Bottom Up In Cancun

The Emerging Focus on Clean Energy Deployment May Break the Climate Logjam

Bracken Hendricks and Lisbeth Kaufman argue that we should welcome the shift from top-down to bottom-up climate measures that’s occurring at this week’s climate conference.

Few observers expected this week’s international meeting in Cancun, Mexico of U.N. climate negotiators to conclude in forging a legally binding treaty for greenhouse gas reductions as a next phase of the Kyoto protocol. Instead, the likely outcome may simply be a balanced package of incremental though significant measures designed to make progress on key climate issues. This movement away from top-down international agreements will be threatening to many because it lacks the appearance of certainty and legal protection that a treaty provides. But the shift to a bottom-up approach dedicated to speeding up deployment of clean technology is not a “consolation prize” of smaller measures. On the contrary, its impact in breaking the logjam on climate change may be profound. And, more importantly, in the race to slow global warming it just might work.

The Kyoto Protocol offered a number of benefits. It promised the security of a legally binding agreement and directly took on issues of global fairness by focusing commitments on historic polluters. But this priority on certainty and equity often came at the price of delay and adversarial negotiations. The Copenhagen Accord and the measures emerging out of Cancun may effectively shift the emphasis to more rapidly moving nationally legislated measures that speed impact on the ground and aligning the interests of major emitters in cutting pollution.

A legally binding climate treaty would be critically important for establishing an international system of compliance. But at the end of the day a treaty can’t deliver national laws or investments in bricks-and-mortar clean energy projects, reformed land use practices, or greater energy efficiency. Negotiators are being pragmatic by stepping back from overarching frameworks and instead focusing international efforts on securing specific commitments to action where agreement can be found. They are also setting in motion real projects that demonstrate the viability of a global clean energy economy, aligning the interests of developed and developing countries in deploying solutions, and creating the context for improved climate politics and the eventual success of a guiding international agreement. These should be seen as welcome developments that do not threaten the international process.

At the start of the talks, Japan signaled its desire to move forward in the near term without a binding commitment by indicating that they would not participate in a second commitment period of the Kyoto Protocol. The faltering of the Kyoto process is especially threatening to developing countries because they fear a future without recourse to binding treaties to guarantee progress.

Yet Japan’s performance so far offers hope and a possible model of how climate protection might proceed in a post-Kyoto environment. Under the Copenhagen Accord Japan’s commitments remain robust with a pledge to cut their emissions 25 percent below 1990 levels by 2020. These reduction targets were further backed by a commitment to fast-start financing for green investments in developing countries of $15 billion. By the end of September $7.23 billion was already implemented. Similarly, the United States has maintained its pledge of 17 percent reductions below 2005 emissions under this framework even in the face of political setbacks on climate legislation. And it has taken up climate finance and other issues.

Bottom-up investments in concrete projects are taking center stage. This is evident in the increasing focus on politically viable strategies to speed clean energy deployment both internationally and in the United States. These investments are becoming the most promising area of consensus for the international community to begin moving forward in rebuilding the global economy on a foundation of clean energy. This newfound emphasis on specific projects and real, if incremental, solutions to existing market barriers may be the greatest legacy coming out of recent climate meetings.

Three bottom-up deployment measures emerging in Cancun

The departure from a top-down approach does not mean the international climate negotiation process is breaking down. Instead, negotiators are beginning to embrace a strategy that values commitments to immediate action, building trust, and making whatever progress is achievable. As we speak, Cancun negotiators are working on a balanced package of bottom-up solutions that offer new possibilities to align interests and build new markets.

For instance, the conference is seeing progress on concrete climate mitigation methods such as reducing emissions from deforestation and forest degradation, or REDD, technology transfer, and increasing access to climate finance.

Preserving forests

REDD agreements include pledges by rich countries to help poorer countries preserve endangered forests so that trees can absorb carbon. They are being blocked by Bolivia and a few other countries. But it seems most other nations support REDD and real agreements can be reached.

Even if Cancun doesn’t produce a global forests agreement, bilateral agreements will provide public- and private-sector financial incentives to protect forests under pressure. These include agreements such as Norway’s pledge in May to provide $1 billion to help Indonesia reduce deforestation between now and 2012. Norway has signed similar pacts with Brazil and Guyana. Last year, the United States , with three partners, also pledged to give a combined total of $4.2 billion to preserve tropical forests over the next three years.

Technology transfer

The Bali Action Plan in 2007 called for strengthened efforts to move technology from developed to developing countries. Incremental progress has been made on technology transfer since then. At Copenhagen participants devised a technology transfer agreement with a Technology Executive Committee to coordinate and a Climate Technology Center to lead capacity-building in developing countries. Less detailed technology transfer language was also included in the Copenhagen Accord.

There have been robust developments since Copenhagen, and many predict that an agreement on technology transfer may be within reach in Cancun. In fact, technology transfer through the Kyoto Protocol’s Clean Development Mechanism already amounted to $50 billion dollars in the five years between 2005 and 2010 for clean technology projects, largely in China and India.

These investment levels should increase going forward, and financing should be moved through a range of multilateral and bilateral agreements.

Access to climate finance

In this decade we will be seriously rebuilding our energy infrastructure to deploy low-carbon technology, making it essential to engage capital markets for broader investment. It’s a good sign, then, that progress on climate finance is being made in Cancun.

Negotiators in Copenhagen made agreements to scale up $30 billion in “fast-start” support to help developing countries reduce emissions and adapt to climate change’s impacts. They also agreed to provide another $100 billion to meet developing countries’ financing needs up to 2020. The challenge at Cancun is to establish a global climate fund with mechanisms to distribute the funds to developing countries.

This goal is within reach. The World Bank and other multilateral development banks, or MDBs, presented analysis at the Cancun conference demonstrating that they already have the instruments necessary to move on climate finance. MDBs provide technical assistance in addition to providing funding, and their tools are designed to mitigate risks to private investors. MDBs are also making additional commitments to develop tools and policies specifically engineered for climate finance.

Moving forward, countries must ensure that pledged funds materialize and are put to work. The UN Secretary General’s Advisory Group on Finance, or AGF, has found that scaling up the $100 billion will be challenging but possible.

On top of the advances above these specific agreements can help build trust and transparency. China, whose resistance to binding measures held up much of the Copenhagen meeting in 2009, has softened its hard-line stance. It continues to move slowly on agreement on a system of reporting and verification measures that assure it is meeting its obligations. But in Cancun, and with the context of this emerging framework, China appears ready to submit to more external review.

These agreements also will make it easier for the United States, the second-largest emitter after China, to take action, which will further align the interests of developed and developing nations. Additionally, the United States’ actions will improve the prospects of forestry, technology transfer, and climate financing agreements, as well as managing other specific challenges such as reining in pollution from black carbon in the atmosphere.

Keeping bottom-up deployment moving after Cancun

The bottom-up deployment strategy taking shape in Cancun will allow the international community to make major strides toward global emissions reductions even under a looser political agreement such as the Copenhagen framework where emitters pledge reductions based on their own national actions. The Center for American Progress and the United Nations Foundation found in a joint report that even without an agreement on a global carbon cap, advancing measures in energy efficiency, renewable energy, forest conservation, and sustainable land use worldwide could achieve up to 75 percent of needed global emissions reduction by 2020 and save a net of $14 billion.

These opportunities need to be actively pursued starting right away. The progress in Cancun on forestry, technology transfer, and financing are exactly the steps needed to begin reaching this 75 percent reduction.

Going forward, the international community can continue to make strides through bilateral and multilateral agreements. The Center for American Progress and Alliance for Climate Protection have devised a plan for the United States to take a leadership position in creating these agreements. The joint report demonstrates that the United States can and should lead on a global climate investment strategy; creating relationships between developed and developing nations to finance clean technologies; energy efficiency; tropical forest conservation; and climate adaption in the near-term (2013 to 2015).

This U.S.-led partnership would work toward scaling up emissions mitigation to limit warming to 2 degrees Celsius above pre-industrial levels, which is the agreed-upon limit to avoid potentially catastrophic climate change.

Just as the U.N. process has faced roadblocks locking in binding international agreements, the United States has also encountered similar barriers passing comprehensive climate legislation that establishes an overarching cap. Here, too, a bottom-up deployment focus can keep global progress going during the current period where the political process is thwarting binding emissions caps.

It might have been ideal to pass both a strong global treaty and an ambitious U.S. climate bill. But even if these top-down agreements had been successful the United States would still have needed to reform its electricity markets, rebuild domestic energy infrastructure, and bring renewable and energy efficiency into mainstream use. Much of this work will need to be done regardless of whether we put a price on carbon or pledge internationally to cut emissions. And with a divided Congress, accomplishing these tasks will take the United States advancing similar bottom-up domestic deployment efforts to cut emissions through targeted legislation, executive action, and progress in the states that together make clean energy cheaper and more available.

The World Resources Institute notes that through ambitious use of the available tools at hand the United States can reduce emissions by 14 percent below 2005 levels by 2020—well on the way to meeting President Barack Obama’s commitment in Copenhagen to a 17 percent reduction. These tools include EPA regulations and state-by-state regional climate agreements.

WRI calculated that this 14 percent reduction could be achieved through aggressive state policies and improved federal executive agency enforcement, even without major new federal legislation on reducing vehicle miles traveled, federal land management policies, or new federal investments in areas such as energy efficiency and renewable energy infrastructure. And particularly without a federal climate treaty.

Estimates by Environment America are even more bullish on the potential impact of proactive state-level policy measures. If even modest federal actions were taken, in addition to robust regional and administrative efforts, much deeper emissions reductions would be well within reach even in the absence of climate legislation.

The United States also should enact policies that accelerate capital investment in clean energy technology. It should focus on deployment challenges and making clean energy affordable and accessible. One example would be establishing a green bank such as the new Energy Independence Trust, which the Center of American Progress and the Coalition for Green Capital have proposed. This new independent corporation would provide much-needed near-term and widespread low-cost financing for proven clean energy technology.

Smart tax policies, too, would go a long way toward deploying low-carbon technologies and reducing emissions from older power plants. These include incentivizing whole-building retrofits, extending the 1603 Treasury Cash Grant program, and expanding the Investment Tax Credit and Production Tax Credit Program along with an extended 48(c) manufacturing tax credit for U.S. Clean Energy Manufacturing. Many of these changes can be accomplished through tax policy and other means that Congress is debating.

CAP believes that a clean energy investment plan such as this should include measures that improve market rules, build more modern infrastructure, and provide improved access to financial capital. America’s aim should be to rebuild our economy to run on clean and efficient energy. This is a bulwark of environmental protection, and it is a profound economic development strategy. It begins and ends with our ability to get projects built.

Today’s climate debate has come to recognize this practical imperative. Far from a step backward, the pragmatic and potentially effective measures under consideration this week in Cancun may be just the thing we need. What will be hailed as only modest wins or compromises coming out of Cancun may turn out to be very important contributions to the international debate. Climate impacts are becoming more severe, while the world has crushing development needs. We cannot afford to wait. It is time to get to work rebuilding the global economy on a foundation of clean energy.

Bracken Hendricks is a Senior Fellow and Lisbeth Kaufman is a Special Assistant for Energy at American Progress.

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Bracken Hendricks

Senior Fellow