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The Second Conference of the Parties (COP-2) to the Framework Convention on Climate Change (FCCC) sent out a number of important political signals as the COP continues toward the goal of strengthening the commitments on the part of industrialized countries to reduce greenhouse gas (GHG) emissions beyond the year 2000. COP-2, marking the mid-point in the schedule for the fulfillment of the Berlin Mandate, “noted” a strong Ministerial Declaration confirming the findings of the IPCC Second Assessment Report (SAR) and calling for “legally binding” commitments. COP-2 also convened a Ministerial Round Table, which endorsed the points in the Declaration. In a dramatic change of position, the US announced support for a legally binding protocol or other legal instrument.

Nonetheless, many longstanding disagreements on fundamental issues appeared to solidify, both in the subsidiary bodies and the COP. For example, delegates could not agree on references to the SAR or on the election of officers, leaving the COP to again “apply” rather than “adopt” the rules of procedure. Also, the US support for a protocol was linked to a preference for a tradeable permit system, raising many new complexities for delegations. These signals — both positive and negative — indicate that many obstacles await future negotiations.

AD HOC GROUP ON THE BERLIN MANDATE (AGBM): AGBM-4 completed its in-depth analyses of the likely elements of a protocol or other legal instrument, and appeared ready to move forward to the preparation of a negotiating text at its next session in December. Most of the discussions dealt with approaches to policies and measures, Quantified Emission Limitation and Reduction Objectives (QELROs), and an assessment of the likely impact of new commitments for Annex I Parties on developing countries.

While many interpret the Geneva Declaration as a signal that sufficient consensus has formed to accelerate the AGBM process, the protocol status of a new agreement is by no means finalized. If a framework for negotiations has begun to be defined, so too have the political hurdles. These will include: striking a balance between an agreed set or menu of policies and measures; satisfying developing and oil exporting countries’ concerns that sufficient safeguards will be taken to offset economic losses likely to be incurred as a result of new Annex I Party commitments; striking a balance between a legally binding agreement and specificity of targets; the strength and credibility of the multilateral consultative process (MCP) called for in Article 13; and embedding the principle of equity and burden sharing in any new agreement.

SUBSIDIARY BODY FOR IMPLEMENTATION: The SBI and the COP were unable to agree on the Annex to the Memorandum of Understanding (MOU) between the COP and the GEF Council. The purpose of this Annex, previously approved by the GEF Council, is to provide guidance on determining the financial requirements for implementation of the FCCC to be used by the GEF during the next round of replenishment negotiations.

While at first sight the disagreement over the MOU seems little more than another institutional rivalry between two international bodies, the fracture runs far deeper. Developing country delegates expressed dissatisfaction with what they saw as an attempt by developed countries to shift the burden of implementation from Annex I to non-Annex I Parties, in part by manipulating the balance of projects that will define funding requirements in the MOU Annex. These delegates objected strongly to proposed language that referred explicitly to funding mitigation projects by non-Annex I Parties. Delegates suspected that, by implying a high priority for funding GHG reduction by non-Annex I Parties, this would remove some of the pressure on Annex I Parties to take the concrete (and likely painful) actions to reduce their GHG emissions to below 1990 levels.

Nevertheless, it was apparent that many favored the introduction of language on the responsibility of all Parties to reduce GHG emissions. Ultimately, this was reflected in a decision submitted by the SBI (FCCC/CP/1996/L.12) on communications by non-Annex I Parties, which will require a national inventory of anthropogenic emissions by sources and removals by sinks of all GHGs as well as a general description of steps taken to implement the FCCC. This decision elicited praise from Executive Secretary Michael Zammit Cutajar during the Closing Plenary.

SUBSIDIARY BODY FOR SCIENTIFIC AND TECHNOLOGICAL ADVICE: As one observer noted, SBSTA-2, for the most part, proved but a dress rehearsal for SBSTA-3, with delegates delivering many of the same arguments in a more dramatic fashion. Agreement on the treatment of the SAR, perhaps the most difficult issue of COP- 2, eluded the SBSTA once again. Many delegations endorsed the SAR as the most comprehensive assessment on climate change available, while others, including many oil producing States and Australia, thought it would be premature to make recommendations. A “Friends of the Chair” group was ultimately formed to reach a consensus, but the group was unable to resolve anything. This issue demonstrates that the boundaries between science and politics are becoming increasingly difficult to maintain.

AD HOC GROUP ON ARTICLE 13: The AG-13 offered to provide input to the AGBM process on the design of a multilateral consultative process (MCP). Drawing on its examination of other international environmental agreements’ compliance procedures, it is likely to contribute to the development of a hybrid mechanism, which might combine assistance with reporting requirements with more stringent compliance monitoring. AG-13 has been preparing the ground for one of the features that will set the Berlin Mandate process apart from the non-binding nature of the FCCC.

MINISTERIAL DECLARATION: There were heated discussions as Parties exchanged views on the adoption of the Ministerial Declaration, or “Geneva Declaration” as it was christened during the Closing Plenary. The Declaration endorses the IPCC’s conclusions, including the finding that the continued rise in GHG concentrations will interfere with the climate system, and calls for legally binding objectives and significant reductions in emissions. However, environmental NGOs quickly noted that the Declaration does not specify that reductions should be well below the 1990 level set in the FCCC, fails to call for binding coordinated measures, and does not specify an upper-bound concentration level of GHGs. Sixteen delegations, including many oil producers, objected to both the Declaration’s content and handling, as well as the transparency of the process that produced it.

US SHIFT IN POSITION: The change in the US position to support a legally binding agreement pleased many environmental NGOs, and some predicted that the move by the US would force many delegations, some of whom had shielded their own opposition behind that of the US, into supporting a legally binding agreement. However, linking a protocol to tradeable permits led some delegates to raise both theoretical and practical issues. AOSIS members openly noted that this could leave the AOSIS protocol, which calls for a 20% reduction in emissions, “dead in the water.” Some developing countries spoke against heavy reliance on market-based schemes, arguing that markets favor the wealthy and often solidify, rather than resolve, inequities. Many delegates noted that a tradeable permit scheme raises a myriad of practical questions and expressed concern about “creative” implementation.

RULES OF PROCEDURE: It has been suggested by one NGO that the issue of the unresolved rules of procedure continues to “dangle like the sword of Damocles over these negotiations.” Without agreement on the voting procedures for a protocol (Rule 42), observers fear that COP-3 may be forced to settle for an amendment to the FCCC, rather than a protocol, because delegates have already agreed on the provision for adoption of an amendment by a three- quarters majority when consensus cannot be reached. The AGBM Chair confirmed that the preference of the Parties is a draft protocol, but said the “continuing divergence of views on the majority required for its adoption” means that an amendment remains an option. The Canadian delegation believes the absence of rules of procedure means a protocol — the preferred route for realizing the Berlin Mandate — can only be adopted by consensus. There is no agreed procedure for the adoption of a protocol within the FCCC, although Parties might appeal to state practice in the UN system, whereby substantive decisions can be taken by a two-thirds majority if consensus cannot be reached. The COP President is continuing intersessional consultations on this issue.

COP-2 was also unable to resolve another procedural question, the election of officers other than the President. Delegates at COP-1 were unable to agree on the composition of the Bureau, with oil-producing States making a bid for group representation. The small islands States were given a seat on the Bureau, in light of their strong interest in the FCCC, and oil-producers have argued for similar treatment. Consultations were conducted by the COP-1 President over the course of the past year, but to no avail. At COP-2, Parties again were unable to reach agreement, despite continued consultations conducted by AGBM Chair Raśl A. Estrada-Oyuela (Argentina). This question, which is politically linked with the voting question, will continue to plague negotiations through 1997. It is unlikely to be resolved until the outline of a protocol emerges. As a delegate from an oil- producing State repeatedly asked, “How much longer can the COP continue without adopting its rules of procedure?”

INDUSTRY SUPPORT: During the first week of COP-2, an international group of insurance companies issued a position paper calling for “early substantial reductions” in GHG emissions. Deborah Vorhies, Coordinator of the Trade and Environment Unit at UNEP, said the insurance industry recognizes the impact of climate change on its business, with increasing storm damage and other phenomena. Managing risk is the business of the insurance industry and climate change has forced some parts of the industry to recognize that their own interests will be best served to press for a stronger Convention. In a world of trade liberalization and reduced governmental intervention in the market, the active involvement of the insurance industry introduces a new dynamic into traditional industry input into the COP.

CONCLUSIONS: Definitive judgments on the future of the FCCC process are difficult to make, given the mixed signals emanating from COP-2. The challenge facing the subsidiary bodies will be to produce a negotiating text that can reconcile divergent interests and maintain credibility and effectiveness. In environmental negotiations the measure of a successful compromise is primarily a measure of its effectiveness in bringing about the desired and sustainable outcome. A compromise per se is not an option and not necessarily a solution. The AGBM will test to the limits the UN system’s ability to broker a deal between those States prepared to invest in a post-fossil fuel era and those who stand to lose on their investment in business as usual. In these terms COP-3’s significance will be immense.

The fulfillment of the Berlin Mandate — set against the failure of most Annex I Parties to fulfill their voluntary commitments under the existing FCCC — will be a significant measure of the degree to which the international community has marshaled the political will required to build on its commitment to sustainable development since UNCED. The debate on the AGBM will continue to spill over into the entire COP process, with Parties unlikely to give way on vital issues including the effectively-engineered dispute over the rules of procedure until the Berlin Mandate’s fate — together with the future of the global climate system — begins to take shape.

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