Todd Stern
Special Envoy for Climate Change
University of Michigan Law School
Ann Arbor, MI
October 8, 2010

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Thank you very much. It is an honor and pleasure to be here today. Michigan holds a special place in my heart. I grew up with maize and blue blood in my veins. My dad and both brothers are alumni and as an undergraduate, while my classmates were traveling the globe, I left Dartmouth to study abroad right here in Ann Arbor. Today I want to spend some time talking with you about the state of international climate negotiations and where they may be headed at the upcoming Cancun meeting in December and beyond.

In particular, I’m going to focus on four questions:

First, can we move to the kind of new paradigm for climate diplomacy that we need and that is foreshadowed in the Copenhagen Accord? Second, is the U.S. domestic situation with regard to climate and energy legislation an impediment to progress in international negotiations? Third, what legal form should a new agreement take? Fourth, can the UN Framework Convention on Climate Change – the official, UN negotiating body – remain the central agent for international action to address the climate challenge? As we approach these questions, we need to begin by recalling the singular events that occurred last year in Copenhagen and its aftermath:

First, the collapse of the over-hyped expectations of many around the world, who had counted on the Copenhagen Conference to deliver a grand new legal treaty to “solve” climate change;

Second the last-minute salvaging of the Conference by world leaders, including President Obama and Secretary Clinton, who spent nearly 20 hours straight together and produced the short, but meaningful Copenhagen Accord – a politically, not legally, binding document;

Third, the refusal of the full “Conference of the Parties” to endorse the Accord – they “took note of it” – because a small, but vocal, contingent objected.

Owing to that refusal, our focus this year has been on having the important understandings of the Accord incorporated into the negotiating text that is now under discussion.

A New Paradigm. Turning then to the first question, we can only understand the challenge of moving to a new paradigm if we understand what came to be accepted by many – although not by all and not by us – as the old paradigm.

That paradigm holds that there is a Berlin Wall between developed and developing countries as they were defined in 1992 in the Framework Convention on Climate Change, with all specific obligations to address climate change assigned – especially by the Kyoto Protocol – to developed countries. The principle from the Framework Convention that is read – misread I think, but that’s another subject – as the foundation for this Berlin Wall is the notion that parties have “common but differentiated responsibilities and respective capabilities.” Over time, many countries stretched this paradigm to say that developed countries have legally binding obligations while developing countries are asked only to act voluntarily. But this claim has no textual support.

Now, in our view, the old “Kyoto” paradigm is wrong as a matter of textual exegesis. But, more important, this paradigm is unworkable as a matter of both substance and politics.

Most fundamentally, you cannot address the climate challenge by focusing only on developed countries; they account for around 45% of global emissions now and will account for some 35% by 2030. You cannot build a system premised on the notion that China should be treated the same as Chad, when China is now the world’s largest emitter, is the second largest historic emitter, will be 60% larger than the U.S. by 2020, and has even surpassed France in per capita emissions. Instead, you need to start with all the major emitters, both developed and developing, accounting for some 85% of global emissions and build out from there.

Second, as a matter of political reality, we could get no support in the United States – notably in Congress – for a climate agreement that required action of us but not from China and the other emerging markets.

The Copenhagen Accord struck the first blow against this paradigm. In its essence, the Accord represented a deal – what some have called a “Grand Bargain.”

On one side of the equation, it included landmark provisions for financial assistance to poor countries as well as important provisions on technology cooperation, adaptation and the protection of forests. The financing provisions themselves were key: (a) a pledge by donor countries to provide something “approaching $30B” from 2010-2012; (b) a goal of mobilizing $100B/year by 2020 from both public and private sources; and (c) agreement to establish a “Green Fund,” as a new vehicle for funding.

On the other side of the equation, all major economies – both developed and developing, agreed to implement the targets or actions they listed in Appendix I for developed countries and Appendix II for developing countries. Further, they agreed to implement their targets/actions in an internationally transparent manner.

So two very important points here. On mitigation, instead of a Berlin Wall with mandatory obligations on one side and purely voluntary actions on the other, all major players committed to take action on a parallel basis. The content of the actions could be different – developed countries agreed to reduce their emissions on an absolute basis, below a baseline such as 2005 or 1990; while developing countries agreed to reduce on a relative basis – in effect, to reduce the growth of their emissions. But the character of their commitment was the same.

Second, on transparency, the developing countries agreed that their implementation would be subject to some measure of international transparency. This is commonplace in institutions such as the WTO, the IMF, the OECD, and the UN Human Rights Council, but it had never been accepted by developing countries in the climate context. As in the case of developing country mitigation, we do not expect smaller or mid-sized developing countries to be subject to the same transparency provisions as the emerging markets. There is plenty of room for flexibility as we discuss details.

What the Accord did, in sum, was to thread a needle between deeply entrenched and often opposing viewpoints. It managed to give enough to all parties while not crossing anyone’s red-lines. It recognized the fundamental imperative of development and the need to deliver large-scale assistance to many countries around the world. It was cleverly structured so that developing countries could make their own choice about whether to list mitigation actions, understanding that if they listed, then they were committing to implement them. Meanwhile, it was well understood, before the deal was struck, that the major developing countries would list their actions.

The question now is whether the Conference of the Parties can embrace this new architecture. It certainly could, because the architecture is flexible and consistent with everyone’s real needs (which is why leaders accepted it last year). And the old Kyoto paradigm cannot produce an agreement. Climate change is not an arena where we can go “back to the future.”

But it is far from clear whether the COP will move forward. To the extent that there is good news, it is that there seems to be some convergence around the notion that the objective for the Cancun COP should be a package of “decisions” designed to make progress on all the main issues. A “decision,” incidentally, in COP-speak, is a non-legally binding document in which parties agree on various points, whether of process or substance. The Copenhagen Accord, had it been adopted by the full COP, would have been a COP “decision.”

So the idea of seeking a balanced package of decisions is constructive, since a legal treaty at this stage is still unrealistic. The question is what the package contains. And the danger is that many countries are arguing that we should capture the so-called “low-hanging fruit” – the “easier” issues on which there is less discord. This is code for saying we should do all the issues that inure to the benefit of developing countries – financing, technology, adaptation and forests – while we postpone action on the harder issues of mitigation and transparency. This is a non-starter for the United States. Genuine progress needs to be made on mitigation and transparency as well as the other issues.

And here, there is cause for concern. The existing negotiating text, some 70 pages long and full of unresolved, bracketed language, includes efforts to return to the Kyoto paradigm – that old Berlin Wall – with mandatory obligations for developed countries and purely voluntary actions for developing.

Indeed, this week in Tianjin, China, where negotiators from 192 countries are having their third formal negotiating session of the year, Chinese negotiators have acted almost as though the Accord never happened, insisting on legally binding commitments for developed countries and purely voluntary actions for even the emerging markets. They have argued – despite the black and white language of the Copenhagen Accord agreed to by their own and other leaders – that China did not in fact agree in the Accord to implement the actions it submitted. In their view, they merely listed those actions on an informational basis, a kind of global “fyi” -- with no political commitment to implement them.

This contention seeks to rewrite one of the core provisions agreed to by leaders last year. It walks away from the parallel structure on mitigation that was essential to U.S. acceptance of the Accord. The contention is unfounded because it contradicts what our leaders agreed to, in face to face negotiations, and it is unwise because it ignores a fundamental point:

We landed on the Copenhagen Accord last year because it hit a sweet spot that is incredibly difficult to find given the widely divergent views and circumstances among 192 countries. It is not as though there were multiple ways to get this done. At the eleventh hour, with the Copenhagen Conference on the brink, leaders agreed on this spare, balanced, non-ideological text. To think the balance of that text can be jettisoned without damage is a bad bet.

Of course, there is still ample time to put things right. It is an odd feature of international negotiations that, while you can see the clock running down, you often still have more than enough time to find agreement – if the will is there. It happened last year and could happen this year as well – hopefully with a little less drama. But there is no question that the negotiations face real challenges.

· U.S. Domestic Action. Let’s move to the second question – is the U.S. domestic situation a stumbling block? The short answer is no. Make no mistake: it is enormously important for our international leverage and credibility that we press forward with strong domestic action, and it would unquestionably improve the atmosphere of negotiations if the US had enacted a comprehensive energy and climate plan this year. But it is just not the case this year, anymore than last year, that everything hinges on U.S. legislation. President Obama is not backing away from the target we put forward in Copenhagen last year, and there are any number of ways to get there, using both legislative and regulatory tools. In his recent Rolling Stone interview, the President made clear that he remains fully committed to taking concerted action on energy and climate.

It also bears repeating that we have done and are doing a lot already. Just two examples:

First, our 2009 stimulus plan provided more than $80 billion in investments, loans and incentives to support a range of initiatives that are critical to transforming the way our country produces and consumes energy. This compares to typical clean energy R&D spending of $3-4 billion.

Second, last year EPA announced the most ambitious emission standards for vehicles ever, and just last week, the Administration initiated the process of developing still tougher emission standards for vehicles built in model years 2017 through 2025. EPA has also taken the preliminary steps necessary to regulate stationary sources of carbon.

In short, we have made a strong start; we have a lot more to do; and it is profoundly in our own economic, environmental and national security interest to act. But the difficulties on the international side are not about U.S. legislation.

Legal form. Let me shift gears now to consider another issue in the negotiations that may be particularly relevant in a venue like this Law School – whether a new agreement, this year, next year or the year after, needs to be legally binding at the international level.

I am not here asking the question of whether national actions should have the force of law. The answer to that question seems to me to be clearly yes; climate change poses far too serious a threat to treat as a matter of voluntarism; we need mandatory national laws and regulations. Rather, the question is whether we need an agreement that is legally binding at the international level as opposed to an accord, a la Copenhagen, that is binding politically and morally, but not legally.

Now, it has long been an article of faith among most countries that we need a legal treaty to govern international climate action. And the United States, has supported this objective and continues to support it, as long as such a treaty is legally binding for major developing countries as well. But it is worth examining both the upsides and potential downsides of a legally binding agreement as we think about the world going forward.

Denmark, in effect, put this question on the table for the first time last fall, when they publicly suggested that a legal treaty might be beyond reach for Copenhagen and that we ought to focus on reaching a politically binding deal instead. We thought that made sense, but many countries protested, and most of those who accepted the Danes’ logic did so only on the basis that a legal treaty would be concluded, at Cancun or before. And yet, a year later, with Cancun just 7 ½ weeks away, a legal treaty is nowhere in sight. So what is going on here?

To begin with, why is the idea of a legal treaty so compelling? First, I think that it conveys a sense of seriousness; if an agreement is legally binding, then the parties clearly mean it. Second, a legal agreement is often presumed to include compliance provisions creating incentives, mostly negative, some positive, designed to push countries to meet their commitments. Third, some, especially in Europe, argue that a legal agreement is necessary if you want to build an international carbon market, in which parties – whether countries or companies – could trade rights to emit greenhouse gases.

At the same time, at least in the near term, a legal treaty would be extraordinarily difficult to achieve. As noted, the United States, as well as a number of other countries, would not accept legally binding commitments unless China and other emerging markets did so as well, and they have made abundantly clear that they will not.

Second, the legal character of an agreement will almost inevitably lead to many countries reducing their level of ambition, whether to make sure they can live up to their commitments, out of fear of the consequences of failing to meet commitments, or both. And this is true even if no consequences are written into the agreement.

Third, negotiating a legal treaty takes a lot of time. The Kyoto Protocol was agreed to in 1997 and didn’t go into effect for 8 years – until 2005. Had a handful of countries not blocked the adoption of the Copenhagen Accord last year, we could be elaborating its provisions and starting to implement it right now.

As for the markets argument, countries with emissions trading systems at a national level could enter into bilateral or plurilateral agreements with others who had their own systems in order to establish transnational trading. Over time, such a process could be built out to a broader international system. So we don’t agree that an internationally legally binding agreement is a precondition for markets.

In light of the trials and tribulations of negotiating a strong, effective legal treaty, it is worth recognizing that if an international accord included countries making political commitments to each other to implement serious, mandatory national laws and regulations; to be internationally transparent in what they do; and to provide appropriate mitigation, technology, adaptation and forestry assistance to poor countries, you’d be much of the way home. Indeed, you might argue that that is exactly what the Copenhagen Accord did last year.

None of this is to say that a legally binding agreement shouldn’t be our objective at such time as countries are genuinely ready for it. But that objective should not stop, or slow down, our quest for immediate concrete progress. The issue is far too urgent and important to put all our climate eggs in the legally binding basket.

The UNFCCC. Let me turn now to the last of my four main questions for today – whether the UNFCCC will remain the central forum for international action to address climate change.

By rights, the UNFCCC should because it has history, inclusiveness and credibility on its side. It has grappled with this issue for 18 years. All nations are part of it. And for all its shortcomings, no other organization has the credibility the FCCC still enjoys with the global community.

And yet those advantages are not enough. The open question is whether the Framework Convention can act effectively and efficiently, given the range of different circumstances, interests and perspectives within its borders.

This is not a trivial question. Climate change, as we know, is a profoundly complex problem. It can only be addressed meaningfully through a fundamental change in the way we produce and consume energy and other resources, and those issues go to the heart of economic development and growth. Thus, the notion that it’s hard to reach agreement among over 190 nations should not be surprising. The risks posed by climate change and the difficulty of containing it pose challenges to every country, but very different challenges, and sometimes very different risks, depending on a country’s circumstances.

Since climate change is about economics and development, raw north-south emotions have been a staple from the beginning. The perception of many developing countries is that industrial nations, having prospered on the easy availability of abundant fossil fuels now want to pull up the ladder when it is developing countries’ turn to grow.

Because of these kinds of deeply engrained resentments, and because of the fundamentally different perspectives of so many countries in regard to issues like causation – both past and future – and vulnerability, it is exceptionally difficult to command consensus for any approach. Yet consensus is exactly what the UNFCCC process requires.

What this means, I think, is that we have to combine ambition with pragmatism and flexibility. We need never lose sight of the fact that we all – in the wise words of my friend Ed Miliband, the former UK Minister for Energy and Climate Change – have our own compelling constraints with regard to facing this challenge.

Yet, if there is a singular feature of climate negotiations over many years, it may be the lack of appreciation for this point. So many countries believe they have the truth, the right way to proceed, the urgent demands that must be met. An appreciation for what those on the other side of the table can and can’t do, what their political red lines are, whether you like them or not, has too often been missing.

Add to this the reality that here, as in so many areas in public life, it is far easier to stop something from happening than to get something done, and you start to appreciate the degree of difficulty presented by climate negotiations.

In short, the question that the Framework Convention faces is whether it has the capacity to find common ground on the difficult issues at the core of the climate negotiations and to embrace a pragmatic response, even though it most certainly will not be everything to everyone.

If the UNFCCC continues to be unable to do that year after year, things will start to evolve in other directions, because the urgency of the problem we are charged with addressing does not permit extended stalemate. Should we face such stalemate, the UNFCCC will inevitably begin to lose its standing, as countries look for other ways to contain the climate threat. More and more, in the corridors of international meetings, you can already hear negotiators from a variety of countries, both developed and developing raising these issues. If the UNFCCC is going to stay relevant, a non-ideological spirit of pragmatism is going to have to take hold.

Conclusion. Thank you for listening. This is an endlessly fascinating, profoundly important, but extraordinarily difficult area. Much needs to be done, much is uncertain, and the future of climate diplomacy is still waiting to be made. Stay tuned. I’d be happy to take your questions.