Avocats chez Davis S.E.N.C.R.L.

Scenes from Copenhagen - Part 1

I thought I'd divide the blogs into two sections. One section devoted to the "experience" of being in Copenhagen, and one about what the Conference is doing. For those of you not interested in hearing about the former, skip to the next blog. For those of you who want a little bit of what it's like to be on the ground, read on.

Today is our first full day in Copenhagen. We arrived last night to a crowded airport and a city fully ready for Christmas - hardly a storefront is not done up with garland (the real stuff), fairy lights and tasteful ornaments. Climate change is a big deal here, but clearly so is Christmas. It's very pretty.

The Conference is being held at Copenhagen's Bella Conference Centre. In order to gain access to to the Centre, you have to be (a) accredited by the UNFCCC and (b) registered. Accreditation happened before the Conference began. Registration for accredited individuals this morning was an absolute zoo. Thousands (and I truly mean thousands, see attached picture) of people queued (which would seem to suggest it was relatively orderly - it was only for a while) to gain access to the registration tables. Most people in the queue are not part of official government delegations, but are rather here as conference observers through various NGOs.

There were activists hanging climate change banners, others handing out flyers and a few wandering through the crowd speaking to anyone who would listen to them about a multitude of different sins humankind has committed against Mother Earth. The "livestock is causing climate change - become a vegan" signage was particularly....interesting. Some had erected "art" devoted to climate change. A couple of enterprising individuals were serving americano coffees at points along the line up. One activist group was giving it away for free, provided you took the proffered flyer.

It was freezing out; not quite the same as it has been in Edmonton the last few days (where apparently the International Airport was the coldest place on the PLANET on Sunday night), but still mighty cold if you're lined-up waiting for access to the Conference. Did I mention that it's a "wet" cold? I saw one girl take off her leather boots and wrap newspapers around her calves and feet and then slip her boots back on. It was not warm. The poor girl from Equador standing in front of us (who had left her hostel with wet hair of all things), could hardly believe her bad luck.

It was pretty calm, cool and collected at the Bella Centre. Not so in a downtown Copenhagen Street later in the day. There are meetings within the Bella Centre and a number of other activities going on in other locations. We were downtown and happened upon a street which was being blocked by police to traffic. The cross street was a pedestrian only thoroughfare and people were being held back and prevented from crossing. I thought something really interesting was going to happen - like someone's motorcade was going to pass by (the helicopter hoving above the street was curious) until I heard beating drums coming from around the corner and a full scale protest/demonstation materialized.

The protesters were all 20-somethings who were protesting capitalism. They were linked arm and arm chanting something I couldn't understand, beating drums, dancing around and generally making it difficult to cross the street! The press were everywhere and there were a huge number people in the demonstration, but what they are really accomplishing, I do not know.

Back to the Bella Centre tomorrow and more from there.

Minister Prentice Talks Climate Change; PM Says He'll Go to Denmark

Minister Prentice believes that in order for the international community to reach a new framework to deal with climate change, the U.S. must "get on board".

Speaking to a packed room on November 13 in Edmonton, the Minister spoke about climate change on the global stage and about the road to the UNFCCC Climate Change Conference in Copenhagen, which begins in less than a month. The Minister's key message during the speech was that in order for Copenhagen, the "mother of all negotiations" to result in a meaningful frameworks to address the stabilizing of greenhouse gases in the atmosphere, the United States has to "make a substantial effort going forward".

The Minister's other key message hit a bit closer to home:

"If the US does not make a substantial effort going forward, there is nothing Canada can do. Our own mitigation efforts will be futile - as a practical matter, we should probably focus on adaptation.

If we do more than the US, we will suffer economic pain for no real environmental gain - economic pain that could impede our ability to invest in new clean technologies.

But if we do less, we will risk facing new border barriers into the American market.

In short, we need a substantial effort from the United States; and a comparable effort from Canada, so we can create an effective North American climate change regime with national policies that are harmonized, consistent and free from conflict. A continental system composed of national policies and regulations that are equal in value and of similar effect, so we foster fair competition and maintain free trade in the integrated North American market".

The crux of his comments? That a harmonized (although not identical) climate change framework is absolutely crucial for Canada and for the U.S.

Why?

1. We share a common environment;

2. Our economies are integrated. The Minister remarked, "many firms in such key sectors as aerospace and automotive do not so much compete with each other as cooperate, being suppliers to, and customers of each other, somewhere on complex supply chains"

3. Canada's energy supply = security of energy for the United States - "[w]e are not just the single largest supplier to the American market of oil, natural gas, hydroelectricity and uranium - we are an indispensable supplier to the land-locked northern tier states"

4. Our pipelines and power grids transcend the border.

The Minister also pointed to a number of cross border harmonization initiatives, such as identical tail pipe emissions standards, the fact that both countries are busy preparing national cap and trade systems, and commitments on both sides of the border to clean energy technology.

But ultimately, his remarks confirmed that both Canada and the United States, while committed to addressing the effects of climate change, will not do so at the expense of the economy. The Minister's philosophy and one that is shared by his U.S. counterparts is to "do no harm - to avoid measures, no matter how well-intentioned, that would cause Canadian firms to be not just down in 2009, but out by 2010". What does this mean in terms of reductions? The American Clean Energy and Security Act has passed the House, and the Kerry/Boxer legislation has now commenced its journey through the Senate. The former sets the target of 17% less than 2005 levels by 2020; the latter currently talks of 20%. The Minister confirmed "[t]hat Both are similar to our own 2020 target of 20% less than 2006 levels".

Those dectractors who assert that Canada should be reducing its emissions by 25-40% less than 1990 levels are not focused on the economic consequences to our country. Minister Prentice addressed these critics and said "to say the least, reducing 2020 emissions in Canada by 25-40% from 1990 levels is easier said than done. The impact on the overall economy would be dire. In economic context, reductions of that magnitude equal an amount far in excess of all the emissions generated from all transportation sources in Canada".

Are the critics prepared to put away not only their own cars, but the cars of their relatives and everyone else they know, for good? To stop flying anywhere? Stop taking the bus? Probably not. And if the solution is to purchase international offsets to meet our emissions targets, are they comfortable with billions and billions leaving the country every year? We have to have a reasonable response to climate change in Canada - and it is reasonable that our system be consistent with that of our largest trading partner and not cause economic hardship to a nation of 35 million people.

So what will happen in Copenhagen? Canada's position is pretty clear. The United States' position is also increasingly clear - everyone, not just the developed nations, has to be a party to an international convention. That includes China and India, whose positions have really not shifted in the months leading up to the conference. Small concessions have been made, but really, the message is still "we're going to do what we want".

But, as Copenhagen draws ever closer, it appears that the international community is taking it more and more seriously. This morning the Edmonton Journal reported that there is increasing pressure on world leaders, including the U.S. President, to attend the conference. Prime Minister Stephen Harper's aides confirmed that if others are there, he'll likely attend as well.

With all these variables, the conference is December is shaping up to be very interesting. Stay tuned for on the ground coverage from Denmark.

223 Proponents Apply for CCEMC Funding

The Climate Change and Emissions Management (CCEMC) Corporation ("CCEMC") issued its 2009 Call for Proposals: Initial Expression of Interest Stage (the "EOI") on August 5, 2009. The response to the EOI has been, to say the least, overwhelming. According to the CCEMC website, 223 proponents have requested funding from the CCEMC for a total ask of $1.6 Billion Dollars.

This is astounding news. Why you ask? Keep reading.

What Does It Mean?

1. The response to the EOI has been overwhelming. Remember that the CCEMC was only incorporated in February. The Climate Change and Emissions Management Fund Administration Regulation, which delegates the powers, duties and functions of the Minister of Environment (Alberta) to the CCEMC was only enacted in May, 2009. That in less than a year the CCEMC has been able to request EOIs and receive responses from 223 proponents is staggering.

2. The sheer number of proponents and amount of the ask demonstrates how interested Albertans and Industry in Alberta are in climate change technology and initiatives. There's a lot going on in Alberta right now in the area of climate change initiatives as evidenced by the fact 223 proponents have applied for funding.

3. The number of proponents and the success of this first EOI shows that Alberta Environment and the Government of Alberta were absolutely right in anticipating and recognizing the importance of establishing a climate change technology fund and the structure of the CCEMC. (For more information on the importance and uniqueness of the Climate Change and Emissions Management Fund, click here.

4. The CCEMC has up to $120 million for project funding for the 2009 Call for Proposals. Up to 50 percent of monies will be invested in green energy production, 20 percent in energy conservation and energy efficiency and 30 percent in implementing carbon capture and storage. Although there is only $120 Million available at this time, there will be further rounds of calls for proposals as more funds are received from the current and future compliance years. The CCEMC will consider the EOIs and the funding envelopes outlined above and select the very best for the full proposal stage.

5. The fact that the CCEMC is through the first stage in its process for calling for projects is a first in Canada and is clearly the most significant event in the world of climate change innovation in this country. The model for climate change funding in Alberta is working to create action.

The evaluation of the EOIs received by the CCEMC is currently in progress. Proponents whose projects are being selected to submit full project proposals will be notified by November 13, 2009. An annoucement of those selected to submit full project proposals will be made shortly thereafter....just in time for the UNFCCC Conference of Parties in Copenhagen in December. Alberta will truly have the technology fund showpiece at the conference and has much to be proud of.

International Climate Funds Disburse Billions?

With Copenhagen just around the corner, developing governments are expressing an urgent need for greater financial contributions from industrialised nations. And how are industrialised nations going to help? One way is climate change funds. Most developing nations, (see our article on India and US protectionism) believe that the industrialised world should pay for their efforts to cope with and adapt to climate change.

It's an expensive proposition.

The world will need a "phenomenal amount of money" to change its energy supply from fossil fuels to cleaner sources and to adapt to climate change, states Yvo de Boer, head of the UN Climate Change Secretariat. Mr. de Boer estimates that beginning in 2020, the cost of reducing greenhouse gas emissions will be $200 billion a year with an additional $100 billion required for adaptation measures. (Adapation refers to people and business adapting to the effects of climate change in order to deliver a sustainable economy vs. mitigation, which is the reaction to rising emissions in order to limit future climate change - most regulatory frameworks address mitigation).

Hundreds of Billions? That's big money.

One of the topics of discussion at Copenhagen in December, will be which countries are going to contribute to climate funds to help developing countries address climate change and to what extent (ie.: how much) are they going to do that.
According to Point Carbon Data collected by the UK's Overseas Development Institute (ODI), has showed that six international multilateral and bilateral funds are responsible for approximately $3 billion in disbursements to more than 830 projects in the developing world which are aimed at reducing greenhouse gas emissions.

The largest contributor is the Global Environment Facility's (GEF) Trust Fund as it relates to Climate Change. The GEF is responsible for nearly $2.4 billion in disbursements to 591 programs. From its inception in 1994, the GEF has supported programs that minimize climate change damage by reducing the risk, or the adverse effects of climate change. On average 32 to 36 countries have contributed, and in its last replenishment in 2006, Canada contributed $131 million, making it the 6th largest contributing nation.

The German Government administered International Climate Change Initiative has disbursed $347 million to 128 international projects supporting climate change mitigation, adaptation and biodiversity projects with climate relevance. The fund intends to focus on countries with a high potential for emissions reduction in view of their significant and rising greenhouse gas emissions.

The Least Developed Countries Fund is managed by the GEF with an aim to address the special needs of the Least Developed Countries. From its inception in 2002, the Fund has aided the 48 Least Developed Countries through disbursements totalled at $47.5 million to over 60 programs. As of May 2009, 19 contributing nations have contributed to the Fund, with Canada being the 10th largest contributor.

The MDG Achievment Fund was established by the Government of Spain and the United Nations Development Programme and made operational in 2007. It has since disbursed $85.5 million to 16 programs aimed at reducing poverty and vulnerability in eligible countries by supporting improvements to environmental management and enhanced climate change adaptation. As of now, Spain and the US are the only two contributing nations to the Fund.

Mexico, Canada's partner in NAFTA, has proposed an "imaginative" climate fund, which aims to bridge the gap between developing and wealthier nations. We previously reported that the Mexican model proposes that countries pay into and are able to receive monies from a fund that may amount to $10 billion a year to help everyone, not just the developing world, adapt to the effects of global warming. Mexico, classified as a developing country by the UN, has suggested that all countries pay into the fund based on that country's economic output, population and fossil-fuel output. Not a bad idea. But still one which is probably subject to governmental budgetary restrictions.

Maybe a better way is the Alberta model. We've told you before about Alberta's climate fund initiative, the Climate Change and Emissions Management Fund (the "Alberta Fund"). The Alberta Fund is a different sort of animal from the aforementioned funds. Why? The Alberta fund, as we've mentioned before, is very unique. The funds mentioned above are funded by government. Because of a link with the compliance mechanism, the Alberta solution is an industry based and funded model. Once the money is paid into the Alberta Fund, the money is segregated and not subject to government allocation processes, unlike the international funds.

The Alberta Fund may only be used for purposes related to reducing emissions of greenhouse gases or improving Alberta's ability to adapt to climate change. Mr. de Boer says that the world is going to need a "phenomenal amount of money" to address climate change globally. The Alberta Fund will, over time, amount to a phenomenal amount - just think - in only one and a half years of compliance, contributions to the Alberta Fund are $122.4 million, with future yearly contributions anticipated to be as high as $100 million. If every jurisdiction had fund like that, imagine the dollars flowing into combating climate change!

And while the objects of the Alberta Fund are different than those international funds listed above, everyone's ultimate goal is the same. Implement effective solutions, bend the emissions curve and ultimately find an answer.

Canada Continues to Co-operate on Climate Change

We have blogged many times about Canada's commitment to address climate change both continentally and internationally. Today we explore how the co-operation continues.

May 24, 2009 represented the official commencement of the international energy efficiency framework. Energy leaders from around the world met in Rome for the G-8 Energy Ministers Meeting to launch the International Partnership for Energy Efficiency Cooperation (IPEEC), a high-level forum for facilitating improvements in global energy efficiency and encouraging market implementation of key energy efficiency technologies. The signatories included the entire Group of 8 (G8), which consists of Canada, France, Germany, Italy, Japan, the Russian Federation, the United Kingdom, and the United States, as well as key emerging economies, including Brazil, China, India, Mexico, and the Republic of Korea.

Discussions about IPEEC began in June 2008, when the G8 countries, China, India, South Korea and the European Community decided to establish the International Partnership for Energy Efficiency Cooperation, at the Energy Ministerial meeting hosted by Japan. The signing of the IPEEC terms of reference on May 24, 2009 put the discussions into action.

The purpose of the partnership is to facilitate those actions that yield high energy efficiency gains in recognition that improving energy saving and energy efficiency is one of the quickest, greenest, and most cost-effective ways to address energy security and climate change and ensure economic growth.

IPEEC will provide a forum for discussion, among developing, transitional and industrial nations to engage in consultation and exchange of information on a voluntary basis. It will not develop or adopt standards or efficiency goals for the partners.

It was decided at the May 24, 2009 meeting that the first order of business for IPEEC would be to establish a Sustainable Buildings Network, a compilation and summary of national energy efficiency action plans, an inventory and review of international energy efficiency initiatives and improved methods for measuring and verifying progress towards domestic energy efficiency goals.

The launch of IPEEC comes in response to conclusions at G8 Environment Minister's Meeting that countries begin processes with the ultimate goal of a global platform on low CO2 impact technology.

Canada's participation at the IPEEC meetings is further evidence of its commitment to co-operation on a global level to address climate change. Copenhagen is 6 months away - wonder what impact this co-operation will have by then? We'll keep you posted.

Jennifer Cleall and Corie Flett, Summer Student

50% reduction by 2050 Climate Change Goal - 'Emerging Nations' Not on Board

At a working session in Toyako, Japan on July 8, 2008, the G-8 leaders met with the leaders from 8 fast-growing, pollution-emitting nations to talk on the topic of global warming. Even though the "Statement on Climate Change" released July 8, and the “Declaration of Leaders Meeting of Major Economies on Energy Security and Climate Change”, released July 9, are full of ambitious and ‘cooperation is key” language, no consensus was reached on the G-8’s climate change goal of reducing emissions 50% by 2050.

China, India, Brazil, Mexico and South Africa, representing 42% of the world’s population, rejected the notion that all should share in the 50% reduction in GHG emissions by 2050 target, on the basis that it is the wealthier countries that have created most of the environmental problem up until now. In a statement, these ‘emerging nations’ commented, "it is essential that developed countries take the lead in achieving ambitious and absolute greenhouse gas emissions reductions.” President Hu Jintao of China is quoted as adding that “developed countries should make explicit commitments to continue to take the lead in emissions reduction.”

This stance on climate change is problematic, in that some developed countries, including Canada, have been taking the opposite approach, saying that major action cannot be taken without these emerging nations on board. This ultimately creates a cycle of “we won’t act unless you are on board, yet you won’t get on board unless we act”. Meanwhile, critics of this cycle point out that this inaction is likely to lead to increased warming of the planet, increased costs in climate change mitigation, and an increase in environmental consequences.

Hopefully the spirit of cooperation will prevail, and, as the Declaration suggests, "launch a comprehensive process to enable the full, effective, and sustained implementation of the Convention through long-term cooperative action, now, up to, and beyond 2012, in order to reach an agreed outcome in December 2009 (Copenhagen Climate Change Conference)."

Carbon markets boom

Posted by Andrew Lord

The voluntary market for carbon credits more than tripled in 2007 to USD $331 million, while the much larger regulated market more than doubled to USD $64 billion. Those are the conclusions of two significant carbon reports released last week.

Ecosystem Marketplace and New Carbon Finance released State of the Voluntary Carbon Markets 2008 last week. The report notes that the volume of credits traded increased from 25 million tonnes CO2 equivalent (tCO2e) in 2006 to 65 million tCO2e in 2007. The average price of a tonne of CO2 jumped by $2 to $6.10. However the price remained very volatile in 2007, ranging from $1.62 per tCO2e to about $300 per tCO2e. That volatility is a reflection of the perceived problems with the quality of some credits, a perception that the market tried to address by introducing a number of voluntary credit standards during the year.

Also released last week was the World Bank's State and Trends of the Carbon Market 2008. This report focuses on the regulated carbon market, particularly the allowance market under the EU Emissions Trading Scheme and the project market under the Kyoto flexibility mechansms (Clean Development Mechanism and Joint Implementation). The value EU ETS trades, which comprised 78% of the overall regulated market, more than doubled to $50.4 billion, with the average price creeping up from just over $22 per tCO2e in 2006 to around $24.30 in 2007. In the project market, the big story in 2007 was the emergence of a strong secondary market for CERs. The value of trades in the secondary market increased by a factor of over 10 to $7.4 billion. The secondary market was largely occupied by aggregators who purchased a portfolio of CERs and sold guaranteed CERs backed by the portfolio and, in some case, credit-enhanced through the aggregators' banks. At about 28%, growth in the value of trades in the primary CDM market was strong, but not as vibrant as that in the secondary market.