The Cancun Agreements on Climate Change

In contrast to the high profile of last year’s meeting in Copenhagen, expectations for this year’s recent meeting in Cancun were modest. Negotiators’ mantra was to reach a “balanced package” of measures that would advance climate protection; at the same time, they studiously avoided—or tried to avoid—the contentious issues of assigning emissions reductions commitments.

Discussions were helped by deft diplomacy on the part of the Mexican hosts, the willingness of many countries to tone down more strident rhetoric and enter into compromises, and a seemingly shared sense that the multilateral, U.N.-based process needed to be set back on track. Perhaps the discussions were even more open because of the lower expectations. Regardless of the reasons, negotiators were able to agree on a set of texts, collectively known as the Cancun Agreements, which address a suite of issues of fundamental importance to long-term climate policy.

Highlights of the Cancun Agreements include:

• The establishment of a new Green Climate Fund. In Copenhagen, countries pledged up to $100 billion per year in new financing for climate-related aid. The new guidance on the Green Climate Fund sets forth principles for prioritizing and governing this aid, emphasizing both mitigation and adaptation. In a key compromise, the Fund is to be administered by the World Bank for a three-year probationary period with the long-term manager to be agreed thereafter. This deal is important because of governance concerns: some developing country parties believe that the Bank is too beholden to the interests of some developed country parties.
• The establishment of a new Technology Mechanism. There is universal acknowledgment that addressing climate change will require the widespread deployment of current low-carbon technologies and the development of new ones. Questions remain, of course, as to the best policy approach to encouraging this process. The Cancun Agreements introduce a new and potentially interesting approach by creating an international Technology Mechanism that seeks to facilitate the process of clean technology knowledge sharing among all countries and with a particular focus on developing countries. The mechanism itself is thus far composed of an executive board and a Climate Technology Centre and Network (CTCN), and priorities include enhancement of domestic technological expertise, deployment and diffusion of clean technologies, investment in technology development, climate change observation systems, and national systems of innovation and technology innovation.
• Agreement on a framework to reduce deforestation. Approximately 20 percent of global carbon dioxide emissions derive from forest clearing and other land use changes; and deforestation provisions have been under serious negotiation since the Bali meeting of 2006. These provisions have become known as REDD+ (Reducing Emissions from Deforestation and forest Degradation, as well as other measures such as conservation and soil management). The Cancun Agreements provide guidelines for developing countries to identify and implement REDD+ actions that could reduce greenhouse gas emissions from deforestation and land use change, and encourage developed countries to assist in this process. The agreements merely provide the framework and do not obligate any country to specific reductions. The hope is that future multi- or bilateral agreements could arise as a result of the more formalized REDD process imitated under the Cancun Agreements, but as of now this potential remains an open question.
• A process for advancing discussions on adaptation. The Cancun Agreements establish an Adaptation Committee that is charged with coordinating adaptation activities under the Convention. In itself, this Committee has no ability to induce countries to adapt or to fund adaptation. Its value, if any, will derive from its convening power and informational brokering. Nevertheless, many countries are happy to see the arrival of the Committee because many countries have asked for help in assessing their own vulnerabilities, and having a formal structure might help disseminate good practices more efficiently. In a related issue, the agreements also have set in motion a process to investigate the possibility of an international climate risk insurance facility, which could be a potential innovation in international policy.
• A formal process for reporting mitigation commitments. The formal negotiations in Copenhagen last year produced no agreements; it was only the last-minute, closed-room negotiation by a handful of heads of state that produced a short document called the Copenhagen Accord. The formal plenary only was able to “take note” of Copenhagen, not to adopt it; and many countries saw the process as being highly undemocratic. Yet at the same time, many countries also realized that the approach taken in the Copenhagen Accord was potentially useful, so it did not make sense to completely scrap it on principle. The Cancun Agreements provide a gentle approach to this integration by setting up a means to report the Copenhagen emissions commitments into the formal UNFCCC system. Because this was negotiated and agreed by the full UNFCCC membership, this approach has now the full legitimacy of the process behind it and therefore may be a useful step toward a future overall agreement.
• A goal of keeping global temperature rise under 2°C. This goal is a critical part of the international discussion on balancing the risks of climate change with the costs of action. While it was included in the Copenhagen Accord, as the previous paragraph stated, the anchoring of such statements within the wider legitimacy of the full international community is an important statement. The Cancun Agreements, moreover, go further in suggesting that the international community consider setting a more stringent goal of 1.5°C based on newer scientific information.
• Agreement on Monitoring, Reporting and Verification (MRV). In the months before Copenhagen and subsequently, monitoring and verification was one of the technical details that remained very important to a few essential countries (U.S., China) and had the potential to derail the participation of these and other key emitters. Negotiators have been working on a compromise for a number of months; and in the end, all were able to agree, aided by some helpful brokering by India. Countries that fund domestic mitigation independently will not be subject to international MRV but will report their own progress, following a standard tradition in international law. However, countries that received international support for their mitigation would be subject to international verification. To assuage the concerns of those interested in more robust MRV for domestic actions, the agreements also establish a system of biennial “international consultations and analysis” (ICA) whereby information will be shared in an international forum that includes technical experts and representatives from the party concerned and will lead to a report.
• CCS and Standardized Baselines in the CDM. One of the successful Kyoto Mechanisms has been the Clean Development Mechanism, or CDM, which allows projects in developing countries to receive carbon credits for reducing emissions below a business-as-usual baseline. This approach provides an additional cash flow for projects that otherwise might not have been sufficiently profitable to undertake, and therefore corrects (in part) for the externality cost of greenhouse gas emissions. To this point, CDM projects were primarily in industrial processes, renewable energy and energy efficiency. The Cancun Agreements expand this set to include carbon dioxide capture and storage (CCS) in geological formations, a decision which will probably have some major implications for both the availability of credits and the more constructive participation of certain oil and gas producing countries (Saudi Arabia and Qatar were among the chief sponsors of this proposal). Another potentially useful change to the CDM could come from the decision to allow so-called “standardized baselines,” which should reduce transactions costs in a number of project categories where such costs have been prohibitively high.

Delegates in Cancun did defer a couple of major questions, such as the status of the Kyoto Protocol and the central question of equitable burden sharing. These will present difficulties in the future. However, the Cancun Meeting’s progress on a broad array of issues does provide a basis for a future agreement. While the legal form of such an agreement remains uncertain, the Cancun Agreements may reassure governments that there is still a use for the broad international discussion under the UNFCCC, and may help focus preparations for the 2011 conference in South Africa.