In December, 194 countries will meet in Paris to finalise a new global commitment to tackling climate change. Called COP21, it will focus on mitigation and adaptation in an attempt to limit global warming. Dentons’ Helen Bowdren explains more…
Before the conference starts, each country must present the ‘fair and ambitious’ steps it is willing to take to reduce greenhouse gas emissions – referred to as Intended Nationally Determined Contributions (INDCs). For the first time in climate negotiations, countries are not treated differently based on whether they are ‘developed’ or ‘developing’ nations but each country will be asked to make a commitment, having regard to national circumstances. Many countries will be agreeing to cut or cap their emissions for the first time.
Progress So Far
So far 33 INDCs have been submitted (including one to cover all 28 member states of the EU). Australia and the USA have both agreed to reduce emissions to 28% below 2005 levels by 2030.
The European Union’s INDC outlines a (self imposed) binding target of at least 40% domestic reduction in greenhouse gas emissions (compared to 1990 levels).
China’s INDC states that it intends to start cutting carbon emissions in 2030 and make “best efforts” to peak emissions before 2030. It includes a carbon intensity reduction pledge of 60-65% below 2005 levels by 2030. This strategy allows the country to continue to increase its emissions in the short term as the economy grows. This is very significant because China is now the world’s largest emitter of carbon (though it remains behind the US and other rich countries on a per capita basis).
The Japanese INDC includes an economy-wide absolute GHG reduction target of 30% compared to 2013 levels by 2030. Of these reductions, between 50 to 100 MtC02e per year will be reduced via the Japanese Crediting Mechanism. Japan has signed bilateral carbon offset agreements with 14 countries around the world to date.
However, many more countries have not yet showed their hand. With less than three months to go before the Paris conference, some of the biggest global emitters, including Brazil, India and Indonesia are yet to say what they will do to reduce greenhouse gas levels.
Finance will be a key issue in Paris – how much will the international community commit to fund climate mitigation and adaptation projects, and on what terms?
Many developing countries have given two reduction commitments, with a lower unconditional target accompanied by a larger reduction target contingent upon receiving climate funding.
Kenya has stated that the measures outlined in its INDC will cost over $40 billion, and that they cannot be achieved without international support. In 2009 at Copenhagen developed countries pledged $100 billion a year in climate finance, but not all of this has been realised. It remains to be seen how much of a stumbling block financing will become at Paris.
Potential Impact for the EU
The EU-wide targets will be enforced by member states regardless of the outcome of COP 21. So in the EU we have a fair degree of certainty as to what emission targets are in the short and medium term. This will continue to shape the EU legislative agenda going forwards.
Separately, the EU Emissions Trading Scheme (EU ETS) is being reformed through the introduction of a market stability reserve which aims to address the huge surplus of carbon credits which have built up in Phase 2 of the EU ETS, and to shore up the credibility of the scheme.
The Waste Sector and Climate Change
The waste sector is exposed to many risks associated with climate change, and the extreme weather patterns it may bring. These include flooding of surface water and groundwater, changes in site hydrology and temperature, site damage from storms, and inundation or erosion of low lying coastal facilities. In addition, all businesses face the risk of supply chain disruption, inability to move waste round the country, and employees being unable to get to work in time, or at all.
The waste industry is already subject to various legal regimes aimed at reducing GHG emissions. These include the EU ETS, the UK domestic Carbon Reduction Commitment, the Climate Change Levy, the ESOS scheme and energy performance certificates. The sector can also benefit from some regulatory incentives such as the Good Quality CHP scheme, landfill gas capture opportunities, and climate change levy exemptions in some cases. The waste sector is a source of GHG emissions, but is also acknowledged as being an essential part of any solution to reduce emissions.
A Post Paris World
So what will a Paris Agreement mean for the waste sector? The outlook for the waste sector in the UK will of course be driven primarily by EU regulation.
In their INDCs, states are asked to consider sector-specific emission reduction measures. The EU’s INDC specifically mentions the waste sector, indicating that it will target biological treatment of solid waste, incineration and open burning of waste and wastewater treatment.
In future, we may see restrictions on the volumes of organic matter which can be sent to landfill, and mandatory requirements to install landfill gas capture technology. Organic matter may be directed to other uses, such as biogas, incineration or composting.
The EU is still developing its circular economy plan, and this may lead to further obligations in relation to design, recycling and reuse of products.
The waste sector could also be impacted by mitigation measures which target other sectors. Waste transportation and collection would be affected by any measures to address transport-related emissions, and energy from waste plants are subject to changes in energy policy.
Outside the EU, many countries have signalled their intent to take on new binding commitments to reduce emissions. The most significant outcomes of the Paris Agreement may derive from operations overseas. For example, South Africa has announced plans to introduce a carbon tax in 2016, and new emission trading schemes are in development in South America (Brazil, Peru and Colombia), Asia (Thailand and Vietnam) and Eastern Europe (Ukraine and Turkey).
A Global Market For Carbon?
There have been debates on the workability of a global emissions policy since Kyoto. However, some of the most significant recent developments in this space have come as a result of national efforts, or sub-national, rather than international. For example, China has set up seven pilot schemes for regional carbon markets, one of which alone (Guangdong) represents a market equivalent in scale to the whole of Germany. South Korea launched an emissions trading scheme at the beginning of 2015 and is estimated to trade carbon worth €360 million this year.
In North America, the linkage of sub-national schemes in Quebec and California shows the potential to connect different carbon markets. This could lead to links between, say, emissions trading schemes in Europe, China and North America—whether as a series of bilateral agreements or under the umbrella of the UN.
The EU’s position is that the Paris Agreement should encourage carbon pricing, notably by facilitating international links between carbon markets.