PROSPECTS FOR UNFCCC COP 17 & COP/MOP 7

1. WWF South AfricaLiving Planet UnitClimate Change Programmetransformation to a climate-safe futurethrough people-centered development PROSPECTS FOR UNFCCC COP 17 & COP/MOP 7

2. Qualification &Acknowledgements • WWF International has not finalised detailed verdict or strategy for way forward, so following not official positioning • Drawing on a range of commentary and analysis, including: • Pew Centre • Earth negotiations Bulletin • Martin Khor / South Centre • Members of SA delegation

3. Overview • Context • Cancun • What the carbon budget looks like • What this means for South Africa Theme

4. Context UNFCCC (entry into force 1994) broad aim: to return global emissions to 1990 levels by 2000 Kyoto Protocol (KP) signed 1997: Annex 1 (industrialised) countries aggregate emissions 5.2% below 1990 levels in 1st Commitment Period 2008-2012 (ambition reduced ~2% by accounting of land use, land use change and forestry) 2001: USA reneges on KP 2005: KP enters into force and concerted discussion of 2nd Commitment Period begins; Washington Post declares, during COP 11 Montreal, that KP is dead – 48 hours later agreed negotiating mandate for the Ad Hoc Working Group (AWG) 2007: COP 13: Bali Action Plan – 2 years to negotiate post-2012 regime; 2-track process; global vision; AWG LCA; US “not block consensus” 2009: Copenhagen fails to deliver agreements under COP15 or COP/MOP5 2010: Cancun Agreements import essential elements of the Copenhagen Accord into UN text, but…

5. atmospheric concentration requires net zero emissions world before end 21st Century IPCC, 2007

6. Form vs substance • Agree legal form of LBA first and ratchet up ambition (tighten caps) over time OR • Set out ambition – Global Vision – and then design legal form to deliver it (Copenhagen Accord was a proxy) • A robust legal form unlikely to get developing country (DC) support without more appropriate, equitable ambition from industrialised countries ( - 25to40% by 2020) • Industrialised countries keeping ambition conditional to bringing down ‘firewall’ in legal form • US/Republican opposition to multilateralism and no federal elections for over 2 years

7. Allocation of effort

8. COP 16 - Cancún UNFCCC Secretariat press release: “…delivers balanced package of decisions, restores faith in multilateral process” Cancún Agreements: “…set all governments more firmly on the path towards a low-emissions future and support enhanced action on climate change in the developing world.” South Centre: “…helped pass the burden of climate mitigation onto developing countries…international regime weakened…serious threat to close the legally binding and top down Kyoto Protocol system” Pew Centre: “most tangible results since the Marrakesh Accords” (2001) COP17 decision: “nothing in this decision shall pre-judge prospects for, or the content of, a legally-binding future outcome in the future” Victory for US and voluntary ‘pledge-and-review” approach? Green Climate Fund under COP; Technology Mechanism; Transparency MRV / ICA

9. Elements of the Cancún Agreements include: Industrialised country targets are officially recognised under the multilateral process and these countries are to develop low-carbon development plans and strategies and assess how best to meet them, including through market mechanisms, and to report their inventories annually. Developing country actions to reduce emissions are officially recognised under the multilateral process. A registry is to be set up to record and match developing country mitigation actions to finance and technology support from by industrialised countries. Developing countries are to publish progress reports every two years. Parties meeting under the Kyoto Protocol agree to continue negotiations with the aim of completing their work and ensuring there is no gap between the first and second commitment periods of the treaty. The Kyoto Protocol’s Clean Development Mechanisms has been strengthened to drive more major investments and technology into environmentally sound and sustainable emission reduction projects in the developing world. Parties launched a set of initiatives and institutions to protect the vulnerable from climate change and to deploy the money and technology that developing countries need to plan and build their own sustainable futures. A total of $30 billion in fast start finance from industrialised countries to support climate action in the developing world up to 2012 and the intention to raise $100 billion in long-term funds by 2020 is included in the decisions. In the field of climate finance, a process to design a Green Climate Fund under the Conference of the Parties, with a board with equal representation from developed and developing countries, is established. A new .Cancún Adaptation Framework. is established to allow better planning and implementation of adaptation projects in developing countries through increased financial and technical support, including a clear process for continuing work on loss and damage. Governments agree to boost action to curb emissions from deforestation and forest degradation in developing countries with technological and financial support. Parties have established a technology mechanism with a Technology Executive Committee and Climate Technology Centre and Network to increase technology cooperation to support action on adaptation and mitigation.

10. Some key outcomes / areas of work • Long term goal: limit average warming to below 2 degrees and review 2013 – 2015 • AWG KP: “completing its work … to ensure no gap between the first and second commitment periods” but no commitments by Japan, Russia or USA • Adaptation Framework, a Committee and work programme; • Technology: Executive Committee, Centre and Network • Green Climate Fund transitional committee • Forests / REDD+: agreed to develop national strategies and AWG to explore financing options (market-based contested) • Produce Inf Docs with numbers – SA to formalise CA pledge

11. Who won or lost? • USA, Japan and India got what they wanted (Ramesh boasted of India’s role in blocking KP); also China, Canada, Russia • Resuscitation of multilateralism/UNFCCC process - with content, but not process of Copenhagen Accord (plurilateral; ‘pledge-and-review’ ) – process beat content/ambition “a balanced package is one with which no country is happy” • Bolivia outraged and considering legal recourse; • Adaptation excluded from the heart of the bargain

12. What can COP 17 deliver • Could and should: Legally binding agreement / new treaty (at least 2 years away) Ambition as required by science, including peaking date; • Fair propects: Decisions on innovative sources of finance, including ‘levy’ on bunker fuels (SA not keen as long-haul destination, but analysis indicates perceptions of negative impacts are inflated, particularly if revenue repatriated for adaptation work) and Financial Transfers Tax; Adaptation – mechanism to insure against loss and damage; Clarification/elaboration of Cancun decisions • Regression: Going the way of Doha Round of WTO

13. Consequences of Copenhagen –shortcomings of COP15 of UNFCCC • need more progress on allocation of effort: emerging economies (BASICs) can’t agree a long-term target before mid-term targets are set for industrialised countries. • South Africa can’t wait for international support • Create market opportunities • Utilise free renewable energy resources • Embrace low-carbon re-industrialisation see: Climate Solutions 2 www.wwf.org.za

14. Post-Copenhagen factor: Small ‘green’ room drafting more than text-based negotiations – not ‘proper’ multilateral negotiation – unlikely to work a second time

15. Carbon markets • Up to EU if KP continues – seem committed and want to link European Trading System (ETS) to other markets, e.g. in north western states of USA, Australia (?); EU still “digesting” Japan and Russia’s rejection of KP 2 commitments • The World Bank has launched a second tranche of funding under its Umbrella Carbon Facility (UCFT2) of €aimed at enabling carbon-cutting projects to keep selling UN-backed offsets after the first phase of the Kyoto Protocol expires in 2012, with Deutsche Bank, GDF SUEZ and the Swedish Energy Agency providing much of the money. • US Mission to the EU said the Obama administration was still confident it could use the country's environment agency (EPA) to regulate carbon emissions. However, Republicans in House of Representatives will shortly introduce legislation to prevent the agency from regulating emissions.

16. Expectations of South Africa: • Undertake “inclusive and transparent consultations” in 2011 • Exemplary COP Presidency – reputation for strong process and negotiation skills; champion of democracy; • Champion interests of Africa (tho’ some resentment within Africa); • Defend 2-track process / firewall for developing countries • Push for (mandate for) Legally Binding Agreement • Set an example with domestic policy and implementation, incl.: REFIT contracts awarded; RE targets incl.15% electricity by 2020 and 50% by 2030 (assuming strong economic growth); IRP2?; National CC Response Policy; carbon tax; coherent strategy for Green Economy, with Low Carbon Action Plan / NAMAs

17. South Africa as microcosm • Government = UNFCCC Secrertariat • >50% of population = Least Developed Countries (LDCs) • EIUG = USA • NBI = EU (incl. Poland et al) • Other industry = Japan or Canada • Free Market Foundation = Russia? • Civil society – from UK to Bolivia • COSATU – from AOSIS to OPEC?

18. Way forward • Learn to speak climate, including acronyms (beef up the SD criteria used by the DNA for the CDM for quality CERs) • Support strong national policy (NCCRP), with carbon tax, national adaptation fund and ambitious RE targets • Implement energy efficiency and conservation and support mandatory measures to meet EE Strategy targets • Call for IRP2 with RE at scale to support development of local industries • Study WWF ENERGY REPORT – launch 3 Feb • a FAIR, AMBITIOUS AND BINDING DEAL is still possible

20. EARTH HOUR 2010 26 MARCH 2011 www.wwf.org.za ENERGY REPORT LAUNCH: 3 FEBRUARY, NEDBANK, SANDTON rworthington@wwf.org.za

21. COP 17 – SOUTH AFRICA a GLOBAL CARBON BUDGET should drive the level of mitigation ambition SA carbon budget 10 – 17 GtCO2e Need long-term strategies - all major emitters: risk management national competitiveness prospects for an effective multilateral system post-2012

22. Expectations of business • Triple-bottom-line accounting – life-cycle analysis with full-cost accounting (incl. externalised costs); not just within CSR/CSI units, but to interrogate core business case: e.g. coal company or energy company? liquid hydro-carbon producer or mobility/transport energy provider?

23. Expectations of business • Understand the carbon budget and consider how it would optimally be spent from a public benefit and inter-generational equity perspective • Constructively engage policy and regulatory processes (e.g. NCCRP, NERSA, IRP2)

24. Finance Finance sector: carbon ‘foot-printing’ of investment portfolios – Scope 3 emissions reporting • Scope 1 – direct emissions from facilities andequipment (including transport) • Scope 2 – emissions incurred / attributable to consumption e.g. electricity use, cement use • Scope 3 – emissions associated with investments • Invest in clean, sustainable energy – RE & EE

25. Integrated Energy Planning • Rigorous interrogation of energy planning processes, incl. assumptions, externalised costs, life-cycle analysis of full costs and benefits incl. Energy RO(e)I, portfolio risk and use of national carbon budget.

26. Allocation of effort

27. What does this mean for SA? • need to develop Low Carbon Action Plan (LCAP) • prioritise emissions for low-carbon infrastructure and manufacturing capacity incl. national solar programme • Climate Solutions 2: low-carbon re-industrialisation

28. What does this mean for SANational CC Response Policy? • Assess and manage implications for coal utilisation • STOP KUSILE – at least as conventional plant Integrated Gasification Combined Cycle (IGCC)? Underground Coal Gasification (UGC)? • and/ or STOP MAFUTA – new coal-to-liquids