In his concession speech after the 2010 mid-term elections, President Obama said
that prospects for meaningful U.S. climate change legislation are doubtful and will be for years.
With
the US and the international community unable to take even modest steps to
combat global warming, the State of California has stepped up in a big, big
way. Despite record unemployment rates, deficits and unemployment, California
voters trounced a measure that would have suspended AB 32, California’s
landmark climate change law. California’s AB 32 cap and trade program will soon
be the biggest market for compliance emission reductions outside of Europe. In
the wreckage of the Copenhagen talks and the new political landscape in
America, California is the most dynamic jurisdiction for climate change
implementation.
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Just
days before the 2010 elections, California’s
regulatory body proposed regulations to implement cap and trade provisions of
AB32. One big question was whether California would allow regulated
entities to use any emission reductions from developing countries for
compliance. The pending rules answered that question by allowing limited carbon
credits into California from developing countries, provided an entire economic
sector in a given jurisdiction reduces emissions significantly below historical
levels. So-called “sectoral credits” are a significant leap forward in carbon
markets. The scale of mitigation for sectoral credits must go beyond simply
stopping emissions at a single location or project.
Sectoral
credits as envisioned in the California rules will demand scaled-down low-carbon
development of entire sectors across large geographic regions [Briefing Note on CA AB 32]. This is a
game-changing development for climate policy and finance. The historical
approach of using climate finance on project-specific activities is the core
operating procedure of the Kyoto Protocol’s Clean Development Mechanism and
voluntary carbon credits. Now to access funds available under California’s cap and trade
program, states and provinces in developing countries at large must reduce
emissions. And given that the prospects for US legislation are pretty close to
nil, California’s new rules are a welcome bright spot and could be the basis
for linking with other international climate change policies.
California
Takes A Giant RED Step.
 Click to enlarge |
Critically
important, California’s proposed regulations stated that the first sector
eligible for international offsets will be reducing emissions from
deforestation (RED). (For the policy wonks out there, yes that is only
one D. The draft regulations suggest California will probably focus on
deforestation first, before other issues such as degradation, soil, etc.). This
handshake, whereby California would pay states in Brazil, Mexico or Indonesia
to reduce deforestation, is a powerful endorsement of the work being done in
the Governors Climate and Forest Taskforce (GCF) and
in the reductions in deforestation already achieved by some key states and
provinces. If REDD+ was already an ember of hope for climate policy after the
dark days of Copenhagen’s failure, RED, at least in California, is now on fire. (In
an earlier article, I discuss how after Copenhagen, REDD+ emerged as the front-runner in international climate
change cooperation. California indicated it would accept up to 74.3
million tons of CO2 reductions from sectoral credits, and forests are the only
sector that is explicitly discussed in the regulations.
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With
California voters backing cap and trade legislation and California regulators
blessing RED as the first option for sectoral offsets, what implications does
this have for international climate negotiations in Cancun, Mexico? Governments are meeting in Cancun for the 16th
Conference of Parties of the United Nations Convention on Climate Change (known
as COP16). They are trying to resuscitate global climate change policy. The
signs from the first week of negotiation are mixed. REDD+ continues to make
substantial progress. The three pages of negotiating text on REDD+ in the 33
pages of key negotiations are largely free of disagreement, with one
major exception. Bolivia has insisted that REDD+ can not “constitute the
establishment or use of a market mechanism.” Bolivia doesn’t like markets. So
for now even though the negotiating documents are getting close to the
consensus needed to make them official decisions, REDD talks are stalled until
Bolivia changes its position. (Supporting Bolivia in this outlier mode is Saudi
Arabia.) Bolivia’s President Evo Morales is rumored to be attending, possibly
with other left-leaning Heads of State to make their case in person. The United States has also said
they won’t let any decision go forward on REDD+ without other concessions in
the negotiations. Notably, the United States wants more clarity on verification
and the role developing countries will play in mitigation. These are the same
issues that helped sink the Copenhagen meetings.
 Strangler fig in North Sulawesi |
With
US federal climate change legislation out the window, and the viability of the
UNFCCC in doubt, progress on REDD+ has devolved to the state and provincial
scales in developing countries, many of them organized under the Governors’ Forest and Climate Taskforce
(GCF). (Disclaimer, the Tropical Forest Group has been an advisor to the GCF
for the past year). This so-called sub-national level is where REDD action has
some traction. The GCF states and provinces are widely credited with helping
California move aggressively on including reduced emissions from deforestation
into the California climate legislation. And critically, an
earlier decision (4/CP.15) from the Copenhagen talks provided a
clear signal that sub-national REDD efforts could go forward. This helps firm
up a potential legal link between what is happening in California, the progress
states and provinces have made in reducing emissions, and the international
community.
But
there are many hurdles still ahead. First, the California regulations are only
proposed. The California Air Resources Board will vote on the draft rules December
16th, 2010. Second, negotiations in Cancun are clearly stalled
between countries that are OK with Copenhagen Accord and countries that
outright are hostile to the Copenhagen Accord. And REDD+
is where Bolivian President Morales has drawn a clear line in the sand, at
least for now. Third, Europe continues to refuse to allow developing country
forestry credits into its Emission Trading Scheme. Given the collapse of US
climate legislation and the emergence of RED in California, Europe and the
biggest compliance in America (California) could not be on more different paths
forward for international emission reductions cooperation.
Briefing Note on Proposed CA AB 32 Regulations [PDF]
John O. Niles is the director of the Tropical Forest Group.
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