KPMG avisa sobre La incertidumbre en torno al Protocolo de Kioto

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Sustainable Insight

Will Doha deliver a deal?

KPMG client briefng:

UN Climate ChangeConerence 2012 (COP 18)

November 2012

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2/12 2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member rms o the KPMG network o independent rms are aliated with KPMG International. KPMG International provides no client services. All rights reserved.


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What has happened in the run-up to COP 18? 2

What was achieved at Durban in 2011? 3

What are the key topics o debate at COP 18? 4

1. The Kyoto gap 4

2. The ambition gap 4

3. The nance gap 6

Filling the gaps: a sign o progress 7

Viewpoint 8

Contents

2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member rms o the KPMG network o independent rms are aliated with KPMG International. KPMG International provides no client services. All rights reserved.


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This client briefng provides a shortpreview o the 2012 COP 18 climate

talks in Doha, Qatar. In this document,

KPMGs member frms revisit wherethe international political process on

climate change got to in 2011 in Durban,

South Arica. We also summarize what

is on the table at Doha through the lens

o what is important and relevant to

business.

To conclude, Yvo de Boer KPMG

Internationals Special Global Advisoron Climate Change and Sustainability asks whether an international climate

deal is still worth fghting or.

What has happened in the run-upto COP 18?

The build-up to COP 18, the 18th

Conerence o the Parties o the UnitedNations Framework Convention on

Climate Change (UNFCCC) has been

low-key and low on expectations.

Climate change remains well down

the agenda o many countries. Europe

remains embroiled in a sovereign debtcrisis that is limiting its desire and ability

to lead on climate change, while the

worlds two biggest emitters, China

and the US, have been pre-occupied

with leadership transitions in the

run-up to Doha.I low-carbon issues have been global

news at all this year, it has been in

relation to trade disputes. The US

and the EU have taken cases to the

World Trade Organization complainingabout the dumping o solar technology

products by China and, in the case o

the US, wind energy products as well.

The EUs attempt to include aviation in

its Emissions Trading System this year

2 | Will Doha deliver a deal?

2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member frms o the KPMG network o independent frms are afliated with KPMG International. KPMG International provides no client services. All rights reserved.


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also produced erce objections romaround the world.

Expectations were similarly low orlast years climate meeting in Durban,South Arica, but the stakes wereraised because Durban had to dealwith the issue o the ending o the

rst commitment period o the KyotoProtocol. With the deal on a successorto Kyoto not due to be signed until 2015,there is no similar pressure or COP 18,which is expected to ocus mostly onlow-prole technical issues. However,among the technical issues, there aresome political hot potatoes lurking.

What was achieved at Durban in 2011?Going into Durban, expectations wereset low. The developing countries wereinsisting that the Kyoto Protocol mustcontinue at all costs, while countriesincluding Russia, Japan and Canadawere equally adamant they would notget involved.

The prospects or the Kyoto Protocollooked bleak and this in turn createdgreat uncertainty as to the uture o theClean Development Mechanism (CDM)and Joint Implementation (JI) carbonmarkets. Yet just as the entire UNFCCCprocess was in danger o becoming anirrelevant sideshow, delegates surprisedmany by demonstrating a determinationnot to leave Durban without a deal.

That deal included a second KyotoProtocol commitment period, to start

rom 2013, that would give businesscondence that the UN carbon marketswould continue. There was also anagreement rom everyone that anew legal, global instrument to tackleclimate change would be agreed by2015 and implemented by 2020.

It is hoped that by 2015, the globaleconomic situation will have improved

and that the publication o the nextreport rom the worlds climatescientists, under the aegis o theIntergovernmental Panel on ClimateChange, will give urther impetus toeorts to conclude a deal.

Important progress was also made on

the Green Climate Fund, which aimsto mobilize US$100 billion a year tohelp developing nations cut emissionsand adapt to the impacts o a changingclimate. In addition, there was also acommitment to develop a commonsystem or measuring, reporting andveriying emissions reductions. Thiswill be vital to stimulating investmentbecause governments and the privatesector will want to be able to evaluatethe eects o their investments.

However, while Durban made greatprogress towards a new mandate, it leta time bomb in the orm o the wordingo the agreement, which calls or aprocess to develop a protocol, anotherlegal instrument or an agreed outcomewith legal orce. No one is quite surewhat this means and the lack o clarity issure to muddy the negotiating process.

Will Doha deliver a deal? | 3



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What are the key topics o debateat COP 18?There are three key gaps in climatepolicy that must be lled to help theprivate sector have the condence toinvest in climate solutions at scale. It is

these gaps that COP 18 must start totackle and given the interconnectednature o the process, it must tacklethem all at the same time.

1. The Kyoto gapThe rst gap is the Kyoto gap thenew, globally-binding legal instrumentto tackle climate change does not comeinto orce until 2020. So the conerenceneeds to put in place a post-2012commitment period and decide on thelength o that commitment period. TheEU wants it to run or eight years, whichwould take it to 2020, while many otherswant a ve-year period.

This is the most urgent matter ordelegates to tackle, with the rstcommitment period ending on December31, 2012. It is also the one most likely tosee concrete progress the deadline isinescapable and delegates have nowhere

to hide rom it.However, the US, Japan, Russia, Canadaand now New Zealand have abandonedKyoto, although Australia has signed upto the second commitment period. It is

unclear whether or how this will aectthe EUs commitment to the treaty. And ithe EU opts out, what is let o the KyotoProtocol but an empty shell?

Agreement on a new commitmentperiod matters because it givesbusiness certainty about the directiono travel or policy in the long term.Knowing that governments havecommitted to carbon reduction targetsgives companies the condence to taketheir own actions to cut emissions. Byensuring the continuation o the UNscarbon markets, it also provides a wayor them to invest in carbon reduction atthe lowest cost.

2. The ambition gapThe second gap is the ambitiongap climate science is increasinglyclear on the need to restrict averagetemperature rises to 2C andorganizations such as the InternationalEnergy Agency are equally clear thatcurrent commitments will ail to dothis. They account or only 60 percent

o the amount o cuts required to meettargets and urther, urgent action isrequired to ensure that emissions peakby 2015, UNFCCC executive secretaryChristiana Figueres told a pressconerence in Washington in October.




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There is a process in place, known asthe Durban Platorm and an Ad HocWorking Group on the Durban Platormor Enhanced Action (ADP), ocused

on increasing the level o ambitionand enshrining that ambition in a newglobal agreement. This will require newcommitments rom both industrializedand developing countries.

But the rich countries, laboring underpoor economic conditions and pre-occupied with elections, are unlikelyto raise their ambitions, certainly notwithout increased engagement romdeveloping countries. In turn, developingcountries are unlikely to increase their

commitments without urther progresson nance.

Businesses will be watching theoutcome o Doha closely to see whatnew commitments emerge, whetherthey will mean companies are requiredto take on more stringent targets andwhether new opportunities in low-carbon sectors will be created.

Given comments in recent monthsrom countries ranging rom the US to

China and Brazil that seem to attemptto water down the Durban agreement,a restatement o the commitment tobinding measures would be helpul tobusinesses seeking to invest in low-

carbon measures. Negotiations will haveto take account o the act that Russia,Japan, Canada and New Zealand haveopted out o a second commitment

period, while the US remains resolutelyunengaged in the process having neverratied the treaty.

However, voices o business in all thesecountries are increasingly highlightingthe benets o being involved in theglobal process.

The most high-prole example o thiswas Business Weekmagazines recentront cover, a picture o a fooded NewYork street ollowing Hurricane Sandy,

with the words Its Global Warming,Stupid. While acknowledging thecomplex interaction o climate changeand hurricanes, the magazine says:The only responsible rst step is toput climate change back on the tableor discussion ... Ultimately, the globalwarming crisis will require globalsolutions.

In Russia too there has been momentumor change, with the Russian Union oIndustrialists and Entrepreneurs, the

Economic Development Ministry andstate-owned banks VTB and Sberbankrecently calling or the government torethink its reusal to sign up to a secondcommitment period.1

1 http://www.themoscowtimes.com/special/environment/eng/business-lobbying-or-kyoto-emissions-role.html

Accessed 2 November 2012


2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member rms o the KPMG network o independent rms are aliated with KPMG International. KPMG International provides no client services. All rights reserved.2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member rms o the KPMG network o independent rms are aliated with KPMG International. KPMG International provides no client services. All rights reserved.


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3. The fnance gapFinally, there is a nance gap. Yes,an agreement was reached in Durbanon the Green Climate Fund (GCF) butnegotiators have only just agreed whereits headquarters will be in SouthKorea and it is still not clear where theUS$100 billion a year will come rom.Immediate and signicant pledges tothe und would be a welcome outcome

at Doha, but given the global economicsituation it is not at all clear that this willhappen.

There are many questions remainingon the GCF, including what thestructure o the und will be, what itsrelationship will be to existing nancialinstitutions and how the private sectorwill be involved. The answers to thesequestions will determine the appetiteo both governments and the privatesector to engage with the GCF. Businessis waiting or meaningul progresson the Green Climate Fund, whichcould open up a major new source o

developing country projects across theeconomic landscape, including energy,transport, waste management and otherinrastructure development.

Further work is also needed on thestructure o Nationally AppropriateMitigation Actions (NAMAs), and howto link them to unding.

NAMAs are the projects or programs

put orward by developing nations toreduce their greenhouse gas emissions,deliver socio-economic benets totheir people and open up opportunitiesor sustainable growth in their localindustries. Designing and implementingsuch transormational programseectively depends, to a large extent,on having all parties (government, civilsociety and the private sector) ullyengaged.

The private sector is crucial to

implementing NAMA projects andto leveraging public sector unding.Governments need to do more work oncreating the right conditions to engage




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private companies in the design oNAMA proposals. This will improve thelikelihood o proposals being turnedinto concrete projects that appeal tonanciers and corporates and unlock thefow o private investment capital.2

The nance situation is complicated bythe Ad Hoc Working Group on Long-Term Cooperative Action (LCA), whichthe Durban agreement stipulated

would close down its program owork. Developed countries are inavor o this but developing countriesbelieve the group has unnishedbusiness, particularly in terms o

nancial commitments rom theindustrialized nations. It seems likelythat the LCA track will come to an end,but that the unnished business willremain, a refection o the act that theconcept o common but dierentiatedresponsibilities remains divisive.

Business can play a key role in puttingNAMAs into practice, oten with thehelp o the Green Climate Fund, but until

there is more joined-up thinking and thegaps are closed on the Kyoto Protocol,climate targets and unding, then thispotential will remain untested.

Filling the gaps: a sign o progressIn an ideal world, COP 18 would decidethe outcomes that COP 21 in 2015needs to decide, giving negotiators twoyears to put in place an agreement. Itseems unlikely. Yet as recently as lastyear, the entire structure o multilateral

climate negotiations was under threatso, while much remains to be done,the act that we are now talking aboutlling the gaps in the structure is a signo real progress.

2 For urther inormation on KPMGs model or eective NAMAs see the Embarking on the Low-Carbon

Journey:National Mitigation Actions as green growth vehicles in developing nations(KPMG International,

2011) and Financing the Growth of your City(KPMG International, 2011). Both publications can be

downloaded rom kpmg.com/sustainability




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Viewpoint

Yvo de BoerSpecial Global Advisor,KPMG Climate Change & Sustainability

Should we give up on aninternational climate treaty?

Progress towards an internationalagreement on tackling climate changehas been painully slow, dogged byundamental disagreements betweenthe countries involved and exacerbatedby the nancial crisis. Little is expectedo the upcoming COP 18 meeting inDoha so is it time to abandon the ideao a climate treaty altogether?

Why not give up and ocus on nationaland regional eorts to tackle climatechange?

Ater all, negotiating a global deal is aslow, rustrating business. Not only is

climate science constantly evolvingbut the 197 countries that will meet inDoha oten have diametrically opposedinterests and points o view. Blockingprogress is ridiculously easy.

Many o the dierences betweencountries revolve around the concepto historic responsibility. This is the ideathat industrialized countries got rich on

the back o emitting greenhouse gasesso they should act rst, and developingcountries should be allowed to developbeore being called upon to limit theirown emissions.

The lack o commitment rom much othe industrialized world to accept thisburden has contributed to a certainobstructiveness among developingcountries. The rich countries are not justreluctant to pay to tackle climate changein poorer countries they are unwillingto commit resources at home as well.Pre-occupied by the nancial crisis,most countries have not seen tacklingclimate change as something that is intheir national interest.

Nonetheless, a global deal remains

worth ghting or. Governments,businesses and civil society all havemuch to gain, or our key reasons.

The biggest benet would be or thevery national and regional eortsmentioned above. A global deal wouldbring a robustness and a consistency toclimate policies in individual countries.The Montreal Protocol tackling ozone-depleting chemicals, signed 25 yearsago, is a case in point. While countriescan make changes on their own, acting

together can be much more eective.A more consistent policy rameworkwould bring a second benet. Witha legally-binding global agreement inplace, businesses and investors willknow that the direction o travel is notgoing to change regardless o day-to-day events. Only then will they have theclarity and security they need to make




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the long term technology investmentsthat can tackle climate change. Makingthe wrong assumptions because long-term policies are unclear can lead tocostly mistakes in the orm o strandedassets, particularly in the feld o energy.

Thirdly, a global agreement would createtransparency, allowing the eorts o onecountry to be measured against anotherand helping to ensure that tackling

climate change in one place does notsimply move harmul activities to othercountries.

Finally, it would also bring an elemento standardization so that all countrieswould know they are fghting thesame battle under the same rules. Itwould also mean that compliance withthese rules would be overseen by civilsociety groups that could hold partiesto account and ensure that countriesdeliver on their obligations.

The impacts o climate change havestarted to become clearer in developingand developed countries alike. Manygovernments are starting to recognizethat, it is in their interests to act now,regardless o who is responsible orhistoric emissions and who is to payor reducing uture emissions. Theincreasing requency and severity oextreme weather events like HurricaneSandy are beginning to bring the issuesinto sharper ocus or many.

And progress is being made. Followingthe 2009 climate change talks inCopenhagen, countries responsibleor more than 80 percent o globalemissions developed targets to cutor limit the growth o their emissions.The ambitions or last years meetingin Durban were low, yet it produced

major achievements. These includedkick-starting the US$100 billion per yearGreen Climate Fund and setting in traina second commitment period or theKyoto Protocol.

More importantly, though, the Durbanmeeting also started the internationalcommunity down the road o all nationsworking together subject to one legallybinding instrument to cut emissions. And

crucially, this outcome was evidence oa new spirit o determination within theinternational community, with delegatesreusing to close the conerence until anagreement was signed.

But or the agreement to succeed, thebenefts o green growth need to beclearer to everyone. Political consensusis important to building a strategy thatwill survive electoral changes, but thebusiness community must also playa central role. The private sector is

going to do most o the heavy litingwhen it comes to green growth, soit is important that it makes the caseeectively or low-carbon investments.

While its important that all countries arecommitted to action to cut emissionsand that those actions should be real,measurable and verifable, its also clearthat many countries will need help romthe international community to do so.That help should be subject to the samestringent accountability requirements

as the emissions-cutting actionsthemselves. The best way to achievethis is through an international treaty yet another reason that such a treaty isworth fghting or at Doha this year.


2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member frms o the KPMG network o independent frms are afliated with KPMG International. KPMG International provides no client services. All rights reserved.


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Contacts

ArgentinaMartn MendivelsaE: [email protected]

ArmeniaAndrew CoxshallE: [email protected]

Australia

Adrian V. KingE: [email protected]

AustriaPeter ErtlE: [email protected]

AzerbaijanVugar AliyevE: [email protected]

BalticsGregory RubinchikE: [email protected]

BelgiumMike BoonenE: [email protected]

BrazilSidney ItoE: [email protected]

BulgariaEmmanuel TotevE: [email protected]

CambodiaPaul BahnischE: [email protected]

CanadaBill J. MurphyE: [email protected]

ChileAlejandro CerdaE: [email protected]

China/Hong KongLeah JinE: [email protected]

ColombiaOrlando Delgadillo A.E: [email protected]

CyprusIacovos GhalanosE: iacovos.ghalanos@kpmg.

com.cyCzech RepublicEva RackovaE: [email protected]

DenmarkChristian HonorE: [email protected]

FinlandTomas OtterstrmE: tomas.otterstrom@kpmg.

Nathalie Clment

E: [email protected] ArnaudE: [email protected]

GeorgiaAndrew CoxshallE: [email protected]

GermanyJochen PampelE: [email protected]

GreeceGeorge RaounasE: [email protected]

HungaryGabor CserhatiE: [email protected]

IndiaArvind SharmaE: [email protected]

IndonesiaIwan AtmawidjajaE: iwan.atmawidjaja@kpmg.

co.id

IrelandEoin OLideadhaE: [email protected]

IsraelOren GrupiE: [email protected]

ItalyPierMario BarzaghiE: [email protected]

JapanYoshitake FunakoshiE: yoshitake.unakoshi@

jp.kpmg.com

Kazuhiko SaitoE: [email protected]

KazakhstanAlun BowenE: [email protected]

LuxembourgJane WilkinsonE: [email protected]

MalaysiaLamsang HewleeE: [email protected]

Mexico

Jesus GonzalezE: [email protected]

NetherlandsBernd HendriksenE: [email protected]

New ZealandJamie SinclairE: [email protected]

NigeriaDimeji SalaudeenE: [email protected].

com

Norway

Jan-Erik MartinsenE: [email protected]

PhilippinesHenry D. AntonioE: [email protected]

PolandKrzyszto RadziwonE: [email protected]

PortugalFilipa RodriguesE: [email protected]

RomaniaGheorghita DiaconuE: [email protected]

RussiaIgor KorotetskiyE: [email protected]

SingaporeSharad SomaniE: [email protected]

SlovakiaQuentin CrossleyE: [email protected]

South AricaNeil MorrisE: [email protected]

South KoreaSungwoo KimE: [email protected]

Spain

Jose Luis Blasco VazquezE: [email protected]

Sri LankaRanjani JosephE: [email protected]

Swedense BckstrmE: [email protected]

SwitzerlandHans-Ulrich PyerE: [email protected]

TaiwanCharles Chen

E: [email protected]

ThailandPaul FlipseE: [email protected]

U.A.E.Sudhir ArvindE: [email protected]

U.A.E. and Oman(Lower Gul)Andrew RobinsonE: [email protected]

UKVincent NeateE: [email protected]

UkraineOlena MakarenkoE: [email protected]

USJohn R HickoxE: [email protected]

VenezuelaJose O. RodriguesE: [email protected]

VietnamPaul Bahnisch

E: [email protected]

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act on such inormation without appropriate proessional advice ater a thorough examination o the particular situation.

2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member irms o the KPMG network o independent irms are ailiated with KPMG International. KPMG

International provides no client services. No member irm has any authority to obligate or bind KPMG International or any other member irm vis--vis third parties, nor does KPMG

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Publication name: Will Doha deliver a deal?

Publication number: 121223

Publication date: November 2012
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KPMG avisa sobre La incertidumbre en torno al Protocolo de Kioto

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