Info Service on Climate Change (Oct16/02)
countries call for expert group on response measures
“How we can think about climate change and economic diversification and how countries that have developed for many years and alleviated poverty, while the rest of the world will have to rely less on fossil fuel for growth,” he questioned from the outset of his presentation titled ‘Diversification and climate policy action: Dilemmas of carbon intensive countries in the uncertain world.’
He said the path towards global decarbonisation will be more challenging for some countries and the process of economic development that continues to generate growth and work for the people will have to respond with flexibility to the transition to low carbon development.
He said that the emerging World Bank Group’s engagement with countries that are dependent on carbon-intensive wealth includes understanding a country’s vulnerability to impacts affecting external demand for fossil fuels and the costs of using them domestically; develop diversification strategies to increase national wealth and contribute to global climate mitigation action by enhancing economic flexibility, adaptability and resilience through a portfolio of national assets; and develop tools to make informed decisions under uncertainty about future impacts of climate response measures and other external shocks.
Peszko also said vulnerability to low carbon transition impacts are determined by the exposure and resilience/flexibility level of carbon-dependent countries. The indicators of exposures are: export revenue from fossil fuels as a share of GDP; expected rents from fossil fuel reserves as a share of GDP; carbon intensity of manufacturing exports; and committed emissions in the power sector divided by current power production.
He added that the indicators for resilience/flexibility are: GDP per capita; economic complexity; macroeconomic stability; financial market development and efficiency; quality of infrastructure; human capital; institutional quality and good governance; ability to absorb technology; and ease of doing business.
In conclusion, Peszko said cooperation in global climate policy action looks worrisome if carbon-dependent countries remain dependent on fossil fuels but it looks attractive from where these countries want to be i.e. diversified and resilient.
he noted that how to diversify matters:
He also said that low- and middle-income economies with large, but yet untapped fossil fuel reserves in the ground, may find it challenging to finance diversification and may need help to cope with near-term costs of diversification.
Peter Govindasamy, Director of International Trade from the Ministry of Trade and Industry of Singapore pointed out that besides the impacts of the implementation of response measures, there are also response measures being developed by international organisations such as the International Organisation for Standardisation (ISO).
He warned that the development of carbon footprint standards namely ISO 14067 (Quantification of carbon footprint for products) and ISO 14026 (Footprint labelling) would have economic and trade implications.
He said such standards do not take account of national circumstances of Parties, referring to Article 4.10 of the UNFCCC which states that Parties shall take into consideration the vulnerability of developing countries’ economies that are highly dependent on income generated from the production, processing and export, and/or consumption of fossil fuels and associated energy-intensive products and/or the use of fossil fuels for which such Parties have serious difficulties in switching to alternatives.
A key shortcoming of ISO 14067 is that a carbon footprint assessed in accordance with the standard does not provide an indicator of any social or economic impact, he said, adding that the standard is also inconsistent with theCconvention that requires Parties to address adverse effects of response measures.
Later, in summing up his expectations of the workshop, Govindasamy said the challenge is how to facilitate the transition (from carbon-intensive to low carbon economies) with as minimal impact as possible.
He said many responses have to take place at the national level, such as provision of social security, but there is need for international level support and cooperation.
South Africa said it would like to see more region-focussed activities. It said there is a need to communicate better what the forum is doing and its objective.
On the linkage between trade and climate policies, it said it would be useful to get the perspective of the World Trade Organisation regarding impacts of the implementation of response measures as well as engaging the ISO.