TWN Info Service on Climate Change (Oct16/02)
14 October 2016
Third World Network

Developing countries call for expert group on response measures

Kuala Lumpur, 12 Oct (Hilary Chiew) – Several developing countries called for the improved forum dealing with the impact of the implementation of response measures of the United Nations Framework Convention on Climate Change (UNFCCC) to establish an ad hoc technical expert group to advance its work.

They call for this decision to be made at the UNFCCC’s 45th meeting of the Subsidiary Body for Implementation (SBI 45) and the Subsidiary Body for Scientific and Technological Advice (SBSTA 45) at Marrakech, Morocco in November.

This emerged at a workshop held in Doha, Qatar organised by the UNFCCC on sharing views and experiences on ‘economic diversification and transformation’ and ‘just transition of the workforce and the creation of decent work and quality jobs’ in the context of sustainable development. The workshop was held on 2-4 October, 2016, and moderated in rotation by the Chair of SBI, Tomasz Chruszczow (Poland), Chair of SBSTA Carlos Fuller (Belize) and co-facilitator of response measures at the 44th meeting of the Subsidiary Bodies, Andrei Marcu.

The call for the establishment of an ad hoc expert group was made following the mandate of the outcome of SBI 44 and SBSTA 44 held in Bonn in May this year. The Subsidiary Bodies convened the first meeting of the improved forum on the impact of the implementation of response measure in accordance with decision 11/CP21 (2015) and agreed to implement a three-year work programme starting from June 2016 to November 2018 which included the above two areas of work – economic diversification and transformation, and just transition of the work force and the creation of decent work and quality jobs.

Based on the outcome of the workshop, Parties will hold an in-forum discussion on priority areas for further work, and as appropriate, constituting anad hoc technical expert group.

Saudi Arabia noted that starting from SB 45, the issue of response measures will be discussed in two tracks, referring to the in-forum discussion based on the outcome of the workshop, including the establishment of the ad hoc technical expert group as well as initiating the discussion on ‘the modalities, work programme and functions of the forum to address the effects of the implementation of response measures under the Paris Agreement by enhancing cooperation amongst Parties on understanding the impacts and the exchange of information, experiences, and best practices amongst Parties to raise their resilience to these impacts.’

The ad hoc technical expert group, ‘which we more or less established at Bonn should  move forward at Marrakech’, it stressed.

Singapore said it would strongly encourage that after Marrakech, one sector from either one of the two themes should be picked to launch the work of the ad hoc technical expert group early in the new year.

“We can think of good practices or principles that would point us to solve issues coherently and consistently. We should quickly move into that mode of work,” it added.

South Africa said it concurred with Saudi Arabia on the mandate ‘on where to go from here’ and the point by Singapore regarding a sectoral approach.

“As a start, the forum is good in terms of broadly conceptualising where we want to go. Going forward we need to unpack (many of the issues) ... the improved forum needs to get its hands dirty. It needs to do more specific work of looking at the mitigation impacts,” it stressed.

Representation of Parties at the 2.5 day workshop was considerably low, especially among those from developed countries with just the presence of the United States and the European Union.

At SB 44, developed country Parties resisted the idea of this inter-session workshop and preferred an in-session workshop (at SB 45 in Marrakech), citing cost-savings, reduced travels and inclusiveness while developing countries were of the view that the inter-session workshop was necessary to dig deeper into the discussion around economic diversification and just transition of workforce.

Furthermore, Qatar had offered to host the workshop with no financial implications for the UNFCCC Secretariat.

In his presentation on economic diversification and transformation, the World Bank Group’s lead economist (on Climate Change) Grzegorz Peszko said this was a new area of work that he is starting to wrap his head around.

“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.

However, he noted that how to diversify matters:
i.   traditional economic diversification through carbon-intensive downstream industrialisation may preserve some value of gas and hedge against cyclical volatilities;
ii.   broad asset diversification increases productivity, economic flexibility and better hedges against risks of deep structure transformations if triggered by climate response measures; and
iii.   dynamic, adaptive diversification paths are needed.

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.