Author Archives: Benito Muller

The Glasgow Ambition Cycle — Domestic Considerations

The case of India, of China, and of the European Union

by Benito Müller[1] (EU), Chandra Bhushan[2] (India), and Xin Li[3] (China)[4]

Political Summary

Two 5-year cycles currently drive the implementation of the Paris Agreement (PA): one of communicating national targets (“Nationally Determined Contributions” NDCs) and one of taking stock of global efforts. In order to complete the ambition mechanism of the PA, which is critical for its full operationalisation and the achievement of its objectives, another 5-year cycle, the “Glasgow Ambition Cycle” (GAC), aimed at ratcheting up the collective ambition of NDCs, has been proposed. It is gaining significant traction and appeal for adoption at COP 26 in Glasgow under negotiations on Common Time Frames (CTF, see Ambition Cycle on course to land in Glasgow).  The GAC provides an elegant and non-controversial solution to the sticking options currently being negotiated, and is meant to start in 2025 when countries would be requested to:

  • communicate (at least) a 2035 NDC (‘with a time frame up to 2035’);
  • re-visit any NDCs communicated earlier to see whether, in light of changed circumstances, their ambition could be increased; and
  • repeat these two steps, ceteris paribus, every five years – thus in 2030 they would be: communicating a 2040 NDC and revisiting (inter alia) the 2035 NDC communicated five years earlier, and so forth.

As recently remarked by Marianne Karlsen (Chair of the UNFCCC/PA Subsidiary Body for Implementation): “Parties are increasingly realizing the importance of the issue [CTF] to the overall dynamics and well-functioning of the Paris Agreement. Of course, it is important to keep in mind that CTF is very much a political issue because establishing timeframes often involves parliaments and cabinets. So, this has to be something that politicians also need to get on the radar to work with.”[5]

This is why this OCP blog post takes a look at domestic considerations and demonstrates that the GAC is flexible enough to be accommodated and workable in three key Parties: India, China and the European Union.

India. India has a well-established revolving five-year electricity planning cycle consisting of Electric Power Surveys (EPS) and National Electricity Plans (NEP). The Surveys involve annual demand projections for the next ten years as well as long-term (‘perspective’) projections for 15- and 20-year time horizons. The Plans contain a detailed growth strategy, including investments in generation, transmission, and distribution, for the next five years and the roadmap for the subsequent five years.

The 20th EPS, to be published in 2022, will contain yearly projections of electricity demand till 2030 and long-term projections for 2035 and 2040. The 4th NEP will be available in 2023; it will contain a detailed plan for 2022-27 and a perspective plan for 2027-32. As the electricity sector is the single largest source of GHG emissions in India, accounting for 47 per cent of the country’s total emissions, its planning cycle can be argued to be already in conformity with the GAC, and therefore in principle, the GAC can be accommodated in India’s NDC communication cycle, given the information in the 20th EPS/4th NEP.

China. China’s overall socio-economic development policy in the first half of the 21st century is dominated by two ‘Centenary Goals’; these mark the centenary of the Chinese Communist Party in 2021 and the centenary of the People’s Republic in 2049. As the mid-point between these two centenaries, 2035 has received special attention in China’s current policy making. The deliberations for the 14th Five-Year Plan (2021-25) include, for the first time, a longer-term vision with a 2035 target, which will set the development pathways for the next 15 years. This combination of short-term and long-term targets in China’s policy making is significant for global climate policy, not least because it is perfectly consistent with the proposed Glasgow Ambition Cycle.

The European Union. A key domestic consideration in the EU for determining the timeframe of climate targets is that implementing legislation can take up to 5 years to be adopted. The 2020 communication of a 2030 NDC update shows that a 2025 communication of a 2035 NDC should (in principle) be possible, even if a 2040 timeframe remains the preferred option among some of the key domestic constituents. Given that the Paris Agreement does not preclude the communication of multiple NDCs, there is no need to choose between the two options: the EU can communicate both a 2035 and a 2040 NDC in 2025, and thus take into account all domestic preferences and do so in a manner consistent with the Glasgow Ambition Cycle. The communication of a 2035 in order to facilitate a harmonisation of the GAC should not be seen as a mutually exclusive option, but rather a demonstration of political flexibility that will not prejudice the substantive essence of the EU’s overall ambition. 

The Case of India: Electric Power Surveys and National Electricity Plans

India has an elaborate system for developing a National Electricity Plan every five years.[6] This system has been codified by an act of parliament – the Electricity Act of 2003 (‘the Act’). The Act obligates the Central Electricity Authority to formulate policies and plans for the development of the electricity sector, and to conduct and publish an Electric Power Survey (EPS) every five years to forecast both the country’s electricity demand and the contribution of various sources of electricity to meet that demand. The Act also stipulates the preparation of a National Electricity Plan (NEP) every five years, in accordance with India’s National Electricity Policy.

The EPS forecasts, every five years, the electricity demand for the entire country and for each State and Union Territory in the short, medium, and long term. Year-wise electricity demand projections are made for the next ten years, while long-term (perspective) demand projections are carried out for 15- and 20-year time horizons. So far, nineteen EPS have been published, the latest one in January 2017. 

The 20th EPS will be published in 2022. It will contain:

  • Annual electricity demand projections for each State, Union Territory, Region, and All India in detail for the years 2021 to 2031 (see figure above);[7]
  • Electricity demand for the terminal years 2036 and 2041.

The NEP contains a five-year detailed plan and a 15-year perspective plan. It includes:

  • Short-term and long-term demand forecast for different regions;
  • Suggested areas/locations for capacity additions in generation and transmission, keeping in view the economics of generation and transmission, losses in the system, load centre requirements, grid stability, security of supply, quality of power (including voltage profile, etc.), and environmental considerations including rehabilitation and resettlement;
  • Integration of possible locations of capacity additions with the transmission system and development of the national grid – including the type of transmission systems and requirement of redundancies;
  • Different technologies available for efficient generation, transmission, and distribution; and,
  • Fuel choices based on economy, energy security, and environmental considerations.

The latest (Third) NEP was published in January 2018. It contains a review of the previous five-years (2012-17), a detailed plan for the next five years (2017-22), and a perspectives plan for 2022-27. 

The Fourth National Electricity Plan will be available in 2023. It will contain a detailed plan for 2022-27 and a perspective plan for 2027-32.

From the above, it is clear that a revolving five-year planning cycle for the electricity sector is well-established in the country. As the electricity sector is the single largest source of GHG emissions in India (accounting for 47 per cent of the country’s total emissions, including LULUCF[8]), its planning cycle could become a basis for India’s NDC communication cycle.

The Case of China: Enhanced Five-Year Planning

At the 15th National Congress of the Chinese Communist Party (CCP) in 1997, President Jiang Zemin introduced two ‘Centenary Goals’ to guide the socio-economic development in China. The first goal refers to the centenary, in 2021, of the founding of the CCP, with the Centenary Goal of building a moderately prosperous society in all respects; the second one referring to the centenary, in 2049, of the founding of the People’s Republic of China, with the goal for China to become a basically modern socialist country.

At the 19th CPC National Congress in 2017, President Xi Jinping brought forward this goal to 2035 as a new mid-term goal, with the second Centenary Goal changing to China becoming fully modernized by 2050.

Three years later, in October 2020, President Xi Jinping introduced, for the first time, a longer-term vision – a 2035 development target – in the course of the discussions on the 14th Five-Year Plan (2021-25) at the 19th meeting of the CPC Central Committee.

This new combination of short-term and longer-term targets in China’ policy making is significant not only for China’s carbon emissions peaking and carbon-neutrality targets, but also for the international climate regime. 

At the time of writing, some provinces, autonomous regions, and municipalities have published their 14th FYP and 2035 long-term policy recommendations. Among these, the important mid- and long-term policy goals related to climate change include (but are not limited to): clarifying the carbon emissions peaking action plan, limiting coal use, increasing the share of renewable energy sources in the energy mix, promoting the intelligence and digitalization of energy development models, and developing green financial service systems. These targets will become the backbone of climate policy making at regional levels in the near future.

Since the formulation of its first five-year plan 70 years ago, China has completed thirteen FYPs, and FYPs will continue to provide guidance to the socio-economic development in China, despite debates on the effectiveness of such administrative economic planning. FYPs fit well with the proposed Glasgow Ambition Cycle, particularly in conjunction with the new longer-term 2035 planning horizon.

In short, the establishment of the 2035 target enables China to play an important role in international climate change negotiations. This is crucial for the ability of China’s own adaptive measures to engage with climate change impacts domestically, and also for the joint efforts of the international community to combat climate change. Combining the carbon emissions peaking and carbon-neutrality timelines, China has the opportunity to demonstrate its contribution to climate change mitigation and also its leadership, in the near future.

The Case of the EU: The Issue of Implementing Legislation

The Glasgow Ambition Cycle crucially requires the communication of a 2035 NDC by 2025. Could this be a realistic option for the EU? A practical way to assess possibilities is to look at precedents – in this case at EU past communications under the Paris Agreement (PA).

On 6 March 2015 (see Table 1 below), the EU communicated their Intended Nationally Determined Contribution (INDC) with a ‘point target’ of emissions in 2030 being at least 40 per cent below 1990 levels, which became its initial NDC on 5 October 2016, when the EU ratified the PA.

This was based on an EU-wide emission trajectory with annual figures from 2021 to 2030, formulated and adopted by EU heads of government in 2014. The subsequent formulation and adoption of the legislation required for implementing the 40 per cent target took almost five years, beginning in July 2015 and ending in December 2020 with the setting of the final 40 per cent target trajectory.

In March 2020, the Commission promulgated the European Climate Law [ECL], which not only mandates the EU to be ‘climate-neutral’ by 2050, but also “proposes the adoption of a 2030-2050 EU-wide trajectory for greenhouse gas emission reductions”[ECL], and five-yearly assessments of “the consistency of EU and national measures with the climate-neutrality objective and the 2030-2050 trajectory”[ECL], synchronized with the Global Stocktakes of the Paris Agreement.

On 19 June 2020, Croatia and the Commission made a ‘Voluntary Submission‘ to the UNFCCC (on behalf of the EU and its Member States) regarding the ‘Future of the UNFCCC process.’ The submission left no doubt whatsoever that “The ambition cycle built upon the global stocktake and the regular submission of NDCs and adaptation communications, … will be the central feature in driving enhanced climate action and support so as to achieve the long-term goals of the Paris Agreement.”  Indeed, it stipulates that the “UNFCCC process needs to maximise its catalysing role for climate action and ambition” and that the “success of the UNFCCC process should be measured by its ability … to catalyse higher ambition”.  We could not agree more with this and the need to put “the ambition cycle … at the centre of the UNFCCC process”, except that the capacity of the ‘ambition cycle’ to maximise ambition is not fully realised without the addition of the GAC.

On 17 December 2020, the EU communicated an update of their initial NDC with a new, more ambitious target of at least 55 per cent below the 1990 level for 2030 emissions and – according to the EU Climate Action Progress Report, November 2020 (see also Figure 1) – the Commission is currently determining the annual emissions allocations (AEAs) for each country for the years 2021 – 2030, to take into account the updated, more ambitious, 2030 target.

Figure 1. Emissions in sectors covered by effort-sharing legislation 2005-2030 and Annual Emission Allocations (AEAs), EU-27 (Mt CO2 eq) [Fig. 4 in Climate Action Progress Report 2020]

What is to happen next? In a first instance, new implementing legislation for the 55 per cent target will have to be adopted, and it is expected that this will take (at least) until 2024, which means that in practice the implementation of the updated 55 per cent NDC is unlikely to commence before 2025.

Box 1. Draft by the European Council for the implementing regulation of the ECL (12 December 2020)

Assuming the adoption of the ECL by 2022, the next milestone will be the first of the ECL-mandated assessments in 2023. Following the pattern seen in the run up to the 2015 communication of the (I)NDC, it stands to reason – not least on the basis of the position of the European Council (see Box 1) – that this will be followed by the formulation and adoption of a second ten-year trajectory (2031-40, see Figure 2), presumably based on the 2050 net-zero trajectory mandated in the ECL. 

Figure 2. EU Domestic and Paris Agreement Cycles

According to Art. 4.9 of the PA, all Parties have to communicate an NDC in 2025. The key question in the present context is about what timeframes the EU could realistically consider in light of domestic considerations?

One of the key domestic constraints, the time it takes to adopt the required implementing legislation (up to 5 years, as mentioned above), for one rules out another update of the 2030 NDC.

Given the INDC precedent, one option clearly is the communication of a 2040 NDC. But, to be sure, the 2020 communication of the updated 2030 NDC equally provides a precedent for the option of communicating a 2035 NDC, which seems to be the preferred option of a number of Member States,[9] and is consistent with the GAC. Fortunately, Art. 4.9 allows for multiple NDCs to be communicated simultaneously, so that there is no need to choose one over the other. 

In short, keeping in mind the domestic legislative constraints, it is possible (as illustrated in Figure 2) for the EU to include the communication pattern set in Paris in a cycle that would be consistent with the GAC by communicating both a 2035 and a 2040 NDC in 2025, updating the 2040 NDC in 2030, and communicating a 2045 NDC and the 2050 (‘net-zero’) NDC in 2035.

Table 1. EU Climate Legislation/Regulation/NDC Timetable.  Courtesy of Artur Runge-Metzger

[1] Oxford Climate Policy and University of Oxford.

[2] International Forum for Environment, Sustainability & Technology.

[3] Oxford Climate Policy.

[4] The authors would like to acknowledge, with gratitude, feedback received (in alphabetical order) by Annika Christell, Kishan Kumarsingh, Geert Fremout, and Artur Runge-Metzger.

[5] Source: In conversation with SBI and SBSTA Chairs ERCST.

[6] References:

[7] Note that strictly speaking, the projections are made for financial years, starting in April and ending in March of the following calendar year. However, to avoid cumbersome notation, the calendar year of the initial nine months is here used to designate the financial year in question, i.e., ‘2020’ instead of ‘FY 2020-21’.

[8] MoEFCC. (2018). India: Second Biennial Update Report to the United Nations Framework Convention on Climate Change. Ministry of Environment, Forest and Climate Change, Government of India.

[9] See Appendix 3 in Enhance Climate Ambition in 2020: Here’s looking at EU, kid!

AMBITION CYCLE ON COURSE TO LAND IN GLASGOW

by Kishan Kumarsingh, Benito Müller, and Anju Sharma

Outcomes of the 2020 Technical Climate Dialogue on Common Time Frame(s)

Five years ago, countries submitted their first Nationally Determined Contributions (NDCs). Research institutions went to work calculating their net impact on emissions and their conclusions were unanimous: the NDCs were not ambitious enough to prevent catastrophic climate change.

In response to these conclusions, governments have come under considerable public pressure at home and globally to ratchet up the ambition of their initial NDCs. The 2020 Climate Ambition Summit on 12 December 2020 was meant to be a moment of truth with national leaders expected to announce enhancements in NDC ambition: 45 countries announced new, updated, or revised NDCs, yet the effect on overall ambition is likely to fall short of what is required, not least because several large emitters were conspicuous by their absence.

While the Paris Agreement allows Parties to adjust their existing NDC to enhance the level of ambition at any time (Article 4.11), it does not specify how often this should happen. There is only an indirect indication of this in Article 14.3, which calls for the outcomes of the five-yearly Global Stocktakes (GSTs) to inform Parties in updating and enhancing their actions and support – suggesting that such updates and enhancements should take place every five years.[1] In a recent LSE Commentary, Peter Betts, former EU and UK lead negotiator, notes: “The COP process is not perfect; but underlying its dramas and process fights are real perceived national interests: how should emissions reductions be shared, and who should be supported financially? … A COP Decision reinforcing the need for five-yearly revision of NDCs could help.”

The Paris Agreement also stipulates that Parties will consider common time frames (CTF) for NDCs (Article 4.10), and a number of Parties have seen this as an opportunity to address this lack of periodic synchronised ambition enhancement. Agreement on the rules for CTF has, however, proven tricky and was not possible in Katowice in 2018, or in Madrid the following year. (Agreement was also not possible on the rules for  Article 6 and transparency, both of which are closely tied to the operationalisation of the CTF). While the postponement of the 2020 Climate Conference (COP26) has further delayed the adoption of these rules, negotiators have been working on the sidelines to ensure that they can hit the tracks running when COP26 takes place, currently scheduled for 2021.

CTF was, therefore, a key element for discussion at the virtually held 2020 UN Climate Change Dialogues, where a technical dialogue on the issue took place on 2 December 2020. The interventions during the Dialogue revealed some important points:

  • The issue of CTF is important for the full synchronisation and effectiveness of the mechanisms of the Paris Agreement, such as NDC communication, GSTs, and the enhanced transparency framework.
  • The technical discussion underlying the well-known negotiating options over the past negotiation sessions have been thorough and exhaustive.
  • A decision will require consideration and possible adjustments of national policy cycles and national requirements.
  • Agreement on a decision on CTF at COP26 will signal a strong commitment by Parties to find workable solutions, conclude the Katowice rule book, and move to full implementation of the Paris Agreement.
  • A solution to CTF is not difficult and a workable approach can be found;
  • Parties are willing to consider the utility of the “Glasgow Ambition Cycle” proposal, taking into account the issues highlighted regarding the implications of not arriving at a decision.
  • The issue has matured to the point where Parties are ready and willing to arrive at a decision at COP26.
  • A decision on CTF ought to be part of the package of decisions at COP 26.

Parties are clearly willing to explore options outside of their individual and group positions towards a solution in Glasgow. The positive nature of the discussions seems to suggest that notwithstanding the need to consider national circumstances and requirements, a decision on CTF, against the background of the three main negotiating options, is not only possible, but achievable, and that its time has come. The discussions also revealed that the landing zone for such a decision may be in sight: “The proposed Ambition Cycle can unite all the options on the table in a way that retains all their advantages, while avoiding the significant risks they pose on their own.”[2]

Dialogue Report

I. The Opening

The Technical Dialogue on Common Time Frames for Nationally Determined Contributions referred to in Article 4, paragraph 10 of the Paris Agreement  was convened  by Marianne Karlsen, the Chair of the Subsidiary Body for Implementation (SBI). It was chaired by the lead author of this post, Kishan Kumarsingh; and included a presentation by second author Benito Müller. Kumarsingh invited the 73 Party participants in the Dialogue to focus on two questions:

  • What approach to CTF will allow all of the processes and mechanisms of the Paris Agreement to function as intended?
  • From your perspective, what are the most important factors to consider in arriving at a practical and workable time frame of an NDC, and how can these factors be accommodated in a solution on common time frames?

This was followed by a presentation by Yamide Dagnet, World Resources Institute (WRI), on the importance of an agreement on CTF in 2021. Dagnet said agreement on this issue will allow the GST, the Article 6 market mechanisms, and the enhanced transparency framework of the Paris Agreement to function as intended. She noted that Parties still have some way to go to reach the 1.5°C threshold recommended by the latest report of the Intergovernmental Panel on Climate Change. The Paris Agreement calls for the communication of Nationally Determined Contributions (NDCs) every five years, and for the NDCs to be enhanced on the basis of GSTs occurring also every five years. This enhancement on the basis of the emissions gap, the adaptation and resilience deficit, and the alignment of financial flows, will allow the “arc of ambition” to get closer to achieving the Paris Agreement’s long-term goals.

The NDCs and the GSTs are therefore at the heart of the arc of ambition, Dagnet said, and of the Paris Agreement’s ambition cycle. A decision on CTF can facilitate ambition by accelerating action at an established rhythm. If Parties have different timeframes, she said the GST will not be able to equitably reflect progress on action and support when countries are at different points in their NDC cycle. Some Parties will be concluding their NDC implementation, while others will be in the middle of implementation when the GST occurs, and this will clearly complicate the assessment of aggregate progress.

Dagnet said ensuring that all Parties are at the same point of their NDC cycle is important to ensure that the GST can consider collective progress in light of the best available science and equity, as required under Article 14.1 of the Paris Agreement.

If Parties have a ten-year timeframe, she continued, they will not be able to make the most of the GSTs, to reflect the achievements of NDCs and boost future climate actions and support. The Paris Agreement is already built on a five-year cycle.

Describing the linkages between CTF and Article 6, Dagnet noted that the market mechanisms of the Paris Agreement will be more complex than those of the Kyoto Protocol, and securing a robust measurement, reporting, and verification (MRV) system will be challenging in the first place, especially for many developing countries. The setting is made even more complex by the variety of NDC types, and the lack of certainty and predictability of markets. If the period of NDC implementation is different between Parties participating in the market mechanisms, this will add another layer of complexity. The impact of the use of those mechanisms on global efforts may not be clear for as long as ten years. Enforcing Article 6 principles of environmental integrity and the avoidance of double counting will become even more difficult.

Dagnet said a five-year “plan-implement-review” cycle at the national level will allow for a better understanding and acceleration of collective progress towards the Paris Agreement goals; allow for taking into account the outcome of the GST every five years; and be more responsive to technological, economic, and societal changes, needs, and opportunities. She noted that countries are already adjusting their governance and institutional structures accordingly.

She concluded that in the current state of climate emergency, Parties cannot wait beyond COP26 in Glasgow to come to an agreement on the CTF issue.

Benito Müller, Oxford Climate Policy, then gave a presentation on “Status Quo Risks and how to deal with them”.

He pointed to two papers[3] that have looked at the risks of not coming to an agreement on the CTF issue in Glasgow. Noting that the majority (80%) of initial NDCs communicated by Parties in 2015 have a time frame up to 2030, he recalled that the Paris Decision (§24) requests the Parties in question to communicate or update these NDCs by 2020, and do so every five years thereafter. He also noted that the Article 4.9 five-yearly communication requirement applies even to Parties with a ten-year timeframe.

In 2023, a GST will take place, which will be able to take into account forward-looking information for the NDCs up to 2030. For the countries that in 2025 choose to communicate a new NDC, the new NDC will be up to 2040. For those who choose to update their 2030 NDC, however, there will be “a cliff edge of information” in 2030, and the forward-looking 2028 GST would be meaningless because there is no information beyond two and a half years.

These countries would then present a new NDC up to 2040 in 2030, but that would not be informed by the GST. This clearly suboptimal situation will arise every ten years thereafter.

Müller then considered the implications of this cycle on the financial mechanism. In 2020, he said, information is available up to 2030, but the vintage of this information is 15 years, since the NDCs were communicated in 2015. This is too distant, particularly for the needs of contingent NDCs. The first replenishment of the Green Climate Fund (GCF) has just taken place, and the 2030 NDC will be updated now (in 2020). The eighth replenishment of the Global Environment Facility (GEF8), the second GCF replenishment, and GEF9 will be reasonably placed in terms of forward-looking information about financial needs. According to Plan A, the 2030 NDCs will be re-updated in 2025, which will mean that GEF10 will be a cliff edge, with no forward-looking information whatsoever, and the same will happen for the GCF’s sixth replenishment. 

Müller then introduced the “Glasgow Ambition Cycle” (GAC) and demonstrated how it could mitigate these risks. In 2020, he said, we will have the 2030 NDCs communicated. The first step in the GAC is that Parties would communicate a 2035 NDC by 2025 (see Box 1), so the information horizon would be till 2035 in 2025, and avoid the cliff edge. The 2023 GST will have information at two levels – for 2030, and 2035.

For a more detailed formulation, see ‘A Glasgow Ambition Cycle’

The second part of the GAC is that in 2025, Parties are requested to update their 2030 NDCs, and then do the same thing every five years. So for the second iteration, they will be invited or requested to communicate their 2040 NDC by 2030; and to update the 2035 one in 2030, and so forth. This will create a rolling cycle with NDCs updated every five years. He then showed how in this scenario, every single replenishment will be covered in terms of forward-looking information.

Müller said the GAC also creates space for equity. Parties will communicate their 2035 NDCs by 2025, there will be a GST in 2028, and an update in 2030. The five years between 2025-2030 will provide an important space to governments and civil society to consider the adequacy, but also the equity and fairness of contributions. While there is no way to impose fairness, the GAC will at least create the essential time and the space to discuss it, by making everything transparent. A more equitable sharing of ambition will, in turn, maximize the enhanced ambition.

Müller concluded that GAC can unite all the options on the table in a way that retains all their advantages, while avoiding the significant risks they pose on their own. The solution is simple – if countries can do a 2035 NDC, that is all that is required. If Parties want to communicate at 2040 NDC in 2025, they can do both, as it doesn’t take more effort to have a 2035 NDC in addition to a 2040 NDC.

II. Party Interventions

How did Parties react to the GAC idea as discussed in the kick-off presentations? What did they say as regards to whether there should be a single CTF or several, and to whether this should be decided at COP 26 in Glasgow?

a) Reactions to the Glasgow Ambition Cycle (GAC)

The Glasgow Ambition Cycle, originally called ‘Dynamic Contribution Cycle’ and submitted to the UNFCCC by Brazil in November 2014, was resubmitted as position of the LDC Group in April 20018, and as part of ‘Option 8’ in the SBI negotiations by Switzerland at COP 25 in November 2019.[4]

So when Switzerland took the screen on behalf of the EIG, and subsequently Bangladesh on behalf of the LDCs, it was good to hear that they remain fully in support of the GAC. 

Switzerland, supporting the ‘5 + indicative 5’ version of the GAC, argued that this “allows more ambition through a functioning  ratcheting-up mechanism.” Moreover, she put forward that “bearing in mind how fast new technologies are being developed, and the increasing pace of the transformation of various sectors, it would be a missed opportunity, in our view, not to give ourselves the opportunity to update our plans and strategies on a regular basis.”

Zimbabwe, speaking on behalf of the African Group of Negotiators (AGN), also endorsed the GAC idea,[5] building on a 2018 AGN submission, and highlighting the importance of providing space for equity mentioned in Müller’s presentation. Supporting the AGN intervention, South Africa stressed that “in a climate emergency, we need to do as much as possible as fast as possible and dynamically,” citing the danger of otherwise locking-in low ambition.

Panama, speaking on behalf of the Independent Association of Latin America and the Caribbean (AILAC), also explicitly supported the GAC “to enable the ambition mechanism of the Paris Agreement to operate in a manner that guides all Parties to the greatest possible ambition” by providing “regular opportunity for the latest scientific, technical, and stocktaking information, and the outcome of the Global Stocktake to directly inform subsequent NDC commitments in as timely a manner as possible” and by giving “citizens, companies, investors, and the international community clear visibility of the direction of travel the country is embarking upon.”

Sweden, speaking on behalf of the EU, informed participants that they do not presently have a preferred option, apart from NDCs being “communicated five years ahead of the start of its implementation” (which is perfectly compatible with the GAC), and that they are “very interested in hearing Parties’ views” at the Dialogue.

Belize reminded the audience that the different options on the table may be preferred for different reasons (preference for raising ambition every five years, or for having longer, ten-year implementation periods), but concluded that “it may be time that we start to meet each other in the middle, and try to find an option that gives everyone what they’re looking for.”

b) The Mandate issue, and how the GAC can resolve the differences.

None of the interventions explicitly rejected the GAC idea, but one issue did divide opinion, namely whether the mandate for the CTF negotiations is to find a single time frame common to all; or whether it allows for multiple time frames (common to some) to be applied as they are at present.

China, on behalf of the Like-Minded Developing Countries (LMDCs), supported by Saudi Arabia, on behalf of the Arab Group, endorsed the former interpretation, while Belize, for example, said the Alliance of Small Island States (AOSIS) believes “there should be a common time frame for all Parties going forward”, and suggested removing the ‘s’ and start referring to ‘a common time frame’.

As a matter of fact, we need to do neither to accommodate all sides. The LMDC proposal, as stated by China, is that “in 2025, the 2035 target and also the 2040 target are all allowed as target year to be communicated.” China also stressed that the LMDCs support “a very inclusive arrangement,” instead of “closing the door for 10 years as one of the options”.

As emphasised at the very end of the OCP presentation, the proposed GAC language (Box 1) does not prohibit anyone from communicating a 2040 NDC in 2025. All they need to do is to also communicate a 2035 one. It is in this manner that the GAC proposal can, as noted by Switzerland, “accommodate both the preference for a five-year and the preference for a ten-year NDC, while preserving the ratcheting up mechanism, which is at the heart of the Paris Agreement, and is really crucial if we want to safeguard ambition.”

c) Decision in Glasgow

SBI Chair Marianne Karlsen said in her opening remarks that is her “intention and profound hope” that the informal exchanges during the Climate Dialogue will add value to Parties’ continued deliberations so that when formal negotiations are resumed at the next SBI session, Parties “are well prepared to navigate this to a landing at COP 26.”

 “Resolving this outstanding issue as soon as possible would help to unleash the full potential of the Paris Agreement,” concurred Huw Davies, on behalf of the COP 26 Presidency, in his closing remarks. “We’re keen to support Parties and Marianne the SBI Chair however we can come to an agreement on this issue by COP 26, and we’ll continue to work closely with the SBI Chair over the coming months.”

While not all participants addressed this issue in their interventions, of the four who did raise it, three were clearly for, and the fourth one consistent with having a CTF decision as part of the key Glasgow outcome package (see Box 2).


[1] Note that Article 4.9 requires Parties to communicate an NDC every five years, and equally requires the preparation of the NDCs to be informed by the GST.

[2] K. Kumarsingh, “Climate ambition still hangs in the balance”, ecbi BRIEF, November 2020.

[3] B. Müller and K. Kumarsingh, “The risks of not adopting a Paris Agreement Ambition Cycle at COP 26 in Glasgow” OCP Blog, 31 August 2020. K. Kumarsingh, “Climate ambition still hangs in the balance”, ecbi BRIEF, November 2020.

[4] “2. Requests all Parties to communicate by 2025 a nationally determined contribution with a starting point of 1 January 2031 and a time frame up to 2035, and to do so every five years thereafter.”

[5] The “period of implementation should be five years, and successive NDCs should be communicated five years in advance of the beginning of the period of applicability”

The risks of not adopting a Paris Agreement Ambition Cycle at COP 26 in Glasgow

by Benito Müller and Kishan Kumarsingh*

Heraclitus of Ephesus (Ἡράκλειτος, Herakleitos; c. 535 BC – 475 BC

* The authors would like to express their gratitude for fee-back and contributions to Aglaja Espelage, Janine Felson, Geert Fremout, and Axel Michaelowa.

I. Summary

‘Ambition’, or rather the lack of it, currently headlines most discussions on the Paris Agreement. The term refers to how much countries are willing and able to do to combat climate change and its adverse impacts through the pledges in their Nationally Determined Contributions (NDCs).

According to Article 4.9 of the Paris Agreement, all Parties must communicate an NDC every five years starting in 2020. Each successive NDC has to “represent a progression beyond the Party’s then current nationally determined contribution and reflect its highest possible ambition”.[Art. 4.3]

While the ambition of an NDC is nationally determined, it can be internationally enabled or stifled. The importance of the latter should not be underestimated. The provision of finance, technology, and capacity is an important enabling factor, but countries will also peg their level of ambition on how much other countries (their peers) are willing to do. All countries have to do their fair and equitable share, as agreed in Article 4.3, reflecting “common but differentiated responsibilities and respective capabilities, in the light of different national circumstances”.

The vast majority of the initial NDCs (over 80%) have a time frame up to 2030.[1] For them, paragraph 24 of Decision 1/CP.21 applies, requesting the countries in question: “to communicate or update by 2020 [these initial NDCs] and to do so every five years thereafter”. The problem is that this poses a number of significant risks.

Locking in low ambition

For one, there is the risk of locking in low ambition, for national and international reasons:

  • At the national level, planning for the longer-term (more than 10 years) as required under paragraph 24, introduces greater uncertainty – and therefore Parties are likely to opt for risk-averse conservative (low) ambition.
  • At the international level, there is no timetable for Parties to consider enhancing previously communicated ambition: everyone is waiting for everyone else, and there is no deadline for (informal) consultations to ensure a just and equitable distribution of ambition, with the effect that the initial risk-averse ambition remains unchanged.

Thwarting Global Stocktakes and Replenishments of Climate Funds

Under paragraph 24, there is a risk that every ten years, there is no information whatsoever on what Parties intend to do next. This not only introduces uncertainty for domestic stakeholders and hampers advance planning, but also thwarts:

  • the ex ante component of every second Global Stocktake, and by extension the ability to assess whether the global community is on target to achieve the 2°C/1.5°C trajectory; and
  • the ability to take into account the financial needs of developing countries as expressed in (‘conditional’) NDCs in the course of the replenishments of the multilateral climate funds. This may disadvantage developing countries in financing their NDCs.

Additional political risks

The further away a target, the greater the temptation to postpone action, with the intention of compensating later in the implementation period. This is a high-risk strategy.

Also, while longer-term targets can be updated in the mid-term, updating a previously communicated ambition may not generate the same public and political attention than the setting of a new target.

The Ambition Cycle: a simple and elegant remedy

These currently prevailing risks to equitable ambition under the Paris Agreement can be mitigated through two simple process requests, for Parties:

  • to communicate by 2025 their next NDC, ending in 2035 (‘with a time frame up to 2035’), and
  • in 2025 , to consider enhancing (‘updating’) the ambition of their initial 2030 NDC; and to repeat these two steps ceteris paribus every five years thereafter.

This ‘Ambition Cycle’ [2] will:

  • shorten the horizon of projections necessary to formulate NDCs;
  • provide for a five-year assessment phase;
  • create an ambition enhancement timetable that provides space for Parties to update their previously communicated ambitions in a fair and equitable manner, reflecting everyone’s highest possible ambition as referred to in Article 4.3;
  • enhance confidence in, and facilitate predictability for financing and means of implementation by ensuring that the periodic needs determination reports of the Standing Committee on Finance  and the replenishments of the multilateral climate funds can be informed by, and take into consideration, the needs of developing countries as reflected in their NDCs;
  • increase support for formulating NDCs by providing an NDC time frame common to all, and facilitate planning on how market mechanisms can be used to raise ambition and avoid double counting under Article 6; and
  • reduce the temptation to postpone action.

It would thus remedy the shortcomings of the 10-year time frame without impeding its advantages. At the same time, it is compatible with the ‘5-year’ and the ‘5+5-year’ options tabled by Parties in the common time frame negotiations. The proposed Ambition Cycle can unite all the options on the table in a way that retains all their advantages, while avoiding the significant risks they pose on their own.

II. The Prevailing Majority Set-up

As mentioned above, paragraph 24 requests those Parties whose intended nationally determined contribution … contains a time frame up to 2030 to communicate or update by 2020 these contributions and to do so every five years thereafter. The problem is that  it does not actually determine what exactly is to be done every five years after 2020. ‘Plan A’ and ‘Plan B’  below describe what in our opinion are the most plausible implementations of paragraph 24.

Plan A. ‘Update-first’ (2025)

  • [0] : In 2020, the 2030 iNDCs are communicated or individually updated (para. 24)
  • [1] : In 2025 the first (2030) NDCs are individually updated (‘update-first’).
  • [2] : In 2030, the second round of NDCs with time frames up to 2040 are communicated.
  • [3]: In 2035, the 2040 NDCs are individually updated; etc.

Key Issues/Risks

Locking in of low ambition due to a lack of an updating time table

It has been said that the decision requiring Parties to submit their NDCs “at least 9 to 12 months in advance of the relevant session of the [CMA] with a view to facilitating the clarity, transparency and understanding of these contributions”[para. 25] was not only to give the Secretariat time to produce a synthesis report, but also to enable Parties, in light of this synthesis report, to update these NDCs before they communicate them at the ‘relevant’ CMA session.

While that failed to take into account that Parties would find it difficult to carry out an updating in such a limited time frame, not only procedurally but also for fear of being accused to have done the original determination in bad faith, it is correct that the highest possible ambition requires not only national but also international consultation.

The level of the ‘highest possible ambition’ referred to in Art. 4.3 [4] depends not only on national circumstances but also on the wider international picture: If I do not know what my competitors are going to offer, and I am worried that I am going to be accused of (unfairly) losing competitive advantage with my offer, then the natural thing to do is to assume no-one else offers anything and calibrate my offer accordingly low. 

Indeed, fair and equitable distributions of ambition can only be achieved through consultations, formal or informal, where everyone involved knows in advance what the others intend to do, so as to arrive at an outcome with a mutual level of confidence that each country is indeed doing its fair share with its highest level of ambition.

Plan A  does provide the ‘space’ to have these consultations, at least when it comes to the 2025 and 2035 updating: the ambition levels of the NDCs in question (2030 and 2040) will have been known for (at least) 5 years. However, what is missing is a clear signal from the process that the time has come to consider an update. Updating, if it happens, is done on an ‘individual’, that is to say, non-coordinated level. But there is a danger that in the absence of a synchronized updating cycle (time table) no significant updating will take place (as may well prove to be the case in Glasgow),  as no-one wants to stick out their neck first.

Decadal cliff-edges

The main drawback of starting the para 24 cycle in 2025 with just an update of the 2030 NDC, however, is that until the next NDC is communicated (which has to be done in Spring 2030 [5]), it is not clear what exactly the target post 2030 will be, and given the Plan A communication cycle, this sort of ignorance ‘cliff-edge’ will happen at the end of each decade.

a. Domestic considerations

Domestic stakeholders need to have a degree of certainty of what will be asked of them at least for the short term, i.e. the next few years. Being potentially in a position of not knowing for sure what will be demanded (other than that it will be more) 6 months before the demands are meant to kick in, should rightly be unacceptable.

b. Global Stocktake (GST)

Additionally, tracking the progress of achieving the PA at GSTs  through an assessment of NDCs and their progress would involve Parties submitting Information to facilitate Clarity, Transparency and Understanding (ICTU) of NDCs. Such information as agreed (Annex I of decision 4/CMA.1 ) requires inclusion of a “time frame and/or period for implementation, including start and end date, consistent with any further relevant decision adopted by the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement (CMA).”  Although applicable to second and subsequent NDCs, Parties are strongly encouraged to include the agreed information when updating their NDCs in 2020.

However, there is no ex-ante information available for the GSTs prior to a cliff-edge (i.e. the 2028 and 2035 GST)  This is  likely to result in locked-in ambition particularly as the ICTU also anticipates information on the planning processes involved in arriving at the NDC. It is unlikely that if a Party, in the absence of an agreed common timeframe, undertakes  such planning processes and submits an NDC, that it will revisit the domestic NDC planning process (or it is likely to resist doing so) to revise its NDC merely to comply with a subsequently agreed timeframe. Therefore, to avoid any additional burdens of having to possibly reconfigure institutional and planning processes to facilitate ICTU and NDC formulation in the future, it would be advantageous to agree on an ambition cycle prior to the second NDC, that can be informed by the GSTs.

Additionally, the absence of a synchronised or agreed common timeframe may bring into question the value of the global stocktake if there is no information on which to base ex ante or ex post actions and therefore whether the Paris Agreement trajectory is on track. An agreed common timeframe that can be synchronised with the GST is therefore the most elegant solution to maximising the intended value of the GSTs.

c. Implications for replenishments of the multilateral climate funds

During the four-yearly replenishments, the multilateral climate funds establish their strategic programming for the subsequent four-year funding period. It is key that these priorities take into account the priorities of developing country NDCs, not least because most of them contain components that are ‘conditional’ on foreign funding. However, under Plan A, this will not be possible.

For example, the next replenishments of the Green Climate Fund, the premier multilateral climate change fund, will take place in 2023, 2027, 2031, 2035, etc. This means that half the GCF replenishments (2027, 2035) would happen under cliff-edge conditions, with insufficient if any information on NDCs for the relevant funding period. As a result, financing for NDC implementation is likely to be impacted negatively.

Plan B. ‘Communicate-first’ (2025)

  • [0] : In 2020, the 2030 iNDCs are communicated or individually updated (para. 24).
  • [1] : In 2025, the second round of NDCs with time frame up to 2040 are communicated (‘communicate-first’), and there is the opportunity for an individual update of the first round of (2030) NDCs.
  • [2] : In 2030, the 2040 NDCs are individually updated.
  • [3] : In 2035, the third NDCs with time frame up to 2050 are communicated, and there is the opportunity for an individual update of the 2040 NDCs; etc.

Key issues/risks

Plan B manages to avoid one key disadvantage of Plan A, namely the cliff-edge scenarios: there are at any one time NDCs communicated with a time frame 10 to 15 years in the future. However, in addition to the risk of locking in of low ambition due to a lack of an updating timetable already highlighted in the context of Plan A, Plan B has some additional issues not present in Plan A. 

Locking-in of low ambition due to a lack of confidence in longer-term projections

For one, not many countries, if any, have the wherewithall to make projections with a fifteen-year time horizon with sufficient confidence for them to be as ambitious as possible. Accordingly, they will reasonably be cautious in the original determination of the ambition level of their NDCs with accounting year more than 15 years in the future.

This risk could be mitigated by the fact that there are two possible points for updating — at the beginning of the NDC term [2] and mid-term [2] — but the former still involves a projection horizon of more than 10 years, which may still lead to conservative updates.

The risk of a false sense of non-urgency

Another problem, albeing related to the issues discussed above, is the fact that long time-frames are likely to lead to the misconception that there is sufficient time later to make up for inaction now: “we can overshoot now and compensate later” 

This can have disastrous consequences, particularly in the context referred to above (1.b) when, as in 2035, which is the first time we will have meaningful data after 2020 to update the next NDC ending in 2040. If we have succumbed to a lack of  urgency due to the lack of mid-term data, then there is a significant risk that we will not be able to compensate our early lack of ambitious action in the remaining 5 years.

III. The Glasgow Ambition Cycle

These currently prevailing risks to ambition under the Paris Agreement can be mitigated by adopting  a couple of simple process requests, collectively making up the ‘Glasgow Ambition Cycle’, namely that Parties:

(i) to communicate by 2025 their next NDC, ending in 2035 (‘with a time frame up to 2035’), and
(ii) in 2025 , to consider enhancing (‘updating’) the ambition of their initial 2030 NDC; and to repeat these two steps ceteris paribus every five years thereafter.

* The dotted blue line segments indicate that the NDCs in question could be communicated up to 5 years before the relevant CMA. For example, the 2035 NDC could be communicated any time between 2021 and 2025. However, communicating after 2028 has the advantage of being able to take into account the 2028 GST.
  • [0] : In 2020, the 2030 iNDCs are communicated or individually updated (para. 24).
  • [1] : By 2025, a second round of NDCs with time frame up to 2035 is communicated, and there is a request to update 2030 NDCs simultaneously in 2025 .
  • [2] : By 2030, a third round of NDCs with time frame up to 2040 is communicated, and there is a request to update 2035 NDCs simultaneously in 2030.
  • [3] : By 2035, a fourth round of NDCs with time frame up to 2045 is communicated, and there is a request to update 2040 NDCs simultaneously in 2035; etc.

Combining the advantages of Plan A and Plan B while avoiding their shortcomings

In this way, the proposed Ambition Cycle combines the advantages of Plan A and Plan B while avoiding their shortcomings, and provides a number of additional workable elements to the Paris Ambition Mechanism:

  • It ensures that after 2030, all Parties have NDCs that end simultaneously, namely in 2035, 2040, 2045, and so forth, which does help in aggregating and synthesizing outcomes.
  • It ensures that from 2025, all Parties will always have two NDCs communicated, providing sort-term certainty for the next five years, and a longer-term vision (for the subsequent five years).
  • It does not require long-term (see ‘Key Issues/Risks Plan A) projections for the determination of NDC (while not precluding them either), and any final updating of an NDC involves only short-term (5 year projections).
  • It provides the enabling framework through a synchronized ambition updating time table for Parties to revisit together the ambition of NDCs communicated five years earlier in light of changing circumstances to be able to enhance their ambition in an equitable and fair manner.

Other key advantages

Compatibility and inclusiveness

Although our detailed discussion has been focussed on the situation addressed in paragraph 24, often referred to as the ‘10-year Option’ and how the proposed Ambition Cycle can be used to resolve the main problems inherent in that Option, it is important to highlight that the proposed Glasgow Ambition Cycle is perfectly compatible with the situation addressed in paragraph 23, that is to say with the ‘5-year’ and ‘5+5-year’ Options.

Creating space for equity

Some may be worried that by introducing synchronised updating of NDC ambition, particularly following GSTs that are highly likely to reveal significant global ambition gaps, will lead to countries being pressured into taking on disproportionate ambition increases. It is indeed crucial, that the envisaged periodic updates be seen to be fair, if they are to happen at all, and a key advantage of the Ambition Cycle is that it provides the space for this to happen. Take the situation illustrated in Figure 4.

[1] The 2035 NDCs are communicated by 2025
[2] In 2028, there is the Global Stocktake, informing the NDCs communicated in 2030 (Art. 4.9)
[3] In 2030, Parties are scheduled to update their 2035 NDC, if possible.

In order to facilitate a fair distribution of (updated) ambitions, Parties need prior information on what they are all proposing to do, as well as time to consider the fairness of these proposals

Under the Ambition Cycle, everyone will know in 2026 what Parties have communicated they will contribute by 2035. This leaves 5 years for them to arrive at a fair sharing of 2035 updates in 2030, in light of the information provided by the 2028 GST and the potential change in national circumstances since 2025. Without this ‘equity space’ there is a very little chance of an equitable ambition sharing in the 2030 communications.

Facilitating the predictability of financial needs

Figure 5 illustrates how the Ambition Cycle incorporates the replenishments cycles of the Global Environment Facility (GEF) and the Green Climate Fund (GCF), with the year of the replenishment and the relevant 4-year funding periods, as well as the end year of the relevant NDCs, either initially communicated or updated, following the Ambition Cycle. The figure shows that information on financial needs provided in the NDCs covers all replenishment periods and is never more than 5 years old.  Under the Ambition Cycle, financing needs for countries with conditional NDCs can therefore properly be taken into account in the strategic programming of the GCF/GEF.

At COP 24 in Katowice, the Standing Committee on Finance was requested “to prepare every four years a report on the determination of the needs of developing country Parties related to implementing the Convention and the Paris Agreement, for consideration by [COP 26] (November 2020)”.[Decision 4/CP.24, paragraph 13] While it is not quite clear how the postponement of COP 26 to November 2021 will affect the start of these reports, their periodicity is essentially that of the GCF funding periods as depicted in Figure 5, which means that the above argument applies ceteris paribus to these reports.

Article 6

It will not be surprising that the issue discussed here has a bearing on the Article 6 negotiations. In that context, we would like to highlight that the Ambition Cycle addresses the following two Art. 6 issues:

  • Parties report every two years on progress towards implementing their NDCs as well as on how their emission balances were adjusted for ITMOs transferred/used. However, only after the end of an NDC timeframe is it possible to assess whether the NDC was achieved, including with respect to Art. 6 engagement. From an Art. 6 perspective, it is important that NDC timeframes are the same for buyers and sellers in order to be able to avoid uncertainty as to whether double counting is actually avoided.
  • It is important for host-countries to understand with reasonable certainty where they stands with respect to (i) generating Art. 6 credits and transferring out ITMOs, in particular to avoid transferring the ‘low-hanging fruit’ mitigation outcomes, as well as (ii) financial needs for conditional activities. Regular, five-yearly updates of NDCs can provide the required information.

[1] Source: Climate Watch. 2018. World Resources Institute. Only ten countries have a time frame up to 2025: Ecuador, Micronesia, Gabon, Palau, Saint Vincent and the Grenadines, Samoa, Timor-Leste, Tuvalu, United States of America, and Uruguay.

[2] See also ‘Complete the Ambition Mechanism’.

[3] By ‘individual updating’ we mean updating in the absence of a common synchronised updating time table.

[4] Art. 4.3. Each Party’s successive nationally determined contribution will represent a progression beyond the Party’s then current nationally determined contribution and reflect its highest possible ambition, reflecting its common but differentiated responsibilities and respective capabilities, in the light of different national circumstances.

[5] 25. Decides that Parties shall submit to the secretariat their nationally determined contributions referred to in Article 4 of the Agreement at least 9 to 12 months in advance of the relevant session of the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement with a view to facilitating the clarity, transparency and understanding of these contributions, including through a synthesis report prepared by the secretariat;[Decision 1/CP.21].


International Bulk Purchasing for Technology Transfer

UJALA marketing poster, by courtesy of EESL

Understanding Art. 6.8 ‘non-market collaboration’

Anyone following the UN climate negotiations in recent years will be aware of the problem that is Article 6, one of the two remaining issues of operationalization of the Paris Agreement (PA) that have so far eluded a solution.[i] The Article deals with ‘voluntary cooperation’ between Parties of the PA in implementing their targets (‘Nationally Determined Contributions’ NDCs). While Art. 6.2 considers the international transfer of mitigation outcomes, and Art. 6.4 establishes a mechanism whereby emission reductions generated in a ‘host’ Party can be transferred for use by another Party to fulfil its NDC, Art. 6.8 introduces the general idea of ‘non-market’ collaborative approaches to assist Parties in implementing their NDCs. All of these require a considerable amount of clarification to be operationalized, a process which it is hoped will conclude in COP.26, whenever that will be.

Conceptually, Art. 6.8 was from the outset a bit of a cuckoo’s egg: it was originally not part of the negotiations that led to Art. 6 and was added mainly due to the insistence of a few Parties hostile to markets on anti-capitalist grounds.

Moreover, it was from the beginning by far the least well understood, and indeed talked about, of the collaborative approaches introduced in Art. 6.

For example, in the context of the events held annually under the auspices of the ecbi Fellowship Programme, the topic of non-market approaches made its first appearance only in 2018. As documented in the 2018 Oxford Seminar Report it was given a separate slot for discussion, kicked off with a presentation by a AOSIS lead negotiator. Both the presenter and the European respondent admitted that ‘non-market approaches’ are not understood well. Indeed, during the Fellows Colloquium that preceded the Seminar, no one was able to give a concrete example of such approaches. All that was clear is that they were not meant to involve the sale of emission reductions (‘mitigation outcomes’).

At the time, I had just come across the Indian UJALA programme which, as mentioned in the Report, was “designed to lower the price of LED lighting and make it desirable for consumers”. Having published a blog post on the need to harness social marketing techniques,[ii] which has since been taken up here in Oxford by the ‘COOL4climate’ initiative, I stressed that aspect of the programme. However, over the next twelve months, I realized that bulk purchasing, as practised under UJALA (see below) could be a type of non-market collaboration as envisaged under Art. 6.8.[iii]

UJALA – Affordable LEDs for All

Unat Jyoti[iv] by Affordable LEDs for All (UJALA) is a government LED lightbulb distribution scheme driving the transition to low-carbon LED lighting in India. Since its launch in 2015, UJALA has emerged as the world’s largest unsubsidized LED bulb programme for households. To date, the National UJALA Dashboard lists the fact that more than 360 million LED bulbs have been purchased by Indian households, with estimated savings of more than 47 TWh. These savings are equivalent to the annual electricity consumption of Portugal, and represent 38 Mt CO2 annually, making it a striking story of developing country technology transition.

http://ujala.gov.in/, accessed 13 May 2020

In January 2014, Energy Efficiency Services Ltd. (EESL), the UJALA operator, floated the first open tender for the procurement of 750,000 LED bulbs for the Indian State of Puducherry. The procurement was done through reverse auctioning where, in its simplest form, vendors offer to sell the quantity sought at a certain unit price, and the buyer purchases from the vendor bidding the lowest price, which is known as the price ‘discovered’ by the auction. The price thus discovered in the initial bulk procurement was INR 310 (USD 4.08) per bulb, just over half of the open market price of INR 595.

The expansion of the UJALA scheme across India meant that the procurement quantity was increased over time (see Figure 1) with the prices discovered decreasing continually, to INR 39.9 in August 2019, (87% lower than in January 2014). It is noteworthy that the market price also declined by 82% to INR110 over that period, mirroring in part a decline in the average global retail price of about 70%.[v]

Data courtesy of EESL.

The data reflected in Figure 1 imply a total procurement cost incurred by EESL between January 2014 and August 2019 of just under USD 260 million (see Table 1). This is not an insignificant amount to invest, which is probably why EESL arranged loans and guarantees from a number of multilateral donors, including most recently, an agreement with the World Bank for 2019-22 (USD 220m loan, USD 80m guarantee).

* USD 1 = INR 76 ; ** remainder @ USD 0.53.

Given the figure for the number of bulbs distributed to date (see above), clearly all the bulbs procured by August 19 have been sold. Unfortunately, the Figure 1 data cannot be used to estimate the total EESL sales revenue without some additional assumptions, in particular regarding how many bulbs were sold at which of the listed EESL sales prices. Table 1 reflects scenarios in which a certain percentage of the bulbs acquired at an auction is sold on the spot at the sales price listed on that date, and the rest at the lowest (August 19) price of USD 0.53. It shows a considerable range of outcomes from 46% profit if all had been sold on the spot, to a 30% loss if all had been sold at the August 19 price, with a break-even point of 40% spot sales. Given that the prices did not fluctuate significantly after December 16, it can safely be assumed that the sale of the bulbs procured after that date yielded a healthy surplus of an estimated USD 65m (78%).

It is worth mentioning that annual sales of LED bulbs grew by more than 130 times to over 650 million bulbs between 2014 and 2018. Initially LED bulbs were mostly displacing CFL bulbs (Figure 2[vi]), but since 2018 their sales have overtaken those of incandescent bulbs in absolute terms. The question of how the UJALA bulk procurement, the global and domestic market prices, and the growth in annual sales are related is not is not trivial, but is beyond the scope of this post. What is clear is that there has been a technology transition in the Indian domestic lighting sector.[vii]

Bulk Purchasing as Art. 6.8 TT collaboration

Technology transfer, particularly as envisaged under the Paris Agreement, is, as The Four Aces song goes, “a many splendored thing!” The term ‘technology’ itself is, according to the ecbi Pocket Guide to Technology, used to encompass what is referred to as ‘hardware’ (physical tools), ‘software’ (knowledge and skills required to use the technology), and ‘orgware’ (institutions, policies, rules, and legislation). According to the ecbi Guide: “Countries rely on different modes of technology transfer, depending on their stage of industrial development. UNCTAD identifies three stages of industrial development in the context of technology transfer:

  • Initiation, when technologies are acquired from other countries through the acquisition of machinery and equipment and reverse engineering. The situation in least developed countries (LDCs) in particular, with many other developing countries, corresponds with this phase.
  • Internalisation, when local firms can learn through imitation under a flexible Intellectual Property Rights (IPRs) regime. (IPRs refer to the legal protection of inventions or creations used in commerce through patents, copyright, and trademarks, which enable people or companies to earn financial benefit from what they invent or create).
  • Generation, when local firms carry out their own R&D and generate IPRs.” [page 4]

It thus stands to reason that bulk procurement, as international non-market collaboration, would be specially suited to the technology transfer needs of LDCs, particularly if combined with the sort of financial support (loans and guarantees) given to the UJALA programme by multilateral funds and donor agencies. But why bring in Art. 6.8?

I have been told by a friend of mine that one of the reasons why non-market approaches to international collaboration have been somewhat marginalized is that: “industrialized countries wanting to engage in markets do not like it and see it as an attempt to set up yet another climate finance mechanism, to which they would have to contribute.” This attitude could explain the prevailing lack of concrete examples. I hope that the idea mooted here demonstrates, for one, that it is possible to engage in economically motivated international collaborations that do not involve emission trading or simple monetary transfers.

Having said this, such collaborations do not rely on Art. 6.8, but the work programme that was established in Paris with the objective to consider “how to facilitate the implementation and coordination of non-market approaches” could be used to identify how such bulk procurements could be most effectively applied in the process of transferring technologies to countries like LDCs that are in the technology transfer ‘initiation stage’.

Acknowledgments

The author is grateful to Mr Saurabh Kumar and Mr Ashish Malviya from EESL for the permission to use the UJALA marketing poster and for the data graphically represented in Figure 2, and to Axel Michaelowa and Radhika Khosla for the feed-back provided.


[i] The other being, of course, Common Time Frames, as dealt with in an earlier post: A “Glasgow Ambition Cycle”?.

[ii]We need Geo-engineering . . . of Consumer Aspirations!

[iii] “On Article 6.8, Müller said … smaller and poorer countries could use it to ‘bulk purchase’ energy efficient technology through a joint call for tender, like India had bulk purchased 700 million energy efficient LED bulbs to drive down their price under the Ujala programme.”[2019 Oxford Seminar]

[iv] ‘Progressive light’.

[v] See, for example, ‘Global LED Lighting Products Price Trend’, LEDinside.org, 16 August 2018.

[vi] Data Source: Kamat, Khosla, and Narayanamurtia (2020).

[vii] In total, 1.5 billion bulbs were sold in that period, just over a fifth of which through the UJALA programme.



Article 6.8 of the Paris Agreement

A Glasgow Ambition Cycle

Johnson Banks, with COP 26 logo.

On 1 April, the UNFCCC Bureau decided to postpone 2020 sessions in light of the corona pandemic. While this may have been inevitable, it must not be used as an excuse to also postpone enhancing the ambition of the global response to climate change under the Paris Agreement. We cannot afford to postpone ratcheting up the ambition of targets (‘Nationally Determined Contributions’ or ‘NDCs’) originally announced five years ago!*

Indeed we need to complete the ‘Paris Ambition Mechanism’ by adding the final component to the current 5-yearly communication and stocktake cycles: an ambition (replenishment) cycle! **

Introducing the missing Ambition Cycle

This aim of this post is to summarise a proposal for this missing cycle, based on work which has been going on since 2014 (see ‘Publications’ below for more info on the origins and evolution of the idea). Following the language used in paragraphs 23 and 24 of the implementing Decision (1/CP.21) of the Paris Agreement (see ‘COP 21 Text’ below) to operationalise the communication cycle, the proposed Ambition Cycle can be introduced with a very simple procedural decision to:

  1. request Parties to communicate by 2025 a nationally determined contribution with a time frame up to 2035, and to do so every five years thereafter, in line with Art. 4.9 [five-yearly communications];
  2. also request Parties to consider in 2025 updating any nationally determined contributions communicated before, in line with Art. 2.2 [Equity], Art. 4.3 [Progression], and Art. 4.9 [informed by the outcomes of the2023 global stocktake] of the Paris Agreement, and to do so every five years thereafter.

Exegesis

A. Choice of Language

Form an exegetical point of view, the first and most important point to be made is that the proposed decision language was chosen not just because of the Paris precedent (paras 23 and 24, see COP 21 Text below) but because it allows avoiding having to go into metaphysical arguments as to the nature of ‘time frames’ which have unfortunately and unnecessarily taken up a lot of time in the past negotiations on the topic.

A lot of time has been spent in the past couple of years to discuss the merits of different durations of a common time frame and whether it should be interpreted as, say, a ‘target period’, or a ‘period of implementation.’ Indeed, it sometimes feels as if there are now different sects (a ‘5-year’ sect, a ’10-year’ sect, and a ‘5+5-year’ ecumenical lot), who seem to be getting more and more entrenched in their creeds. Fortunately, there is no need to enter into such metaphysical debates in order to adopt a common time frame. All that is necessary is the realisation that the target period and period of implementation of an NDC have a common end-point X, referred in the Paris language as the NDC “containing a time frame up to X”. Given this it is possible to define a common time frame without any reference to durations, in the manner proposed above.

B. The Paragraphs

Para. 1 launches the 5+5 cycle. Note that the request is to communicate by 2025 (not in 2025), which leaves open the possibility for Parties to communicate the 2035 15 years before the end of the time frame, as some seem to favour.

Para. 2 introduces the ambition replenishment cycle, that is the simultaneous regular (5-yearly) assessment by Parties of the ambition of NDCs that were originally announced (‘contributed’) 5 years earlier. A lot can happen in 5-years, which is why Parties will not lose face if they decide that, in light of such changed national circumstances, they can do better than what 5 years prior was their highest possible ambition (Art. 4.3). However, this will not happen without a common timetable as to when such assessment are to happen: no-one will increase their ambition ‘spontaneously’ on their own, not least for fear of being accused of imposing an unfair burden on domestic stakeholders.

In practice the two paragraphs mean that Parties:  

  • in 2020: (§23) communicate a (new) 2030 NDC (i.e. with a time frame up to 2030), or (§24) consider updating the existing 2030 NDC;
  • by 2025: communicate a 2035 NDC, in 2025: consider updating 2030 NDC;
  • by 2030: communicate a 2040 NDC, in 2030: consider updating 2035 NDC;
  • by 2035: communicate a 2045 NDC, in 2035: consider updating 2040 NDC;
  • etc. etc.
Source: COP26, UK House of Commons Library Briefing Paper, April 2020.

* See also Francesco Bassetti, “Coronavirus Postpones Climate Summits, But Climate Action Cannot be Delayed“.

** The only way to avoid the situation castigated in a recent Climate Home News blog post (Is the Paris Agreement failing its first test?) becoming the default is by adopting such an ambition updating cycle.


COP 21 Text

Relevant Articles and Paragraphs from the Paris Agreement and Decision 1/CP.21, respectively.

  • Para. 23. Requests those Parties whose intended nationally determined contribution pursuant to decision 1/CP.20 contains a time frame up to 2025 to communicate by 2020 a new nationally determined contribution and to do so every five years thereafter pursuant to Article 4, paragraph 9, of the Agreement;
  • Para. 24. Also requests those Parties whose intended nationally determined contribution pursuant to decision 1/CP.20 contains a time frame up to 2030 to communicate or update by 2020 these contributions and to do so every five years thereafter pursuant to Article 4, paragraph 9, of the Agreement;
  • Art. 2.2. This Agreement will be implemented to reflect equity and the principle of common but differentiated responsibilities and respective capabilities, in the light of different national circumstances.
  • Art. 4.3. Each Party’s successive nationally determined contribution will represent a progression beyond the Party’s then current nationally determined contribution and reflect its highest possible ambition, reflecting its common but differentiated responsibilities and respective capabilities, in the light of different national circumstances.
  • Art. 4.9. Each Party shall communicate a nationally determined contribution every five years in accordance with decision 1/CP21 and any relevant decisions of the Conference of the Parties serving as the meeting of the Parties to this Agreement and be informed by the outcomes of the global stocktake referred to in Article 14.

Selected Publications

Reverse chronological order.

Here’s looking at EU again! The European Climate Law

European Commission President Ursula von der Leyen and Greta Thunberg (Virginia Mayo/AP)

On 4 March 2020, the European Commission presented “a proposal to enshrine in legislation the EU’s political commitment to be climate neutral by 2050, to protect the planet and our people. The European Climate Law sets the 2050 target and the direction of travel for all EU policy, and gives predictability for public authorities, businesses and citizens.”[1]

While criticized by climate activists like Greta, who sat next to Commission President von der Leyen, for not being ambitious enough, both with respect to the near term (enhancing the ambition of the 2030 target) and the 2050 net-zero target (too late), the law proposes a process of how to reach the net-zero target that is worth highlighting. According to the press release:

  • [a] The Commission proposes the setting of a 2030-2050 EU-wide trajectory for greenhouse gas emission reductions, to measure progress and give predictability to public authorities, businesses and citizens.
  • [b] By September 2023, and every five years thereafter, the Commission will assess the consistency of EU and national measures with the climate-neutrality objective and the 2030-2050 trajectory.
  • [c.1] The Commission will be empowered to issue recommendations to Member States whose actions are inconsistent with the climate-neutrality objective, and Member States will be obliged to take due account of these recommendations or to explain their reasoning if they fail to do so.
  • [c.2] The Commission can also review the adequacy of the trajectory and the Union wide measures

This illustrates very nicely how a long-term strategy (net-zero in 2050) can be linked to periodic ambition adequacy reviews to ensure not only that the long-term goal is achieved, but (pace Greta) to allow for a rule governed review of the long term target [c.2]

It is also clear that the 5-yearly assessments are meant to coincide with the Global Stocktake cycle of the Paris Agreement, and it seems reasonable to assume that the trajectory [b] is going to be aligned with the EU’s post-2030 NDCs (Nationally Determined Contributions, i.e. targets). What is not so clear is what exactly is going to be assessed in these 5-yearly reviews. And while it seems again reasonable to assume that the 2023 assessment is going to be about achieving the initial (2030) NDC, nothing is said about objects of the subsequent assessments in 2028, 2032 etc.

It stands to reason that the trajectory [a] is going to be given as a sequence of EU-wide targets, most likely as multi-year emission budgets of equal duration, which essentially means 5- or 10-year budgets. Figure 1 illustrates the two options.[2]

Figure 1. Options for the Assessment Trajectory

Plan A

The initial EU has a ten-year target period from 2021 to 2030. Under Plan A, this would be maintained in subsequent NDCs, with the effect that there would be two more NDCs until 2050: the second one with a target period from 2031 to 2040, and the third one from 2041 to 2050. Given the 5-yearly rhythm of the assessments, this means that each of them would be assessed twice, once with an implementation period of 12 years, and once with an implementation period of 7 years.

Plan B

This plan introduces four 5-year target periods post-2030. Each assessment follows exactly the same pattern, established under the assessment of the initial 2030 NDC:

  • 2021-23: Assessment of EU and national measures with regards to achieving the 2030 NDC and recommendations in September 2023, with a 7-year implementation period till 2030.
  • 2021-24: Review of the adequacy of the [c.2]-trajectory, with communication of an updated 2030 NDC in 2025, if appropriate.

Which?

Given that steps 1, 3, and 5 of both Plans are identical, there cannot be any institutional/legal reasons why Plan B could not work if Plan A does. However, there is one significant political difference between the two.

There is a good reason for the Commission to propose a trajectory towards net-zero in 2050, and not just a single emission budget for 2030 to 2050. Having intermediate milestone targets prevents the natural temptation to procrastinate action (‘don’t worry we have time, we can make up for current inaction later in the period’). Plan B is clearly superior in combatting procrastination than Plan A, and since we cannot afford to procrastinate, it is superior tout court!

In short, to keep with the spirit of the proposed trajectory [a], the EU must adopt 5-year target periods for its post-2030 NDCs and follow Plan B in the assessments [b] and reviews [c.2] proposed in it new climate law.

Internationally, this would also have the advantage of aligning with an idea of how to synchronise ambition enhancements under the Paris Agreement that is gaining traction. For more on this, see The Dynamic Contribution Cycle: Enhancing Ambition on the Basis of Equity, and also the sisters of this post:


[1] EC Press Release, 4 March 2020.

[2] While there is theoretically time to carry out a 2048 assessment the 2050 (net-zero) target, we can sensibly discard such an assessment as not particularly useful, given that it would only leave two years to implement any [C.1] recommendations.


Leipzig in September: Birth of a new G2?

In March 2017, Amb. Bo Kjellen (Sweden) and I wrote a Strategy Note (“Once more unto the breach, dear friends, once more”), focussing in particular on what would enable China to continue taking a global lead after the demise of the 2014 Xi-Obama ‘G2’ that is widely credited as having paved  the way for the success at Paris.

Our analysis was based on what we considered a fundamental maxim (‘red-line’) of Chinese climate change policy: as concerns issues related to the principle of common but differentiated responsibilities (such as expressed in Art. 3.1 of the UNFCCC: “developed country Parties should take the lead in combating climate change and the adverse effects thereof.”), China considers itself firmly to be a developing country, and will not allow itself to be pushed into situations that could be interpreted otherwise.

This is why we advocated that the EU should take up the role of developed country partner in a new G2 with China, and the hope is that the EU-China climate summit meeting in Leipzig in September could have a similar catalytic effect as the 2014 Beijing meeting between Presidents Xi and Obama. One concrete outcome could be an agreement with respect to enhancing ambition.

The EU has already announced that it will enhance its 2030 ambition in Glasgow. Given China’s CDBR sensitivities, it seems unlikely to me that they will follow suit at the same time. But it seems conceivable that they could agree to consider enhancing in 2025. Indeed, it would seem to be reasonable that this could be done in the context of a general invitation to Parties to do so, such as issued in the proposed ”Glasgow Ambition Cycle” language (see below, Para. 2). Given the highly significant nature of the year 2035 for China, it was pointed out to me by a Chinese colleague that the request (Para. 1) to communicate a 2035 NDC by 2025 should also be, in principle, acceptable to China.

In light of recent developments (see FT Headline below) the EU also seems to be moving towards a position compatible with the DCC, which means that Leipzig could be the locus where China and the EU are demonstrating joint-leadership and decide to complete the Ambition Mechanism of the Paris Agreement by adopting the DCC as their ambition position for Glasgow.

Mehreen Khan in Brussels FEBRUARY 29 2020

The Glasgow Ambition Cycle

Para. 1. Requests Parties to communicate by 2025 a nationally determined contribution with a ten-year time frame up to 2035, and to do so every five years thereafter.

Para. 2. Invites Parties to consider in 2025 (2030) updating their nationally determined contributions with a time frame up to 2030 (2035), in line with Art. 2.2 and Art. 4.3 of the Paris Agreement, and to do so every five years thereafter.

Art. 2.2. This Agreement will be implemented to reflect equity and the principle of common but differentiated responsibilities and respective capabilities, in the light of different national circumstances.

Art. 4.3. Each Party’s successive nationally determined contribution will represent a progression beyond the Party’s then current nationally determined contribution and reflect its highest possible ambition, reflecting its common but differentiated responsibilities and respective capabilities, in the light of different national circumstances.

COP 25: What is missing is global political leadership!

David Robinson, who attended COP 25 in Madrid and numerous prior COPs representing Oxford Climate Policy, has written the following eyewitness blog on what happened.[1] 

David Robinson, Senior Research Fellow, OCP

The widespread view of COP 25 as a failure reflects civil societies’ growing concern with climate change as well as unrealistic expectations about what a COP could achieve. Most insiders to the negotiating process did not expect much and were not surprised by the outcome. And in some respects, there was progress. However important individual COPs may seem, making serious breakthroughs on fighting climate change depends on what happens between those events, in particular on “top down” global political leadership as well as “bottom up” initiatives from individual governments, the private sector, research institutions and civil society.

Why were insiders not surprised? Essentially because real breakthroughs do not happen at a COP if they have not been agreed beforehand by the main players. There is always room for some detailed negotiation and arm-twisting. But major breakthroughs require global leadership and agreement well before the summit takes place. The agreement between President Obama and Chairman Xi prior to the Paris COP, for example, was central to obtaining virtually unanimous support for the Paris Agreement (PA). There was no such leadership or agreement prior to COP25 on the big issues, for instance on ratcheting up mitigation commitments under NDCs (see also Benito Müller’s Madrid blog post), or on delivering the annual $100 billion financial support for developing countries, as promised at the COP in Copenhagen. Indeed, these were not even among the original UNFCCC objectives for COP25, which was billed as a preparation for COP26. On the main official objective of COP25, namely, to agree Article 6 (international carbon trading) of the PA, there was no prior agreement and – unsurprisingly – little expectation of a deal.

So, in what way can COP 25 be characterized as successful?

  • First, the fact that Madrid was able to organize the conference in 5 weeks, after Chile decided it could not proceed due to political unrest, was itself evidence of international commitment and cooperation to address climate change; cancellation or postponement would have been a serious blow.
  • Second, there was some progress in official negotiations. The parties stressed the urgency of enhanced ambition to close the significant gap between the aggregate effect of existing NDCs and what science tells us will be required to keep temperature increases within the limits set by the Paris Agreement. Other hard-won decisions were to include oceans in future negotiations on climate change and to include “loss and damages” in negotiations over finance. Ironically, failure to agree on Article 6 could also be considered a success to the extent that it reflects an unwillingness of most countries to accept a “bad” agreement that would have allowed double-counting of emission reductions and a carry-over of a large volume of stranded emission reduction assets, condemning the new regime to failure. This list of successes is woefully short of what civil society expects, but does constitute progress in a world where key players – the US and Brazil in particular – are led by men determined to undermine the global fight against climate change.
  • Third, the COP witnessed and even inspired action outside the negotiations. The EU announced its commitment to carbon neutrality in 2050. The unofficial “We are still in” US pavilion demonstrated a powerful US commitment to the PA from the Congress, as well as from states, cities, civil society and companies. Large private financial institutions announced new lending policies that shift investment priorities to low carbon activities. Finance Ministers were present for the first time at a COP, a recognition that climate change is now at the centre of policy making throughout the world.

Without a doubt, the most powerful messages came from the young, whose future is endangered by climate change. The march led by Greta Thunberg attracted an estimated 500,000 participants and served to underline the divide between official negotiations and civil society.

What can we expect at COP26 in Glasgow? Negotiators will pick up the pieces left by COP25: finalizing Article 6 and other details of the Paris “rule book”; carrying out a reality check on the Paris ambition schedule; and nailing down how to deliver the annual $100 billion finance goal after 2020. With the UK and the EU having passed legislation to achieve net zero emissions by 2050, I also expect Glasgow to focus on negative emissions, both new technologies for capturing and using CO2, as well as protecting and promoting natural land and ocean CO2 “sinks”. 

However, a truly successful outcome in Glasgow – especially with regard to achieving much greater ambition – will depend on global leadership and agreements reached prior to COP 26. While the Trump Administration is out of the picture, the greatest challenge and opportunity is for other global powers – starting with the EU and China – to forge a strategic collaborative agreement to lead on the implementation of the PA and to convince the rest of the world to follow. For that to happen will require a very broad agreement – possibly in the form of a treaty – on climate change, investment, trade and cooperation.

Many challenges remain, but the wheels are beginning to turn already and will continue to do so, whether or not Trump remains in power.



[1] This note was first published in EEnergy Informer, The International Energy Newsletter in its January 2020 edition.

Enhance Climate Ambition in 2020: Here’s looking at EU, kid!

Rick Blaine (Humphrey Bogart) and Ilsa Lund (Ingrid Bergman) in Casablanca

An American looking at a European, a Swede to boot, for increased climate ambition may seem a bit rich, but actually the owner of Rick’s Café Americain in Casablanca gave his nationality as “drunkard” which, according to  Capitaine Renault, head of the local police,”makes him a citizen of the world”. And there is no doubt: the citizens of the world will be looking to the EU to lead the way on enhancing the ambition of the initial Paris Agreement pledges — the initial ‘Nationally Determined Contributions’ (NDCs) — at the UN Climate Conference (COP26) in Glasgow next December.

‘Updating’ and the reputational risk of ‘high-ambition-washing’

The ambition fight, a defining feature of last year’s UN Climate Change Conference (COP25) in Madrid, was about whether in 2020 countries should enhance the ambition of their initial NDCs. More precisely, it was about whether two paragraphs (§23 and §24, see Appendix 1) in the Paris Outcome mandate the Parties to the Paris Agreement morally, if not legally, to enhance the ambition of their initial NDCs by 2020.

Tensions grew as the Conference reached its final days. Even though the Chilean Presidency had made ‘ambition’ a central pillar of COP25, any references to countries being called upon to ‘enhance’ or ‘update’ their initial NDCs by COP26 were removed from the negotiating text. All that was left was a very general and rather toothless acknowledgement of “the growing urgency of enhancing ambition and responding to the threat of climate change.”[§ 4 Appendix 2]

Reacting to this, the High Ambition Coalition led by the Marshall Islands, with the backing of the European Commission, made it clear that the final COP25 decision text must include a clear call for enhanced ambition in 2020. . “We need more ambition than what is currently on offer at #COP25,” tweeted Frans Timmermans, Executive Vice President for the European Green Deal of the European Commission on 14 December 2019. “We cannot tell the world that we are lowering our ambitions in the fight against climate change.”

In the end, slightly more ambitious wording was added (§§ 5-7, Appendix 2), pointing to the emissions gap between what country pledges currently add up to and what is needed to keep global temperature rise well below 2°C, and urging Parties to consider this gap when implementing §23 and §24 of the Paris Outcome (Appendix 1) .

The EU did play a very progressive role in Madrid. They announced a long-term strategy of net-zero emissions by 2050, with an implementing European Green Deal, mandating the European Commission to present by Summer 2020 “an impact assessed plan to increase the EU’s greenhouse gas emission reductions target for 2030 to at least 50% and towards 55% compared with 1990 levels in a responsible way.”[COM(2019) 640 final]

As regards the COP25 ambition debate, another significant announcement was made in the Conclusions of the European Council meeting of 12 December 2019, during the end-game at COP25, inviting the European Commission “after a thorough impact assessment, to put forward its proposal for an update of the EU’s nationally determined contribution (NDC) for 2030 in good time before COP26.”

So the initial EU NDC is to be updated by 2020, in good time before COP26. This must be welcomed, provided that ‘updating’ is understood as ‘enhancing ambition’. The reason I am highlighting this is that I have been told by a usually reliable source that some in the EU are thinking of interpreting the term as merely updating some information rather than ambition, a scenario that is unfortunately consistent with the changes that were made to the draft conclusions before they were adopted. The draft conclusions (Appendix 3) emphasised that the EU will follow §24 in 2020 “in a manner that represents a progression of ambition beyond the current one and that reflects the EU’s highest possible ambition, taking into account the collective further efforts needed and actions undertaken by all Parties in line with the long term goals of the Paris Agreement“. In the final version, however, this was replaced by the statement that in 2020 the EU will update its NDC “taking into account the need to increase clarity, transparency and understanding of its NDC“.

I sincerely hope this will not happen, and I find it difficult to believe it will, not least given the Green Deal mandate (see above). However, if it did, it would be at a considerable reputational cost for the EU. As a climate leader, such a purely informational update of the initial NDC could rightly be branded as ‘high-ambition-washing’. What is clearly expected in the 2020 update, as acknowledged by Timmermans, is the increase of the initial (2030) ambition!

With the #EUGreenDeal adopted and #COP25 behind us, now we look forward to raising global ambitions at #COP26 in 2020.”[@TimmermansEU, 13:48h, · 15 Dec. 2019]

A Common Time Frame and the EU: ditherer or high-ambition champion?

The ambition battle in Madrid was about whether, five years after they were initially announced, countries should reconsider their NDCs in light of changed circumstances with respect to whether they still reflect the highest possible ambition. As it happens, this question also lies at the heart of another issue that was not resolved in Madrid, namely the need to complete the ‘Paris Ambition Mechanism’ by introducing a ‘Common Time Frame’ (CTF).

This debate has been going on for over five years, and the only outcome thus far has been a decision at COP24 (Katowice 2018) that “Parties shall apply common time frames to their nationally determined contributions to be implemented from 2031 onward.” At COP25, the issue was again kicked down the road without even a decision on a date for a decision. The main difference was the reaction by civil society. Fired up by what was happening (or not) on ambition they took a very dim view of the lack of progress on the CTF issue, as witnessed in the ECO article of 6 December (reproduced below).

Dynamic Ambition Replenishments

To explain the connection between a CTF and global ambition, let me use the proposal for a Dynamic Ambition Replenishment (DAR) Cycle (a.k.a. Dynamic Contribution Cycle) which is seen by many as a potential ‘landing ground’ in this debate. It can be introduced, following the template of §23 and §24 of the Paris Outcome [Appendix 1] with two very simple decisions, namely to:

  • Request Parties to communicate by 2025 a nationally determined contribution with a ten-year time frame up to 2035, and to do so every five years thereafter.
  • Invite Parties to consider in 2030 updating their nationally determined contributions with a time frame up to 2035, in line with Art. 2.2 and Art. 4.3 of the Paris Agreement [Appendix 1], and to do so every five years thereafter.

The first is simply a (‘5-year+5-year’) ‘dynamic’ compromise between §23 (5-year) and §24 (10-year) which ensures that by 2025, there will always be two consecutive 5-year NDCs communicated. The second is the ambition replenishment component, rectifying the lack of clarity in §23 and §24 that led to the ambition battle in Madrid. It establishes a 5-yearly cycle for simultaneous enhancements of ambitions initially communicated 5 years before.

As graphically represented above, the DAR Cycle involves four activities:
A. The ‘ratcheting up’ (‘updating’) the ambition of the NDC initially communicated (at least) 5 years before.
B. The communication (‘indication’) of an NDC with a (+5) time frame ending five years after the updated NDC.
C. & D. The assessment of the +5 NDC by the public and governments.

This type of process is important for ambition because it creates an ‘enabling space’ of 5 years where everyone knows and can evaluate Parties longer-term (10-year) ambition in light of Global Stocktakes and changing circumstances, together with a regular synchronised timetable for Parties to get together and  discuss potential ambition enhancements. While at present Parties can spontaneously enhance the ambition of their NDCs, it will be abundantly clear to anyone acquainted with replenishments of funds that they are more efficient and effective than such spontaneous ‘voluntary donations’.

The Way Forward

As the ECO article notes, the EU has, for some time, been treating the CTF discussion as premature, with a decision only needed in 2023, in time for the communication of a second NDC in 2025. However, this will tie the EU into a 10-year time frame, as it has been suggested that the EU needs 15 years between the communication and the the end of an NDC. Delaying the communication of the second NDC to 2025 will then mean a time frame up to 2040 (i.e. 2025 + 15).

This said, things do seem to be moving. In the discussion on the issue during the Environment Council meeting of 4 October (see transcript, Appendix 3), the majority of the 12 intervention were in favour of a 5-year time frame. No one mentioned 10 years, and only three though it was still premature to take a decision. Moreover, the Council Conclusions also recalled “the importance of striving towards common timeframes for all Parties’ NDCs, in line with the Paris Agreement.”

In fact, the EU could still join the Dynamic Ambition Replenishment Cycle, at it requests communicating a 2035 NDC by 2025and not in 2025. So the EU could follow the request (with a 15-year announcement lag) by communicating a second NDC with a time frame up to 2035 at COP26 in December 2020.

This would put the EU on the 5+5 track, and if the promised updating of the 2030 NDC “in good time before COP26” is not just cosmetic, but a genuine ambition enhancement “after a thorough impact assessment” then it should be relatively straightforward to use the same process to come up with a 2035 NDC at the same time.

Therefore, to live up to the reputation of being a high-ambition champion, the EU should by Glasgow not only communicate an enhanced 2030 NDC, but also a 2035 NDC (or at least decide that its second NDC is to have a time frame up to 2035). This would allow them to sign on to the Ambition Replenishment Cycle, thus ensuring that the Paris Agreement processes supports, rather than impedes, a regular enhancement of global ambition.


Appendix 1. The Paris Outcome

Paris Agreement
Art. 2.2. This Agreement will be implemented to reflect equity and the principle of common but differentiated responsibilities and respective capabilities, in the light of different national circumstances.
Art. 4.3. Each Party’s successive nationally determined contribution will represent a progression beyond the Party’s then current nationally determined contribution and reflect its highest possible ambition, reflecting its common but differentiated responsibilities and respective capabilities, in the light of different national circumstances.

Decision 1/CP.21; III. Decisions to give effect to the Agreement; Mitigation
§ 22. Also invites Parties to communicate their first nationally determined contribution no later than when the Party submits its respective instrument of ratification, acceptance, approval or accession of the Paris Agreement; if a Party has communicated an intended nationally determined contribution prior to joining the Agreement, that Party shall be considered to have satisfied this provision unless that Party decides otherwise;
§ 23. Requests those Parties whose intended nationally determined contribution pursuant to decision 1/CP.20 contains a time frame up to 2025 to communicate by 2020 a new nationally determined contribution and to do so every five years thereafter pursuant to Article 4, paragraph 9, of the Agreement;
§ 24. Also requests those Parties whose intended nationally determined contribution pursuant to decision 1/CP.20 contains a time frame up to 2030 to communicate or update by 2020 these contributions and to do so every five years thereafter pursuant to Article 4, paragraph 9, of the Agreement;


Appendix 2. Chile Madrid Time for Action

Decision 1/CMA.2.
§ 4. Acknowledges the growing urgency of enhancing ambition and responding to the threat of climate change;
§ 5. Re-emphasizes with serious concern the urgent need to address the significant gap between the aggregate effect of Parties’ mitigation efforts in terms of global annual emissions of greenhouse gases by 2020 and aggregate emission pathways consistent with holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 °C above pre-industrial levels;
§ 6. Recalls that each Party’s successive nationally determined contribution will represent a progression beyond the Party’s then current nationally determined contribution and reflect its highest possible ambition, reflecting its common but differentiated responsibilities and respective capabilities, in the light of different national circumstances;
§ 7. Also recalls the request to Parties contained in decision 1/CP.21, paragraphs 23–24, and urges Parties to consider the gap referred to in paragraph 5 above with a view to reflecting their highest possible ambition when responding to this request;
§ 8. Reminds Parties that have not yet communicated their nationally determined contributions pursuant to Article 4, paragraph 2, and decision 1/CP.21, paragraph 22, to do so;
§ 9. Reiterates its strong encouragement to Parties to provide the information necessary for clarity, transparency and understanding of nationally determined contributions, described in the annex to decision 4/CMA.1;
§ 10. Recalls the request in paragraph 25 of decision 1/CP.21 to the secretariat to prepare a synthesis report, and requests the secretariat to make this report available to the Conference of the Parties at its twenty-sixth session (November 2020);


Appendix 3. EU Environment Council, 4 October 2019

EU Preparations for the United Nations Framework Convention on Climate Change (UNFCCC) meetings

Draft Council conclusions: 27 September 2019
[HIGHLIGHTS that the EU will [update] [or communicate] [review] [and enhance] its nationally determined contribution (NDC) in 2020, as agreed in Paris, in a manner that represents a progression of ambition beyond the current one and that reflects the EU’s highest possible ambition, taking into account the collective further efforts needed and actions undertaken by all Parties in line with the long term goals of the Paris Agreement [and IPCC 1.5 ⁰ C report], and to increase clarity, transparency and understanding of its NDC.]

Council conclusions: 4 October 2019
HIGHLIGHTS that in 2020, the EU will update its nationally determined contribution (NDC) as agreed in Paris, taking into account the need to increase clarity, transparency and understanding of its NDC, as agreed in Katowice. STRESSES the need to step up the global efforts to tackle climate change in light of the latest available science, especially the IPCC Special Report on the impacts of global of 1.5°C above pre-industrial levels.

Transcript of interventions referring to Common Time Frames

(in chronological order, with references to webcast times [hh:mm:ss]. MS missing in the list did not refer to CTFs in their interventions)

Spain [00:07:15] “We think the text is a balanced one, but we do think it can be bolstered in two ways. The first one is that it needs to be more consistent with the Paris Agreement and the five-year cycle. Like other MS we think we need these conclusions to send out a signal of support for the five-year framework for the contributions to the PA”
Sweden [00:12:15] “The 5-yearly ambition cycle is one of the cornerstones of the Paris agreement and we will need to ensure that it becomes as effective as possible in raising the global level of ambition to meet the long-term targets of the agreement. We should therefore show openness to support having five year timeframes. It’s important to note that a five year CTF from 2030 and onwards is entirely without prejudice to the timeframe of the EU internal targets of the post-2030 framework”
France [00:17:42] “Lastly, FR thinks it is time for the EU to take a decision on the timeframe. We need to take a joint decision to ensure that we can participate constructively in the discussions which will take place at COP25. FR is in favour of a schedule which is in line with the Paris Agreement objectives – we need to make sure we are consistent and clear, so a five-year time for all NDCs.”
Portugal [00:38:55]“The leadership role of the EU for climate action needs to be reflected in our NDC in keeping with the 5-year cycle for the PA.” [00:40:29]“We support the common time frames but we’re against transferring units to the Kyoto Protocol.”
Belgium [00:52:44] “We have stressed the need to establish a CTF for all NDCs, but this far we have been pretty vague in our position, and that is why we haven’t been able to especially constructive in the negotiations” [00:51:53] “Now, FR and SE’s comments we can support them as well regarding the CTF, the CTF of 5 years for all NDCs as of 2030, we think that is best in line with optimally performing […] of the Paris Agreement”
UK [01:00:30] “Further, the UK supports the inclusion of text that seeks agreement of a five year CTF for NDCs.”
Malta [01:05:07] “On issues related to CTF for the NDCs, Malta is of the view that it is not yet time for such discussion to take place and would clearly prejudge future discussions”
Germany [01:09:17]“… That is an important point for the next COP – as is the time frame. We think that it’s worth working towards a CTF, but as others have said, we need to have some flexibility here. We shouldn’t stick too fast to this, because this is still an open point”
Luxembourg [01:15:37]“Thirdly, the EU needs to support a CTF for all parties and then with the review cycle from the PA, which I think would give us a dynamic for reviewing the NDCs which would be more effective and more transparent”
Bulgaria [01:20:06] “As for the proposal to include text about a common five-year TF for implementing the NDCs, we’d like to stress that the current EU legislation effective for the period 2020-2030 is fully in line with the PA. At the same time, we believe it is extremely premature to discuss other timeframes post 2031. Therefore, we strongly oppose the introduction of a 5-year TF to execute the nationally determined programme.”
Estonia [01:22:40]“In today’s discussions, there has been references to the CTF – I think it’s too early to reach any decision on this point”
EC (closing remarks) [01:30:26]”The Commission does not see any reason to include additional text on the Common Time Frames, as this issue is not up for decision in Santiago.” [01:30:54]”Any language implying five-yearly greenhouse gas target setting for the European Union remains a decision outside the scope and mandate of the Environment Ministers.”

Innovative Sources for Multilateral Climate Finance

A

A COP 24 Seminar co-hosted by the PCCB and ecbi


Introduction

From its inception, in 2005, the ecbi has been based on the understanding that enhancing the capacity of the multilateral climate change regime to produce ambitious outcomes requires significant building and enhancement of trust between negotiators. Over the past five years, the ecbi Director has consistently argued that the well-being of the Financial Mechanism of the UNFCCC/Paris Agreement is key in generating such trust.[i] This is why the PCCB (Paris Committee on Capacity Building) and ecbi joined forces to organize a joint Seminar at COP 24 in Katowice to showcase ideas aimed at generating innovative additional contributions to the funds of the Financial Mechanism to enhance their longer-term viability.

This Seminar took place, with the financial support of the World Bank, on 8 December in the PCCB COP 24 Capacity-building Hub. The event was opened by Marzena Chodor, PCCB Co-chair, and Tomasz Chruszczow, Polish Special Envoy for Climate Change and UNFCCC Climate Champion. Following a number of showcase presentations, there was a panel discussion with representatives from civil society, sub-national governments, and multilateral financial institutions and funds (all of the contributions are to be made available as on-demand webcasts on the PCCB website). Daniele Violetti, UNFCCC Director, Finance, Technology & Capacity building, gave the closing address of the Seminar.

Kelley Kizzier, Sean Kidney, Julie-Anne Richards, Benito Müller, Eric Theroux (Deputy Assistant Minister, Fight against Climate Change, Quebec), Liane Schalatek (Associate Director, Heinrich Böll Foundation North America), Mirza Shawkat Ali (Adaptation Fund Board member, Bangladesh), Yunus Arikan (Head of Global Policy and Advocacy, Global Services, ICLEI), Mark Sadler (Practice Manager, Climate Funds Management, World Bank).
 

Presentations

For the purposes of the Seminar, ‘multilateral climate finance’ was interpreted in terms of the Financial Mechanism of the Paris Agreement – that is the Green Climate Fund, the Adaptation Fund, and the Least Developed Countries and Special Climate Change funds, operated by the Global Environment Facility. ‘Innovative’, in turn, was used to refer to sources other than the traditional budgetary government contributions, be they on an ad hoc (‘voluntary’) or a multi-year replenishment basis. Sources were divided into ‘top-down’ or ‘bottom-up’, depending on government involvement (individually or collectively, and at whatever level, i.e. multilateral, national, sub-national):

  • The International Air Passenger Adaptation Levy (IAPAL): top-down (multilateral);
  • The Climate Damages Tax: top-down (multilateral);
  • The International Maritime Fuel Carbon Tax: top-down (multilateral);
  • The Western Climate Fund: top-down/bottom-up (sub-national);
  • The Corporate Air Passenger Solidarity Programme: bottom-up.

The presentations can be downloaded from the ecbi website.

The International Air Passenger Adaptation Levy (IAPAL)

The first top-down innovative source established for multilateral climate finance was the share of proceeds of the Clean Development Mechanism which was intended to be the main source of income for the Adaptation Fund. In 2006, a Working Paper by Benito Müller and Cameron Hepburn[ii] put forward the idea of a solidarity levy on international air passengers for the benefit the Adaptation Fund. Two years later this was taken up by the UNFCCC Group of Least Developed Countries and submitted as a proposal at COP 14 (Poznan, Poland) to establish an International Air Passenger Adaptation Levy (IAPAL) for consideration under the Bali Action Plan.

The Proposal

Achala Abeysinghe, Senior Strategic Adviser to the LDC Group and Head of the ecbi Training and Support Programme, presented the LDC Group IAPAL proposal. Following the very successful example of the French ‘Leading Group’ solidarity levy to combat HIV/AIDS, the Group proposed an adaptation solidarity levy on international air passengers to provide more adequate funding for adaptation activities in the poorest and most vulnerable countries and communities.

The levy, collected by airlines at the point of ticket sale, was earmarked for the Kyoto Protocol Adaptation Fund. It was to be universal in the sense of covering all international air travel. Being international and dependent only on the evolution of air travel demand, the funds raised would truly be new and additional, as well as significantly more predictable than traditional funding mechanisms.

The proposed levy would have no significant impact on passenger numbers – its value representing less than a tenth of the expected annual growth rate – and hence minimal to no negative impact on tourism-dependent economies. In contrast, it would have significant positive impacts on the development of the poorest and most vulnerable countries and communities, by avoiding climate change impacts through the deployment of timely and adequate adaptation measures funded using the revenue raised by the levy.

  • Responsibility for implementation. Airlines would collect the levy from their passengers at the point of sale and transfer it to a dedicated account of the Adaptation Fund. The airlines are compensated for reasonable administrative costs incurred in the course of collection.
  • Revenue. In line with the French levy, the LDC Group proposal involved a small passenger charge for international flights (USD6 per economy and USD62 per business/first class trip); it was estimated that this charge would raise between USD8 billion and USD10 billion annually in the first five years of operation, and considerably more in the longer term. By its very nature, this revenue is not only new and additional to the traditional flows of bilateral funding for adaptation, but also predictable due the stability of the airline sector.
  • Justice considerations. According to the LDC proposal, the proposed levy conforms to the idea of Common but Differentiated Responsibilities and Respective Capabilities (CBDR/RC) with respect to: (i) the personal responsibilities of passengers due to the international emissions produced and (ii) their capability revealed by the ability to fly internationally.[iii]

To reflect CBDR/RC at the national level, the revenue raised in developing countries could be retained by them for their own adaptation activities, with only the revenue from developed countries going to the Adaptation Fund.

The Climate Damages Tax (CDT)

Julie-Anne Richards (Adviser, Climate Damages Tax Coalition) gave a preview of a report on The Climate Damages Tax (CDT), which she co-authored and launched at COP 24 two days after the Seminar. The chief purpose of the proposed CDT is to raise resources to pay for what has become known in the multilateral climate change regime as ‘Loss & Damage’ (L&D). The first time the UNFCCC negotiation texts referred to “unavoidable loss and damage from the adverse impact of climate change” was in 2008 (see “Loss and damage due to climate change An overview of the UNFCCC negotiations”). But it was in 2013, at COP 19, that the issue was fully acknowledged through the establishment of the Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts (WIM) “to address loss and damage associated with impacts of climate change, including extreme events and slow onset events, in developing countries that are particularly vulnerable to the adverse effects of climate change”. Even though the WIM was given the mandate to enhance L&D finance, there have hitherto been practically no resources been allocated for that purpose. This was one of the main reasons for launching the Climate Damages Tax campaign in April 2018.

The Proposal

The Climate Damages Tax (CDT) is a charge on the extraction of each tonne of coal, barrel of oil, or cubic litre of gas, calculated at a consistent global rate based on how much climate pollution (CO2e) is embedded within the fossil fuel.

  • Responsibility for implementation. The CDT proposal is to set up a solidarity facility for loss and damage, managed by the GCF. Working with existing systems of payment, fossil fuel companies will pay an extra amount on the volume they extract to the solidarity facility. International law and precedents embodying the Polluter Pays principle (such as the International Oil Pollution Compensation Fund) serve as a working example of similar facilities.
  • Revenue. The proposal recommends that the CDT is introduced in 2021 at a low initial rate of USD5 per tonne of CO2e, increasing by USD5 per tonne each year until 2030 to USD50 a tonne, with the expectation that it is increased at the rate of USD10 per tonne annually after that to reach USD250 a tonne by 2050. The increasing rate of tax will keep CDT revenue for loss and damage at roughly USD300 billion a year over this period.
  • Justice considerations. The CDT would raise funds for an international loss and damage solidarity facility, and also raise revenue to support a just transition from fossil fuels to renewable energy. This would help low-income communities and workers shift to carbon-free jobs, energy, and transport, via a share of the CDT remitted back to the country where the oil, coal, or gas was extracted. The share remitted to the country of extraction varies between 50 per cent for rich countries, and 100 per cent for low-income countries, with a sliding scale between the two ensuring that rich countries take the responsibility for funding loss and damage.

The International Maritime Fuel Carbon Tax

Kelley Kizzier (Independent Consultant) presented an IMF Working Paper she co-authored on “Carbon Taxation for International Maritime Fuels”.

The purpose of the paper is to promote dialogue about the possibility of a carbon tax as a key element of a GHG mitigation strategy for international maritime transport, in the context of the April 2018 International Maritime Organization (IMO) pledge to cut emissions by 50 per cent by 2050, relative to the 2008 level. The paper discusses the case for the tax over alternative mitigation instruments, together with options for practical design issues; it also presents estimates of the impacts of carbon taxation and other instruments.

The Proposal

  • Responsibility for implementation. Maritime carbon taxes could be collected domestically (through extending administrative capacity for domestic fuel taxes), but the more immediately relevant option (given delegation of GHG mitigation strategy to the IMO) would be an international collection from ship operators (based on required reporting of their fuel consumption). This could be achieved through the establishment of an IMO-administered fund, following the precedent of the International Oil Pollution Compensation (IOPC) Funds, established and overseen by the IMO. Operators could pay the tax on either an annual or individual route basis, with denial of port access, or ship arrest, for non-compliant operators being the potential enforcement mechanisms. Under current practice, IMO members are mandated to enforce the IMO convention — the tax could be paid to the fund, but any non-payment would be enforced by states.
  • Revenue. A tax rising to USD75 per tonne of CO2 in 2030 (USD240 per tonne of bunker fuel), and to USD150 per tonne in 2040, is estimated to raise revenues of about USD75 billion in 2030 and USD150 billion in 2040, while increasing shipping costs by 0.075 per cent of global GDP in 2030.
  • Justice considerations. Compensation mechanisms to reconcile the principle of CBDR/RC and the global application of the maritime carbon tax (preferred due to the high mobility of the tax base and the undesirability of introducing trade distortions), could be achieved by remitting the carbon tax revenues to the GCF.

The Western Climate Fund

Benito Müller

In December 2015 at COP21 in Paris, Quebec’s Premier Couillard announced that CAD6 million of the revenue from Quebec’s auctions of emission allowances under the Western Climate Initiative (WCI) – the joint cap and trade scheme of Quebec and California – were to be contributed to the Least Developed Countries Fund (LDCF) of the UNFCCC/Paris Agreement. At the announcement, former US Vice President Al Gore expressed “deep gratitude, admiration and congratulations” for Quebec’s initiative, which illustrates how the wealthy regions of the world can reach out in partnership to the least developed countries, enabling them to participate fully in solving the global climate crisis.

The Proposal

Benito Müller, ecbi Director, introduced a proposal to build on this example by establishing a Western Climate Fund (WCF) to receive contributions for the multilateral funds of the Paris Agreement from states and provinces in or around the WCI. The trans-national character of this ‘catchment area’ is important, as it would guarantee that the Fund is not perceived as competing with national support, but as being genuinely complementary to it. In order to assure predictability, the Fund’s primary income is intended to come through innovative sources, in particular from shares of proceeds of carbon price instruments, such as emission trading schemes or carbon taxation, namely:

  1. an earmarked share of cap and trade auction revenue (as in the case of Germany’s Climate and Energy Fund[iv]);
  2. an earmarked share of emission allowances to be monetized by an intermediary (as in the case of the share of CDM proceeds monetized by the Adaptation Fund, or the “Allowance Allocation to Electrical Distribution Utilities on Behalf of Ratepayers” under the California Cap and Trade Programme);
  3. an earmarked share of a carbon tax.

By participating in this initiative, sub-nationals can contribute to the support needed by the globally poorest and most vulnerable to enable them to combat global climate change while reducing poverty. This is not just a moral imperative. Without such support, this fight cannot be won.

  • Responsibility for implementation. This depends on the sub-national circumstances, and the source modality. Shares of government revenue would most likely be collected by the relevant government, while the monetization of shares of emission allowances might best be outsourced to a not-for-profit entity.
  • Revenue. 2 per cent share of (expected) 2018 auction revenue: Quebec USD10 million; California USD125 million.
  • Justice considerations. In sub-national contexts, ‘climate justice’ is often focused exclusively on domestic issues. The fact that, in the context of climate change, it is in the interest of everyone to acknowledge that justice knows no jurisdictional boundaries, will have to be explained to the domestic constituencies.

The Corporate Air Passenger Solidarity Programme

The Proposal

The ecbi Director also presented the Corporate Air Passenger Solidarity (CAPS) Programme, launched in 2017 as part of the “Oxford Crowdfunding for Adaptation Initiative”. The aim of the Programme is to encourage corporate entities to contribute 1 per cent of their annual air travel expenses to the Adaptation Fund of the Paris Agreement, in social solidarity with the plight of the globally poorest communities which are most vulnerable to the adverse impacts of climate change. With the financial support of the Luxemburg government, the Programme aims to establish a web-based platform for a ‘CAPS Partnership’ to be used in a campaign to market the idea of contributing ‘Corporate Passenger Solidarity Donations’ to the Adaptation Fund.

Müller argued that, in the context of socially responsible (corporate) air travel, the narrative on ‘climate neutrality’ needs to be augmented. It can no longer only be a matter of carbon neutrality, that is of purchasing voluntary carbon offset credits to mitigate ones flight emissions – particularly given that, as of 2020, the industry will have its own emissions reductions program. ‘Climate neutrality’, he maintained, must also address the need to support the most vulnerable in dealing with the adverse impact of climate change. In short, Müller suggested, the narrative in question has to be re-defined as:

Climate Neutrality = Carbon Neutrality (mitigation) + Impact Solidarity (adaptation),

with CAPS contribution to the Adaptation Fund as an effective and efficient solution to providing the latter.

  • Responsibility for implementation. The CAPS Programme, with the support of the Adaptation Fund.
  • Revenue. A contribution of 1 per cent of corporate air travel expenses – which corresponds roughly to the cost of offsetting – by 1 per cent of corporate travellers would amount to over USD100 million per year, and match the Adaptation Fund’s current annual income.
  • Justice considerations. Voluntary contributions.

Conclusions

There is an abundance of possible innovative sources for multilateral climate finance, each with different characteristics regarding potential scale, predictability, and political feasibility.

Unsurprisingly, multilateral top-down sources – namely global taxes, levies, or ‘shares of proceeds’ – have a much larger revenue potential than sub-national or bottom-up sources. As earmarked revenue streams, they would also generally be more predictable than traditional budgetary contributions.[v] The ‘only’ drawback, as witnessed by the fate of the LDC Group IAPAL proposal, is that in the past they did not command sufficient political buy-in to materialize.[vi]

Sub-national sources, such as the ones presented at the PCCB/ecbi Seminar, have a much smaller revenue potential – which is why they should probably be directed at the smaller funds of the Financial Mechanism, to enable them to serve as multilateral ‘retail outlets’, with the GCF as the ‘wholesale’ fund (see “On the Virtues of Strategic Divisions of Labour”). Their advantage is that they depend less on political will because fewer, if any (as in the case of the CAPS programme), governments are involved.

The one thing that all of these innovative options have in common is that, in providing support to the Financial Mechanism of the Paris Agreement, they help build trust among the Parties of the Paris Agreement. Trust – albeit intangible – is the key ingredient in enhancing the Agreement’s overall ambition.


[i] See, for example, B. Müller, ‘The Time is Ripe! Support from US sub-nationals for the Least Developed Countries Fund of the Paris Agreement’, Oxford Climate Policy, June 2017.

[ii] ‘IATAL — an outline proposal for an International Air Travel Adaptation Levy’, Benito Müller and Cameron Hepburn, Oxford Institute for Energy Studies Paper EV36, October 2006.

[iii] Indeed, given the international character of the activities in question and of the resulting emissions, the only equitable way to deal with the non-national responsibilities for these activities is at the personal level, which – given the price levels of international flights – also respects the idea of respective personal capabilities.

[iv] ‘Two Unconventional Options to Enhance Multilateral Climate Finance Shares of Proceeds and Crowdfunding’, Benito Müller et al., ecbi.

[v] For more on this, see “To Earmark or Not to Earmark?” or “Finance for the Paris Climate Compact

[vi] The one exception is, of course, the ‘share of proceeds’ of the CDM, and subsequently of the Art. 6.4 mechanism of the Paris Agreement. It is still extraordinary that this concept was adopted, and it stands to reason that this only happened because it was not called a ‘tax’ or ‘levy’ but was presented as a charge to cover the administrative costs of the scheme.