“Mexico and Japan in the New International Agenda: A Comparative Analysis”

Climate Change, Sustainable Development and Mexico´s “Green Fund” Proposal

Lisa Antillón K.

Tokyo, Japan, November 20-21, 2008

CLIMATE CHANGE

• 1979- Discussion about climate change begins in international forums during World Conference on Climate Change.

• 2006- United Nations Environment Program (UNEP) Fourth Intergovernmental Panel on Climate Change (IPCC) states that “Warming of the climate system is unequivocal and “Most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic greenhouse gas concentrations”

• Annual growth carbon emissions:2000- 1%2006-2.5%

THE WORLD TODAY

• Deserts spreading• Floods, especially in

Northern latitudes• Ice melting• Seas losing their capacity to

absorb carbon emissions• Plant and animal extinction

at faster rate than ever

THE WORLD 2030-2080• Water. Climate change will alter patterns of water availability by intensifying the

water cycle. Droughts, heatwaves and floods will become more severe in many areas.

• Food. Food production will be particularly sensitive to climate change, because crop yields depend in large part on temperature and rainfall patterns. While agriculture in higher-latitude developed countries is likely to benefit from moderate warming (2 –3°C), even small amounts of climate change in regions closer to the Equator, such as the tropics, ARID AND SEMI ARID REGIONS –where most of the world´s poor people live- will lead to declines in yield. Declining crop yields are likely to leave hundreds of millions without the ability to produce or purchase sufficient food

• *Ocean acidification. Adverse effects on marine ecosystems, including fish stocks, which provide protein for 17% of the world population.

• *Environmental refugees. 75% of the poorest people in the world live in rural areas and rely on agriculture for their livelihood. They will be especially hard hit by warmer climate. Today, almost as many people are forced to leave their homes because of environmental disasters and natural resource scarcity as flee political oppression, religious persecution and ethnic troubles (25 million compared with 27 million).66 Up to 200 million (2% of projected population) people may become permanently displaced by the middle of the century due to climate change. Will industrialized countries be willing –and able- to receive them?

THE WORLD 2030-2080• Health. Changes in the water cycle will affect health, especially in poor

countries. Dehydration, respiratory problems, drowning and waterborne diseases such as cholera and malaria.

• Sea level rise. Flooding of cities, agricultural lands and small islands. Fresh water and ground water supplies will be inundated with saltwater.

• Infrastructure. Droughts, flooding and permafrost melting will affect stability of buildings and infrastructure. Flooding made up to almost 90% of the total losses from natural catastrophes in 2005.

• Biodiversity. Climate will change too rapidly for many species to adapt. One study estimates that around 15 – 40% of species face extinction with 2°C of warming in highly biodiverse areas in Mexico, Central and South America, Asia and Africa. Surge of pests.

1992 UNFCCC Stabilize anthropogenic green house gas (GHG) emissions to a level that allows ecosystems to adapt naturally to climate change and ensure sustainable economic development

•ENCOURAGES DEVELOPED INDUSTRIAL COUNTRIES to adopt measures to ensure a reduction of GGE so that at the end of the decade they would decrease their emissions to the level they had in 1990•Common but differentiated responsibilities and capabilities for all countries•No measurable goals

1997 Kyoto Protocol

COMMITS both developed and transition economies to globally reduce GHG emissions to 5.2% less than their 1990 emissions between 2008 and 2012.

•COMMITS AND TRANSITION ECONOMIES to cover all expenses incurred by less developed countries to control GGE, to transfer technologies and to channel financial resources •Countries meet their targets through1.National Measures2.Market based mechanisms that issue Certificates of Emissions Reductions (CERs), each equivalent to 1 ton of carbon:

a) Emissions trading. Annex B countries can trade carbon as if it were any other commodity. b) Joint Implementation. Annex B countries can reduce carbon emissions in other Annex B countries. Cost efficient. c) Clean Development Mechanism . Annex B countries can implement emissions reduction projects in developing countries.

MEXICO, A HIGH EMISSIONS INTERMEDIATE DEVELOPMENT COUNTRY

Mexico´s ranking worldwide: • Among the first 25 countries with

greater emissions, GNP and population of the world

• 13th amongst polluting countries.• 15th amongst fossil fuel emissions• 16th for deforestation. • 93rdon a per capita basis with 6.4

tons (world average is 6.5)

A third of all GHG emissions are due to environmental destruction.

As a developing country, Mexico is not obligated to reduce its emissions under the Kyoto Protocol.

Mexico Special Program for Climate Change, Public Consultation, p. 25.Ibid, p. 23

MEXICO´S VULNERABILITYGeography:

• Close to the Equator. Deserts and grasslands encroaching on tropical and semi tropical landmass, which results in droughts, erosion, loss of biodiversity and desertification.

Population distribution:• Mainly in flood-prone valleys, coasts

and large cities, uncontrolled random settlements close to river basins and hills.

Governance:• High income inequality• Lack of long-term planning: changes of

land use, construction of inadequate infrastructure, unsustainable tourism and population centers

TABASCO FLOODS 2008: A CASE OF VULNERABILITY IN MEXICO

• 3rd worst natural disaster after 1985 earthquake and the combined losses from hurricanes Wilma and Stan (2005)

• 3.8 bn. USD losses• 29.1% of state GDP

Zapata Martí, Ricardo. Inundaciones en Tabasco. Evaluaciones Socioeconómicas coordinadas por la CEPAL y CENAPRED

MEXICO IN A WARMER WORLD

• Up to 40% loss of biodiversity

• Significant loss of reefs and mangroves

• *Important loss of employment related to agriculture and farming

• * Drastic reduction of economic growth

• * Political instability

• *Unprecedented migration of Mexicans and Central Americans to the United States and Canada

…

• http://blog.cleveland.com/world_impact/2008/08/large_migrant.jpg

MEXICO IMPLEMENTS NATIONAL POLICIESStrengthen hits enviro mental institutions

• Created the Inter-Ministerial Commission on Climate Change in 2007 to coordinate the Special Program for Climate Change

a) Promote climate change policies within the 2007-2012 National Development Program and the UNCCCb) Issues Letters of Approval for Mexican projects that wish to

participate in the Clean Development Mechanism. (p. 29 PECC)

Mexico´s Environmental Objectives… • Reduce GGE • Promote clean technologies and efficiency to generate energy• Promote energy efficiency domestic, agricultural, industrial transportation• Promote adaptation policies to climate change• Ensure equity in access to environmental goods and services• Guarantee the population´s personal and patrimonial security amid climate

change Inter-Ministerial Commission´s main objectives

MEXICO´S INTERNATIONAL COMMITMENTS

Kyoto Protocol. • As a non-Annex I country, Mexico benefits from the

Clean Development Mechanism, by which developed countries can buy Certified Emissions Reductions (CERs), each equivalent to one ton of carbon.

• Mexico has a potential to reduce 81 million tons of CO2/year. According to current market CDM prices, this could represent more than 480 million euros per year.

• OF a total of 1,078 CDM projects authorized to receive CERs in 2008 for a total reduction of 216.5 million tons of CO2/year, 105 projects will take place in Mexico, with annual emissions of 7.3 million tons of CO2/year.

• Mexico has agreement memoranda on CDM with the Japanese Bank of International Cooperation, Germany, Austria, Canada, Denmark, Spain, France, Italy, Netherlands, Portugal and the Japanese Bank of International Cooperation.

• AVERIGUAR CUÁNTOS PROYECTOS SON JAPONESES. • PECC, p. 185.

National Ecology Institute of Mexico

CDM PROJECTS IN MEXICO

• Residues in pork and beef farms• Methane in sanitary fillings• Residual waters• Windpower• Hydroelectricity• Incinerators, • N2O mitigation in the chemical

industry• Energy cogeneration and

efficiency• Fugitive emissions• Transportation

ADVANTAGES OF THE KYOTO PROTOCOL´S 3 MARKET-BASED MECHANISMS TO REDUCE GREENHOUSE GAS EMISSIONS

• Has successfully placed a monetary value on carbon emissions reductions for the first time in history

• National commitments to measuring and reporting ensure transparency and accountability

• Consequences for non-compliance include suspension• Investments are complementary to national policies and foreign aid

LIMITATIONS OF THE KYOTO PROTOCOL´S 3 MARKET-BASED MECHANISMS TO REDUCE GREENHOUSE GAS EMISSIONS

• Scope. Financing projects –and not programs, sectors and sub-national entities- has limited effects

• The Global Environment Facility, through its implementing agencies (UN organizations, World Bank) makes it seem more “assistance-based” than “market-based” and possibly prone to the World Bank´s conditionality

• Concentration. 80% of the Clean Development Mechanism´s projects are concentrated in 6 less developed countries

• Baselines. By ensuring that projects are not making up for non-compliance of national legislation or companies´practices, a perverse mechanism is created by which national and company regulations have an incentive to be kept at very low standards.

• Disproportionately benefits the “Gray Agenda” versus the “Green Agenda”

The Road to Post 2012 Kyoto Commitments• Bonn, Germany, May 2006. Must proceed

expeditiously towards agreement on future commitments for Annex I Parties.

• Nairobi, Kenya, November 2006. Decision to focus in 2007 on analysis of mitigation potentials and ranges of emission reduction objectives of Annex I Parties.

• Bonn, Germany, May 2007. Discussion of the current status of scientific understanding and relevant experience.

• Vienna, Austria, August 2007. Adopted conclusions on the analysis of mitigation potentials and identification of ranges of emission reduction objectives of Annex I Parties.

• * Bali, Indonesia, December 2007. Strengthen Convention before and after 2012. Developed timetable in order to avoid a gap between the first and second commitment period and effectively implement UNFCCC in long term.

• Bangkok, Thailand, March-April 2008. Workshop on the means to reach emission reduction targets.

• Bonn, Germany, June 2008. Consider the means that may be available to Annex I Parties to reach their emission targets and relevant methodological issues.

• Poznan, Poland, December 2008. Expected to reach agreement on plan of action regarding future commitments; advance on “shared vision” for a new climate change regime.

• * Copenhagen, Denmark, December 2009. Expected to define commitments of the Kyoto Protocol´s second period beginning in 2012.

MEXICO´S POSITION ON KYOTO AFTER 2012

• Clear actions are required of all states under the principle “common but differentiated responsibilities and respective capacities”.

• Annex I countries must reduce greenhouse gas emissions between 25 and 40% of their 1990 level by 2020 in order to achieve maximum historical levels in the next 15 to 20 years.

• Supports the intensive use of market mechanisms

• Reducing GHG emissions will require large-scale funding

JUSTIFICATION:• Mitigation and adaptation to climate change will only reach a relevant scale through

adequate financing• Would support countries and activities that have not been able to benefit from the Kyoto

Protocol

HOW MUCH SHOULD COUNTRIES CONTRIBUTE?:General Principles:

1. Polluters Pay2. Equity. All human beings have a right to benefit from the Earth´s environmental services3. Efficiency. Economic development must be associated to decreasing GHG emissions4. Capacity. All countries should face climate change according to their respective capacities.

Indicators:1. Greenhouse gas emissions2. Population3. GNP

STRENGTHENING KYOTO BY CREATING THE WORLD FUND AGAINST CLIMATE CHANGE (GREEN FUND)

GREEN FUND. ARGUMENTS AND COUNTER-ARGUMENTS1. INCLUSIVENESS

“MUST EVOLVE FROM WORKING MOSTLY IN HIGH-EMISSIONS DEVELOPING COUNTRIES TO INCLUDE ALL DEVELOPING COUNTRIES”

Argument• 80% of CDM projects

concentrated in 6 countries• Since it refers to projects

and not national sectors or programs, what country these projects are in is unimportant.

Counter-Argument• Easier to monitor a small

number of high-impact countries

GREEN FUND. ARGUMENTS AND COUNTER-ARGUMENTS2. SCOPE OF FINANCING

“MUST EVOLVE FROM PROJECTS TO SECTORS, PROGRAMS AND SUBNATIONAL ENTITIES”

Argument• “In order to increase the

impact of CDM, beneficiaries should include national sectors, programs and sub-national entities”

Counter-Argument• It has been proven that

funding grand development schemes results in a dilution of efforts and money, a lack of transparency and accountability.

• Projects are easier to monitor and measure

GREEN FUND. ARGUMENTS AND COUNTER-ARGUMENTS3. INDEPENDENCE

“The Fund should be independent and democratic and will not result in more bureaucracy”

Arguments• The Global Environmental Facility (GEF),

an “independent financial entity”, implements all programs (including CDM) through UN and World Bank organizations. Therefore, resources allocation is influenced by their “conditionality”.

• An independent fund would enable the ““common but differentiated responsibilities and respective capacities” principle to materialize.

• Resources are allocated through a previously-agreed formula that takes into account principles and indicators

• This is not a Less Developed Countries Forum

Counter-Arguments• So far, the GEF´s, UN´s and

World Bank´s performance in measuring, monitoring and allocating funds has been what is expected. Why risk it?

GREEN FUND. ARGUMENTS AND COUNTER-ARGUMENTS5. BASELINE

“Baselines result in a perverse mechanism that promotes legal and practical immobility ”

Argument• It is a perverse incentive

because in order for projects to be approved, they must prove that they aren´t substituting for practices or legislation that host parties should be implementing. This keeps standards low.

Counter-Argument• True. Countries would

probably have to install “watchdogs” to monitor practices and legislation to make sure not only that they are progressive, but that they don´t become backward. Would that be expensive?

GREEN FUND. ARGUMENTS AND COUNTER-ARGUMENTS6. GREEN AGENDA

“CDM should pay proportionate attention to the Green Agenda”

Argument• In order to diminish GHG it is

important to preserve and create carbon sinks

• Out of 1,078 CDM projects, only 1 is for the Green Agenda (reforestation)

• An average 17% of GHG are due to deforestation and land use changes (33% in Mexico)

• The Green Agenda has a multiplying effect: prevents deforestation and land degradation, conserves water and crops crops, prevents migration, political instability, threats to democracy

Counter-Argument ?????????

GREEN FUND. ARGUMENTS AND COUNTER-ARGUMENTS7. ENVIRONMENTAL SERVICES

“Strengthening the Green Agenda empowers developing and less developed countries”

Argument• Developing countries are

repositories of the world´s forests and biodiversity, which provide environmental services (carbon sinks, water factories) and contribute to world peace and stability.

• If these important contributions were valued, developing countries could, for once, become DONORS instead of RECIPIENTS of aid/investments.

• A more balanced power equation in the world

Counter-Argument• To be discussed…

ConclusionsRethinking the Green Fund

The adoption of the Green Fund by the Kyoto Protocol Parties could become more feasible if:

• CDM and JI continue to be project-based. Thus, the Fund would increase in depth and breadth

• All countries should contribute according to the “common but differentiated responsibilities and capabilities” principle

• Least developed and most vulnerable countries should receive larger funding

• The Green Agenda should be equally important as the Grey Agenda

UNFCC Annex I and Kyoto Protocol Annex B countriesPECC, Ministry of the Environment of Mexico