July 2011

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• NAMA-Rama
• European Policy Tracker:  (Don’t) Come Fly With Me
• UK Policy Tracker:  Better Craic for the CRC
• African Policy Tracker:  Pretoria Paradox

NAMA-Rama

As hopes dim for an agreement at Durban, could a system of Nationally Appropriate Mitigation Actions add up to a genuine global deal? 

This December, the UN Framework Convention on Climate Change (UNFCCC) will hold its last Conference of the Parties (COP) before the original Kyoto Protocol expires.  Given the intense pressure, as well as the lack of progress in the international negotiations over the past few years, it is unlikely that the 2011 COP, to be held in Durban, South Africa, will be able to create an effective international agreement to succeed the Kyoto system.  Because of this, policymakers are increasingly focused on finding alternatives to a global deal.  The frontrunner is an emerging system of Nationally Appropriate Mitigation Actions (NAMAs) within the UNFCCC framework.  NAMAs are emissions reduction and sustainable development programmes established by national governments, which makes them easier to approve and implement than a comprehensive global agreement.  However, NAMAs also allow governments to tap into the structure and support provided by the UNFCCC.  At the Cancún COP last year, the UNFCCC decided to set up a fund to finance NAMAs, a mechanism to help transfer green technology between countries, and a registry that will match NAMAs with potential sources of international funding.  

A successful, interconnected system of NAMAs could completely change the global narrative on climate change, relieving the damaging pressure on the UNFCCC negotiations.  One high-profile advocate of NAMAs is the former UNFCCC Executive Secretary, Yvo de Boer, who presided over both the groundbreaking Bali negotiations in 2007 and the disastrous Copenhagen COP in 2009, the latter of which is widely held to have derailed the UNFCCC process.  Speaking at a public event held by the All Party Parliamentary Climate Change Group in the UK Parliament last month, Mr. De Boer said that national actions can revitalise the faltering international negotiations.  In addition to demonstrating that progress on climate change issues is possible, Mr. De Boer told MPs and business leaders, NAMAs can also provide an attractive model of green growth that will spur governments into a race to the top, making them willing to commit to cutting emissions in order to gain a competitive edge.  For further analysis of the prospects for NAMAs, please see The CarbonNeutral Company’s blog. More information about the All Party Parliamentary Climate Change Group, including how to attend its events, can be found here:  http://www.carbonneutral.com/page/appccg/.

European Policy Tracker:  (Don’t) Come Fly With Me

The EU suits up for an aerial battle, as leading airlines scramble to oppose the extension of the EU-ETS.

From January 2012, the European Union’s Emissions Trading Scheme (EU-ETS) will cover all flights that arrive or depart from airports within the EU.  Airlines will need tradable allowances to cover the emissions from these flights.  Non-European airlines are putting up a fight, however:  the Air Transport Association of America and United Continental are challenging the legislation in the European Court of Justice.  Meanwhile, the Chinese government is opting for commercial retaliation instead.  Hong Kong Airlines had previously ordered ten Airbus jets at the Paris Air Show last month, a milestone sale for the European Airbus corporation.  Under pressure from the national government, however, Hong Kong Airlines has decided to withhold this high-profile contract – a deal worth US$ 3.8 billion.  In spite of this resistance, the European Commission has made it clear that it will not pull back from tackling emissions from international airlines.

UK Policy Tracker:  Better Craic for the CRC

Can a government revamp sell the CRC to a wary business world?

The UK government has now set out its proposals for the future of the Carbon Reduction Commitment.  After a backlash in the business community declared the CRC too complicated, the government intends to simplify a number of aspects of the scheme, in order to reduce the administration involved.  For example, companies would originally have had to report their emissions from twenty-nine different fuels.  The new proposals would reduce this to just four – electricity, gas, kerosene, and diesel – which account for 95% of the emissions covered by the CRC.  The proposed changes to the CRC would also simplify the organisational rules to better fit the companies covered under the scheme, and streamline the process of determining whether a company qualifies for the CRC.  Companies already covered by the EU Emissions Trading Scheme or subject to sectoral Climate Change Agreements would be exempt from the CRC.

More importantly, the government’s new vision of Phase 2 of the CRC, now due to start up in 2014, has shifted significantly.  Under the new proposals, instead of annual auctions of carbon allowances, Phase 2 would see semi-annual sales of allowances at a fixed price.  This would help provide price certainty and reward companies that accurately forecast their use of energy, while supplying an incentive for good energy management.  The government has also scrapped plans to set an overall emissions cap.  However, it may be an uphill struggle to convince businesses to welcome even the revised CRC.  A formal consultation on the new proposals will take place in 2012.

African Policy Tracker:  Pretoria Paradox

Could South Africa’s planned carbon tax undermine its commitment to ending fuel poverty?

The government of South Africa recently launched a public consultation on its Integrated Resource Plan 2 (IRP2), a comprehensive energy strategy that aims to cut greenhouse gas emissions in line with the country’s international commitments, agreed at the Cancún climate negotiations.  The IRP2 is also intended to create jobs, foster economic growth, and secure affordable energy for the entire population of South Africa.

The IRP2 focuses on providing energy security for the energy-intensive industries on which the South African economy relies, including the aluminium and ferro-chrome sectors.  In addition to all of South Africa’s existing power plants, as well as those the government is already committed to building, the IRP2 would add another 9.6 GW of electricity generated by nuclear power, 6.3 GW by coal, and 17.8 GW by renewable energy sources, along with 8.9 GW generated by other forms of energy.  This influx of renewable energy would be supported by a system of feed-in tariffs, allowing renewable-energy producers to sell electricity to the national grid at a guaranteed price.  The IRP2 has already gone through one consultation period; the results of this consultation led the government to include an expanded support structure for renewable energy in the plan, but also to commit to building a new generation of coal-fired power plants earlier than originally intended.

However, South Africa’s goal of ensuring that all its citizens have access to affordable energy may run an unexpected obstacle:  the government’s other flagship climate change initiative.  This is the nation-wide carbon tax proposed by the National Treasury.  The South African power utility Eskom has already warned that if the carbon tax goes into effect, Eskom will be unable to absorb the extra cost.  The utility plans to pass the entire cost of the tax on to consumers by raising its prices, which could mean that electricity remains out of reach for South Africa’s poorest.