New Zealand on the eve of COP21: where do we stand?

Published on: November 29, 2015

Filed Under: Commentary, COP 21, New Zealand

The following is a summary and analysis of the New Zealand government’s stated negotiating positions on the key remaining issues on the table at COP21.

The information in this article is primarily sourced from the New Zealand Ministry of Foreign Affairs and Trade’s (MFAT’s) COP 21 ‘stakeholder briefings’, held on November 18 in Auckland and November 19 in Wellington, New Zealand; and an interview with Climate Change Minister Tim Groser Q&A broadcast on TVNZ on November 21st (viewable here).

Context: Increased Political Will

MFAT negotiators believe the political will mobilised throughout 2015 will be projected into the negotiations at Paris. They particularly emphasised the political importance of the current climate relations between China and the United States, which illustrates an increasing desire from major powers to combat and decrease fossil fuel emissions. Globally, the use of renewable energy sources continue to rise, driving the cost of these sources down relative to the cost of fossil fuel. There is also increasing international awareness that fossil fuel emissions must be decoupled from economic growth, and that economies need to transition towards a more carbon neutral system of growth. Jo Tyndall, New Zealand’s Climate Change Ambassador,  also highlighted the importance of the ‘bottom-up’ process which has taken shape through the submission of more than 160 ‘intended nationally determined contributions’ (INDCs). This process has fostered global participation, engagement and increased transparency.

MFAT believe the factors above collectively reflect a socio-political context that demonstrates greater political will than seen at previous climate negotiations. This means they are hopeful about the prospects of adopting a global and effective climate change agreement in Paris 2015.

New Zealand’s outlook is not out of place. Many groups are expressing optimism on the eve of the talks. It is important to note, however, that reaching an agreement – while an important milestone – will merely be the first step in a long process. Key challenges remain to be resolved, both at the conference, and in the following years.

Key Remaining Challenges

Differentiation Between Developed and Developing Countries Within the Text

The principle of common but differentiated responsibilities (i.e. how to divide responsibility between nations of differing capacity and historical emission responsibility) is enshrined in the UNFCCC and has long been a central issue to the climate negotiations. It remains a core issue at Paris.

In the Kyoto Protocol (the Paris Agreements predecessor), emission reduction obligations were differentiated through the Annex I (‘developed economies’) and non-annex divides (‘developing’ economies).

MFAT has noted that the UNFCCC annexes are unlikely to change, even though the countries respective economies have changed since 1992.

New Zealand negotiators want to downplay the centrality of the annexes in the text and suggest they are not central to influencing emissions reduction commitments. Instead, New Zealand argues that emissions reductions are best determined on a national level – that is, through the INDC process, which will be subject to further negotiation during the conference.

Furthermore, New Zealand’s stance is that the initially self-differentiated commitments ought to be held to a common ‘no backsliding’ standard, and should be improved over time. It is worth noting that New Zealand’s INDC has, in fact, been lowered since its Copenhagen pledge.

Generally speaking, the developing country stance at Paris will be that differentiated commitments should not just be limited to emission reductions, but also to other elements of the agreement, such as adaptation, loss and damage, and finance. As such, New Zealand negotiators expect developing countries will be pushing for processes and obligations which provide more certainty of support and benefit for developing economies post-Paris.

Legal Form – “Bindingness” of the Agreement

The MFAT Negotiators are confident that the outcome from Paris will be a ‘legal’ agreement. However the critical question is what will the form and nature of the legal agreement be. Legal form will essentially be determined by the nature of the commitments undertaken, and how the procedural mechanisms within the agreement relate to the commitments undertaken. Deconstructing Paris has previously discussed the different forms the agreement could take; Carbon Brief has more recently published an updated assessment of the options.

Jo Tyndall highlighted the necessity to maximise ambition within the agreement while also “avoiding constitutional issues.” This point relates primarily to the USA. The US Senate (a separate governmental body to the US Executive climate negotiators) has historically refused to ratify any international agreement which ‘binds’ the USA to commitments. Essentially, the USAs negotiation stance is that the INDCs themselves should not be subject to an outside enforcement body. Thus in order to minimize constitutional issues within the United States, the legal form of the agreement and nature of the obligations will need to be softer.

With this in mind, New Zealand’s negotiating proposal is a legal agreement, where emission reduction ‘contributions’ (note: not obligations,’) should sit alongside the legal agreement rather than being internal to it.

This means the INDCs will be ‘housed’ or ‘nested’ outside of the core legal agreement in a sub-agreement with a different legal nature.  New Zealand’s proposed method has been labelled “bounded flexibility” within a “hybrid approach.” Importantly, this does not mean the whole agreement has no obligations under international law; within the legal agreement, there will still be, for example, obligations relating to financial contributions, potentially being bound to produce a national adaptation plan, and compliance obligations, ie: reporting, monitoring, and review mechanisms.

New Zealand’s proposal has previously gained international recognition and may be adopted as the final method and form of the agreement in Paris. It is worth noting, however, that the EU is still pushing for legally binding commitments.

Loss and Damage

Loss and damage refers to proposed funding that would help developing countries recover from disasters that were triggered or amplified by climate change. Its scope is not yet precisely defined.

Developing countries are pushing for a comprehensive loss and damage system, which assigns liability to large emitter nations, and allows for compensation to countries impacted by climate event.

New Zealand’s negotiators believe that such an approach would be counterproductive. Instead, they propose a way of dealing with loss and damage that eliminates the possibility of liability being assigned to specific countries.

Finance

Securing $100 billion USD per year (from 2020 onward) to finance the international climate effort has been an aspirational target for many years – but where all of it comes from, and what counts as climate finance, remains unsettled. A recent OECD Climate Policy Institute report suggests that $62 billion in finance currently now being delivered annually, and projects that the $100 billion target can be reached by 2020.

New Zealand’s stance is that to close the finance gap, the donor base must be broadened beyond Annex I nations to all countries ‘which are able.’ Furthermore, New Zealand will be pushing for increased financial transparency, by setting up monitoring, recipient reporting and verification systems, so that donor countries can account for their contributions. New Zealand negotiators have repeatedly emphasised the importance of establishing transparency in this area.

In terms of New Zealand’s specific contributions, New Zealand has already committed $3 million to the Green Climate Fund and has spent $100 million on the transition to clean energy in the Pacific.

What are New Zealand’s Key Priorities

Land Sector – Agriculture

Agriculture accounts for roughly 50% of New Zealand’s greenhouse gas emissions, primarily in the form of methane. New Zealand’s emissions profile is unusual for a developed country in having such a high percentage of its carbon emissions coming from agriculture. Agriculture accounts for only 13% of the global emissions.

MFAT maintains that New Zealand is in a ‘special position’ and wants agricultural factors to be noted in the agreement. Suggested approaches would be to include in the preamble “consideration of food security” as a counterbalance to emissions output, or an emphasis on improving emissions intensity (ie efficiency) rather than reducing agricultural emissions per se. Food security is a growing concern in the developing world. Taking into account developing nation population growth projections, New Zealand’s negotiating stance is that an increase in global agricultural production is a necessary reality, therefore efficient agricultural production ought to be encouraged.

This outlook is reflected New Zealand’s domestic policy. On November 24, the government began a formal review process for its Emissions Trading Scheme (ETS). The possibility to include agricultural emissions under the scheme has been excluded entirely, causing considerable backlash. The reason for its exclusion is because unlike carbon dioxide emissions, there is currently no realistic way to reduce methane emissions, other than simply reducing farming intensity. Thus, including agriculture would effectively amount to a tax on agricultural producers. This does not align with the New Zealand government’s priorities. Instead, they consider it pragmatic to approach the issue from an entirely different angle: by investing in agricultural research, namely the Global Research Alliance on Agricultural Greenhouse Gases, with the aim of eventually reducing agricultural emissions through technological solutions.

On Q&A, Tim Groser suggested that New Zealand’s initiation of the Alliance should be considered a positive contribution to the international climate response. He also made a similar point regarding New Zealand’s potential influence on ‘legal form.’

Land Sector – Forestry

With regards to land use rules (LULUCF; ie accounting for forestry carbon sinks as emission offsets) MFAT’s stance is that the core principles previously established under the  Kyoto Protocol ought to be in the Paris agreement, but the onus should be on individual countries to follow the accounting rules correctly.

This is arguably very hands-off approach; and does not acknowledge that many in the international community have criticized the LULUCF rules for containing exploitable loopholes. When independent international analysis Climate Action Tracker rated New Zealand’s INDC as ‘inadequate‘ in July 2015, they noted that “New Zealand appears to be increasing emissions, and hiding this through creative accounting.”

On November 25, New Zealand submitted to the ADP an addendum to its INDC further clarifying its forestry methodologies and assumptions. It is still based on Kyoto methodologies.

Transparency and Accountability

Deconstructing Paris has previously described the role of the transparency mechanism as follows:

A central, and interconnected transparency mechanism will be crucial for establishing an effective legal agreement. A robust transparency mechanism would enable a system in which differentiated INDCs can develop incrementally and organically, yet effectively. Weak transparency mechanisms, on the other hand, could mean the entire INDC system, while procedurally sound, is operationally ineffective due to lack of trust between parties.

The New Zealand negotiators emphasised the importance of transparency mechanisms to a robust multilateral system that is credible and that parties can have confidence in.  Transparency mechanisms are important to preventing backsliding. Rather than having two separate transparency and accountability mechanisms for developed and developing country parties, New Zealand negotiators want a single transparency system for both. However, they do not want to impose impossible reporting obligations on developing country parties and want to improve those parties’ in-country capacity to monitor and report.

Fossil Fuel Subsidy Reform and the Communique

Within the current global market, fossil fuel companies receive $500-600 billion in subsidies. This encourages wasteful consumption and delays the shifts to renewables. MFAT proposes that phasing out fossil fuel subsidies could lead to a 10% decrease in global emissions.

On 17 April 2015, Tim Groser led a coalition of governments calling for the phase-out of subsidies to fossil fuels in the lead-up to COP21. It can be read here. At the time of writing, 30 countries have endorsed the Communique, and New Zealand will continue to push it at the negotiations.

However, the New Zealand government has been criticised by the WWF for failing the key principles of its own communique. A 2013 WWF-New Zealand report revealed that the government was subsidising the fossil fuel industry by at least $46 million dollars a year. Furthermore, the government is currently refusing to reveal how much it provides in tax breaks for petroleum mining on the basis that it no longer collects that information.

Carbon Markets

New Zealand has long supported accessible, efficient global carbon markets. The MFAT website notes that the use of carbon markets is important to New Zealand due to lack of affordable options for significantly reducing its domestic carbon footprint.

While the New Zealand negotiators do not believe it necessary to include the use of carbon markets as a legal requirement for the Paris agreement, they want use of these markets  to be clearly referenced both within the agreement and in a Ministerial Declaration in Paris. Furthermore, they have suggested a Code of Practice to set standards and avoid double-counting.

While not all INDC submission include the intention to use market mechanisms, they are likely to be an important part of the post 2020 climate regime. China, for example, has also recently announced the launch of a national cap-and-trade system commencing in 2017 as a consolidation of its existing regional schemes. New Zealand has made its own INDC conditional on the crystallization of market rules. Due to the large acceptance of the operation of markets as useful in mitigating climate change efficiently, it will be necessary at Paris for clear market signals to be set. Domestically, New Zealand’s own ETS stands to benefit greatly if clear signals and guidelines are agreed upon as a result of Paris.

Ambition and Long Term Objectives

At the MFAT briefing, Jo Tyndall noted that it is important to remember that Paris is the “beginning, not the end.” That is, the Paris agreement will mark the start of a more refined and ‘realistic’ international legal response to climate change, which has learnt from the previous challenges of climate change negotiations.

The recent UNFCCC synthesis report (as well as the reports of other independent research institutes) calculate that the aggregate INDC submissions will limit the world’s warming (above pre-industrial levels) to 2.7-3.5 degrees celsius by 2100. While this is lower than business-as-usual projections, it will overshoot the the upper limit goal of 2 degrees already agreed upon as ‘safe’ by the negotiators – not to mention the 1.5 degree limit, which has gained considerable traction as a more accurate limit of what is considered ‘safe’ warming. As already mentioned, the agreement will likely contain some kind of ‘progression’ mechanism, but whether this gap can be closed remains to be seen.

New Zealand negotiators raised the importance of the ‘Global Stocktake’ which was first set out in Article 10 of the co-chair’s draft agreement (released on October 6) and remains in the most recent draft text. The Stocktake will involve the Conference of the Parties weighing up the aggregate implementation of INDCs against the best available science, with a view of enhancing the implementation of the Agreement. The draft outlines the stocktake  is likely to take place in 2023 or 2024.

Tyndall believes the Paris agreement could adopt a form of mobilizing and enhancing ambition into the future through regular review and renewal of mitigation targets every 5 years. However, at this point, in the lead up to Paris, there does not seem to be the likelihood of an ‘automatic ratchet mechanism’ (you can read more about this here).  This is an important point because arguably the “bounded flexibility” approach outlined above derives its legitimacy from the idea that ambition will be increased in the future. Ideally, in Paris, states ought to bind their future selves to the ‘automatic ratchet mechanism.’ This could, however, create a problem if political pressure and political will moving forward dissolves. Importantly, this is why Paris is “the beginning, not the end.”

Summary and Conclusion

The negotiators believe the political will which has been accumulated internationally will lead to, and be projected into, a legal agreement. Its form, shape and nature of commitments are a critical issue – this article has briefly touched on where the MFAT negotiators believe the negotiations could go.

The bones will be there, with a skeleton ‘take it or leave it’ agreement text. There will be a lot to flesh out post-Paris. But, importantly, MFAT emphasises that this agreement’s focus should be wide participation over bindingness, and providing a framework for international cooperation to mobilise, enhance and project ambition, moving into the future. The formal process is slow-moving and unwieldy, but there is currently political will and trust in the legal architecture that will appear in Paris. Climate cooperation between countries has profoundly increased over the last decade.

MFAT’s assessment of the remaining issues was concise and in line with many other international commentators. Their own negotiating stances generally fall in line with the global trajectory/Umbrella group – and have even been rather influential, with regard to their suggested hybrid approach to legal bindingness. They are also quick to champion the importance of the transparency regime.

That said, on the whole, the New Zealand’s government’s negotiating stances are economically pragmatic to the point of conservatism. Their stance on financing is simply to widen the donor base, and they are resistant to a strong loss and damage mechanism. Their strong reliance on land use, offset mechanisms and carbon markets represent a business-as-usual approach, despite the fact that reliance on such approaches in the Kyoto Protocol did little to slow global net emission growth in the 21st century. They appear to be pushing for an end to fossil fuel subsidies on an international scale before committing to ending such subsidies themselves. Their focus on agriculture has sidestepped an in-depth discussion about carbon emission cuts in areas such as transport. Yet with regards to agriculture, they are hedging all of their bets on technological innovation.

Ought New Zealand be so conservative on this issue? On the one hand, we are a country that contributes only 0.15 per cent of global emissions: the problem is much bigger than us. One the other, we are a highly developed nation with a proud history of taking the lead on global issues. One thing that is clear is that the Paris agreement represents the beginning of a long road. No doubt New Zealand will continue to play an interesting role in the future.

 

The Deconstructing Paris Team

Image by TravellingPooh, used under Creative Commons Attribution-NonCommercial-NoDerivs 2.0.

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