Climate Talks Back $100 Billion Aid Fund, Forest Protection; No Kyoto Deal

Envoys at United Nations talks agreed to a package aimed at limiting global warming by protecting forests, advising nations on adapting to higher temperatures and opening a $100 billion Green Climate Fund.

The group representing 193 nations set aside differences between rich and poor nations about how to limit greenhouse gas emissions after 2012, when restrictions in the 1997 Kyoto Protocol expire. That issue may roil the talks next year.

“There is still a long journey ahead, a difficult journey,” Connie Hedegaard, the European Commission envoy to the talks in Cancun, Mexico, said in an interview. “But we’ve shown in the last few days that compromise is possible. That’s the kind of spirit we need.”

The Cancun Agreements help heal a rift that resulted in the collapse of negotiations last year in Copenhagen, where 144 nations led by the U.S. and China broke off from the rest of the group to sign up for voluntary measures on limiting pollution from fossil fuels. Bolivia, which was among six countries that blocked an agreement in 2009, objected to this year’s program.

“It’s a pretty good balance,” said Jennifer Morgan, climate and energy program director at the Washington-based World Resources Institute. “We’ve managed to bring all major emerging economies into a fragile UN agreement.”

U.S. Secretary of State Hillary Clinton called the agreement “a balanced and significant step forward.”

Elements of the Package

The deals in the UN text, which delegates greeted with cheers and multiple standing ovations, include:

-- A “Green Climate Fund” that would manage a “significant share” of the $100 billion pledged last year in climate aid from richer to poorer nations. The World Bank was invited to manage the fund.

-- A technology mechanism would be set up to help developing nations tap low-carbon products such as wind turbines, solar panels, and energy-saving devices. Further market mechanisms will be debated at next year’s conference in Durban, South Africa.

-- A forest plan known as Reducing Emissions from Deforestation and Forest Degradation, or REDD. It would fund projects in developing nations that use plants to soak up carbon dioxide, the main greenhouse gas. A mention of using carbon markets in the program was dropped from the agreement.

-- A “Cancun Adaptation Framework” that would help assess the needs of the most vulnerable nations to adapt to the effects of higher temperatures such as rising sea levels, increased droughts and melting glaciers.

-- A package of details on how to monitor, report and verify emissions reductions by developed countries and climate protection actions taken by poorer ones, or MRV in UN jargon.

‘Very Substantive’

“These drafts represent real and very substantive progress,” Patricia Espinosa, the Mexican foreign secretary who is leading the talks, told delegates, who received an ovation for her efforts.

The text did not outline tighter emission targets from any nation, referring instead to figures that will be published later covering cuts from industrial and developing nations.

The lack of an extension or a replacement for the Kyoto treaty may boost the cost of fighting climate change, said David Hone, chairman of the International Emissions Trading Association, a Geneva-based lobby group,

“If there is no international cohesiveness, it makes it more difficult for a responsive market-based approach to develop,” said Hone, also Royal Dutch Shell Plc’s climate adviser. “This ultimately leads to a higher-cost solution for everyone,” he said in a phone interview from London.

Kyoto Dispute

The dispute about how to replace or extend Kyoto marred the two weeks of talks and nearly derailed them. China, India, Brazil and South Africa pressed industrial nations to agree to new restrictions on fossil fuel emissions once Kyoto finishes. Japan, Canada and Russia refused, saying the accord excludes the world’s two biggest polluters, the U.S. and China.

“The negotiations are not completely fulfilled,” China’s delegation chief Xie Zhenhua told delegates at the conference. “The negotiations in the future will continue to be difficult.”

Compromise wording keeps alive the possibility that Kyoto is extended while not committing any nation to make new promises. The UN document said countries will move as soon as possible to ensure there is no gap between the Kyoto treaty’s first commitment period expiring in 2012 and the next round of cuts. It suggests “further work” will need to be done.

Confidence in Process

“They seem to have solved the Kyoto conundrum,” said Tim Gore, policy adviser for Oxfam. “They seem to have a system which will give enough confidence to developing countries that the Kyoto Protocol will move ahead.”

The document notes developed countries would need to cut combined emissions in the range of 25 percent to 40 percent below 1990 levels by 2020. That compares with a 5.2 percent target from 1990 levels between 2008 and 2012 under Kyoto.

“This is a good paper, and a good basis for moving forward,” Kuni Shimada, the Japanese envoy, said in an interview, praising the work of the Mexican foreign minister.

The UN text suggests the world keep temperature gains below 2 degrees Celsius (3.6 degrees Fahrenheit) and consider whether to make the pledge 1.5 degrees. Current emissions reduction pledges could lead temperatures to rise up to 5 degrees by 2100, the UN Environment Program said Nov. 23.

“I’m really disappointed, because we’re toying around the edges,” Bharrat Jagdeo, president of Guyana, said in an interview on Dec. 9. “Positions are watered down. The greenhouse gases are being pumped into the atmosphere.”

Copenhagen Collapse

Last year, Bolivia joined Venezuela, Sudan, Cuba, Nicaragua and Tuvalu in blocking the Copenhagen Accord, an agreement brokered by about 30 leaders, including U.S. President Barack Obama and China’s Premier Wen Jiabao, from being adopted as a formal UN text. Developing countries remain frustrated that industrial countries aren’t cutting emissions more.

This year Bolivia also said it would not join in the consensus. The chair of the meetings overrode those objections and adopted the text, taking note of Bolivia’s concerns.

“Bolivia isn’t prepared to sign up to a document that puts more human lives closer to death,” Pablo Solon, the nation’s envoy at the talks, told delegates at the meeting this morning.

The U.S., which never ratified Kyoto, sat outside the debate about how to extend the treaty. It prefers a new system for limiting emissions that requires quick-growing polluters including China and India to join. Todd Stern, head of the U.S. delegation in Cancun, said the package showed “balance.”

A failure in Cancun would have lead to a loss of confidence in the UN-led effort to curb global warming. And the coming dispute over how to replace the Kyoto pact also threatens the process.

“Kyoto is the lynchpin,” Alden Meyer, who has attended the UN talks for the U.S.-based Union of Concerned Scientists for more than a decade, said in an interview. “If the message out of here is that Kyoto is dead or on life support with no chance of resuscitation then the developing countries will block anything going forward that the U.S. needs for a new treaty.”

To contact the reporters on this story: Jim Efstathiou Jr. in Cancun, Mexico at jefstathiou@bloomberg.net; Alex Morales in Cancun, Mexico, at amorales2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg in Cancun, Mexico at landberg@bloomberg.net

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