IGES Consultations on the Post-2012 Climate Regime - Round 4
Policy Forum on Integrating Asia's Energy Security Concerns into the Post-2012 Climate Regime
13 August 2008
On 7 and 8 August 2008, the Institute for Global Environmental Strategies (IGES), Japan held a policy forum on the climate regime beyond 2012 in Bangkok, Thailand, in collaboration with the Asian Institute of Technology (AIT), Thailand and Keimyung University (KU) of Republic of Korea. Approximately 70 participants including policymakers, academics, and representatives from NGOs and businesses from seven Asian developing countries (China, India, Indonesia, the Philippines, Republic of Korea, Singapore, and Thailand), eight developed countries (Australia, Canada, Germany, Japan, Sweden, the Netherlands, UK and USA) and two international organisations (UNDP and UNESCAP) attended the forum and actively contributed to discussions.

The forum was the fourth in a series of "Asia-Pacific consultations on the climate regime beyond 2012", held annually since 2005. This year's consultation was held as part of the larger international conference organised by AIT in partnership with IGES on the theme of Energy Security and Climate Change: Issues, Strategies and Options at Sofitel Centara Grand Hotel, Bangkok from 6 to 8 August.

As in previous years, the policy forum had the twin goals of (a) promoting new and constructive thinking in the Asia-Pacific region on future climate actions and (b) contributing to the shaping of a post-2012 climate regime that adequately reflects the concerns and developmental aspirations of countries in the Asia-Pacific region.

The consultation featured discussions on five themes related to the post-2012 climate change regime: (a) energy efficiency and renewable energy, (b) sectoral approaches, (c) enabling conditions (technology, finance and capacity building), (d) bio-energy, and (e) the Bali Action Plan. The consultation also aimed to elucidate the differences in perspectives of developing and developed countries on each of these themes and to promote understanding on ways to reconcile such differences in negotiations on the post-2012 climate regime. Based on the outcome of consultation, effective options for a future climate regime that reflects Asian concerns on energy security and development will be presented at a side event in the COP14 scheduled for December in Poznan, Poland as well as at various meetings on the future climate regime.

For additional details, Contact:
Dr. Ancha Srinivasan, Principal Researcher and Manager,
Climate Policy Project
The Institute for Global Environmental Strategies (IGES)
Tel: +81-46-855-3818 Fax: +81-46-855-3809

Ms. Megumi Kido, Public Relations Officer,
The Institute for Global Environmental Strategies (IGES)
2108-11 Kamiyamaguchi, Hayama, Kanagawa, 240-0115 Japan
Tel: +81-46-855-3700 Fax: +81-46-855-3709

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Key Points from Presentations and Discussion

Opening Session

- In his keynote speech, Prof. Ram Shrestha highlighted differences in how developed and developing countries define energy security. He noted that most Asian countries are highly vulnerable in energy security and that greenhouse gas (GHG) emissions from Asia would continue to increase if drastic changes in development paradigms are not made. He stressed the urgent need for aligning climate and energy policies and concluded that carbon taxation policy alone might have a negligible impact on GHG emissions.
- Professor Hironori Hamanaka, in his opening remarks, noted that the architecture of the future climate regime to be agreed upon in Copenhagen in December 2009 has considerable implications for sustainable development in Asia. He stressed that all countries should feel a sense of ownership in the future regime and commit to take progressive actions that simultaneously enhance energy security and combat climate change.
- Dr. Ancha Srinivasan summarised the outcomes of the past three years of IGES stakeholder consultations and noted that most of the post-2012 climate regime proposals do not consider Asia's energy security concerns. He mentioned that ignoring such concerns might adversely affect the success of the regime, and that the post-2012 regime must provide operational support for integrating climate concerns in national and local energy plans.

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Session 1: Energy Efficiency and Renewable Energy

- The future regime should promote strategies to harmonise the interests of developing Asia in enhancing energy access with global climate stabilisation goals, and bolster national capacities to adopt low carbon technologies appropriate to resource endowments (e.g. low quality coal in India). The creation of a financial mechanism to deploy carbon capture and sequestration (CCS) technologies and unilateral CDM could be an effective way to integrate energy security concerns into the future climate regime.
- Market mechanisms must be reformed in a way that more energy efficiency (EE) and renewable energy (RE) projects are implemented in Asia. Credible signals through deeper emission reduction targets by developed countries are crucial to promote unilateral EE and RE CDM projects. Furthermore, barriers to end-use energy efficiency projects should be removed through enhancing the awareness of policymakers and creating conditions for mobilising finance to achieve a low-carbon and energy secure society in Asia.
- In the current regime, market-based approaches to promote small-scale EE and RE projects have not made much headway. Therefore, rules governing the approval process for such projects must be further simplified. As market approaches mainly aim at controlling costs rather than environmental impacts, it is critical to include adequate safeguards in the future regime. Cross-subsidisation policies must be revisited and market distortions must be removed so that energy security goals do not compromise climate protection efforts. The need to extend renewable portfolio standards to the private sector in emerging economies was also highlighted.
- Future regime discussions must consider additional ways to promote EE and RE, for instance, by creating innovative financing options that enable countries to phase out subsidies for carbon-intensive methods of production. Suitable reforms for carbon finance and the development of flexible CDM methodologies will be crucial.
- Some participants stressed the need for energy efficiency comparisons of countries based on physical energy efficiency (energy consumed per unit of physical output) instead of monetary energy efficiency (energy consumption per unit of GDP). The need for setting a reasonably high value for carbon through innovative market mechanisms was stressed.

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Session 2: Sectoral Approaches

- The lack of common understanding among various stakeholders was considered a major barrier to moving the discussion on sectoral approaches forward. The importance of creating (a) incentive mechanisms to engage developing countries more effectively and (b) frameworks to make such actions measurable, reportable and verifiable was stressed.
- Japan's proposal on sectoral approaches to estimate the mitigation potential of various sectors and derive national GHG emission reduction targets based on bottom-up aggregation attracted considerable attention. While some participants noted that the proposal would enable the transfer of technologies to developing countries, others stressed that it does not consider historical emissions and contradicted the UNFCCC principle of common but differentiated responsibilities.
- The need for promoting synergies with initiatives such as the Asia Pacific Partnership for Clean Development and Climate (APP) especially to deploy sector-specific technologies in key countries was noted. The APP was considered a complement to not a replacement for the Kyoto Protocol. As current presidential candidates in the US are likely to place more emphasis on multilateral actions to address climate change, participants felt that the APP might play a significant complementary role to the UNFCCC.
- Participants noted that the current climate regime has largely failed to facilitate CDM in the transport sector even though "programmatic CDM" was approved recently. The future regime must consider the prospects for implementing sector-wide emission reduction agreements in transportation in a step-wise manner.
- Based on an analysis of options for applying sectoral approaches to the Chinese steel sector, it was suggested that sectoral Clean Development Mechanism (CDM) with GHG intensity targets and technology-based CDM would be more feasible than CDM with absolute targets and policy-based CDM.

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Session 3: Enabling Conditions

- Despite the fact that major emerging economies in Asia have begun to implement many mitigation and adaptation actions, barriers related to financing, technology and capacity remain significant. The success of the future climate regime thus depends upon the extent to which such barriers can be overcome at both the national and international levels.
- Participants stressed that the future climate regime should provide incentives, including the creation of a technology fund for the development, transfer and deployment of carbon-neutral technologies, especially those that cannot be developed at the national level.
- The future climate regime should create mechanisms through which public and private investments are significantly increased, funding sources are more diversified, and the use of funds is made more efficient, perhaps through a system of monitoring, reporting and verification. The use of national or global carbon taxes, especially for GHG-intensive sectors, to preferentially support RE projects and other low carbon or carbon-neutral technologies in Asia must be examined carefully. Carbon taxation should be closely coordinated with related energy taxes. Some participants stressed that new investments in energy and infrastructure in the region must not conflict with climate protection goals.
- The future regime should focus on capacity building programmes with a partnership approach and promote networking of institutions inside and outside the region for sharing information on new technologies and best practices. The need for scaling up small and medium enterprises devoted to clean energy issues in Asia was also noted.
- The future regime should create an enabling environment so that intellectual property rights (IPR) do not impede technology transfer. Each Asian country needs to determine at what stage of the technology transfer process IPR serves as an incentive or a barrier. The future regime should employ metrics to monitor the effectiveness of technology transfer.

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Session 4: Bio-energy

- Biofuels are important for both energy security and rural development in Asia. However, in some cases ensuring the sustainable production of biofuels and bio-energy can be challenging. The future climate regime, therefore, should promote only those projects in which food security and sustainability are not compromised. The future regime should create financial and technological incentives for the production of second generation biofuels, as most studies indicate that their production might be more sustainable
- Participants noted that very few methodologies were available to promote biofuels and biomass-based energy solutions through the current CDM. The need for the development of additional methodologies in the future regime was stressed.
- Reducing Emissions from Deforestation and Degradation (REDD) is a critical element of the Bali Action Plan. Participants noted that REDD schemes have different implications in different countries depending on the status of deforestation. In China, where deforestation is not a major problem, the conflict between land allocated for biofuels and REDD does not appear to be a problem, while in Indonesia such conflicts may appear as deforested land is often used for biofuel production. Some participants noted that Europe's stance on REDD might have a significant influence on the global CDM market in the future regime.
- .Some participants suggested that the future climate regime should make life cycle assessments (LCA) of GHG emissions in production and utilisation of biofuels mandatory if the feedstock is edible agriculture or forest produce. On the other hand, it should not be mandatory if the feedstock is agricultural by-products or forest residue.
- Participants noted that both biofuels and biomass-based energy solutions indirectly help rural communities adapt to climate change as they enhance incomes, provide energy and thereby improve living standards and coping capacity.

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Session 5: Bali Action Plan

- In the future climate regime, Australia supported the continued use of top-down Kyoto-style targets for developed countries and voluntary commitments for mitigation actions by major developing countries. Participants noted that a common set of indicators such as population, population growth, and gross domestic product (GDP) could enable comparisons of commitments and/or actions by developed countries.
- A participant from China expressed serious concerns that provisions in the Bali Action Plan regarding sectoral approaches have been misinterpreted to support bottom-up target setting. He noted that these provisions are intended to refer to sectoral approaches that facilitate technology transfer not bottom-up targets.
- A participant from Korea noted that nationally appropriate mitigation actions (NAMAs) would be a key element of the post-2012 regime, and that significant reforms to market mechanisms and incentives (e.g. different multiplication factors for CERs generated from RE projects) would be required for developing countries to take NAMAs.
- A participant from Indonesia commented that a major weakness of the Bali Action Plan is that it places deeper cuts from developed countries in a footnote (25% to 40% off of 1990 levels by 2020 for developed countries). She was also sceptical about using "developed" and "developing countries" rather than the previously used Annex-1 and non-Annex 1 terminology.
- A representative from Thailand suggested that the main strengths of the Bali Action Plan were that it sets up a long term global goal and directs all countries to work together in pursuit of that goal. The Bali Action Plan's main weakness is that it does not establish a concrete mechanism to ensure that developed countries transfer technologies and finance to and/or build capacity in developing countries.

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