Global climate governance blog

Wednesday marked the first day of the United Nations Conference on Sustainable Development in Rio de Janeiro, commonly referred to as Rio+20 as it seen as a successor to the Earth Summit that took place in the same city in 1992.  The draft agreement presented by Brazil, the host country, to delegates as they arrived at the conference has been greeted with dismay by civil society groups who believe that it “does not reflect [their] aspiration.”  Senior NGO representatives have since requested that the opening paragraph be amended to remove reference to the “full participation of civil society”.

These disappointments, felt by NGO representatives who had higher hopes for Rio+20, point to mixed expectations between delegates and NGOs over the role of NGO consultation in improving the quality and accountability of the final agreement.  When the initial draft, entitled “The Future We Want” was published on 16th June, civil society responded with “The Future We Don’t Want,” an e-petition deriding the draft and calling for “transitional actions for global sustainable progress.”    The lack of substantive CSO input into the most recent draft highlights the struggles civil society faces in affecting the course of negotiations, despite its involvement in the preparatory process.    This reflects the continued inequitable distribution of power in global governance with respect to climate change and sustainable development.  Whilst progress has been made vis-à-vis increasing the voice of developing countries since the 1992 Earth Summit, these benefits have accrued to the dominant emerging economies, as evidenced by the significant role of Brazil in authoring the draft.    However, civil society and the least developed countries remain on the fringes.  Given the lack of NGO participation in preparing the draft it is unsurprising that their representatives requested the paragraph claiming such be removed. 

One key issue that demonstrates the limited input of civil society to the draft document is  the elimination of fossil fuel subsidies, which are estimated at $400 billion by the International Energy Agency and up to $1 trillion by Oil for Change    One of the challenges in promoting increased uptake of renewable energy sources is their high price per unit with respect to energy from fossil fuels.  That fossil fuels prices are kept low by subsidies means that this price difference is to some extent artificial:  a removal of subsidies would make renewable energy more competitive and reduce demand for fossil fuels.  In this way, subsidies provide economic incentives for environmentally damaging behaviour and contribute to climate change.  The initial draft did acknowledge this issue but only tentatively, supporting the eventual phasing out of fossil fuel subsidies and agreeing to their gradual elimination. There followed a high profile Twitter campaign in addition to explicit demands from numerous civil society groups to pledge swifter and more decisive action on this issue.  The negotiators did relent and inserted further paragraphs concerning subsidies but these were tokenistic, enabling them to claim that attention had been paid to the demands of civil society without actually fulfilling them.  On 19th June the text was amended to reaffirm pre-existing commitments to eliminate fossil fuel subsidies, whilst merely “inviting” countries that do not yet have such commitments to “consider” introducing them.  There is still therefore no clear plan or binding agreement to end this practice.  Whilst there have therefore been some changes to the draft on this issue, the primary goal of CSOs of an end to fossil fuel subsidies is nevertheless unlikely to occur in the short or medium term in the absence of clear, binding commitments.

From this example, it can be seen that the expectations of civil society regarding Rio+20 may have been misplaced.  Hopes were high among some actors given their participation at all stages of the preparatory process of the conference, their mass presence at the summit itself including representation at the High Level Roundtables and the political will of certain key delegates such as EU Commissioner for Climate Action Connie Hedegaard for a firm agreement.  However, the result as it stands is more a recognition of the challenges facing the globe rather than a clear plan as to how to surmount them.  Although the conference is not yet over, and there remains time for binding agreements to be reached, NGOs are not optimistic that this will occur.  It remains to be seen precisely what influence civil society would deem adequate for them to accept that the draft has been drawn up “with their full participation.”  Whilst a more equitable global governance regime that takes account of at least some of the demands of civil society is certainly desirable, it may be counter-productive for NGOs to distance themselves from all but the perfect agreement.  More explicit conditions for their approval would go some way to bringing about a more inclusive document.

The secrecy surrounding financial payments made by multinational companies to many governments in exchange for access to natural resources continues to pose a barrier to those seeking to hold their governments to account over their financial agreements.  Too often, communities are denied the financial benefits - such as investments in local services – which they should be seeing as a result of the exploitation of their country’s natural resources. A lack of transparency concerning the financial dealings between many multinational companies and national governments means that, all too often, the flow of royalties, taxes and other payments that are made to governments cannot be traced by outside observers.

Ensuring transparency and accountability is crucial to guaranteeing responsiveness to the needs of a country’s population; by allowing the public to access financial information regarding such payments, citizens are better able to hold their governments to account. Through making this information publicly available, local communities, businesses, politicians and anyone else with an interest in the needs of a particular community or country, are able to assess whether they are getting their fair share of the profits which are being generated from the exploitation of their country’s natural resources.

With such considerations in mind, the European Parliament and member states will be considering a proposal to amend the EU’s Transparency and Accounting Directives over the coming months. The proposal, which was put on the table on 25th October 2011, advocates the introduction of European legislation which would require extractive companies listed in Europe to publish details of payments that are made to national governments. This proposal has taken its initiative from the US Dodd-Frank Wall Street Reform and Consumer Protection Act. The Dodd-Frank Act, which was brought into law in July 2010, requires that oil, mining and gas companies registered with the US Securities and Exchange Commission report the payments that they make to governments.

This piece of European legislation, if introduced on a sufficiently rigorous basis, could make a significant contribution to ensuring an increase in development investment for many low-income countries. It would build on the Extractive Industries Transparency Initiative (EITI), a voluntary initiative of which Ghana (our country case study for the Global Climate Change Governance project) is already a member. However, for the EU legislation to be effective, it must take into account both listed and non-listed firms, as well as ensuring that no exemptions are in place which would jeopardise effective reporting of payments by European firms.

Recent coverage of the situation in Colombia has helped to highlight the need for such legislation. The Colombian government demands that mining companies pay royalties in order to access the country’s natural resources; although 80% of these payments are supposed to be invested in development projects in the producing region, local communities are unable to access any information regarding the status of these payments. If rigorous legislation on reporting by EU companies were brought into law, local communities and decision-makers in developing countries could hold their governments to account over the status of such payments.

Our Global Climate Change Governance project is assessing the accountability policies and quality management systems of key global institutions, as one way of understanding how responsive they are to the needs of citizens in the face of climate change. In the same manner, the need for greater accountability and transparency concerning financial transactions between companies and governments is critical to ensuring that communities in some of the poorest countries benefit from natural resource extraction. We hope that the new EU legislation, when passed, will go some way to achieving this.

In July, the European Court of Justice (ECJ) conducted an initial hearing where US airlines contest the legality of regulating certain flights within the EU under it EU Emissions Trading System (ETS) after the case was deferred by the UK government last year.

The EU ETS which started in 2005 is a ‘cap and trade’ program that places a limit on the amount of greenhouse gas emissions emitted by factories, power plants and other installations. If a limit by a company in these sectors is exceeded, it can purchase emission credits from other companies who emit below their allocated limit, therefore still reducing emissions overall.  Companies who anticipate exceeding their limit are also encouraged to find innovate ways to reduce the emissions without trading, such as incorporating energy efficient technology into their processes.

The EU seeks to further its scope of the EU ETS to encompass the aviation sector in 2012 to further reduce emissions. It will incorporate emissions from all domestic and international flights – from or to anywhere in the world – that arrive at or depart from an EU airport into the EU ETS.

American groups such as the United Continental Holdings Inc., AMR Corp.’s American Airlines and the Air Transport Association of America (ATA) initially challenged this proposal after the UK adopted it into its national rules. It was then deferred to the ECJ.

The airlines are disputing the law as they are opposed to the regulation of American airlines when they travel to countries within the EU. A spokesman for the ATA states this nature of the regulation violates international law.

The airlines also disputed the proposal on the grounds that it violates the Convention on International Civil Aviation because this regulation is not seen as a coordinated effort, but unilateral action, thereby violating the first article of the convention establishing the sovereignty of airspace over a countries’ territory.

The EU is defending its regulation on the grounds that it takes place within a cap and trade system. The EU ETS is a pollution ceiling allowing companies the freedom to choose how they stay under that ceiling without imposing a direct tax charge or levy, expressed an EU climate spokesman.

Emissions from international aviation account for about 2-3 per cent of global greenhouse gas, which is seemingly a small amount in the larger span of things. However, airlines are one of the fastest growing industries, rising greenhouse gas emissions up 45 per cent between 1992 and 2005 within the sector, and it is projected to rise even more in the future.

This case perfectly illustrates the challenges inherent in regulating climate change, a global problem with multiple governance levels. Although the EU ETS is a coordinated effort encompassing 27 countries, it is viewed as a ‘unilateral’ action by American airlines. The desire to extend the EU ETS to encompass air transit in skies not directly above the EU highlights the limited impact climate related regulations have within territories, regardless of its deep effects domestically, a point the EU seems to recognise and attempts address.

The underlying political nature of the US airlines’ opposition to the regulation represents a common problem that prevents many climate initiatives from reaching a much needed wider scope, if it gets enacted at all. Although there is a wide consensus that we should prevent rising temperatures via lowering greenhouse gas emissions and we have an idea about how much, the difference in opinion concerning what industries should be regulated and how to do it (government, private or self) allows for political interests to enter the debate, albeit possibly under the guise of safeguarding economic growth, protecting individual/state rights or any other reason. For example, the argument that the EU ETS violates American sovereignty has been deemed valid enough to present a case to the ECJ. Or to expand, many argue that the airline industry’s relatively low present contribution to the overall atmospheric emissions merits it to become a low priority in the climate change agenda and we should concentrate on other sectors instead.

We will find out around March 2012 weather the ECJ with uphold the EU ETS expansion, which is after the 1 January 2012 date when the expansion should have come into action. Even if the regulation is allowed to go ahead, private American companies have already successfully delayed an EU level progressive policy that aims to prevent rising temperatures.

Very recently the South Centre called for renewed leadership of the EU in climate change negotiations at the UNFCCC climate talks in Bonn, as printed in the Guardian. A lack of EU leadership may doom climate talks to failure.

The EU sees itself as a leader in climate negotiations (see DG Climate) and in the past has demonstrated that it is capable of exerting significant influence in the climate field, most notably through its propellant position during the Kyoto Protocol agreements from the 1990s onwards. At that time the EU overcame internal divisions among its member states and took the opportunity to diminish US power in the increasingly important field of environmental governance.

Compared to those days the EU does currently not seem to be in the mood to lead. Maybe too caught up with economic recovery, signs of the EU’s aspiration to leadership are lacking in the EU internal and external policy and politics. First, in order to lead others the EU needs to clear and ambitious commitments to carbon reduction. Its lack of commitment to climate leadership became for example evident at the Cancun climate change conference last year. The EU offered to raise its carbon emissions reduction target from 20% to 30% of 1990 levels on the condition that others also committed to more ambitious targets. The EU continued to hold this position recently in Bonn. Even considering the EU’s internal constraint of having to align differing opinions from its member states, this is not how a leader in climate change politics (and as said, this is the role the EU attributes to itself) behaves. Leaders set targets and move ahead in achieving them; they do not wait for others to move alongside with them. Although there are a number of calls internally for an increase in EU climate commitments, most notably from the Committee for Environment, Public Health and Security last month, these discussions (let us hope they succeed) are too non-committal and too late to have made a change in recent climate talks in Cancun and Bonn.

More hints of lack of leadership become apparent when we look at the EU’s carbon emissions and carbon emission reductions. Besides the important fact that the EU has achieved a great deal of its CO2 reductions through the so-called “EU bubble” burden sharing agreement of shifting emission allowances internally (see John Vogler and Charlotte Bretherton 2006), we need to look at the fact that the EU is one of the greatest trade powers in the world.  

In 2008, for example, with 16.7% in global exports and 19.1% of global imports, the EU took the lead in external trade ahead of the USA and China (EC Eurostat 2011). These extensive trading activities are in contradiction with most of EU objectives in climate change. Trading activities foster carbon emissions through higher resource use for consumption and production, long and often unnecessary transport ways and higher waste production. They also confuse calculations about real EU carbon emissions and decoupling efforts. Currently, the EU comes third after China and the USA in carbon emissions by country. If we were, however, to include carbon emissions caused by import trading activities (goods are produced in one country but eventually consumed in another) and relocation of production sites (consequently also relocation of emissions abroad) the EU endeavours in climate change protection would look much worse. For example, researchers from the Potsdam Institute for Climate Impact Research found that taking Germany’s trading activities into consideration (i.e. accounting for its exported and imported CO2 emissions) would lead to a revision of the country’s domestic emissions upwards by 15%, as reported in the taz. This number may not at first seem very high; considering, however, how difficult it seems to be for the EU to increase its carbon reduction commitments from 20% to 30%, the revision is significant. 

It follows that, to be a resolute and inspiring leader in climate change policy and also in other sustainability areas, the EU, in conjunction with its member states, would work towards taking full responsibility for all carbon emissions that it causes, internally as well as abroad. It could implement new, meaningful measures to work out its global emissions and by doing so encourage others to act similarly. Creating awareness of accurate emission production is the basis for fair negotiations and behaviour change.

Ultimately, for me, to be a truly coherent sustainability actor, the EU would downsize its global trading activities and instead concentrate on regional production and consumption. This however, may (still) be a little too radical for the EU. Right now, a lot of people would be content for the EU to realise its partly announced plans of reducing carbon emissions by 30% by 2020. 

Whether this move would be enough to convince others to take comparable climate protection measures, particularly considering those opportunities that the EU has missed in recent climate negotiations, I am not sure. If however, the EU is seriously interested in regaining its leadership position in climate change talks, and does not want to be led by others, it needs to demonstrate a clear commitment and lead by example.