In many ways Durban exceeded expectations. In the dying hours of the conference a surprising amount of decisions were made, despite the sceptics (myself included) thinking that little progress was likely to be made.
There were some important developments. Some have been well covered in the media – the continuation of the Kyoto Protocol, the agreement to work towards a new global deal on climate change and the establishment of a new fund to finance low-carbon action in developing countries. Some decisions have received less coverage in the media. This includes important decisions on technology and sector approaches.
So what now? If the UK economy is to grow a healthy and green manufacturing base, what are the actions we would need to see happen at this juncture? A new EEF paper sets out the issues that are important to us, the UK manufacturing sector. We’ve resisted the temptation to discuss what a global agreement might look like in future. Instead, we’ve focused on three immediate issues that are of immediate importance to manufacturing.
Does the action committed to at Durban justify strengthening the ambition of Europe?
A new breath of life was given to the Kyoto Protocol. In the very least, it means that carbon markets will not be disrupted in the short-term. Equally welcome is the commitment to work on a new deal to be concluded in 2015 and become operational in 2020.
This signals that the politicians still believe there is a chance to broker a new deal, however slim that chance may be. There is a glimmer of hope that a level playing field can be restored. But there is certainly no guarantee.
Many important issues have been rolled over and there are some lingering doubts about how secure an “agreement to agree” will be in producing an outcome by 2015, and whether the last-minute weakening of the EU’s proposed 2020 “legal framework” to “an agreed outcome with legal force” may cause problems. Emerging economies are likely to stick to their entrenched positions and US agreement at the talks does not necessarily indicate that Congress agree and will allow changes to domestic law.
We conclude that with just 16 per cent of the world’s emission captured in the extension of the Kyoto Protocol, there is nothing new on the table that would justify a reduction in the EU’s 2020 target to reduce emissions by -20%. Instead, let’s ensure we remain focused on meeting existing targets, cost-effectively.
Sector approaches provide the best next step option
In the absence of a unified price of carbon, we believe sector approaches represent the most equitable, realistic and environmentally-efficient approach to tackling emissions from energy-intensive, internationally competitive industries.
Much of the discussion around international sectoral agreements focussed on two sectors at Durban: aviation and shipping. But the texts emerging from Durban hint that other sectors – such as steel and cement – may in future be able to develop their own sector agreements.
By tackling emissions on a global, sector basis, the issue of leakage is addressed. This is where emissions are displaced as production grows overseas to regions where production is not subject to carbon costs and commodities are therefore cheaper on the global market. The approach is also attractive as it allows the specific barriers and opportunities of a sector to be fully analysed and enhances the incentive to address these. Technologies, regional circumstances, skills and innovation needs can be more thoughtfully considered. Deployment and finance mechanisms should be more focused and easier to develop as a result. The result would be a basket of measures tuned to help steer a global sector onto a sustainable, low-carbon future, one that can make a significant contribution to reducing GHG emissions on a global scale.
But industry can not do it alone. Attempts by industry to develop global sector schemes have fallen short because of poor participation from those in countries which have no restrictions on emissions. And who can blame them. There is really nothing in it for these producers as they are currently not required to do anything. If this is going to have a chance to work, we need government to start building support with the major producing countries to achieve this common goal. Neither government nor industry can do this in isolation.
Technology transfer: facilitating global deployment of low-carbon technology
The conclusion of the talks kick-started the search for a host for the Climate Technology Centre (CTC) to promote technology transfer between developed and developing countries. The CTC’s work will be guided by the Technology Executive Committee - a global hub of expertise on technology. The Committee should prove a powerful voice in overcoming barriers to market for those vital low carbon technologies. But it is likely to be lobbied hard by developing countries on Intellectual Property Rights (IPR), who argue these hinder the transfer of low-carbon technologies. While IPR remains protected now, it could be under threat in the medium to long term.
We believe the UK can still be a leader in low-carbon technology. To that end, we think government should bid to host the Climate Technology Centre. And if we are to seriously empower the Technology Executive Committee, we need to start thinking now how we feed into its work and understand how the government is to interact with the private sector. There is a role for the UK government to explore how it might work with others internationally to strengthen the incentive for innovation.
We also need more support from government at home. British manufacturers can play a strong role in providing the world with the technologies they need to meet low-carbon goals. But first these innovative solutions need to get to market. We also would like to see a UK strategy addressing how we are to develop the technologies required to meet our 2050 emissions reduction target, focusing on addressing the general barriers manufacturers face when trying to get low-carbon technologies to market – from access to finance to penetrating well-established supply chains – and how government can further encourage innovation.
Finally, we can not risk blunting IPR without the risk of blunting innovation by the private sector. Although some developing countries have called for a weakening of IPR to speed up deployment of low-carbon technology, we believe IPR is not a barrier. To help overcome such perceptions there is a roll for the Climate Technology Centre to provide training on licensing arrangements and their negotiation and facilitate pooled procurement strategies and other sharing arrangements, among other measures.