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2.3 The future: Possible post-2012 frameworks and implications for New Zealand

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Summary

This section:

  • summarises approaches to a post-2012 international framework for climate change that have been developed in an array of international think-tank dialogues
  • identifies some key issues of interest for New Zealand.

It concludes that:

  • two distinct approaches – “top-down” and “bottom-up” – are apparent from these dialogues
    • top-down approaches seek to define emission targets in the near term based on long-term climate change outcomes and assume an international framework based around binding emission targets for industrialised countries
    • bottom-up approaches generally focus on technology development and sector-specific policies and measures
  • some of the ideas that have been explored contemplate significantly more stringent emission reductions than New Zealand is required to meet during the first Kyoto commitment period
  • the evolution of a post-2012 international framework will entail important risks and opportunities that need careful management as New Zealand engages in international processes.

While there is clear international support for the UNFCCC to continue as the primary forum for intergovernmental discussion on climate change, there is currently no agreement by parties to the Convention to begin considering future action beyond 2012. “Post-2012” or “beyond-2012” are commonly used to describe future action on climate change, with 2012 being the final year of CP1. The future of intergovernmental commitments delivered through the UNFCCC is uncertain beyond that point. Under Article 3.9, the Kyoto Protocol requires Parties to initiate consideration of future commitment periods in 2005

In the absence of formal UNFCCC consideration, many ideas for a post-2012 international climate change regime have been developed in an array of informal think-tank “dialogues” – often involving government experts acting in an individual capacity – or through workshops and publications by independent research institutes. These think tanks, with some exceptions (eg, the Pew Center ) tend to focus on how to achieve multilateral engagement under the framework of the UNFCCC. Some of these ideas were also explored in a recent discussion paper prepared by the Canadian Government in its capacity as host of the forthcoming United Nations Climate Change Conference (Environment Canada, Foreign Affairs Canada, 2005).

2.3.1 Possible post-2012 frameworks

Most of these dialogues have recently been summarised in work by the Pew Center and the OECD ( Pew Center, 2004; OECD, 2005a). Two broad groupings of mitigation ideas can be seen:

  • top-down approaches focusing on long-term outcomes and emission targets
  • bottom-up approaches focusing on technology and supporting policies, voluntary agreements and partnerships.

Top-down approaches: long-term outcomes and emission targets

This first grouping of ideas generally sits within a quantitative or top-down approach. This approach is generally based on explicit consideration of aggregate global greenhouse gas emissions over some time period, guided by views (and underpinning science) about the risks of climate change associated with greenhouse gas concentrations in the atmosphere.

This type of approach generally assumes that all (or most) industrialised countries take on fixed and binding emission targets, but developing countries do not. An international carbon market (perhaps with some price-cap mechanism) is sustained through international emissions trading. In some countries, targets might be taken on at a sub-national level. There has also been discussion of what role agreements between sector-specific transnational companies might play as part of such a framework.

This core policy framework is then supplemented by various ideas for how developing countries might be engaged. These generally are a mix of ideas for policies and measures plus some form of evolution or transformation of the CDM. Proposals for economy-wide emission-intensity targets and dynamic sectoral “crediting baselines” are being actively analysed and discussed in a range of fora. Beyond general agreement that the concept has merit, discussions have encountered a number of difficulties in trying to make the concept work in practice. There are also some ideas for fully including developing countries in an overall targets and trading framework in this next step of the international regime; eg, under some kind of emissions- per-capita formula that provides developing countries with surplus allowances. But these face many political obstacles.

Supporters of this approach to seeking multilateral agreement generally also believe that it is urgent that emissions in the coming one to two decades need to be reduced significantly from current trends and projections. This reflects an assessment that if this is not done, options to eventually stabilise atmospheric greenhouse gas concentrations at required low levels will have been foregone or will become prohibitively costly. It also reflects the concern that critical thresholds in the climate system could be crossed with severe global effects that cannot be reversed, even if greenhouse gas concentrations are reduced later.

Top-down approaches are generally based around an explicit long-term climate change goal, expressed either as a maximum-acceptable temperature rise or as a target for the stabilisation of greenhouse gas concentrations (expressed in CO2 or CO2-equivalent (CO2e)). Working backwards from such long-term targets, short-term emission goals are derived as necessary milestones along the way (den Elzen and Meinshausen, 2005).

Bottom-up approaches: technology and supporting policies and measures

The second grouping of ideas generally does not sit within a quantitative, top-down frame or its attendant timing concerns. These ideas tend to be of a “policies and measures” nature; eg, agreements to adopt specific technology uses over time (such as in the transportation or power generation sectors) or to adopt managed low-carbon price paths (such as through harmonised carbon charges or price-capped domestic emissions trading schemes). While some of these ideas may be framed as quantitative in nature, the metric is not emissions in general and specifically not about aggregate global emissions, except perhaps in the very long-term sense. Some proponents of these ideas still see a role for a carbon market. This might be created, for example, by a projects-like “offsets” approach, where commitments to specific policies and measures can be met by some other action, perhaps in another country. Moreover, at a domestic level, countries could choose the policy of a cap-and-trade emissions-trading scheme for some of their emission sectors. It may also be possible for these schemes to be linked with schemes of other countries or regional groups. Many technology-based approaches tend to aim for climate change outcomes as well as co-benefits in the area of energy security, air pollution and reduced resource consumptions.

The label generally put to this second grouping of ideas is “bottom-up”. This is because an overall outcome is more likely to emerge from a mosaic of domestic, bilateral and perhaps regional initiatives. These approaches are generally not framed against the objective of achieving an explicit emissions target within a particular timeframe. Further, an overarching multilateral agreement per se is not normally envisaged. Some experts who favour this “policies and measures plus market” approach share the assessment commonly underpinning the top-down approach that there is an urgent need to address climate change. However, they consider that a negotiation process leading to a top-down outcome is not feasible in the near term, citing the difficulties experienced with Kyoto. In this view, a bottom-up approach, with substantive non-binding undertakings by those who are party to it, may be the more achievable short- to medium-term solution (OECD, 2003).

Approaches to obligations and commitments

Both top-down and bottom-up approaches have explored a broad range of targets and other obligations that countries might be asked to adopt. Binding emission targets could take any number of forms, but three of the most commonly discussed are: absolute (fixed) national emissions targets (as in the current Kyoto Protocol regime), dynamic intensity targets (eg, expressed as a ratio of emissions to GDP) and per-capita emissions targets. Technology agreements could spell out coordinated approaches to research and development funding, market development, and joint demonstration projects. Policies and measures might include pledges by countries towards adopting certain standards or percentages of low-emitting technologies, which may or may not be combined with broader market mechanisms (OECD, 2005a).

The role of adaptation in future agreements

The past years have seen an increasing push for considering adaptation in the UNFCCC and possible post-2012 regimes. Developing countries are seeking greater emphasis on adaptation as part of any future international agreement, given the limited resources they have to manage adverse impacts of climate change and their typically lower per-capita emissions. Success in balancing adaptation and mitigation efforts and expectations is generally seen as crucial to the success of any future multilateral negotiations. Any successful future adaptation framework will very likely require support by Annex I countries for adaptation in developing countries through multilateral funds, targeted support mechanisms for capacity building and climate modelling, and specific assistance for the most vulnerable countries. Think tanks are only beginning to consider the possible role of adaptation in future agreements and how to ensure efforts and needs are measurable and comparable between countries (OECD, 2005a, 2005b; CCAP, 2005).

Different vulnerabilities and perspectives of developing countries on adaptation also mean that the most vulnerable developing countries, such as low-lying Pacific Islands, could begin to argue for mitigation actions in future agreements not only by developed countries but also by large developing countries. Clear statements of this kind have already been made in fora outside the UNFCCC (eg, in the 33rd Pacific Islands Leaders’ Forum), but are yet to appear in formal climate change negotiations.

2.3.2 Possible post-2012 frameworks: issues for New Zealand

Taking a broad-brush look at the many possibilities for post-2012 being discussed mostly offline, but beginning to be raised by some parties in more formal discussions, it is possible to distil some key issues of interest to New Zealand.

Top-down approaches and implied emission targets

Much of the work emerging from (mostly European) think tanks brings a top-down approach to post-2012 frameworks (Climate Action Network, 2002; German Advisory Council on Global Change, 2003; International Task Force on Climate Change, 2005).

The official policy goal of the European Union to limit global warming to less than 2°C above pre-industrial levels implies that global greenhouse gas concentrations would need to stabilise at 450ppm CO2e to provide a 50/50 chance of not exceeding this target. Such long-term goals are used to derive medium-term emission targets of 15% to 30% below 1990 levels by 2020 for Annex I countries, but would also require major developing countries to limit their further emissions growth (den Elzen and Meinshausen, 2005).

Other long-term targets based on higher temperature targets, or higher risk of exceeding the temperature limit, would result in less stringent medium-term emission targets (Wigley 2004). However, most plausible long-term targets would still require ongoing and significant emissions reductions in the medium and long term.

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To date, the New Zealand Government has taken no formal position on the desirability of a specific long-term temperature or concentration target in future climate change agreements.

Developing countries and competitiveness

The discussion of top-down approaches has not contemplated developing countries taking on, at least for the foreseeable future, targets that could restrict their economic growth. The possibility of providing developing countries with positive incentives has been raised; eg, through “no lose” targets. However, for this to be effective, developed countries would need to take on more stringent binding targets.

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To date, New Zealand has advocated that future agreements would require “broad and balanced participation by all major emitters”, by implication including key developing countries. The criteria for “broad and balanced participation” have not, however, been specified.

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Annex I and Non-Annex I framework and differentiation

Much of the work under way in think tanks has taken as a given the principle of “common but differentiated responsibilities” within the UNFCCC, with the Annex I and Non-Annex I classification being a key aspect of this. While there has been some examination of possible ways to differentiate within Non-Annex I – mostly centred on how groupings of countries might “graduate” from easy to more difficult commitments over time – there has been very little consideration of possible differentiation within Annex I. One paper that has considered this grouped New Zealand with a number of other Annex I countries in a middle tier of future commitments. The United States and Australia were in the first (hardest) tier.

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Adaptation

Future agreements are likely to involve greater and more comprehensive efforts to support adaptation.

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Land use, land-use change, and forestry (LULUCF)

There is often little consideration of how LULUCF might fit into possible frameworks. The issue is considered difficult and complex and other sectors are receiving far greater attention. To date, LULUCF has been an important focus for New Zealand, given the value of sinks in helping New Zealand meet its obligations in CP1.

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New Zealand is currently actively engaged in technical and policy discussion on LULUCF. Continued engagement will take time and resources.

Emissions per capita

Emissions per capita are used in some proposals as an indicator on which to base various commitments. New Zealand does not come out positively on this scale, largely due to its high share of agricultural emissions.

Existence of a carbon market

A particular feature of the Kyoto Protocol is that it has supported the emergence of a market for greenhouse gas emissions. The existence of binding commitments has driven the development of the European Emissions Trading Scheme System. Moreover, the Kyoto arrangements provide for flexibility mechanisms that allow for the sale and purchase of emissions reductions, facilitating the identification and exploitation of the lowest-cost emission-reduction options.

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New Zealand has been a strong advocate of international market mechanisms in the design of the Kyoto Protocol.

2.3.3 Conclusion

The uncertainty surrounding the international framework for climate change post-2012 is apparent from the divergence between the top-down and bottom-up ideas that have to date been explored outside the formal UNFCCC processes. This uncertainty presents particular challenges in framing domestic climate change policy.

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Section 6 discusses a possible position and strategy for the forthcoming UNFCC Conference of the Parties in Montreal