New York – A year after the 15th Conference of the Parties (COP15) in Denmark ended in disarray, climate change negotiation veterans are gearing up to meet in Cancun, Mexico, for COP16, in hopes of achieving some progress in the development of a framework that will succeed the Kyoto Protocol.
In the white paper “COP16: Not the Final Countdown”, Deloitte Touche Tohmatsu Limited (DTTL) examines the expectations for and potential outcomes of the COP16 meeting, as well as the potential implications for business.
“Climate change is too important an issue to be left in limbo,” says the paper’s author Nick Main, DTTL’s Global Managing Director, Sustainability & Climate Change. “Given that we are less than two years away from the expiration of important elements of the Kyoto Protocol, there needs to be progress if we are to establish the next framework for determining and enforcing burden-sharing among nations for greenhouse gas emission reductions.”
Commenting on the COP process, DTTL Global Managing Director Services and Mergers & Acquisitions, Jerry Leamon, says, “The Conferences of the Parties are the only global negotiations aimed at achieving a global agreement on emissions reductions. Even though the expectations for Cancun have been set low, it is critical that the world leaders continue to discuss the challenges and the conditions that will lead to a more sustainable future.”
One obstacle to reaching a meaningful agreement in Cancun is the unfinished business that remains from COP15. Promised funding for climate change mitigation and adaptation programs in developing nations has yet to materialize. “Already there is some comment that the US $ 30 billion of short-term emergency funding promised to developing countries has not been forthcoming,” says Main. “There needs to be a greater confidence that promises of funds to the developing world post-2012 are credible.”
Furthermore, the mechanisms for transparency, accountability, and the management of finances will need to be created or strengthened. It will be critical to reach an agreement on the issue of measurement, reporting, and verification (MRV), which will be instrumental to the transparency and accountability of emissions reductions.
“Additionally, Nationally Appropriate Mitigation Activities (NAMAs) and the measurement bases need clarification,” says Main. “The structures supporting the financing of carbon reduction need to be strengthened and the mechanisms for collecting and distributing the funds must be created.”
According to the paper, what may help accelerate the negotiations is if “the developed world, potentially in the form of the G20, indicates what level of commitments and ambition it could subscribe to. This would involve quantifying both reductions that might be targeted, and contributions to greenhouse gas mitigation and climate change adaptation funds. Such a move could provide a basis for a negotiation. But it would be a misleading simplification to think that this is a simple binary negotiation that pits the developed world against less-developed countries. It might be very important for Europe and the United States to have a common view on these issues.”
Success at COP16 will likely be defined as agreement on how to negotiate, leaving the substance of any agreement for COP17, to be held December of 2011 in South Africa, according to the paper. And in the absence of a coordinated global response to climate change, in-country legislative procedures will be of greatest significance for businesses until COP17. Increasing use of bilateral negotiations and agreements on carbon credits are likely to be features of the next few years. Moreover, the environment for business is likely to become increasingly complex and difficult to manage.
“Companies should pay attention to the shifting terminology, as ‘climate finance’ is increasingly used in lieu of ‘carbon markets.’ This reflects a new paradigm in which mechanisms such as NAMAs and non-market-based forestry incentives have taken on greater prominence,” adds Main. “Companies will continue to be challenged to understand how their resource use – as well as their overall business models – will be affected by national and even local interactions with the regulators and other stakeholders occasioned by these mechanisms.”
Click here to read the white paper: https://www.deloitte.com/assets/Dcom-Global/Local%20Assets/Documents/Press/dttl_cop16_final_11152010.pdf
About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte’s approximately 170,000 professionals are committed to becoming the standard of excellence. For more information, visit www.deloitte.com/about.
Source: Deloitte Press Release dated November 16, 2010.
