Informal Thematic Debate of the General AssemblyClimate Change as a Global Challenge

31 July 2007, United Nations

The way forward: International Context for a post-2012 agreement

Yvo de Boer

Executive Secretary

UNFCCC

Tackling climate change

• Major sustainable development issue

• Need for a global approach

• Need for a long-term policy

• Requires action on mitigation and adaptation

• Technology is at the core of the solution

Industrialized countries

• Minimizing costs to their economies

• Avoiding negative impacts on their competitiveness

• Ensuring adequate and comparable level of effort

amongst themselves

• Enhancing participation by developing countries in the

future regime

Developing countries

• Overriding concerns are poverty eradication and economic

growth

• Barriers to CC mitigation: lack of access to climate-friendly

technologies and investment

• Local environmental concerns and high energy costs lead to:

– attention to energy security and efficiency;

– interest in approaches that have local co-benefits.

Action on mitigation

• Mitigation in longer-term global framework is necessary to slow

the growth of global emissions: declining path after 2020

• Global emissions cuts of more than 50% by 2050 are needed

• Need to stop further growth in emissions in the coming 15 years

• It requires major restructuring of energy systems 

Mitigation: Key elements

Industrialized countries should continue to take the lead

Further action by developing countries to limit the growth of their emissions is required

– $20 trillion to be invested in energy-supply infrastructure by 2030, with half in developing countries (IEA)

– Challenge: to green energy investment

Incentives have to be provided for further action in developing countries, including through technology cooperation and access to green investment

Funding and Investment needs in the energy sector

Public action must target private sector to leverage private funding.

Investment in Energy Supply Infrastructure

(2005,Million US$)

World bank Funding in Energy Sector

( 2005, Million US$)Funding Sources Flows

% Contribution to the total

investment need

Bilateral Development Assistance 2132 0.27%World Bank Group 2845 0.37%EBRD 773 0.10%GEF 124 0.02%Asian Development Bank 677 0.09%Inter-American Development Bank 306 0.04%Total ( Bilateral + multilateral) 6806 0.88%

Total investment in ESI in 2005*

776615

Sector World Bank Investment Need*

% Contribution to the total

investment needCoal 234.00 21653.85 1.08%

Oil & Gas 562.00 315038.46 0.18%Power 2049.00 433692.31 0.47%

TOTAL 2845.00 770384.62 0.37%

Public funding for energy supply infrastructure accounts to about 1% of the investment needs.

Challenge for post-2012 regime

… is to construct agreement that:

• Does not include hard emission reduction targets for developing

countries

• Provides incentives to developing countries to limit their emissions

growth

• Provides for a cleaner development path than business as usual

• Addresses competitiveness concerns

Political conditions for the future climate change regime

Meaningful action by developing countries

Investment opportunities in developing countries

Reduced economic growth

Subsidization

-

-

+

+

III

IIIIV

Key elements: Adaptation

• Move from damage prevention to damage minimization

• Efforts towards the MDGs frustrated by climate impacts

• Adaptation will be essential component of future agreement

Challenge: how to generate additional resource flows to finance adaptation projects.

Technology

• Provides means for mitigation efforts and for adaptation

• Innovation and deployment of new technologies will be largely driven by business in industrialized countries  

Challenge is to put in place policy incentives for: diffusion of existing climate-friendly

technologies development of break-through technologies enhanced international technology cooperation

Role for market-based approach?

• Allows business to look for cheapest emission reductions globally

• Bridges the key components of climate change policy:

o Lowers the costs for industrialized countries of complying with commitments

o Allows for attracting green technologies and investments to developing countries, incentivizing further mitigation action

o Levies on transfers in the carbon market generate funding for adaptation

Imperatives for post-2012 agreement

• North-North equity (in commitments)

• North-South equity

– in respecting responsibilities and capabilities

– in respecting economic growth

– providing appropriate incentives for developing countries

• Addressing competitiveness concerns

Momentum is building up

Encouraging signals from the North:• Agreement in the G8: -50% in 2050 and the need to act within a

multilateral UN forum

• EU: -20% emission reduction by 2020 compared to 1990 – to be increased to 30% if other developed countries join

• Norway: -30% by 2020; by 2050 reduce 100% of emissions

• Japan: Cool Earth 50 proposal

• USA: California and other states; bills in the Senate/Congress (cap and trade)

Action in the South:• China: reduction in emission intensity of GDP; renewable energy

• India: national climate change plan, car emission standards

Challenge for the leaders

• Urgency to act now: cost of delay are high

• National action requires a global framework setting a long-term perspective

• An agreement for post-2012 is needed by 2009

• A new agreement will take about two years to negotiate and two more years for countries to ratify

• Work has to start this year

• COP 13 in Bali in December: opportunity to act

Potential principles for post-2012 regime

1. Addressing climate change requires a long-term global response in line with latest scientific findings and compatible with long-term investment planning strategies of the business;

2. Industrialized countries must continue to take the lead and reduce their emissions substantially given their historic responsibility and economic capabilities;

3. The problem cannot be solved without further engagement of developing countries;

4. But this requires incentives for developing countries to limit their emissions and assistance to adapt to the impacts of climate change while safeguarding socio-economic growth and poverty eradication, and for this;

5. Full flexibility in the carbon market should be allowed, to ensure the most cost-effective implementation and to mobilize the resources needed to provide the incentives to developing countries.