The annual climate negotiations are wrapping up in Lima, Peru tonight or likely tomorrow. Negotiators are working through the night in overtime as they seek to hammer out a blueprint that will serve as the negotiating template for next year.  This is the meeting before next year’s big meeting in Paris when expectations are high for a new climate agreement that will establish the targets and actions countries are willing to make for the 2020 period and beyond. So, what’s going on? What’s at stake? What are the key outcomes? Points of dissensus and consensus? Should we be optimistic or pessimistic? Here is one live negotiation tracker and what I believe is the proposed text that the chair proposed just as I went to bed.

They Won’t Resolve All The Issues, But Something Will Emerge

Andrew Revkin captured the general state of optimism heading into these talks. In the wake of the U.S.-China bilateral climate agreement, we are now in a period when a bottom-up”soft” agreement of country pledges followed by rigorous international review may be within reach:

The new emphasis on a soft approach is quite a contrast to the tone in the run-up to the tumultuous Copenhagen talks in 2009, when inflated “seal the deal” expectations — partially driven by the election of President Obama — led to the idea there could be new international, legally-binding gas limits like those tried in the 1997 Kyoto Protocol — which has proved a dead-end document.

The U.S.-China agreement (and U.S. actions to regulate power plants) have altered the mood in Lima for much of the opening days of the negotiations. The U.S. delegation is being greeted with “warmth,” an unusual development at these negotiations where the U.S. is often seen as a difficult actor departing from the orthodoxy of campaigners and states that want to see more vigorous action on climate change. The New York Times captured the sentiment:

At the global climate change negotiations now wrapping up in Peru, American negotiators are being met with something wildly unfamiliar: cheers, applause, thanks and praise.

So, even though the negotiations are dragging on per usual, negotiators are optimistic that a text will emerge from this meeting that will serve as the contours for the Paris agreement next year. Here was The Guardian’s take from earlier this afternoon:

All is Not Roses: Sticking Points on Commitments, Monitoring, and Money

Some contentious issues remain and are helping drag out negotiations in Lima. They probably won’t all be resolved tonight, but here are some of the key faultlines that negotiatiors are trying to finesse: (1) whether country commitments will be legally binding, (2) the specificity and rigor of monitoring country pledges, and (3) the firmness of pledges of climate finance to poor countries. There may be others, but this is what I’ve gathered from my Twitter feed. Here was the state of play of the draft text from Friday afternoon from Robyn Eckersley from the Lowy Interpreter:

The co-chairs of the Durban Platform for Enhanced Action (ADP) had prepared a twelve-page draft negotiating text containing all the required elements of the new 2015 agreement (mitigation, adaptation, finance, technology transfer, transparency of action and capacity building). By Wednesday of the second week of negotiations, a revised compilation of this text had blown out to 37 pages, reflecting multiple and conflicting formulations. The negotiations on this text have now closed, and it will remain a work in progress during the inter-sessional meetings leading to Paris at the end of 2015. It will take a Herculean and high-level effort to whittle this text down into a much shorter and more manageable form that might induce parties to sign at Paris.

The Legal Nature of Emissions Reductions Commitments
As I wrote before, the U.S. doesn’t want commitments to be legally binding at the international level through a treaty instrument because this would set the negotiations up for failure. Given the absurdly high bar for treaty ratification in the Unites States (2/3 of United States Senators have to provide their advice and consent), no treaty can clear the Senate so the nature of the international agreement that is negotiated shouldn’t be something that the U.S. can’t join. While other aspects of the agreement such as monitoring might be legally binding (and indeed the commitments could be legally binding domestically if they emanate from some process), internationally legally binding commitments for the United States are a non-starter. The EU still wants legally binding commitments:

“The EU is of the mind that legally binding mitigation targets are the only way to provide the necessary long-term signal, the necessary confidence to the investors … and provide credibility in the low carbon transition worldwide,” said Elina Bardram, head of the EU delegation at the conference, which opened on Monday.

John Upton has a good take in Climate Central on how legally binding would be a bad idea:

Including legally binding commitments in the next climate treaty “may make some people feel good in the European environmental community,” Esty said. But it would exclude the U.S., which, along with China, is one of the two most important players when it comes to spurring a meaningful global climate solution, meaning it would “not likely translate into a real response to the climate change problem.”… “There’s another kind of ‘binding’ that’s meaningful, and that’s binding under domestic law,” environmental economist Robert Stavins, a Harvard University professor closely involved with the climate negotiations, said. “If the U.S. puts in place an executive order, a regulation or a statute, it is bound by that under the U.S. Constitution. That’s true in all the democracies of the world. In the case of China, the analogy would be if it’s in the 5-year plan.”

I think the EU is going to have to give on this though. They want an agreement so this ultimately probably won’t be as big a source of discord.

The bigger issue might be “differentiation.” Developing countries want to hold on to the principle of “common but differentiated responsibilities,” which has been a crutch for fast-growing developing countries to hold on to not having to take on commitments of their own. The U.S. wants to get rid of differentiation, but this is probably an area that will not be resolved tonight. There are a variety of options floating around, but this probably needs some more time to ripen.

Monitoring
If commitments are not legally binding, then there has to be thorough reporting and verification of state actions to ensure that countries are living up to their commitments. “Trust but verify” was the old maxim in arms control negotiations. Here, I think the maxim is likely “mistrust and verify.” The main sticking point that almost killed the U.S-China bilateral deal before it got off the ground was credibility of commitments. The U.S. wasn’t sure if China would keep commitments give the lack of enforcement power by the country’s environment ministry, and China isn’t confident the U.S. will keep its climate commitments, given the political contestation of the Obama Administration’s policies domestically. Rolling Stone (yes, that magazine) has a good story capturing how this played out in the lead up to the big U.S-China announcement. Flash forward to Lima. Early news reports suggested that China doesn’t want strong verfication as part of the agreement. Part of it is a function of limited domestic capability to do monitoring and China’s general aversion to transparency and international meddling in their sovereignty:

China has for years balked at such requirements, and as of early this week its negotiators in Lima were working to ensure that the final document would not include such clauses, said an environmental advocate in Lima, who is tracking the talks and spoke on the condition of anonymity to not be seen as influencing the events.

Whether or not this is the opening gambit remains to be seen, but I am certain that the United States will insist that verification is a key piece that comes out of Paris, whatever is agreed tonight or tomorrow in Lima.

Show Us the Money

In 2009, advanced industrialized countries pledged to mobilize up to $100 billion per year in climate finance for poor countries by 2020. The closer we get to 2020, the shakier that commitment of finance seems to be, in part because it is predicated on both public and private money. People seem to forget that the private finance part which would require that donor countries have carbon prices, cap-and-trade measures, or mechanisms that would incentivize private actors to look for low-cost emissions reductions in the developing world, whether it be forest conservation, renewables, or improvement in industry efficiency and emissions. On the public side, the question was whether or not rich countries would make good on capitalizing the new Green Climate Fund (GCF) which a year ago largely faced empty coffers.

With the U.S., Germany, France, and Japan all announcing big pledges this year, the GCF now looks like it will have more than $10 billion to work with. Even Australia (which has become a climate laggard under its new leader Tony Abbott) offered to pony up a contribution of nearly $166 million. Still, there are some warnings signs coming from different directions. There are some suggestions from conservative media that the House spending bill has a rider that blocks the U.S. contribution to the GCF. E&E news reported on this as well. It doesn’t appear there was a specific appropriation request from the Obama administration for 2015.

The other issue is that developing countries are not happy that there isn’t a clear path to getting to that $100 billion. India, which is increasingly under pressure to follow China’s lead and adopt a more vigorous climate policy of its own, has seized on the climate finance issue. The Guardian reports their displeasure:

It was also unclear how industrialised countries could be held to an earlier promise to mobilise $100bn a year for climate finance by 2020, negotiators from developing countries said. “We are disappointed,” said India’s Prakash Javadekar. “It is ridiculous. It is ridiculously low.” Javadekar said the pledges to the green climate fund amounted to backsliding. “We are upset that 2011, 2012, 2013 – three consecutive years – the developed world provided $10bn each year for climate action support to the developing world, but now they have reduced it. Now they are saying $10bn is for four years, so it is $2.5bn,” he said.

Moreover, as Lisa Friedman and Jean Chemnick report, the focus on adaptation and loss and damage might not be as central to the document as developing countries want:

What’s more, the United States has pushed to move adaptation and loss-and-damage funding to a less prominent section of the negotiating text, angering developing countries, which see those issues as cornerstones of the eventual deal.

Oxfam explained the state of play this afternoon:

Separate discussions are proceeding to overcome sticking points on the approach to finance in the time pre-2020, which is oddly referred to as ‘long-term finance’. Compromise proposals are floating around among negotiators but these have yet to be made public. The current state of play is that the outcome will likely be very weak. Proposals to create a roadmap for reaching the $100bn promise have been watered down to merely “inviting” developed countries to provide further information on this goal. This makes it very unlikely that developing countries will get the clarity, predictability and support they need to boost climate action in the next few years.”

I don’t know how this turns out. While adaptation can probably be moved around in the text, the U.S. has probably stepped out about as far as it can at this stage and still has to figure out how to make good on the $3bn pledge to the GCF. So, in the end, I think the negotiators will try to figure out some compromise and punt this decision to Paris. So, by the time we wake up, we may know more as negotiators may be in for a long night ahead of them!