What is going on in Copenhagen?

The meetings in Copenhagen this week on global climate change policy are billed as critical to our collective future, but what the negotiations are focused on concretely seems less well understood. Concerns over growing global carbon emissions and their potential costs in the decades ahead have resulted in the development of a new global negotiating track involving major emitters which is different than any previous international negotiations. The joint interest in reducing emissions is clearly accepted; how to divide the costs involved among countries and speed to reduce emissions are less clear.

Global climate negotiations date back to the Earth Summit of 1990 and the United Nations Framework Convention on Climate Change (UNFCCC)of 1994, which gave a mandate for ongoing discussion and negotiation of climate change among UN members. It was, unlike the General Agreement on Tariffs and Trade (GATT) or the shorter of the World Trade Organization (WTO), lacking in clear rules and specificity of commitment but it did importantly embody the principle of “common but differentiated responsibilities” for developing countries for climate change. A negotiation followed in 1997 on the Kyoto Protocol setting out emissions reduction targets out to 2012 for so –called Annex 1 countries (effectively developed countries plus Russia). Non Annex 1 countries were simply not to participate in emissions reductions, although emissions, trading between Annex 1 and non Annex 1 countries was introduced through the Clean Development Mechanism.

Current negotiations date from 2007 and a UNFCCC meeting in Bali which produced the so called “Bali road map” for negotiations on post 2012/ post Kyoto arrangements, which were scheduled to conclude in Copenhagen in December 2009. This negotiation was to evolve with a four pillar structure with a focus on emissions reduction (so called mitigation), adaptation, innovation, and trade and finance. As the negotiation has advanced it has become ever clearer that an agreement without the larger, more rapidly growing developing economies, and especially China and India, would do relatively little to deal with carbon emissions and gaining their participation has become an ever more central part of the negotiation. China is poised to become the world’s largest emitter of carbon, and India is ranked 4.

But what has emerged are basic and fundamental differences in position between large OECD countries and developing countries represented by the G77 in UNCTAD, in which India and China play a key role. OECD countries emphasize the need for action and propose equiproportional cuts in annual emissions across countries. The G77 take a different approach arguing their distinctiveness, and appealing to the common but differentiated responsibility principle. Specifically, they argue that any emissions reduction should be based on historical not on annual emissions, and in addition there are key country asymmetries which come from different growth rates and stages of development. They emphasize how the costs of meeting similar emissions level reductions are much higher for high growth economies, and suggest that they undertake commitments on emissions intensities, not emission levels.

In addition, the G77 have argued that there needs to be a large injection of funding into an Adaptation Fund to pay for climate related damage that developing countries expect to face in the next four decades. Around $100-$300 billion/year is the range of figures which currently circulate, and in the post crisis environment developed countries are reluctant to advance towards such a size of fund. To further complicate matters, proposals and legislation circulate in the OECD for border tax adjustment measures to counteract both so called leakage effects on emissions between participant and non participant countries and anti competitive effects on domestic firms in participant countries.

The result has been a negotiation facing such difficulties that an agreement has all but been struck that Copenhagen would only focus on a political level communiqué expressing commitment to act, with concrete agreements to follow later, perhaps in 6-12 months. In this negotiation, coalitional activity by China and India through a 5 year pact committing both countries to a common negotiation position has also been key.

These climate negotiations demonstrate also clearly the impacts of shifting global power on emerging global architecture. A meaningful agreement without China, India, and the G77 is not possible. With growing emissions their leverage in such a negotiations is large. The differences in position from the OECD countries are deep and fundamental. Time will only tell how this evolves, but its impacts spread into trade, finance, and other areas.