International Business

Dr. Meinhard Doelle: Negotiating the Paris Rulebook: Compliance in Transition

February 5, 2019 rbudd Leave a Comment

Dr. Meinhard Doelle, Professor of Law, Schulich School of Law, Dalhousie University

Dr. Meinhard Doelle, Professor of Law, Schulich School of Law, Dalhousie University, has graciously agreed to join the CEGE Connection conversation and share his insights on climate change and environment law. We highly recommend a visit to Professor Doelle’s Blog: Environment Law News, which provides vital information that speaks to the complexities of environmental and energy law, climate change, GHG emissions, and the role of human rights in these areas of enquiry.

“Negotiating the Paris Rulebook: Compliance in Transition.” has been republished from Professor Doelle’s blog, Environment Law News.

In December, 2018, Parties to the UN Climate Regime are set to negotiate a Rulebook on how to implement the Paris Agreement. The Rulebook will cover a broad range of issues, from market mechanisms, to finance, reporting, and the 5 year review cycles build around the global stocktake. Key among the elements of the Rulebook is the compliance system. In this post, my intention is to briefly highlight some of the issues before negotiators of the compliance system. A more detailed assessment of the draft negotiating text is available in my article entitles “Compliance in Transition: Is Facilitative Compliance Finding Its Place in the Paris Climate Regime?”. It is published in CCLR, and a draft is available at SSRN: https://ssrn.com/abstract=3228766.

In the transition from the Kyoto Protocol to the Paris Agreement, some parties took great lengths to distance themselves from the architecture and institutions of the Kyoto Protocol. Key among this architecture was the Kyoto compliance system, which was seen as a departure from the norm for multilateral environmental agreements (MEAs). The system included an enforcement branch that applied automatic consequences in case of non-compliance with key obligations of developed country parties. It is therefore not surprising to see a focus on facilitation in Article 15 of the Paris Agreement and specific direction that the compliance system is to be non-adversarial and non-punitive.

The differences between the Kyoto compliance system and that to be developed under the Paris Agreement are, of course, also driven by substantive differences between the two agreements. Most notable among these differences is that the Paris Agreement establishes a much broader range of commitments and obligations covering mitigation, adaptation, funding, technology access, education, capacity building, and loss and damage. The commitments, furthermore, have been made by a much broader range of parties, including all developing countries, in particular the least developed countries and small island states. Many of the commitments are self-determined in the form of nationally determined contributions (NDCs) to be updated by parties every five years.

While there are many important differences, some of the core challenges of ensuring compliance are, on closer examination, remarkably similar to the Kyoto Protocol. Both agreements include a range of commitments from voluntary to binding. Both include provisions for market mechanisms, which will be dependent on compliance to be effective. Both include a range of reporting obligations that are fundamental to the functioning of the regime. These parallels suggest parties would be well advised to draw on the compliance experience under the Kyoto Protocol in negotiating the design of the Paris compliance system.

This post assesses the state of play in the negotiations under Article 15 heading into the COP 24 negotiations in Poland from December 2-14, 2018. The negotiations are taking place in the context of the provisions of Article 15 itself as well as provisions 103 and 104 of the Paris COP decision. Before delving into the current state of the negotiations, it is helpful to identify the key relevant elements of the agreement parties reached in Paris.

The overall purpose of the compliance process under Article 15 is to facilitate the implementation and promote compliance with the provisions of the Paris Agreement. It is important to highlight that Article 15 refers to “the provisions”, not just some provisions, and not just obligations. It seems clear, therefore, that the mandate of the compliance committee should be broad in scope, include individual and collective commitments, and include binding obligations as well as non-binding commitments.

Another set of provisions in Article 15 clarify the overall approach to be taken in the design of the compliance system. They refer to the facilitative, non-adversarial and non-punitive nature of the process, and the principle of transparency. These elements offer important guidance to negotiators on the design of the compliance process and the measures the compliance committee should have at its disposal to facilitate implementation and promote compliance.

A key message in Article 15 relates to the “respective national capabilities and circumstances of the Parties”. This reference to the revised principle of common but differentiated responsibilities (CBDR) in the Paris Agreement signals that the process needs to be sensitive to the capacity challenges of the least developed countries in particular. Article 15 is clear that with respect to compliance, differentiation based on capabilities and other relevant circumstances is the job of the compliance committee. This suggests that the compliance modalities and procedures should provide flexibility for the committee to apply certain aspects of the compliance system to parties that have capabilities and circumstances that may warrant either relaxing process requirements or warrant the application of different measures at the conclusion of the compliance proceedings.

The agreement reached in Paris offers considerable direction on the process to be designed. Included is the composition of the compliance committee (12 members, two from each of the 5 UN regions plus one each from a least developed country and a small island developing state), required areas of expertise, and the importance of gender balance on the committee. The committee is to report annually to the Conference serving as the Meeting of the Parties to the Paris Agreement (CMA). This is the context within which parties are now negotiating the modalities and procedures for compliance. Among the key issues are the following:

Purpose, Principles and Nature of Compliance Procedures

Functions of the Compliance Committee

Institutional Arrangements

Scope of Work of the Compliance Committee

Initiation of Proceedings before the Committee

Process to be followed by the Committee

Measures and Outputs at the Committee’s Disposal

Identification of Systemic Issues (ie beyond individual party issues)

Sources of Information for the Committee’s Work

Relationship with and Accountability to the Conference of the Parties (COP)

Who Carries out Reviews of the Modalities and Procedures

Secretariat Support for the Work of the Committee

A particular source of complexity in the negotiations is that the compliance modalities are being negotiated in parallel with the overall Paris Rulebook. Not only is there uncertainty about the nature of substantive rules on mitigation, emissions trading, and finance, but as discussed elsewhere in this special issue, the Paris Agreement contemplates a comprehensive 5 year review cycle that consists of parties reporting on their efforts to implement their NDCs, review of those efforts and reports, a global stocktake of progress against the long term goals, and revised NDCs. Even though the Paris Agreement clearly provides for a compliance system, it seems that some parties would prefer to subsume the compliance effort under the work of the transparency framework and the global stocktake.

To be effective, the compliance process under Article 15 will have to find its place within the Paris Climate Regime, both substantively (i.e. its role with respect to mitigation, emissions trading, finance, adaptation, technology, capacity building, coordination among institutions and connection among commitments) and in relation to the overall institutional structure being developed. The aim must be to complement the bottom up NDC approach with appropriate top down elements to help close the significant ambition gaps that currently exist in all key areas of the Agreement. A key contribution of the compliance process will be its relative independence and its resulting opportunity to impartially assess compliance with individual and collective commitments. This will help inform the broader discussion about the effective implementation of the Paris Agreement.

There is much to be resolved in developing an effective, efficient, and fair compliance process under Article 15. Key among them are effective triggers for the compliance process, an adequately broad mandate to be able to effectively facilitate implementation and promote compliance with all important commitment in the Paris Agreement whether binding or not and whether made by a developed or a developing country Party. The inclusion of “implementation and compliance” and the language of “the provisions” in Article 15(1) clearly enables the process to deal with all important commitments. Any differentiation between binding and non-binding and differentiation among parties should focus on applying appropriate measures in the circumstances. This can be assured through an appropriate combination of general direction to the committee and appropriate discretion. A fair and effective process will depend on the full implementation of the commitment to transparency and on procedural fairness to any Party being investigated.

It will be important to keep the focus of the committee on technical issues and to avoid having it dragged into political issues and equity judgement calls. This seems particularly important and tricky when it comes to the assessment of systemic issues. The committee will be well advised to stick to assessing whether the collective goals are on track and to technical assessments of the causes, without being seen to point fingers at any particular party or group of parties unless they have clearly failed to meet their individual commitments. This means the focus should be on commitments that allow for a technical assessment of compliance or implementation, rather than political consideration or judgements. Committee has the potential to make an important contribution to progress on collective commitments, particularly those that involve all parties or a clearly identified group of parties, as this can be assessed without getting to any assessment of who within the group of parties needs to do more. Having said this, to ensure the committee has the full opportunity to pursue important systemic issues as they arise, the triggers for systemic issues should include the CMA, the Article 13 outcomes, and the committee based on its own assessment of reports generated under the PA.

It will be important to properly integrate the work of the committee with Article 13 and 14. Not much can be said about the details of how to ensure this is done until there is more clarity on the review process under Article 13 and the global stocktake under Article 14. However, it is clear that the compliance committee can benefit greatly from the work proposed under Article 13, and its conclusions and recommendations have the potential to be important for the global stocktake.

For binding commitments, it will be important for the committee to make a finding of compliance/non-compliance and to apply other appropriate consequences including a compliance action plan, and other non-punitive measures. It would be helpful for negotiators to recognize in this regard that compensatory measures are different from punitive measures, and that for markets under Article 6 to function, it may be important to include compensatory measures in the toolbox of the compliance committee. Special access to support should be limited to LDCs and SIDS.

Conclusion

It is too early to say whether the compliance system is finding its place among the many institutions and processes under the Paris Regime. There are still many issues unresolved within the compliance negotiations, and many more issues to be worked out on other key aspects of the Paris rulebook, such as the reporting, transparency and global stocktake provisions. In the absence of significant progress in other areas in advance of COP 24, negotiators may be well advised to develop the modalities and procedures for compliance at a fairly high level, and to leave some of the detail for the compliance committee to work out after there is more clarity on how other aspects of the Paris Agreement, including Articles 6, 13 and 14, will be implemented. As a result, while this year’s COP should be an important milestone in the development of the Paris compliance system, it is unlikely to mark the end, as much of the detail will inevitably have to be finalized later, either by the CMA or by the compliance committee once it is established.

Dr. Meinhard Doelle, Professor of Law, Schulich School of Law, Dalhousie University

Professor Doelle specializes in environmental and energy law, with a focus on climate change and environmental assessment processes. He has been involved in the practice of environmental law in Nova Scotia since 1990 and in that capacity served as drafter of the NS Environment Act and as policy advisor on the Canadian Environmental Assessment Act (1992). Professor Doelle was a non-governmental member of the Canadian delegation to the UN climate change negotiations, 2000 – 2006. He continues to follow the negotiations as an official observer. Professor Doelle was a visiting scholar at the Environmental Law Center of the IUCN in Bonn, Germany, 2008. He co-chaired a strategic environmental assessment on tidal energy in the Bay of Fundy from 2007 to 2008, served on the Lower Churchill Joint Federal-Provincial Review Panel from 2009 to 2011, and co-chaired a provincial panel on aquaculture from 2013 to 2014.

Teaching

Professor Doelle’s teaching within the law school has involved courses in environmental law, energy law, climate change and contract law. He has also been involved in interdisciplinary teaching outside the law school, most notably at the College of Sustainability, where he co-taught a course on Humanity in the Natural World from 2009 to 2012.

Dr. Meinhard Doelle: Reflections on the IPCC’s Report on 1.5 °C

November 29, 2018 rbudd 2 Comments

“The basic message in the report is that GHG emissions come at a high cost in terms of human health, future economic growth, human security, and our ability to meet our basic needs of food and water. The cost at 1.5 °C may be manageable, but the cost increases significantly if temperatures are allowed to go higher, and may quickly become unmanageable. The time delay between emissions and impacts means that by the time we know for sure the impacts will be unmanageable, it will be too late to prevent them from becoming unmanageable.”

Dr. Meinhard Doelle, Professor of Law, Schulich School of Law, Dalhousie University

“Reflections on the IPCC’s Report on 1.5 °C has been republished from Professor Doelle’s blog, Environment Law News.

On October 6^th, 2018, the Intergovernmental Panel on Climate Change (IPCC) released its much anticipated report on the implications of the 2015 Paris Climate Agreement’s goal of keeping global average temperature increases to 1.5 °C. This IPCC Report was commissioned by the Parties to the Paris Agreement because when they agreed to the 1.5 °C goal, only limited analysis on 1.5 °C had been done by the scientific community, and none by the IPCC. Until then, the IPCC’s scenarios had been based on 2 °C and higher, pointing to the increasingly disastrous consequences of these higher temperature scenarios. It is through this higher temperature scenario work that it gradually became clear that 2 °C was not an adequate goal to ensure a stable climate.

The 1.5 °C Report offers a first opportunity for Parties to the Paris Agreement to assess how their current “Nationally Determined Commitments” (NDCs) and their national efforts (such as the Pan Canadian Framework) stack up against the 1.5 °C goal they all accepted in Paris in 2015. In this post, I will offer highlights of the key conclusions of the IPCC Report (http://www.ipcc.ch) and consider its implications for Canada.

What the IPCC Report Says

The report starts by providing important context for the consideration of the 1.5 °C goal. It points out that the Earth is already experiencing over 1 degree of warming, will reach 1.5 °C between 2030 and 2050 at the current rate of increase ( ~0.2 °C per decade). It also points out that global average temperature increases are not distributed evenly. They tend to be higher over land than over oceans, higher inland, and higher in polar regions. Regions at disproportionately higher risk from the effects of climate change include northern regions, inland dryland regions, small-island developing states at risk from sea level rise, and least developed countries because they lack resilience. Many of these regions are already experiencing significant impacts and losses from crop failures, erosion, storm damage, water shortage, and loss of biodiversity.

The Report offers the following key conclusions on its assessment of the 1.5°C goal:

Impacts on health, livelihoods, food security, water supply, and human security will be less for 1.5 °C than for 2 °C, and the global economy will be harmed less by climate change impacts at 1.5°C than at 2°C.
Unless we are prepared to rely on risky, expensive, and/or unproven removal technologies to meet the 1.5°C goal, global emissions have to decline by about 45% by 2030, and reach net zero around 2050.
In addition to reducing CO2, we need deep reductions in emissions of methane and black carbon.
Pathways limiting global warming to 1.5°C require rapid and far-reaching transitions in energy, land, urban and infrastructure (including transport and buildings), and industrial systems. These systems’ transitions are unprecedented at a global scale, but are doable. They imply deep emissions reductions in all sectors, a wide range of mitigation options and a significant upscaling of investments in those options. Carbon pricing is an important part of this effort, but much more that a price on carbon is needed.
The lower the emissions are by 2030, the more likely it is that the challenge in limiting global warming to 1.5°C after 2030 will be manageable.
There are many synergies between 1.5 °C pathways and the 2015 UN Sustainable Development Goals, but there are also significant risks of trade-offs, particularly with respect to large scale efforts to enhance sinks and other efforts to remove carbon from the atmosphere.

What the IPCC Report Means for Canada

First, I think it is important to recognize that the IPCC Report would have important implications for Canada even if we decided not to change our GHG emission reduction targets or increase our domestic effort to decarbonize. I say that because the Report makes it clear that regardless of our actions, somehow preserving the status quo is a practical impossibility. Even if we don’t decarbonize, the world around us will change in significant ways. If we don’t act, and in the process discourage others from acting, climate change will accelerate, causing economic, social and environmental hardship for all.

Even if we were to free ride, meaning we decided not to act on climate change while other countries do act, we would lose export markets for the GHG intensive products we currently rely on for our economic wellbeing. Even in that scenario, we would need to transition our economy, something that will not happen without domestic markets for the solutions to climate change. Domestic markets for these products and services in turn depend on investor friendly policy and regulatory environment for decarbonization solutions.

The basic message in the report is that GHG emissions come at a high cost in terms of human health, future economic growth, human security, and our ability to meet our basic needs of food and water. The cost at 1.5 °C may be manageable, but the cost increases significantly if temperatures are allowed to go higher, and may quickly become unmanageable. The time delay between emissions and impacts means that by the time we know for sure the impacts will be unmanageable, it will be too late to prevent them from becoming unmanageable.

It is clear that a significant part of the global community is committed to the transition that is needed, though we are at a critical time to ensure the global action will be at the scale needed to avoid worst-case scenarios. The transition is well under way in many countries. A key message from the IPCC is that it needs to be accelerated, and that there are global economic (among many other) advantages to accelerating the transition. All Parties to the Paris Agreement will be challenged, starting in Poland this December, to increase their targets, and to match the more ambitious targets with more ambitious action at home and internationally. This means that industries dependent on fossil fuels and other sources of significant GHG emissions are increasingly at high risk of becoming unprofitable. It also means that there are huge economic opportunities for those who find ways to accelerate the decarbonization of societies around the world.

For Canada, the message of the IPCC Report, therefore, is that we need to decarbonize from a domestic consumption perspective, and we need to prepare for export markets drying up for our fossil fuel based (and other GHG intensive) products. We should, over the next year, set new targets for 2030 and 2050 that are in line with the IPCC report and with our commitment under the Paris Agreement to make a fair contribution to the global effort to keep global temperature increases to 1.5 °C. We should increase our domestic efforts to decarbonize in line with our revised targets. We should continue to diversify our economy by supporting industries that are part of the solution, and stop investing public resources or otherwise subsidizing industries that are not part of the solution. Finally, we should make every effort to ensure the transition of our society from a fossil fuel based one to a carbon neutral one is fair. A priority in this regard is to ensure a transition of the workforces that are currently working in sectors that we will lose (such as the production of fossil fuels), and to help other sectors to thrive through the transition (by doing everything we can to support a shift to carbon neutral agriculture, manufacturing, and buildings, for example).

As importantly, the IPCC report means that we have to change the nature of the discourse on climate change in Canada. We have to change from trying to protect the status quo to accepting the need for the transition. Rather than continue to fight or delay the inevitable, we need to ensure that the transition that we need to make is fair, and that we thrive economically and socially through the transition. This is not accomplished by trying to hang on to what “we have” for as long as possible, and then face the collapse of our economy along with the collapse of the climate system. Rather, it is accomplished by taking seriously both the climate threat and the challenges and opportunities associated with the transition that is now so clearly inevitable.

Priority Actions for Canada

The following are priority actions the IPCC Report demands of Canada:

We need to update our Nationally Determined Contribution (NDC) under the Paris Agreement by 2020 in light of the findings in the IPCC Report.
We need to significantly accelerate the electrification of transportation and heating and any other significant uses of energy, and develop our own manufacturing capacity along the way (such as leading on the manufacture on electric vehicles, and on innovative approaches to carbon neutral buildings).
We need to make the production of electricity itself carbon neutral, by completing the shift to renewables, through investment in production capacity along with storage, demand management, and smart grid approaches. We are well on our way on this front in many provinces, but do need to accelerate this effort, especially if the electrification of transportation and heating is to accelerate decarbonization.
We need to continue to improve the efficient use of energy, particularly in buildings, transportation and energy intensive industries.
We need to stop subsidizing and otherwise supporting the exploration and use of fossil fuels, and shift that support to industries and technologies that are part of the solution
We need to prepare for the phase out of fossil fuels by diversifying our economy around the solutions to climate change.
We need to protect and enhance our carbon sinks in a manner that supports biodiversity, indigenous cultures, and food production.
We need to transition our food production and diets to low-carbon or carbon neutral food sources.

Continuing to fight this inevitable transition will exhaust us as a country, and leave us ill prepared for the challenges ahead. It is time to put our energy into embracing the transition, and thriving through it. Swimming upstream in the hope that the current will weaken (when we know better) is not the way to avoid the waterfall downstream. It is time instead to stand up and get out of the water while we still can make it to shore, and before we are swept downstream by the growing current. Perhaps, in the process, we will learn that living on dry land is not so bad after-all.

Dr. Meinhard Doelle, Professor of Law, Schulich School of Law, Dalhousie University

Teaching

Randy Coutts: Fourteen Years Later

June 13, 2017 rbudd 2 Comments

“In 2014, my wife Cathy and I sold all of our possessions and moved to Africa with all we owned in two suitcases each.” Randy Coutts, Fixer. Builder & Operations Specialist

Randy Coutts

October 2003

Graduation MBS(FS)

The class of 2003 was celebrating, basking in the “mission accomplished” feeling. The glow of walking across the immense stage to collect our diplomas was still fresh in our memories. We took turns at the podium to say thank you to our families, professors and the ever-supportive OEGP (now CFAME) team. There was even talk of a reunion in 2004, in a location where there was sun, sand & sea. It was a great idea, but we all knew that this night would never have a repeat. It was both an ending and a beginning. Or as T.S. Eliot wrote many years ago, “What we call the beginning is often the end. And to make an end is to make a beginning. The end is where we start from.”

June 2017

Randy Coutts was in my graduating class of 2003. Now, fourteen years later, we reconnected over the phone and shared the stories that came after graduation. Randy’s interests center on social responsibility, international business and entrepreneurial endeavour. His message is “I’m an ideas guy, a coach, a student and a runner. If you want to change the world, give me a call.”

One Acre Fund (OAF) allowed him to explore his core values and participate in creating entrepreneurial opportunities in Africa.

Randy & Cathy Coutts

“In 2014, my wife Cathy and I sold all of our possessions and moved to Africa with all we owned in two suitcases each.” Randy recounted. “We travelled East Africa together for 18 months, spending a lot of time in Western Kenya, Nairobi and Rwanda, but also touching down in Burundi, Uganda, Ethiopia and Tanzania. We stayed in accommodations ranging from a dormitory style convent to fancy, world class hotels and logged enough air miles to get to the coveted “priority” status with our local airline. Along the way we had many adventures, saw many strange things and met people from all corners of this earth.”

One Acre Fund was my opportunity to combine my business skills, with my philanthropic mindset and a passion for travel. I had always wanted to join an international microfinance organization, but I also wanted it to be one that had an entrepreneurial spirit. OAF, which is a US based charity, runs most of its African operations under a social enterprise (SE) model, where they charge people a fair price for extraordinary value. I spent two years in charge of the finance function for this fast-growing social enterprise, where we went from an annual budget of $40M USD to $100M USD and from 200,000 clients to 500,000 clients across 8 East African countries. The implementation of a world class SAP Business One accounting system, the preparation to centralize all African finance functions to Kigali, Rwanda and the introduction of the first Financial Services Advisory team to our country leadership, were my greatest accomplishments.

I used virtually all my MBA (FS) teachings. Perhaps even more importantly than the technical skills I carried forward, Dalhousie instilled within me a sense of wonder and an appreciation for learning that did me well in this chaotic, incredibly fast paced and risk filled atmosphere. My greatest takeaway: Keeping my eyes and ears open, my mouth somewhat more closed and being open to possibilities and opportunities.

Changing the world begins with creating communities of learning wherever we go.”

Category: International Business