The deal U.N. climate negotiators reached last week in Cancún is modest, but the gathering’s dramatic conclusion does restore confidence in the U.N. process, which was limping badly after last year’s fiasco in Copenhagen.

Observers witnessed one of the most dramatic closing “plenary” sessions of the 16 years of negotiations yet, complete with rounds of standing ovations as the Mexican chair overrode Bolivia’s vocal objections and efforts to block adoption of the agreement.  But, seeing themselves as holding in their hands not just the fate of the U.N. climate process, but also the credibility of the multilateral system, 193 of the 194 countries united to adopt the “Cancún Agreements” and redefine what the climate convention’s “consensus” decision-making process means.

Unlike so many previous meetings, ministers and their negotiators vacated the Moon Palace beach resort with giddy relief and a renewed self-confidence in their ability to make progress in this particular forum.  The United Nations Framework Convention on Climate Change (UNFCCC) talks appear to have stumbled back on track.

The Cancún Agreements

Once the euphoria wears off, the Cancún Agreements will look much like the Copenhagen Accord brought in from its limbo, but with more elaboration, more institutions and committees, and a detailed work program for 2011 that will necessitate additional negotiating sessions.

The Agreements contain no new binding national pledges to cut carbon emissions, and no decision about whether to extend the Kyoto Protocol, the international agreement to cut greenhouse gases whose first “commitment period” is set to end in 2012.  But the Agreements do include a commitment by rich nations to create a $100 billion Green Climate Fund to help developing countries reduce their emissions and adapt to the adverse effects of climate change.  And for the first time, the UNFCCC has put its seal of approval on a framework for reducing emissions from deforestation.

The Cancún deal was reached in significant part by kicking down the road the most difficult decisions, such as the fate of the Kyoto Protocol’s second round of commitments, and how to merge the Kyoto agreement with the parallel “LCA” negotiating track, where negotiations over obligations for the U.S. and major developing countries are lodged.

The Agreements are a package of decisions balanced across the main areas of negotiation, and include:

• a reaffirmation of countries’ Copenhagen Accord commitments to curb their greenhouse gas emissions (also known as mitigation)
• a legal structure for the reporting and monitoring of mitigation and finance commitments
• a strong decision on emissions from deforestation (REDD+)
• the creation of a Green Fund and attendant institutional arrangements
• “centers and networks” to advance the transfer of clean technology
• institutions to assist developing countries with adaptation

What Cancún means for 2011’s Durban talks

Despite these successes, the prospects for achieving an overarching, legally binding agreement by the next Conference of Parties to the UNFCCC (COP-17) in Durban, South Africa are not materially brighter than before.

With Japan and Russia adamantly declaring they won’t re-up their Kyoto commitments beyond 2012 without the U.S., Brazil, South Africa, India and China on board with commitments, and with no prospect of U.S. legislation anytime soon, the building blocks for a deal are still elusive.

Moreover, the South African hosts have large shoes to fill: Cancún’s success is widely attributed to the diplomatic skills of Mexico’s Foreign Minister, Patricia Espinoza, and its Special Representative on Climate and U.N. Permanent Representative, Luis Alfonso de Alba, and to Mexico’s ability to run an inclusive, transparent confidence building process throughout the year.

The UNFCCC remains a forum worthy of countries and non-governmental organizations’ active engagement, but all involved need to take a long-term view of its prospects for reaching a comprehensive agreement and meanwhile continue to pursue opportunities to reduce global greenhouse gas emissions in other forums.

Cancún outcomes: where policy issues stand now

On the first day of the talks, we shared a list of what we expected would be the most important issues to watch in Cancún.  It’s now clear that reducing emissions from deforestation and finance were big winners in the two-week conference, but each major policy saw some movement.

Here’s a breakdown of what happened with the main policy issues at COP-16 in Cancún, how our expectations fared, and what it means as countries turn their sights on COP-17 in Durban.

Avoiding Deforestation (REDD+)

In what Mexican President Felipe Calderon declared “undoubtedly one of the greatest outcomes of this conference”, the UNFCCC adopted a decision on deforestation and climate change.  Reducing Emissions from Deforestation and Forest Degradation (REDD+) was seen by many as an area most likely to make some progress in Cancún if an overall agreement could be reached, but negotiators managed to exceed expectations, approving the key elements needed to make REDD+ a reality.

In a welcome move, negotiators agreed to all three proposed phases of REDD+: REDD+ readiness (phase 1), REDD+ implementation (phase 2), and results-based payment-for-performance (phase 3).  The agreement also includes a global goal for reducing emissions from deforestation, and allows for interim state-level REDD+ programs that have clear paths toward becoming national-level.

In the next year, countries will explore the options for financing all three phases and report back their findings in Durban.  To ensure REDD+ policies’ workability and durability, countries must use the sustainable and large-scale funding that carbon markets can generate, and heading out of Cancún, all but one country – Bolivia – agrees that markets should be explored.  The decision also instructs the technical advisory group to the Convention to decide on the monitoring, methods and safeguards needed to implement REDD+ in the next two years.

The basic framework that this decision creates will give countries and the private sector the needed guidance and certainty to make REDD+ a reality.  In a historic achievement, after five years of debate, the UNFCCC has put its seal of approval on REDD+.

Indigenous Peoples and REDD+

The role of stakeholders was strengthened through the REDD+ decision’s incorporation of social and environmental safeguards.  The decision includes transparency measures for protections for indigenous peoples, who are critically important to REDD+ policies because they are best-suited to monitor and protect their land from deforestation.

The Parties also agreed to tie financing for REDD+ activities to these environmental and social safeguards, meaning countries will have to show they are protecting forests and indigenous peoples in order to receive financing for their REDD+ projects and giving indigenous peoples more control over the financing of their development pathway.

The REDD+ decision also importantly includes a reference to the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) that could provide for annual reporting of social safeguards by countries to the UNFCCC, and should provide a safeguard framework from which to start REDD+ readiness work.

Finance

Finance has been and remains one of the lynchpins for a comprehensive global climate deal.  Cancún produced a good, balanced result, establishing a Green Climate Fund (GCF) while focusing more on institutional arrangements for finance than on by when and from where funds might come.  The GCF, a top-line demand of developing countries, will disburse funds devoted to climate mitigation and adaptation activities.

The funds are to be governed by a board of 24 members – with equal representation from developed and developing countries – and includes mechanisms that allow recourse to experts.  The structure also ingeniously addresses the concerns of the developing world; instead of using current and existing institutions for setting the guidelines and the delivery of long-term finances, the World Bank is deemed an interim trustee of the funds for the next three years and will manage and deliver the funds under direction from the Board with clear administration and accounting guidelines.  Under this process, Parties will have transparency and control of the process, and are ensured balance between financing activities for climate mitigation and adaptation.

For short-term finance issues, the Cancún Agreements reiterate developed countries’ commitments in the Copenhagen Accord to deliver on “fast-start finance” within three years, and include commitments to better reporting, balance among themes (e.g. adaptation, mitigation, forestry, and capacity building), and prioritization for the most vulnerable nations.

Now long-term finance will be the larger focus, though Parties postponed addressing sources of finance and commitments, instead taking note of the report of the U.N. Secretary General’s Advisory Group on Finance (AGF) and designating a Standing Committee for the Fund to mobilize resources for long-term financing.  This postpones – to Durban or beyond – a discussion of long term finance options, pending establishment of the Committee.

The AGF report clearly indicates there are multiple ways to reach the targeted $100 billion-per-year climate funding by 2020, including well-designed and transparent market mechanisms.  Governments must take the first step in providing financing, but ultimately the only truly scalable and sustainable source of finance is the private sector, responding to proper government incentives – which is why it was encouraging to see in the negotiating text language supportive of markets.

To ensure effectiveness and build confidence in the GCF, the global community must now guarantee transparency and accountability in how the funds are generated, allocated, and spent.

Shared Vision (Long-Term Targets) and Pledges

One of the most contentious issues in the negotiations, and a top priority for the United States, was giving the emission reduction pledges of last year’s Copenhagen Accord a more formal status under the U.N. climate agreement.  Because they spanned both developed and developing country commitments, and thus departed from the Kyoto Protocol’s stark division of responsibility, where and how this was done carried major baggage.  Ultimately, the Parties simply “took note of” the pledges, arguably little improvement over their taking note of the Copenhagen Accord.

The Parties did, however, agree on the need to take urgent action to meet the long-term goal of holding temperature increases below 2 degrees Celsius, a level above which the planet is expected to suffer serious irreversible impacts.  Notably, they also agreed on the need for “peaking emissions”, and to work in 2011 towards identifying a timeframe for when emissions at a global level should reach their peak and begin declining.  And, addressing a “must have” of the Small Island States, they agreed to a review and possible strengthening of the goal to 1.5 degrees Celsius.  Agreeing on an actual collective emissions reduction goal by 2050 was postponed until Durban.

Transparency & Accountability (MRV)

Thanks in large part to a compromise proposal from India’s Minister Ramesh, the U.S. and China were able to reach agreement on their biggest sticking point: transparency and accountability (known in the UNFCCC as monitoring, reporting, and verification, or MRV) for developed and developing countries’ mitigation actions and for the financing of developing country actions.

The agreement requires developed countries to enhance the reporting of their mitigation actions (including submitting annual emission inventories and reporting on their progress in achieving their emissions reductions), and also to improve the reporting of their financial, technological and capacity-building support to developing countries.  It requires developing countries to improve their reporting on emissions and actions, with their reports subject to domestic monitoring, reporting, and verification “in accordance with guidelines to be developed under the Convention”.  The reports will also be reviewed by independent technical experts.

The Parties also agreed on a workplan for enhancing the relevant guidelines.  These provisions are an important step toward national accountability, but what precisely goes into those guidelines, how they are applied, and how they are enforced remain crucial open questions that will have to be answered credibly if the UNFCCC is to support a viable global carbon market and ensure that countries deliver the emission reductions needed to avert dangerous climate change.

Land-Use and Forestry

Heading into Cancún, hopes were high that agreement could be reached on the accounting rules for emissions from changes in land use (like forestry), which are a prerequisite to setting targets for the Kyoto Parties’ second commitment period.  Parties in Cancún had the opportunity to reach consensus on robust rules with strong environmental integrity that would enhance accuracy, comparability, completeness, consistency, and transparency in land-use accounting – but they only managed a few baby steps toward this goal. ?

Parties ultimately agreed to require developed countries to undertake a technical review of how they were constructing their chosen forest-accounting baselines (initial level of emissions), and agreed on a detailed set of guidelines for conducting such reviews with environmental integrity.  The technical review process was developed in response to developing countries’ (and non-governmental organizations’) concerns about potential loopholes and a lack of transparency.

These scientific reviews will ensure developed countries will be forthcoming about their data in a comparable and consistent way; their data will be reviewed by independent experts from around the world; and the review process will catch any problems.  The strength of this review process also creates a powerful disincentive for any Party that is considering a baseline that isn’t comparable, consistent, or as accurate as other Parties’.

All other questions were put off – including those that could have made progress toward delivering a complete package, like forest management baselines, and the accounting for harvested wood – with the intention of finalizing them by Durban, when Parties will also have the benefit of seeing the results of the technical reviews.  In the meantime, countries should focus on accomplishing a robust and timely review, and resolving these remaining elements of the package in a way that maintains the environmental integrity of the system.

Future of the Kyoto Protocol

The Parties punted on one of the most contentious issues facing them: the fate of the Kyoto Protocol.  In Cancún, developed country parties to the Kyoto Protocol finally embraced a collective goal of reducing their emissions by 25-40% below 1990 levels by 2020, though with caveats, and without agreeing to a second round of emission reduction commitments after 2012.  Both Japan and Russia had announced they would not sign up for post-2012 obligations without seeing the United States and major emerging economies take on obligations as well.

Instead of forcing the issue, parties agreed that discussions will continue in the coming year, with the goal of avoiding a gap between the first and second commitment periods.  Also postponed to Durban were decisions on how long the second commitment period should be.

International Shipping & Aviation (Bunker Fuels)

Negotiations on the international transport sector reached a deadlock in Cancún, with Parties unable to agree on even the opening language of negotiating text to address bunker fuels, nor any general framework for an agreement, nor a work plan for the coming year headed toward Durban.?

As such, Parties missed their opportunity to send a clear signal to the International Maritime Organization and the International Civil Aviation Organization – the U.N. agencies for international maritime shipping and aviation affairs which have accomplished next to nothing on climate over 16 years – that greenhouse gas emissions from international transport must be regulated immediately. ?

There is clear disagreement in multilateral negotiations on international shipping and aviation, which makes it even more important for regions and states to continue moving forward in regulating the emissions from these sectors.  The international forums should push forward on the development and implementation of global sectoral measures to reduce emissions from international transport.  However, they must work in parallel with regional systems, whose right to regulate these sectors instead of waiting for uncertain and belated action from these bodies should be preserved.

Momentum as preparations for Durban begin

Even though Cancún’s talks just ended, the trek to Durban has begun – and there’s a lot to be done before COP-17 starts on Nov. 28, 2011.  We expect the Parties will schedule several additional sessions between now and then to start hammering out some details and move negotiations forward before reconvening in South Africa.

This year’s measured success, particularly with REDD+ and finance, offers an encouraging start for the coming year, but it’s up to countries to maintain the momentum – and for nongovernmental organizations and other stakeholders to keep them headed toward the ambitious, durable outcome we so desperately need.

Many of our colleagues have also posted thoughtful analyses of the Cancún summit outcomes.  See, for example, posts by Harvard University’s Robert Stavins, World Resources Institute’s Jennifer Morgan, and Natural Resources Defense Councils’ Jake Schmidt.

**EDF’s international climate experts contributing to this blog post include Steve Schwartzman (REDD+, Indigenous Peoples); Gus Silva-Chávez (REDD+); Chris Meyer (Indigenous Peoples); Richie Ahuja (Finance); Gernot Wagner (Finance); Annie Petsonk (MRV, Future of Kyoto Protocol); Jason Funk (Land-use and Forestry); Miriam Chaum (Land-Use and Forestry); and Jenny Cooper (International Shipping & Aviation).  You can read their updates from Cancún at http://blogs.edf.org/climatetalks/category/un-negotiations/cancun/.