Fairness on the agenda as UN begins job of strengthening the Paris climate deal

Hugh Breakey, Griffith University

The dust has long settled from December’s Paris climate summit, which hammered out the first truly global deal to reduce emissions. But the negotiations ended with widespread acknowledgement that the deal needs significant strengthening if its overall goal of keeping warming well below 2℃ is to be met.

The Paris Agreement therefore requires countries to ramp up their efforts significantly over the coming years and decades.

That job arguably begins today, with the opening of an 11-day meeting in Bonn, Germany, featuring the first session of the Ad Hoc Working Group on the Paris Agreement (APA).

The APA functions rather like a much more modest version of the Paris conference. Parties to the Paris Agreement send delegations, and small groups can be tasked with resolving specific issues before reporting back to the larger group for decision-making.

Among the most important items on the meeting’s agenda is the Global Stocktake to assess overall progress towards fulfilling the Paris Agreement’s goals. This stocktake will kickstart the process of five-yearly reviews to strengthen the Paris Agreement, the first of which will happen in 2023.

A new approach

The Paris Agreement sets down a new model for confronting global warming. Unlike the Kyoto Protocol, which imposed emissions targets on each country in a “top-down” way, the Paris process allowed countries to pledge their own climate targets.

This approach has been credited for the Paris negotiations’ success, in contrast with previous talks which descended into recriminations over the burden that each country should bear.

But one obvious weakness of the new model is that the countries’ voluntary commitments will not deliver anything like the necessary emissions reductions to prevent dangerous warming.

The five-yearly review mechanism thus aims to ensure that nations ramp up their commitments in coming years.

The question of fairness

As the Paris regime’s core review mechanism, the Global Stocktake will consider many aspects of the parties’ collective progress. While it will focus mainly on practical and scientific issues, the Paris Agreement also requires it to assess the collective progress “in the light of equity”.

In international climate negotiations, “equity” refers to an array of moral principles developed by the parties since 1992. These principles flesh out ethical priorities, such as ensuring the sustainable development of poorer countries.

They also inform burden-sharing decisions – for example, requiring countries that are more able to fight climate change, or that bear greater historical responsibility for it, to shoulder more of the burden.

As such, those five short words – “in the light of equity” – are arguably the first ever attempt to formalise the idea of countries doing their fair share when considering their contribution to the global fight against climate change.

What will the meeting achieve?

It is too early to know exactly how the APA will implement its mandate. However, in order to cover equity appropriately, the stocktake will need to include an official consideration of how well each country’s climate efforts accord with the Paris goals and principles. This means considering two key questions:

• Is each country doing what it promised?

• Is it promising enough?

This is not what normally happens when parties discuss ethics and fairness. Because the climate negotiations have had no principled system of moral evaluation and deliberation, countries can make implausible and inconsistent ethical claims as they defend climate targets that were actually chosen on the basis of national self-interest.

In the ideal case, the stocktake will encourage countries’ delegates to talk in a reasonable and structured way about the ethical principles that inform their national climate targets. It will hopefully prompt them to be clearer about what principles they think are important, and how those principles justify their contribution.

As well as encouraging laggards to lift their game, the stocktake could clarify the application of specific equity principles. This could lead to improved overall ambition, more fairness in burden-sharing, and a greater shared belief in the regime’s legitimacy. Indeed, the process leading up to the stocktake can itself realise important procedural values, such as inclusiveness, reciprocity and deliberation.

In time, the process may prove to be an essential part of a functioning Paris regime.

What could possibly go wrong?

Opening up an official space for moral appraisals offers perils as well as promises. We must bear in mind that the Kyoto model failed precisely because it proved impossible to get consensus on questions of burden-sharing. An equity-based review might just reignite these past disagreements.

Indeed, any appeal to ethics carries some risks. Sometimes it’s better to speak of collective risk reduction rather than taking an adversarial position of preaching, lecturing or blaming others.

Despite these dangers, the Paris model desperately needs a principled mechanism for reviewing national climate targets so as to scale up the overall level of ambition to what’s needed globally.

The task is not impossible. The drafting of the Universal Declaration of Human Rights shows that, with clear structures and strong leadership, constructive international moral deliberation is possible.

Crucially, the stocktake will not need to take a single authoritative position on what equity requires. It can still drive improved ambition even if it allows coutries substantial flexibility in how they understand and apply equity principles.

While 2023 may seem a long way off, if the APA wants to ensure a constructive process, it will need to start laying the groundwork soon. It can start engaging states on equity issues in small meetings at the upcoming annual climate summits, starting with this year’s talks in Marrakech, or more formally at the Facilitative Dialogue scheduled for 2018.

After all, any assessment of this type does its best work long before it happens. In signalling that an ethical reckoning is on the horizon, it can encourage countries to start seriously considering whether their current commitments are fair, and what they could do better.

Hugh Breakey, Moral philosopher, Institute for Ethics, Governance and Law, Griffith University

This article was originally published on The Conversation. Read the original article.

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Direct Action not giving us bang for our buck on climate change

Paul Burke, Australian National University

Direct Action is the centrepiece of Australia’s current greenhouse gas reduction efforts. To date, A$1.7 billion in subsidies has been committed from the government’s Emissions Reduction Fund to projects offering to reduce emissions.

The scheme replaced Australia’s two-year-old carbon price in 2014 and is a key part of the government’s plan to reduce emissions by 5% below 2000 levels by 2020, and 26–28% below 2005 levels by 2030.

Environment Minister Greg Hunt has called Direct Action a “stunning success” and “one of the most effective systems in the world for significantly reducing emissions”.

In a new article in Economic Papers, I look into the economics of Direct Action and how it is working. I conclude that the scheme is exposed to funding projects that would have happened without government funding.

This issue has long been known as a threat to schemes of this type, and means that the scheme is likely to be less useful in reducing emissions than the government is claiming.

Commonwealth Procurement Rules require value for money in government purchases. It is not clear we are getting that with Direct Action.

Information problems

The key challenge for schemes like Direct Action is information. What exactly is the scheme buying, and would that have happened without it?

Direct Action works by inviting voluntary project proposals and then allocating funds to the lowest bidders in reverse auctions.

Unfortunately, projects that would have gone ahead even without a subsidy – call them “anyway projects” – have a cost advantage that makes them well placed to win the auctions. It is often difficult for the government to identify such projects. When projects of this type receive funding, taxpayers’ money is being used ineffectively.

Economists call this adverse selection, or the “lemons problem”.

All about that baseline

The government has developed a set of methods for defining projects and measuring the emission reductions provided by each project against estimated baselines. It is an economy-wide scheme, and there are methods covering everything from energy efficiency to aviation.

As is, the methods leave opportunities for anyway projects to qualify. The Emission Reduction Fund White Paper states that a “flexible approach” is being pursued so as to encourage participation.

One rule is that projects be new. But across the Australian economy, new projects are launched every year. Some happen to reduce emissions. These projects are being attracted into the Direct Action auctions.

Carry-overs from the former Carbon Farming Initiative have also been allowed to side-step the newness requirement.

The experience so far

Three Direct Action auctions have been held to date, with the most recent in late April 2016.

Some of the funded projects are likely to be providing genuine reductions in emissions. Unfortunately, however, some project categories are rather questionable.

Landfill operators have been awarded Direct Action subsidies in each of the auctions. Their projects are often already generating revenues from electricity sales and renewable energy certificates.

Other projects to win subsidies include upgrades to lighting in supermarkets and to the fuel efficiency of vehicles. These are activities that are supposed to happen anyway.

The biggest winner to date has been vegetation projects. Among these are projects to reduce tree clearing, including of invasive native species near Cobar and Bourke in New South Wales. The large payments for these projects are likely to have preserved some vegetation. But some farmers appear to have not actually been planning to clear. If so, funding is going to anyway projects.

This vegetation could be protected under the avoided deforestation category of Direct Action. But was it going to be cleared, and is a taxpayer-funded subsidy the best way to save it?
Paul Burke, Author provided

Projects potentially in line for the next auction include boiler upgrades and modifications to aircraft. If Direct Action were to continue for years to come, the bill could become very big.

Journalists such as Lenore Taylor and Tristan Edis are among those who have raised concerns about the quality of Direct Action projects. The government has yet to properly engage with this issue.

This problem could be avoided

There are far better policy approaches than Direct Action subsidies.

A key advantage of either an emissions tax or an emissions trading scheme is that the government does not need to evaluate individual projects from covered enterprises.

These schemes instead introduce a price per unit of emissions and leave the private sector to decide which projects to implement. Large emitters are already required to report their emissions, so implementation is comparatively straightforward. Any revenue raised could be used to reduce other taxes or Australia’s budget deficit.

Regulations could also be put to more use. Strengthened restrictions on vegetation clearing and on the release of coal mine gas are examples.

Eligibility to generate offset credits should be tightened to cover only credibly genuine emission reductions that are difficult to achieve using other policies. Some carbon farming activities can meet this criterion, and could generate revenue from private-sector buyers. Public expenditure on new offset projects could be ended.

Better off going back to what was working

There are many other downsides to Direct Action. These include its administrative complexity, the issue of emissions reappearing elsewhere in the economy, and the subsidy culture it inculcates.

The scheme is yet to induce emissions reductions in key sectors of the economy. Emissions from electricity generation are rising again.

Australia has a big challenge ahead in decarbonising our economy. There are many opportunities, but we need to get our policy settings right. It would be better to move on from Direct Action subsidies. An approach centred on pricing emissions makes more sense.

An open-access version of Paul’s paper can be downloaded here.

Paul Burke, Fellow, Crawford School, Australian National University

This article was originally published on The Conversation. Read the original article.