In the four years since the Paris climate agreement was adopted, countries have debated the fine print of how emissions reduction should be tracked and reported. One critical detail is proving particularly hard to work out – and a weak result would threaten the environmental integrity of the entire deal.
The sticking point is rules for carbon markets: specifically, how to prevent double counting of emissions reductions by both the country selling and buying carbon credits.
These rules are proving a major barrier to reaching consensus. In December, the negotiations move to Chile for this year’s major climate talks, known as COP25. The double counting issue needs to be resolved. It will not be an easy job, and the outcome matters to many countries, including Australia.
The Morrison government says Australia will meet the Paris emissions targets by 2030 without international trading – partly by counting old carbon credits towards its Paris efforts. But in future Australia may adopt a stronger target in line with global climate goals. This may entail government and businesses buying carbon credits from overseas.
In an article just published in the journal Science, we and our co-authors* explain why double counting could undermine the Paris goals, and how a robust outcome could be achieved.
International carbon trading allows two or more countries to achieve their emissions targets more cheaply than if going it alone. Countries where cutting emissions is relatively cheap do more than is required by their targets. They then sell the additional emissions reductions, in the form of credits, to countries that find it harder to achieve their targets.
Carbon credits could be produced through activity such as replacing fossil fuels with zero-emissions energy, greater energy efficiency and electrification in transport and buildings, new technologies in industry and better practices in agriculture and forestry.
Rules for carbon trading are defined under Article 6 of the Paris agreement. Trading under the deal could be big: almost half the parties to the agreement have signalled they want to use carbon markets. Airlines might also become major buyers of emissions credits, under rules requiring them to offset increases in carbon emissions from international flights above 2020 levels.
The cost savings from using carbon markets could make it easier for countries to adopt more ambitious targets – ultimately resulting in greater emissions reductions.
But if trading rules are not watertight then the use of carbon markets could lead to greater emissions, undermining the agreement.
One fundamental risk is double counting: a country selling a carbon credit might claim the underlying emissions reduction for itself, while at the same time the country buying the credit also claims the same emissions reduction.
Obviously any international transfer of emission reductions should not lead to higher total emissions than if participating countries had met their targets individually. This could be ensured through a form of double-entry bookkeeping, wherein the country selling carbon credits adjusts its emissions upwards, and the country acquiring the carbon credits adjusts, by the same amount, downwards.
But the devil lies in the detail – and in the self interest of the parties involved.
Countries are wrangling over what double counting is, how it should be avoided and whether it should sometimes be allowed.
Some countries hoping to sell emissions credits, notably Brazil, propose rules under which emissions reductions sold to another country could effectively also be claimed by the selling country. Such rules existed under the Kyoto Protocol, which came before the Paris agreement. However under Kyoto developing countries did not have emission targets. All major countries have emissions targets under Paris, making the method unsuitable now.
Another potential pitfall lies in the potential purchase by international airlines of large amounts of credits to offset increases in their emissions. Aviation emissions are not counted in national emissions inventories. So it would be logical to adjust the selling country’s inventory for any emissions reduction sold to airlines.
But some countries, notably Saudi Arabia, argue that this should not be done because the airline industry is governed by a separate international treaty. This approach would allow emissions reductions to be included in both agreements and counted twice.
In a separate point of debate some countries – including Australia, Canada, Japan, and the United States – oppose the idea of a single international body overseeing carbon trading under the Paris agreement, arguing for more national sovereignty and flexibility between nations buying and selling.
Making things even more complex, the Paris agreement allows each country to determine how to frame their emissions target. Some countries frame them as absolute emissions, others as a reduction relative to business-as-usual, or as a ratio of emissions to gross domestic product. Some countries’ targets are simply unclear.
Letting each country determine its own ambitions and approach was key in making the Paris agreement a reality. But it makes accounting for carbon markets more complex.
There are also questions over whether a portion of carbon trading revenue should be allocated to help pay for climate change resilience in developing countries, and whether old credits from a trading scheme under the Kyoto Protocol, the Clean Development Mechanism, should be tradable in the new scheme.
The solutions to all these issues will be nuanced, but will require that governments agree on some fundamentals.
The first is that a single set of common international accounting rules should apply, irrespective of which carbon market mechanism is used by countries or groups of countries.
The second is to ensure robust emissions accounting, regardless of how mitigation targets are expressed.
The third is that over time, all countries should move toward economy-wide emissions targets, as the Paris Agreement foresees.
The need to reach a political deal in Chile must not result in loopholes for international carbon markets. The rules must ensure environmental integrity and avoid double counting. If this is achieved, emissions reductions can be made more cheaply and global ambition can be more readily raised. If not, then the accord could be seriously undermined.
The article in the journal Science “Double counting and the Paris Agreement rulebook” is authored by Lambert Schneider, Maosheng Duan, Robert Stavins, Kelley Kizzier, Derik Broekhoff, Frank Jotzo, Harald Winkler, Michael Lazarus, Andrew Howard, Christina Hood. See here for the full manuscript.
Frank Jotzo, Director, Centre for Climate and Energy Policy, Crawford School of Public Policy, Australian National University; Lambert Schneider, Research coordinator for international climate policy, Oeko-Institut, and Maosheng DUAN, professor, Tsinghua University
Three years after the Paris Agreement was struck, we now finally know the rules – or most of them, at least – for its implementation.
The Paris Rulebook, agreed at the UN climate summit in Katowice, Poland, gives countries a common framework for reporting and reviewing progress towards their climate targets.
Yet the new rules fall short in one crucial area. While the world will now be able to see how much we are lagging behind on the necessary climate action, the rulebook offers little to compel countries to up their game to the level required.
The national pledges adopted in Paris are still woefully inadequate to meet the 1.5℃ or 2℃ global warming goals of the Paris Agreement. In the run-up to the Katowice talks, the Intergovernmental Panel on Climate Change released a special report detailing the urgent need to accelerate climate policy. Yet the summit ran into trouble in its efforts to formally welcome the report, with delegates eventually agreeing to welcome its “timely completion”.
Rather than directly asking for national climate targets to be increased, the Katowice text simply reiterates the existing request in the Paris Agreement for countries to communicate and update their contributions by 2020.
Much now hinges on the UN General Assembly summit in September 2019, to bring the much-needed political momentum towards a new raft of pledges in 2020 that are actually in line with the scientific reality.
A key element of the Paris Agreement is the Global Stocktake – a five-yearly assessment of whether countries are collectively on track to meet the Paris Agreement’s goals to limit global warming.
The new rulebook affirms that this process will consider “equity and best available science”. But it does not elaborate specifically on how these inputs will be used, and how the outcomes of the stocktake will increase ambition.
This raises concerns that the rulebook will ensure we know if we are falling behind on climate action, but will offer no prescription for fixing things. This risks failing to address one of the biggest issues with the Paris Agreement so far: that countries are under no obligation to ensure their climate pledges are in line with the overall goals. A successful, ambitious and prescriptive five-yearly review process will be essential to get the world on track.
One of the aims of the Katowice talks was to develop a common set of formats and schedules for countries to report their climate policy progress.
The new rules allow a degree of flexibility for the most vulnerable countries, who are not compelled to submit quantified climate pledges or regular transparency reports. All other countries will be bound to report on their climate action every two years, starting in 2024.
However, given the “bottom-up” nature of the Paris Agreement, countries are largely able to determine their own accounting rules, with guidelines agreed on what information they should provide. But a future international carbon trading market will obviously require a standardised set of rules. The newly agreed rulebook carries a substantial risk of double-counting where countries could potentially count overseas emissions reductions towards their own target, even if another country has also claimed this reduction for itself.
This issue became a major stumbling block in the negotiations, with Brazil and others refusing to agree to rules that would close this loophole, and so discussions will continue next year. In the meantime, the UN has no official agreement on how to implement international carbon trading.
Accounting rules for action in the land sector have also been difficult to agree. Countries such as Brazil and some African nations sought to avoid an agreement on this issue, while others, such as Australia, New Zealand and the European Union, prefer to continue existing rules that have delivered windfall credits to these countries.
The new rulebook defines what will constitute “climate finance”, and how it will be reported and reviewed.
Developed countries are now obliged to report every two years on what climate finance they plan to provide, while other countries in a position to provide climate finance are encouraged to follow the same schedule.
But with a plethora of eligible financial instruments – concessional and non-concessional loans, guarantees, equity, and investments from public and private sources – the situation is very complex. In some cases, vulnerable countries could be left worse off, such as if loans have to be repaid with interest, or if financial risk instruments fail.
Countries can voluntarily choose to report the grant equivalent value of these financial instruments. Such reporting will be crucial for understanding the scale of climate finance mobilised.
The Paris Agreement delivered the blueprint for a global response to climate change. Now, the Paris Rulebook lays out a structure for reporting and understanding the climate action of all countries.
But the world is far from on track to achieving the goals of the Paris Agreement. The latest report from the UN Environment Programme suggests existing climate targets would need to be increased “around fivefold” for a chance of limiting warming to 1.5℃. The newly agreed rules don’t offer a way to put us on this trajectory.
Multilateral climate policy has perhaps taken us as far as it can – it is now time for action at the national level. Australia, as a country with very high per-capita emissions, needs to step up to a leadership position and take on our fair share of the global response. This means making a 60% emissions cut by 2030, as outlined by the Climate Change Authority in 2015.
Such an ambitious pledge from Australia and other leading nations would galvanise the international climate talks in 2020. What the world urgently needs is a race to the top, rather than the current jockeying for position.
International leaders and policymakers gathering in Katowice, Poland, for the 24th annual round of UN climate talks know that they have plenty of work to do.
They are hoping to make progress on the Paris Agreement Work Programme, otherwise known as the Paris Rulebook – the guidelines needed to guide implementation of the Paris Agreement. That agreement was struck three years ago, but it is still not clear how the treaty’s goals to curb global warming will actually be achieved.
This requires all countries not only to slash global greenhouse emissions, but also to help the world adapt to the impacts of climate change. The agreement requires countries to develop national climate plans, to report back on their progress, and to ramp up their efforts in the coming years.
Whereas the Paris Agreement talks about what needs to be done, the Paris Rulebook to be agreed at Katowice is about how nations can set about achieving it. Unlike the previous, more prescriptive Kyoto Protocol, the Paris Agreement allows countries to choose their own approach to climate change. But it is important that actions taken by countries are done within an agreed, transparent framework of rules.
Rules need to be agreed about nations’ emissions targets, climate finance (including climate aid for developing countries), transparency, capacity building and carbon trading. Bringing all of this together is a huge challenge for negotiators. They need to establish a common set of rules applicable to all countries, while also maintaining the crucial principle of “common but differentiated responsibilities and respective capabilities” that underpins the UN climate process.
As well as being difficult, the task is also urgent. There is already evidence that countries are struggling to live up to their Paris commitments.
Analysis of the current emissions targets (known as Nationally Determined Contributions) shows that countries need to do more to reach the 2℃ goal. Meeting the 1.5℃ goal will be harder still and will need ambitious and swift action, as recently highlighted by a special report from the Intergovernmental Panel on Climate Change.
Although much of the focus has been on the challenge of bringing emissions targets into line with the Paris goals, our research suggests that climate adaptation efforts are also lagging behind.
Climate adaptation involves managing climate-related risks and deciding on how to manage and prepare for unavoidable impacts, such as increases in intensity and frequency of extreme weather events such as heatwaves and extreme storms, along with slow-onset impacts from sea level rise.
Many countries have developed climate adaptation policies as part of their climate change response. Our recent research analysed 54 of these national adaptation plans to understand how they match up to the intent of the Paris Agreement (as outlined in Article 7 of the Agreement).
We found that most adaptation plans only partially align with the Paris Agreement. Plans were largely focused on the social and economic aspects of adaptation, and were broadly aligned to countries’ existing policy priorities, especially around disaster management and economic development. For developing countries, there was a strong focus on linking adaptation and development.
However, countries are struggling to include environmental considerations into their planning. While the Paris Agreement clearly emphasises the important role that ecosystems play for climate adaptation, most plans are silent on this point.
What’s more, developed countries tended to take a less participatory approach to adaptation planning. Planning in developing countries was hampered by limited access to scientific knowledge but they made more use of local and traditional knowledge. The issue of resourcing and support for developing countries remains a challenge for climate change adaptation.
Our results suggest that countries need to build on their existing adaptation plans to meet the ambitions in the Paris Agreement. There are good opportunities to better balance social and economic aspects with environmental and ecological considerations to improve planning.
Many countries, including Australia, have ratified the Paris Agreement, but few are delivering the ambitious action it requires. Besides pursuing deeper cuts to greenhouse emissions, countries need to revisit and update their adaptation strategies. Australia is well positioned to do so, given its economic wealth, its technical abilities, and the extensive climate adaptation research it has already undertaken.
Increasingly, we know what needs to be done to combat climate change. The Katowice summit will hopefully advance an agreement on how countries can do it. But actually doing it on a globally coordinated scale will be the biggest challenge, and there is some way to go to catch up.
Edward Morgan, Research Fellow in Environmental Policy and Planning, Griffith University; Brendan Mackey, Director of the Griffith Climate Change Response Program, Griffith University, and Johanna Nalau, Research Fellow, Climate Adaptation, Griffith University
While Australia is coming to terms with yet another new prime minister, one thing that hasn’t changed is the emissions data: Australia’s greenhouse gas emissions are not projected to fall any further without new policies.
Australia, as a signatory to the Paris Agreement on climate change, has committed to reduce its total emissions to 26-28% below 2005 levels by 2030, and reach net zero emissions by 2050.
New analysis by ClimateWorks Australia has found Australia has three times the potential needed to reach the federal government’s current 2030 target, but this will not be achieved under current policy settings.
Australia’s emissions were actually falling for more than half a decade, but have been steadily increasing again since 2013. If Australia sustained the rate of emissions reduction we achieved between 2005 and 2013, we could meet the government’s 2030 target. But progress has stalled in most sectors, and reversed overall.
Emissions are still above 2005 levels in the industry, buildings and transport sectors, and only 3% below in the electricity sector. It is mainly because of land sector emissions savings that overall Australia’s emissions are on track to meet its 2020 target, and are currently 11% below 2005 levels.
Despite the current focus on the energy market, electricity emissions comprise about one-third of Australia’s total greenhouse emissions. So no matter what policies are proposed for electricity, other policies will be needed for the other major sectors of industry, buildings, transport and land.
Fortunately, Australia is blessed with opportunities for more emissions reductions in all sectors.
ClimateWorks’ analysis assessed Australia’s progress on reducing emissions at the halfway point from the 2005 base year to 2030, looking across the whole of the economy as well as at key sectors.
We found emissions reductions since 2005 have been led by reduced land clearing and increased forestation, as well as energy efficiency and a slight reduction in power emissions as more renewable energy has entered the market. But while total emissions reduced at an economy-wide level, and in some sectors at certain times, none of the sectors improved consistently at the rate needed to achieve the Paris climate targets.
Interestingly, some sub-sectors were on track for some of the time. Non-energy emissions from industry and the land sector were both improving at a rate consistent with a net zero emissions pathway for around five years. The buildings sector energy efficiency and electricity for some years improved at more than half the rate of a net zero emissions pathway. These rates have all declined since 2014 (electricity resumed its rate of improvement again in 2016).
Looking forward to 2030, we studied what would happen to emissions under current policies and those in development, including the government’s original version of the National Energy Guarantee with a 26% emission target for the National Electricity Market. Our analysis shows emissions reductions would be led by a further shift to cleaner electricity and energy efficiency improvements in buildings and transport, but that this would be offset by population and economic growth.
As a result, emissions reductions are projected to stagnate at just 11% below 2005 levels by 2030. Australia needs to double its emissions reduction progress to achieve the federal government’s 2030 target and triple its progress in order to reach net zero emissions by 2050.
So, while Australia is not currently on track to meet 2030 target, our analysis found it is still possible to get there.
The gap to the 2030 target could be more than covered by further potential for emissions reductions in the land sector alone, or almost be covered by the further potential in the electricity sector alone, or by the potential in the industry, buildings and transport sectors combined. Harnessing all sectors’ potential would put us back on track for the longer-term Paris Agreement goal of net zero emissions.
Essentially this involves increasing renewables and phasing out coal in the electricity sector; increasing energy efficiency and switching to low carbon fuels in industry; increasing standards in buildings; introducing vehicle emissions standards and shifting to electricity and low carbon fuels in transport; and undertaking more revegetation or forestation in the land sector.
The opportunities identified in each sector are the lowest-cost combination using proven technologies that achieve the Paris Agreement goal, while the economy continues to grow.
In the next two years, countries around the world, including Australia, will be required to report on the progress of their Paris Agreement targets and present their plans for the goal of net zero emissions. With so much potential for reducing emissions across all sectors of the Australian economy, we can do more to support all sectors to get on track – there is more than enough opportunity, if we act on it in time.
Tony Abbott has called for Australia to pull out of the Paris climate agreement, in a swingeing attack on Malcolm Turnbull’s National Energy Guarantee.
Abbott said the NEG was not about reducing prices but about cutting emissions. “The only certainty that the National Energy Guarantee as it stands would provide is the certainty of emissions reduction.”
Delivering the Bob Carter Commemorative Lecture in Melbourne, Abbott said: “Withdrawing from the Paris agreement that is driving the National Energy Guarantee would be the best way to keep prices down and employment up – and to save our party from a political legacy that could haunt us for the next decade at least”.
“As long as we remain in the Paris agreement – which is about reducing emissions, not building prosperity – all policy touching on emissions will be about their reduction, not our well-being. It’s the emissions obsession that’s at the heart of our power crisis and it’s this that has to end for our problems to ease.”
Abbott played down the importance of the government’s much-vaunted tax cuts in comparison with the implications of energy policy.
“These are strange times in Canberra when there’s a hullaballoo over modest tax cuts that only take effect fully in six or seven years’ time, while mandatory emissions cuts that start sooner, that mean more for the economy, and whose ramifications will be virtually impossible to reverse are expected more or less to be waved through”.
In the party room last week Abbott had little support for his attack on the NEG. But his constant agitation is unhelpful for the government as it tries to win backing from the states and territories for the scheme. It also reinforces the impression of division in government ranks, even though the majority of the backbenchers now just want the energy policy settled.
Abbott said that his government in 2015 had set a 2030 emissions reduction target “on the basis that this was more or less what could be achieved without new government programs and without new costs on the economy.
‘’There was no advice then to the effect that it would take a Clean Energy Target or a National Energy Guarantee to get there,” he said.
“My government never put emissions reduction ahead of the wellbeing of families and the prosperity of industries”.
When the world’s leading country exited the Paris agreement “it can hardly be business as usual,” he said. “Absent America, my government would not have signed up to the Paris treaty, certainly not with the current target”.
Abbott said he could understand “the government would like to crack the so-called trilemma of keeping the lights on, getting power prices down and reducing emissions in line with our Paris targets – it’s just that there’s no plausible evidence all three can be done at the same time”.
“If you read the National Energy Guarantee documentation, there’s a few lines about lower prices, a few pages about maintaining supply, and page after impenetrable page about reducing emissions.
’‘The government is kidding us when it says it’s all about reducing prices when there ’s an emissions reduction target plus a reliability target but no price target”.
The government said it wanted to give certainty but the only certainty was that any NEG approved by state ALP governments at COAG would be “massively ramped up to deliver even more emissions reduction under the next Labor government”.
Abbott repeated his call for the government to subsidise the boosting of baseload power. He again suggested threatening to compulsorily acquire Liddell coal-fired power station, which AGL is refusing either to keep going or to sell.