As I discussed in my previous post, the draft negotiating texts for the Copenhagen agreement are now out. With the release of these texts the world now begins the serious work to get an agreement in Copenhagen — marking them up and getting agreement.

As in the other post, I’ll briefly discuss how the American Clean Energy and Security (ACES) act that just passed out of committee touches upon these issues. For more details on the tools to help secure a strong international agreement contained in this bill see this post.

There are 6 key elements of the Copenhagen Agreement contained in these texts. I discussed elements 1 and 2 — shared vision and developed country emissions reductions in my previous post — so this post will focus on the details of the 3rd and 4th elements – developing country emissions reductions and the incentives to encourage them to go further.

There is a bit of agreement emerging that developing countries would do five things (apologies in advance for the acronyms, but international climate negotiations are filled with them and I spared you many of them):

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  1. Put together a “national low emissions development strategy”;
  2. Undertake a set of actions to reduce their emissions (called Nationally Appropriate Mitigation Actions or NAMAs);
  3. Outline how much further they could go in cutting emissions with incentives and the nature of those incentives
  4. Propose their mitigation actions internationally (through a “Registry”) with some kind of monitoring, reporting, and verification of action (MRV); and
  5. Gain access to carbon markets under certain conditions.

There is still some ambiguity on the details on each of these elements, how they are different, and exactly what is committed to as a part of each. That is why there are a large number of options proposed by countries for each of these pieces and a lot of {brackets} (both of which mean that there isn’t agreement yet).

But here are what I think are the key elements of each.

National low emissions development strategy. Countries would develop these strategies, which would outline an emissions pathway outlining where their emissions could head under a low carbon development effort. These plans would also outline the set of actions (the Nationally Appropriate Mitigation Actions) that the country is currently undertaking or will in the future.

Nationally Appropriate Mitigation Actions. Countries would elaborate a set of specific actions that they are undertaking or will implement to reduce emissions on their own (unilateral actions without support from the developed countries), actions that they could implement with some assistance from the developed countries, and details on the assistance that they would need.

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These actions could take a variety of forms as proposed by countries, including:

  1. Cap and trade programs;
  2. Sectoral programs to limit emissions in a particular sector or group of sectors;
  3. Economy-wide emissions intensity targets; and
  4. Efforts to reduce deforestation emissions (as I’ll discuss in greater detail in part 3).

There is significant promise in a sectoral approach for developing countries as I’ve discussed how we need to evolve from “offsets” to sectoral approaches for developing countries. The ACES bill that just passed the House Energy and Commerce Committee provides some key tools towards this effort as a sectoral approach is developed for offsets from certain countries and sectors.

Other approaches might also be important for a country to adopt as there is a wide-variation in the capability and expectations of developing countries.

Some countries (i.e., the U.S. and Australia) have also proposed having developing countries outline how their emissions reduction actions will evolve over time. This would include increasing in stringency and scope (e.g., covering a greater share of the countries emissions) so that at some defined point their action would mirror the kind of absolute economy-wide targets that developed countries are undertaking (as I discussed here).

Incentives for Undertaking Further Emissions Reductions. Developing countries would outline the set of actions that they could implement if they had incentives to go further (as I’ll discuss in more detail below).

Documenting, Tracking, and Providing a Platform for Supporting Action (the “Registry”). So all this outlining of efforts, documenting of actions, and incentives for action needs to have a place to be scored in the international context. That is where the registry would come in. In its simplest form, the registry would serve as a place for countries to document their actions internationally so that there would be some means to see what countries are proposing to do and are actually doing. But the registry needs to do even more, as some countries have proposed to have it:

  1. provide a framework for mobilizing and matching developing country action with the set of incentives from developed countries; and
  2. support the monitoring, reporting, and verification (MRV) of developing country action and the incentives from developed countries.

Some countries have proposed a set of technical boards to help with each of these functions (e.g., for verifying actions and support).

Technology and finance assistance to support further emissions reductions in developing countries

Countries have proposed the use of private (e.g., carbon markets) and public financing, as well as technology support as a means to provide incentives for further emissions reductions in developing countries.

Design of Carbon Markets. Countries have proposed three “evolutions” of the current carbon markets:

  1. Crediting for verified nationally appropriate mitigation actions. This proposal is still a bit loosely defined at this stage, but the general concept is that verified emissions reductions by developing countries would be eligible to generate carbon offsets.
  2. Sectoral crediting.Under this approach, a developing country that beats a “pre-defined” emissions level for an entire sector (e.g., electricity) could generate offset credits (as I’ve discussed here and as the ACES bill includes as I’ve mentioned here).
  3. Crediting reducing deforestation and forest degradation emissions and increased forest cover. I’ll discuss the details of this in part 3.

To assess whether a country’s actions under any of these approaches should generate offset credits, the text proposes creation of either a single technical body or bodies for each mechanism.

Public financing could complement private sector financing or be utilized for actions that aren’t easy to be deployed with private financing (e.g., hard to assess offset credit generation or for “advanced technologies”). To generate this funding there are variety of proposals including:

  1. Official development assistance.
  2. Setting aside a portion of the allowance value in a cap-and-trade program.The ACES bill does this for “clean energy exports” and deforestation as it sets aside a dedicated portion of the allowances for these purposes.
  3. Fee on international aviation and maritime emissions.
  4. A fee on the use of international offset mechanisms.

There is a difference of vision right now on where public funds should be channeled — with some countries proposing that all funds should go to an international entity, while others are proposing that countries also be allowed to use national mechanisms that would follow similar international criteria for how that funding would be utilized.

Technology Support. Private and public financing could play critical roles in helping to speed up the deployment of clean energy solutions in developing countries. But countries have also proposed actions beyond financing that will be critical, including: development of technology action plans to accelerate research, development, and deployment; creating the appropriate country legal and policy framework (called “enabling environments”); supporting capacity building; and cooperative research and development.

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How these pieces all fit together, will be the heart of the negotiation towards the Copenhagen agreement, as the actions that developing countries undertake and the support they receive to go further are at the heart of this negotiation.

In the next post I’ll discuss the last two key elements — deforestation emissions reduction efforts and adaptation assistance.