Building trust through transparency – Section I of the Paris Text

Published on: August 25, 2015

Filed Under: Analysis, Draft Text

Section I of the Paris negotiating text deals with transparency of action and support. Its relationship with every other section is of critical importance to the overall effectiveness of the Paris climate agreement.

The options laid out in the draft Transparency section have the potential to influence every other section of the Paris text. In particular, the Transparency section will have profound implications for the mitigation and adaptation sections; as well as the various sections dealing with financial, technological, and capacity-building support.

What is the transparency section?

In layman’s terms, the transparency section of the Paris negotiating text seeks to establish a system that will collect, assess and disseminate information on countries’ progress in achieving their climate pledges. While it has less political momentum than other pressing issues such as finance, legal form or adaptation, developing a robust and well-designed transparency system is critical if the Paris agreement is to be successful.

Why is transparency important?

Transparency ensures that states are accountable both to the Secretariat and to one another. It is particularly important to the Paris climate agreement because of the Nationally Determined Contributions (“NDC”) approach that has been adopted (NDC’s are discussed at length here). The primary advantage of a bottom up ‘pledge and review’ NDC system is that it incentivises all nations to participate. This is important: the Kyoto Protocol negotiations, which allocated overarching emission reduction targets to developed nations from the top-down, proved unsuccessful in convincing all Parties to ratify the agreement. By contrast, the flexibility of NDCs encourages participation, allowing for a more nuanced burden sharing between developed and developing nations (a central concern of the negotiations).

However, the downside of a bottom-up approach is that the aggregate reductions determined by nations are unlikely to meet the level of emissions cuts required to keep average global temperature rise within 2 degrees (the target defined at COP19 in Copenhagen as “dangerous” climate change). This is something even the co-chairs of the ADP have acknowledged; although, they insist that “Paris climate pact will not have failed if it does not deliver greenhouse gas cuts to limit global warming to 2C.” This, they argue, is because the Paris agreement will require nations to progressively increase their mitigation contributions over time (as discussed in section [D]), and as it will further set up a framework for financial, technological, and capacity-building for developing nations.

Yet, these requirements are largely procedural – actually increasing emissions targets will still be reliant on political willpower, and political willpower often turns on transparency. In a political collective action problem such as climate change; the cost of solving the issue alone is implausible, so trust between actors is critical. Transparency builds trust and reputational incentives among countries and stakeholders, as well as providing clarity for investors in terms of market direction and regulatory constraints. A well-organised, quantifiable, comparable, and publically accessible database of mitigation/adaptation commitments would put pressure on parties who are lagging behind to “up the ante”, would redistribute political power to parties who have adopted strong positions, and would help to bring the difficulties of implementation in developing countries into focus. Furthermore, developed nations are more likely to provide substantial aid to developing parties if the flows of money and technology are accountable. Other benefits of accessible information include easy diffusion of effective policy across sectors, clear inputs for the compliance regime (discussed in section [K]), and greater legitimacy for groups pushing for increased domestic ambition on climate change mitigation. Overall, a robust transparency mechanism would enable a system in which differentiated NDCs can develop incrementally and organically, but effectively. Weak transparency mechanisms, on the other hand, could mean the entire NDC system, while procedurally sound, is operationally ineffective due to lack of trust between parties.

Current framework

To construct a transparency system for the Paris agreement, we do not need to start from scratch. There is much to be learnt from the current system under the UNFCCC, established at the 2011 Cancun talks. This system encourages all Parties to submit annual national reports to the COP on their implementation of activities relating to mitigation. However, it lacks teeth and has no standard against which to compare reports.  It relies on countries to decide their own targets voluntarily, rather than negotiate these in advance

At the climate talks in Lima last year, countries promised to adopt a similar (but hopefully improved) system ahead of Paris. They agreed to submit pledges for climate action prior to Paris, which would be subject to a technical examination and be exchanged among countries. The added publicity and media attention around Paris as well as the feeling that Paris will be a ‘critical legal moment’ for climate action, has driven countries to take this agreement seriously and 29 submissions have already been received.

While, with 14 weeks until Paris, the clock is ticking for the other nations who are yet to submit their INDCs, it is encouraging that the US, China, Japan, Russia, Canada, Australia and Mexico have already publicly announced their climate pledges. Yet, as no common transparency or reporting framework has so far been agreed, it is difficult to quantify and compare their goals. In particular, the pledges submitted to date:

  • Target different years (either 2025 or 2030) and use different baselines (including 1990, 2005 and 2013);
  • Use different treatments of market mechanisms, carbon offsets and carbon sinks;
  • Use different approaches for setting emissions targets;
  • Measure different greenhouse gases, including all of the main GHGs or just carbon dioxide;
  • Have a wide range of ambition, raising the question as to which end of the range is the actual pledge; and,
  • take different approaches to the national reporting of historical emissions.

Such issues are concerning and highlight that the fact that the new system cannot be a continuation of the present one. It must view transparency not as a precursor to compliance and sanctions (as was the case in the Kyoto protocol) or fixate itself on precise emissions accounting, but rather see transparency as a way to build trust that collective mitigation action is underway. The transparency section in the Paris agreement needs three things: pertinent information, an individual and collective assessment process, and broad country participation.

So what are the options in the Paris text?

By COP21, countries must agree on the main objectives and principles to underpin the transparency system and inscribe these in the legal Paris agreement. That said, it is not necessary that they systems technical details are formulated at Paris; these can be worked out in subsequent years.

Turning to the current draft Transparency section, it appears there are many alternate options available. Fortunately, the goal of the section is generally consistent across the options: to set up a transparency framework and monitoring, reporting and verifying requirements for commitments/contributions (i.e. mitigation efforts) and support measures (i.e. finance, technology, and capacity building). This framework will include support from developed nations to developing ones.

The options differ, however, on how the level of responsibility ought to be divided between nations at different stages of development. This differentiation reflects the position of developing nations who are still implementing the relatively new transparency requirements adopted in Copenhagen and Cancun, and who feel it is too soon to further enhance the framework. Some parties have suggested limiting transparency requirements to developed nations only. Others apply the goal to all parties, but with less binding words; to “promote transparency of action and support.” Others have suggested opt-out tiers to provide flexibility to developing parties.

The specifics of the Monitoring, Reporting and Verifying framework have been detailed in seven different options. They do not represent a sliding-scale. Rather, they overlap. The more limited options generally stay within the realms of existing MRV institutions and procedure (i.e. Lima), with “no backsliding” as a bottom line. The more comprehensive options include criteria such as:

  • A common MRV framework set up by the governing body of the UNFCCC (for both developed and developing nations)
  • Increased frequency of reporting (some options suggest biennially)
  • Standardized format of NDCs, expressed in terms of C02 equivalent and projected emission trajectory, with a common accounting framework, and a common base year.
  • Reporting on national inventories, progress made in terms of long term strategy and what improvements have been made to enable regulatory environments and mainstream efforts.
  • Rigorous accounting and support flows from developed to developed nations, and reporting on what developed nations have been doing to improve enabling environments and mainstream efforts.
  • Independent expert review.

Most of the options that suggest a common MRV framework do qualify it with the principle of common but differentiated responsibility. Some parties argue that the frequency and content of developed nations reporting obligations should be consistent with level of support received, whereas others want it to be developed entirely on a basis of self-differentiation of national circumstances.

Options for commitments range from all parties broadly “participating” and “continually improving” the transparency framework, to requiring all parties to submit biennial reports on action and support measures that are verifiable, transparent, consistent, complete, accurate, and comparable (with methodologies and metrics agreed by the IPCC). One option further elaborates on this, characterizing the differentiated responsibilities by requiring verification of developed nations’ reports through “a robust technical review process and a multilateral assessment process.” This process may be given teeth through non-compliance procedures (outlined in section [k]). Developing nations would only be subject to technical analysis and a non-punitive “facilitative sharing of views” under this option.

Finally, Section I presents further guidelines related MRV for market measures. Once again, these provisions generally provide the same thing: some are vaguely worded, and there is no single most comprehensive option. Commonly suggested guidelines include:

  • Addressing the need for a common definition of climate finance
  • Establishing a governing body of the UNFCCC to develop rules and any necessary new mechanisms around monitoring financial support channels, which
    • Allow funds to be traceable and assessable on a commonly agreed format
    • Ensure that money isn’t double counted
    • Provide biennial (or annual) reports of operating entities of financial mechanism to the COP
  • Developing performance indicators for capacity support and common formats for technology transfer

This part of Section I is closely connected to the financing section (section [F]). How it is formulated in the final Paris agreement will likely reflect the approach taken in Section [F].

Overall,

The wide array of options does not appear to represent a high level of disagreement among Parties about transparency measures. While there are many different ways to get there, the goal is ultimately the same.  In one form or another, section I will likely contain:

  • MRV measures, expanding on existing ones, which
    • cover all elements of the text;
    • provide for sufficient information about expected outcomes, as well as accountability;
    • require regular updates and accessibility for all parties.
  • Efforts to converge reporting formats (with respect to common but differentiated responsibilities).
  • Provisions enabling developing countries to participate in this framework, in particular through provision of support (financially, capacity wise, and technologically).

Conclusion

Transparency and accountability are no substitute for a legally binding core agreement. In that respect, the outcome of Paris still largely hinges on the Mitigation section. However, transparency is a crucial pillar of the overall effectiveness of the Paris climate agreement. Without effective transparency mechanisms, the bottom-up NDC approach, which hopes to tackle the collective action problem incrementally, could stagnate due to a lack of trust. Thankfully, Section I provides many different transparency options. It appears to be understood as a priority by all parties. While the precise format of the transparency instruments are yet to be decided, it is hoped that the eventual Paris Agreement will contain robust transparency mechanisms.

Simon Hillier and Thomas Stuart  | Photo by Casey Fleser

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