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Differentiation, Financial Support, and the Paris Climate Talks

| November 12, 2015

The parties to the United Nations Framework Convention on Climate Change (UNFCCC) are scheduled to conclude a new international agreement to address climate change, at their annual conference in Paris in December 2015. If the 196 parties to the Convention come to a decision, the Paris accord will be the most significant multilateral climate-change agreement since the Kyoto Protocol, concluded in 1997 (or maybe ever).

The most important difference between the Kyoto Protocol and the Paris agreement is that developing countries are submitting pledges under the Paris agreement to reduce emissions. They had no emissions-reduction (mitigation) obligations under Kyoto. The root of the sharp dichotomy between developed and developing countries in the Kyoto Protocol, with respect to mitigation obligations, is a well-known clause in the Convention itself:

The Parties should protect the climate system for the benefit of present and future generations of humankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities. Accordingly, the developed country Parties should take the lead in combating climate change and the adverse effects thereof.1

The first UNFCCC Conference of the Parties (COP-1) in Berlin interpreted the principle of "common but differentiated responsibilities" (CBDR) narrowly, in a decision of the COP, as follows:

The process shall be guided…by the following: …(d) The fact that the largest share of historical and current global emissions of greenhouse gases has originated in developed countries, that the per capita emissions in developing countries are still relatively low and that the share of global emissions originating in developing countries will grow to meet their social and development needs;… The process will…for developed country…Parties included in Annex I…set quantified limitation and reduction objectives within specified time-frames, such as 2005, 2010 and 2020, for their anthropogenic emissions…Not introduce any new commitments for Parties not included in Annex I…2

("Annex I" to the Convention is a list of developed-country parties.)

The Kyoto Protocol,3 concluded at COP-3 in late 1997, realized the Berlin Mandate's vision of differentiation.4 However, there have been other visions of differentiation—in the research literature and in policy circles. As time has gone on, these alternative approaches to differentiation have been prompted in part by developing countries' emissions increasing significantly—in absolute terms and relative to developed countries'—thus rendering one motivation for sharp differentiation, quoted from the Berlin Mandate above, obsolete.

Berk and den Elzen, writing in 2001, suggested that countries could be allocated emissions permits (for use in an international cap-and-trade system) on a per capita basis, with the numbers of permits per capita varying according to level of the country’s development.5 Philibert and Pershing, also in 2001, considered a variety of types of emissions-reduction targets, with CBDR possibly being realized by countries adopting different types.6 (The Paris agreement incorporates a similar approach.)

Lavanya Rajamani wrote on self–differentiation in 2013:7

By allowing Parties, developed and developing alike, to self-select and list mitigation commitments and actions, the [Copenhagen] Accord effectively substitutes a regime of differentiation in favor of developing countries with a regime of differentiation for all countries, providing flexibility for all. This, through architectural sleight of hand, recasts the contours of the CBDR…principle—rendering the issue of differentiation for developing countries increasingly irrelevant.

This is indeed the approach that the Paris agreement takes—building on the Copenhagen Accord noted in Rajamani's paper. National governments are voluntarily submitting mitigation "contributions"8 ("commitments" sounds a little too scary for some countries), and the type of mitigation pledge can be whatever a national government wants it to be. These range from absolute, economy-wide emissions reduction targets relative to a specific base year (as in Kyoto; mainly Annex I countries are pledging these); to emissions reduction relative to a business-as-usual baseline (developing countries—for example, Argentina); to reduction in emissions intensity—that is, the ratio of emissions to GDP (other developing countries, including China and India).9

As of November 11, 2015, 16010 parties to the UNFCCC had submitted their pledges, out of 196 total parties. All of the top ten emitting countries had submitted pledges, including China, India, Indonesia, Brazil, and Mexico. Countries that have submitted pledges represent over 80% of global emissions (though the specific pledges do not). This is a huge improvement over Kyoto, with regard to participation—and, quite possibly, with respect to mitigation ambition, as well.

Researchers and practitioners have been thinking about a bottom-up, voluntary pledge-based policy architecture similar to the Paris agreement since we have been trying to address climate change in multilateral forums. However, the COP decision that made the Paris agreement possible was one in Bali in late 2007:

[The COP] Decides to launch a comprehensive process to enable the full, effective and sustained implementation of the Convention through long-term cooperative action…by addressing…Enhanced national/international action on mitigation of climate change, including…consideration of…Nationally appropriate mitigation actions by developing country Parties in the context of sustainable development, supported and enabled by technology, financing and capacity-building, in a measurable, reportable and verifiable manner…11

The Bali decision broke the Kyoto-differentiation logjam in allowing considering of mitigation action by developing countries.12 There followed the Copenhagen Accord, Cancun Agreements, and Durban Platform for Enhanced Action—the last very important in its own right, as it mandated the Paris agreement and stated that it would be "applicable to all Parties"13—another milestone in the evolution of differentiation (or lack thereof).14

However, at every milestone since Bali, financial assistance from developed to developing countries has been a condition of the latter making mitigation commitments—to one degree or another, and in one form or another.15 Many developing-country pledges submitted for inclusion in the Paris agreement include components that are contingent on external financing. Thus, the second key aspect of differentiation in the Copenhagen-Cancun-Durban-Paris era is that developed countries provide finance for mitigation, and developing countries receive it. (The Convention itself directed developed countries to provide financial support for adaptation, technology transfer, and reporting, and it established a financial mechanism for supporting developing-country initiatives. It just did not support mitigation, because mitigation commitments were not envisioned for developing countries at that time.)

There are two dimensions of climate finance that will be of concern to negotiators in Paris. The first is support for climate action (mitigation, adaptation, technology transfer, "capacity building"). The other is labeled "loss and damage" in the UNFCCC process, and some developing countries understand loss and damage in terms of liability for climate damages to be assumed by industrialized countries. The United States, Europe, Japan, and other developed countries will not accept any liability language in the Paris agreement, though they may well accept an interpretation of loss and damage that focuses on insurance and risk.

CBDR remains a core principle in the Convention, and developing-country parties will not abandon differentiation. Parties to the Convention are self-differentiating with regard to the type of mitigation pledges, and developing countries place a very high priority on realizing financial flows that they deem sufficiently large. Given that mitigation contributions are self-defined and submitted in advance (that is, already a done deal by definition), the negotiations over finance are the most significant challenge to a successful conference.

One last word on mitigation, however—maybe not completely a done deal: There is almost universal agreement among knowledgeable observers that the voluntarily defined mitigation contributions will not be sufficient, in the aggregate, to limit greenhouse-gas concentrations or temperature increase within any bounds considered acceptable. The ambition of the commitments will need to be increased over time. It will be interesting to see if there will be pressure to differentiate developing- and developed-country responsibilities with regard to a periodic review process that might be included in the Paris agreement and through which commitments are ratcheted up over time. There might be a way to make such differentiation acceptable to all parties, but that will have to wait for another post.

For more information on this publication: Please contact Harvard Project on Climate Agreements
For Academic Citation: Stowe, Robert C..“Differentiation, Financial Support, and the Paris Climate Talks.” EnergyCollective, November 12, 2015.