South Africa Workshop 16-17 October 2005 Looking to the Future – Challenges for Developing Countries Luiz Gylvan Meira Filho Visiting Professor Institute for Advanced Studies University of São Paulo

National Climate Change Conference“Climate Action Now”South Africa, 17-21 October 2005Climate Change Consultative ConferenceThe CDM and strengthening a post-2010 climate regimeLuiz Gylvan Meira FilhoVisiting ProfessorInstitute for Advanced StudiesUniversity of São Paulo

The UNFCCC established amandatory quantitative objective of“stabilizing the atmosphericconcentration of greenhouse gasesat a level...”

This implies that all countries arecommitted, collectively, to reach asituation where the net anthropogenicemissions (net means emissionsminus removals), remain constantover time.

Given the dynamic equilibrium ofcarbon dioxide between theatmosphere and the terrestrialbiosphere, in practice we have tostabilize the stock of carbon in theatmosphere-biosphere system.

From the point of view of the historyof emissions, developing countriesare those that, by 1990, had not yetreached their objectives of providingenergy, transportation, etc, to all oftheir population.

Even if the industrialized countriesceased all of their emissions today,the developing countries would haveto limit their emissions. The level atwhich they would limit their emissionscould be at a higher than the presentlevel, on a per capita basis.

Regardless of the level at which theatmospheric concentration of carbondioxide is to be stabilized, it will benecessary to reduce its globalemissions by about 60 percent,otherwise there is no stabilization.

The long-term challenge fordeveloping countries is then to seeka future in which their emissions arelimited. This is sustainability from thepoint of view of climate.

The near-term challenge fordeveloping countries is to use theinternational climate changeagreements to facilitate the transitionto that future.

The Convention provides for adifferentiation of commitments (commonbut differentiated responsibility).In particular, non-Annex I countries aresupposed to receive financial resourcesto support their commitments.

At present, in addition to ODA andGEF as the financial mechanism ofthe Convention, the only practicalmechanism for the provision of thosefinancial resources is the CleanDevelopment Mechanism of theKyoto Protocol.

It follows that the post-2012 CDM is asignificant part of the debate on thepost-2012 regime.

Lack of clarity about the second andfurther commitment periods under theKyoto Protocol is translated as riskfor the investors. This fact is alreadyinfluencing negatively investordecisions.

Any post-2012 regime containing aCDM style mechanism must containassurances over a period of timelonger than at present.

The interpretation of the MarraqueshAccords at present preclude, in practice,the implementation of large-scale CDMproject activities on the grounds that theyare not able to demonstrate financial orinvestment additionality, or that they arebased on governmental policies.

Further guidance is needed from theMeeting of the Parties to the KyotoProtocol, indicating that large projects(e.g. those involving the increase in theuse of renewables, or the redesign oftransportation)

Such guidance would make it easier forParties included in Annex I of theConvention to accept deeper cuts inemissions in the post-2012.They would pave the way for Parties notincluded in Annex I of the Convention tosee the benefits of adopting limits toemissions on a scale larger than that ofsimple projects.

There is a danger that, if COP-11 doesnot make progress in reforming the CDM,the compliance with Kyoto targets byAnnex I Parties will be done with use ofthe emissions trading mechanism underthe Protocol, without a real contribution tomitigating climate change – simply usingthe slack available in Russia and Ukraine.

At present, the existence of the CDM is apowerful factor in engaging the privatesector in support of government policiesto mitigate climate change. A signal fromCOP-11 in a direction different fromenlarging the CDM may reverse thissupport.