the key workstreams that were supposed to be discussed and sorted in COP 25 meeting, almost after a stagnancy of six years. WIM has the following key functions:

• Enhances knowledge and understanding of the comprehensive risk management approach towards climate change-related losses and damages, including the slow onset impact
• Encourages positive dialogue and coordination among all stakeholders
• Focuses on action and support in the form of finances, technology, and capacity building to address issues related to loss and damage

Unlike non-consensus on Article 6, Loss and Damage managed to receive some traction in Madrid; however, the scale and urgency with which it was earlier anticipated, still remains debatable. Most of the debate around Loss and Damage centered around two key themes related to financing:

1. Establish a finance arm under WIM – a move that was opposed by developed countries, as it would result in direct admission of the liability for causing climate damage
2. Establish a financing window under the Green Climate Fund (GCF) – opposed by the developing nations (G77 + China), due to unclear boundaries between Loss and Damage and gradual adaptation, resulting into a reduced amount of funds for developing nations

Right from the outset of COP 25, there has been some contention between the developed and developing countries. While developed nations want the reporting format to be uniform and communication channel to be streamlined for reporting loss and damage, on the other hand, developing countries have been continuously expressing the need to shore-up more on-ground activities.

Key requests by the coordinated group of developing nations, G77 and China, included the following:

• Scale-up new and additional finance by developed countries
• Establish an expert group on the action, on support
• Establish the Santiago Network for averting, minimizing, and addressing loss and damage
• Establish dual governance of the WIM under the Convention and the Paris Agreement

Some progress in overcoming issues related to loss and damage has certainly been discussed in the COP 25 summit. Subsequent COP meetings will need to take this issue seriously, as a lot depends upon secure financing and establishing clear guidelines to access such finance. While the next review is scheduled for 2024, some positive outcomes in the upcoming COP 26 on issues related to governance and setting-up of an expert panel are expected to be seen.

Regional Viewpoint

The argument over the moral obligation of rich and developed countries to preserve climate has always been a strong one, and rightly so, due to the role that they have played in damaging it. To put things in perspective, Hurricane Dorian, a category 5 hurricane, struck the Bahamas on September 2019, resulting in a total loss of $3.4 billion, and to make matters worse even claimed 70 innocent lives. This is one of the many recent examples where climate change has disproportionately impacted several poor countries.

The Bahamas contributes to ~0.02% of the total global carbon emissions, but it is a frequent victim of such natural calamities mainly risen due to changes in climate behavior. Loss and damage are one of key issues for resolution by many smaller countries, including the coalition of 44 island countries, known as the Alliance of Small Island States (AOSIS). These countries were not satisfied with the meager contributions that developed nations, such as the US, Canada, Japan, Saudi Arabia, and Australia, have committed, or are willing to commit.

China, India, the EU, and the US contributed around 60% of the global CO₂ emissions from fossil fuel combustion in 2017. Many argue that only if these four regions are able to meet their Paris targets, the world would be a much better place to live. However, the equation in itself is not that simple – per capita emission contribution in the US is nine times higher than it is in India. Though, a lot have been pledged and committed, what needs to be seen is how large emitters react on-ground to achieve these targets.

India has pledged to reduce its carbon emissions by ~35% over 2005 levels till 2030. The country plans to generate 40% of electricity from renewable sources by 2030 and has pledged an additional carbon sink of ~3 billion tons of CO₂ by 2030 through increasing forest cover. While India has been ramping its renewable energy capacity year-on-year, several issues, such as low tariffs, the financial position of state discoms, the inability of banks to provide funding, etc., continue to plague.

China has pledged to reduce its carbon emissions by ~60-65% over 2005 levels till 2030. It also plans to peak its carbon emissions by 2030, post which the country expects to witness a decline. It will be interesting to see how China deals with the issue of coal power generation, given the magnitude of reserves that it possesses.

The EU has pledged to reduce its carbon emissions by ~40% over 1990 levels till 2030. However, certain countries, such as Germany and Poland, are expected to miss their 2020 targets.

As described by Climate Tracker, efforts undertaken by the US are not significant in the direction of reducing emissions. The country withdrew from the Paris Agreement and has been against the Green Climate Fund, where it has been the largest contributor. It had pledged to reduce its carbon emissions by 20-25% over 2005 levels till 2025; however, it may miss its 2020 targets.

Outlook

It barely needs any guesswork to declare that the outcomes of COP 25, by and large, have been below expectations. There has been no consensus on carbon markets, no new finance mechanisms, and barely any movement on additional finances required for the Loss and Damage program. This being said, a strong signal has been sent to the global community that a lot needs to be achieved in the next COP 26 meeting at Glasgow, with a clear revision of NDCs that are progressive enough to set the path for a wider change.

Moreover, 2020 needs to set a new benchmark wherein the world leaders are extremely serious and undertaking necessary measures to deal with the mammoth task of climate change, moving beyond their personal interests. The UK is one of the first advanced economies to legislate the net zero emissions target by 2050; building on that legacy, the country should play an instrumental and defining role in presiding over the COP 26 meeting.