Lima COP: Setting the Stage for Paris

The international community converged in Lima, Peru in early December 2014 to hammer out the path forward for a post-Kyoto Protocol climate agreement to be signed in Paris in December 2015. After two weeks of negotiations and more than thirty hours beyond the official ending of the Conference of the Parties ('COP'), climate change negotiators issued their decision text--the Lima Call for Climate Action (an advance unedited version of which is available here). While not setting forth agreed upon elements to include in the Paris agreement, the text sets the stage for further discussions between now and the signing of an agreement in Paris. Unlike most of the prior climate talks in recent history, the U.S. was a leader in the negotiations, and negotiators were buoyed by the presence of the U.S. Secretary of State John Kerry, who stated his personal commitment to getting an agreement signed in Paris.

A key takeaway from the Lima meetings involves changing the narrative around the distinction between developed and major developing countries with all countries, both developed and developing, now being required to take on "intended nationally determined contributions"-  or INDCs -  to reduce greenhouse gases.  The discussions in Lima occurred with the momentum following the joint U.S. and China announcement on greenhouse gas mitigation targets. This agreement helped bridge the historical divide between the industrialised and developing country Parties under the UNFCCC and help to create greater confluence in negotiating positions.  US, EU and Chinese negotiators (representing approximately 50% of global emissions) were aligned in the need to create an ambitious agreement in Paris applicable to all Parties, not just developed countries. These negotiators focused on the need to create a framework which would  maximise the level of participation and ambition of Parties.

There remain, however, substantial divides between the industrialised Parties and developing Parties. The key areas of difference between them are the extent to which the industrialised world will provide finance to developing country Parties and the level of transparency and oversight that the industrialised Parties will have over developing country Parties' mitigation pledges, and the role of a loss and damage mechanism. In the final days of the COP, it was on these issues, among others, that debate ensued over the decision text and these issues are likely to be difficult negotiating points in the lead up to Paris. 

Another dynamic at play in the negotiations was the effort, led by the U.S., to get an agreement on INDCs. Notably, Parties committed to stating mitigation contributions in the first quarter of 2015 to allow time for international scrutiny and to create an opportunity for greater ambition in the overall outcome.  In particular, the U.S. and China INDCs will be closely watched as they constitute a significant portion of global emissions and will factor in heavily in the negotiations around Paris. The more delicate and time consuming discussions on the ‘Elements Paper’ (the draft of elements to be contained in a Paris agreement, and annexed to the Lima Call for Climate Action) were left to future discussion forums to resolve.  As a consequence the Elements Paper has bloated from 5 to almost 45 pages, and it contains a very diverse range of positions on key issues such as the development of a market mechanism, the process by which INDCs will be updated and the role of adaptation finance in the final agreement.

In sum, the Lima Call for Climate Action is a significant step forward on outlining expectations for a new agreement, but it leaves much to be determined between now and Paris in December 2015.  Below we outline key points from the Lima Call for Climate Action. We are also available to discuss specific implications for your business; please see our contact information to the left.

Key points from the Lima Call for Climate Action

Parties required to produce INDCs by Q1 2015

  • The key feature of the Lima Call for Climate Action is that it calls on all Parties to state their mitigation contributions – called ‘Intended Determined National Contributions’ (‘INDCs’) – over the next six months (i.e. by Q1 2015) (paras 10-13).
  • The ‘deadline’ in the Lima Call for Climate Action is couched in soft-language: Parties are invited to provide INDCs well in advance of COP 21 “(by the first quarter of 2015 by those Parties ready to do so)”

Why this is significant?

  • This effectively continues progress agreed to at COP 17 under what is called the ‘Durban Platform for Enhanced Action’. COP 17 [make sure no weird spacing here once in Baker Exchange] established an Ad hoc Working Group on the Durban Platform for Enhanced Action (‘ADP’), a subsidiary body operating with a mandate to develop a protocol, another legal instrument or an agreed outcome with legal force under the UNFCCC applicable to all Parties, which is to be completed no later than 2015 at COP 21 in Paris, and to come into force no later than 2020.
  • Creating the infrastructure for all Parties to make mitigation pledges is an important pre-requisite to achieving a global agreement in Paris, and to this end, the Lima Call for Climate Action is significant. It departs from the previous approach taken under the Kyoto Protocol where only Annex I countries were included.
  • While the Q1 2015 deadline is flexible, the Lima Call for Climate Action clearly calls on Parties to produce INDCs “well in advance” of COP21.
  • INDCs are unique because of their ‘top-down and bottom-up’ nature, rather than the purely ‘top-down’ approach taken in prior agreements.

No ‘back-sliding’ on INDCs

  • The Lima Call for Climate Action states that Parties’ INDCs would “represent a progression beyond the current undertaking of that Party” (para 10).

Why is this significant?

  • In the short term, this is important because it sets in place a requirement for countries to ratchet up their mitigation commitments from where they currently stand.
  • In the longer term, this is significant because it codifies the ‘no back-sliding’ principle. If the Paris agreement includes a mechanism for countries to update their INDCs on a 5 or 10 year basis, it means they will need to constantly build on previous commitments. This will send very strong signals to business and governments regarding the need for transitioning to lower carbon energy sources.

Transparency of INDCs

  • The INDCs shall be accompanied by information that facilitates “clarity, transparency and understanding” of the pledges and may include, inter alia (para 14):
    • quantifiable information on the reference point (including, as appropriate, a base year);
    • time frames and/or periods for implementation;
    • scope and coverage;
    • planning processes;
    • assumptions and methodological approaches including those for estimating and accounting for anthropogenic GHG emissions and, as appropriate, removals;
    • how the Party considers that its intended nationally determined contribution is fair and ambitious, in light of its national circumstances; and
    • how it contributes towards achieving the objective of the UNFCCC Article 2.
  • The UNFCCC Secretariat is to produce INDCs on the UNFCCC website and provide a synthesis report of the INDCs to the Parties by 1 October 2015.

Why is this significant?

  • A key issue of discussion at the COP was the extent to which, and mechanisms for, INDCs to be reviewed.
  • There has been negative press about the failure of the Lima Call for Climate Action to develop a UN led or other form of mechanism to formally review and asses proposals. Ultimately this was removed as it was a contentious issue among developing country parties (particularly sub-Saharan African states and small island states).
  • The text which has been included, however, provides enough impetus for advocacy bodies and financing bodies providing climate finance, to hold Parties to account for the provision of transparent information on INDCs.

Other issues and developments from COP 20

Green Climate Fund ("GCF")

The GCF had a strong presence at the COP. GCF was featured in negotiations based on new country pledges, and it participated in several side events. The total pledges to the GCF are now over $10 billion. There were mixed views about the GCF. There is some concern that its current board of 24 members was unwieldy and may significantly slow its progress and its ability to disburse funding.

Reducing Emissions from Forest Degradation and Deforestation ("REDD+")

REDD+ features obliquely in the Lima Call for Climate Action, as one of the policy approaches which technical expert meetings should continue to examine (para 19 (a)(iii)).

The overwhelming sentiment regarding REDD+ was that the Warsaw Framework (COP 19) largely settled the elements of REDD+, and that Parties should focus now on implementation. The technical discussions on REDD+ focused largely on safeguards and whether greater guidance should be provided to the Parties. No conclusion was reached on this topic.

In general, the REDD+ negotiators have determined that work on REDD+ has been completed, and the topic has been turned over to higher level discussions to advance the Durban Platform and new market mechanism. REDD+ did not featured prominently in either discussion in COP 20. However, the Elements Paper attached to the Lima Call for Action does contain several references to REDD+. The work over the next year will be to ensure that the options that recognize REDD+ move forward.

Other REDD+ developments included that Colombia, Guyana, Indonesia, Malaysia and Mexico formally submitted information and data on the status of their greenhouse gas emission reductions in the forest sector. Also, the governments of Norway and Germany committed up to $65 million to each of Colombia and Ecuador under the REDD Early Movers program.