In the first two months of 2013, there were only 58 requests (according to the United Nations Framework Convention on Climate Change, UNFCCC) to register  Clean Development Mechanism (CDM) projects in the world, compared to 280 requests in January and February 2012. CDM is one of the three flexible mechanisms defined in the Kyoto Protocol that provides for emissions reduction projects with Certified Emission Reduction (CER) units, essentially credits that can be traded in emissions trading schemes. Developed countries can fulfill their commitments to reduce emissions by buying CERs from developing countries, which, in turn, achieve sustainable development by building emissions reduction projects.

The CDM provides a solution for financing low carbon projects in developing countries, as CDM projects can derive revenue from two sources: operational revenue, such as selling electricity or decomposition product, and selling the CERs from the project to Annex I (industrialized) countries under the Kyoto Protocol. For example, a wind power plant can sell its generated electricity to domestic grid companies while gaining extra income from selling CERs after achieving a certain amount of CO₂ emission reductions.

However, as shown by the lack of new CDM projects, the mechanism is failing. Due to oversupply of CERs, the price for each unit is falling rapidly. Two years ago, the CER price was above €12/ton of carbon dioxide equivalent (tCO2e) (US$15.46/tCO2e). At present, it is less than €0.5/tCO2e (US$0.64/tCO2e) (See Figure 1).

China is especially hard hit as it dominates the CDM market with the largest investment of CDM projects in the world ($220 billion, or 61.8 percent of total registered CDM projects globally). These Chinese CDM projects have supplied 738 million CERs, or 61.2 percent of all 1,200 million CERs issued from 2005 to present.

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Sometimes it looks as if the Parties to the UN Framework Convention on Climate Change have bet large amounts of money against themselves on the success of climate negotiations.

"Are we done yet?” Poland has hardly been an enthusiastic actor in UNFCCC negotiations (Source: IISD.ca)

Countries are now engaged in an excruciatingly slow race to reach an agreement by 2015, which would for the first time commit both the developed and the developing world under “a protocol, another legal instrument or an agreed outcome with legal force” (ah, the beauty of UNFCCC language…), in order to meet the goal of 2 degrees warming by the end of the century, the “safe” limit that was agreed upon at the 2009 Copenhagen summit.

Given what’s at stake, and the inefficiencies inherent to the UN process, you’d think that the world’s nations would make sure that not a minute is lost in the talks. And yet, after a Qatari Presidency that left everyone with the vivid memory of conference chairman Abdullah bin Hamad al-Attiyah literally hammering out a last-minute deal, Poland has been designated to host the 19th annual Conference of the Parties (COP19) next October.

It may not be obvious, at first sight, why Poland hosting the climate talks seems like a step backwards. After all, the ambitions around COP19 are not to come up with a global agreement, but rather to make substantial advances on pressing issues in preparation of the Durban Platform deadline, fixed for 2015 (and a very likely French Presidency). But it helps to remember that the last COP on the road to the rather underachieving Copenhagen Conference in 2009 took place in Poznań, which could say something about the capacity of a Polish COP Presidency to pave the way for ambitious deal-making. These fears, of course, are not enough to dismiss Poland as a valuable host. What weighs heavier is that the country does have a history of blocking progress in climate negotiations, particularly at the European Union level.

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With Chavez gone, what will become of his PetroCaribe program? Photo credit: Valter Campanato, Agencia Brasil

Among the questions arising after the death of Venezuelan leader Hugo Chavez is what will become of the PetroCaribe program he started in 2005 and upon which many Caribbean economies have become dependent. Since it began, PetroCaribe has become a much-needed lifeline to countries in the region that are overly reliant on fossil fuel imports to supply their energy and transportation sectors. However, it has also increased the unsustainable debt levels of these countries. What comes next is uncertain as Venezuela prepares to elect Chavez’ successor as president of Venezuela next month.

Chavez started PetroCaribe with the aim of helping neighboring countries bear the burden of oil dependence at a time when oil prices began to rise sharply. Touted on its Web site as a “shield against misery,” the program allows participating Caribbean countries to purchase Venezuelan oil under preferential conditions. At the outset, 50 percent of the payment was due within 90 days with the remainder being financed over an extended period, sometimes up to as long as 25 years. The interest charged on the balance was at 2 percent but fell to 1 percent once oil surpassed US$40 per barrel.

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Following the call to action and sweeping plan of attack offered by President Obama during his Second Inaugural Address last month and State of the Union this week, it is clear that he has made climate change a priority in his second term.  From outlining the need to increase renewable energy research and installations to setting an ambitious goal of improving efficiency in homes and businesses by 50 percent over the next twenty years, President Obama’s wide-reaching plan has the potential to once again make the United States a global leader in environmental action.

President Obama discusses Hurricane Sandy, an extreme weather event that has been linked with climate change, with disaster response officials. Obama has reaffirmed his intention to fight climate change in his second term (Source: The White House)

While President Obama’s renewed commitment to address climate change has raised hopes, it is important to review the successes and failures of his last four years in order to set realistic expectations for what is possible during his second term.

Early during his first term, the United Nations climate negotiations in Copenhagen presented President Obama with a major international opportunity to demonstrate how his Administration would differ from the previous eight years of the United States playing foil to international environmental cooperation during the Bush Era.  The Obama Administration did not rise to the challenge, instead offering minor concessions while continuing to push for stalling the negotiations until 2015 and beyond, effectively deferring the responsibility for an international treaty to the next Presidential term.

Domestically, Obama’s environmental track record fared somewhat better.  The Administration has advanced environmental protection by increasing vehicle mileage standards, expanding protected areas, strengthening air quality standards, and raising federal investment in clean energy to the highest levels in US history.  On the other hand, the Obama Administration failed to oversee comprehensive climate legislation, and has drawn out the decision on the Keystone XL tar sands pipeline.

Of course, there are some extenuating circumstances that Obama faced in his first term that made success more difficult to achieve.  While a lack of political readiness or will to move may be to blame for the Administration’s lack of forward progress at international negotiations, domestically the Obama team’s success was tempered by a divided congress, the prolonged economic depression, and a desire to remain an appealing candidate throughout a hotly contested re-election. 

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When Sir Nicholas Stern published his UK government-commissioned “Review on the economics of climate change” six years ago, his work wasn’t exactly met with great enthusiasm by his fellow economists. Most of them dismissed the predictions – 75 percent chance of 2-3 degrees Celsius warming with current trends, reducing economic output by 3 percent, with worst-case scenarios permanently amputating global consumption by 20 percent – as too alarmist. A few took the opportunity to dismiss the “scientific consensus” on the issue (it was 2006, remember?). Even William Nordhaus, one of the most climate-aware among the profession, argued that the discount rates (how much more we value our present consumption over our future consumption) used in the Review were too low.

Number 1 on his list? Newly designated President of the World Bank Jim Yong Kim has vowed to make climate change a priority (photo: Bloomberg)

Six years and a few climate catastrophes later, the tone of the conversation has radically changed. Stern’s description of climate change as “the greatest and widest-ranging market failure ever seen” has penetrated minds across the globe – even those usually impervious to environmental preservation imperatives. The annual meeting of the World Economic Forum, which took place in Davos, Switzerland a week ago, is the latest illustration of this evolution (disclaimer : I did not physically attend the Forum. Membership fees are  around $45,000…) The preliminary “Global Risks Report”, which is published in preparation of the Forum every year and usually sets the tone of the meeting, was particularly adamant on this point: the climate bill is growing larger by the minute, and it’s still uncertain how we’ll be able to pay for it.

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President Obama’s decision to make climate change and energy a centerpiece of his Inaugural Address has taken political analysts and partisans on both sides of the issue by surprise. Of the half dozen specific issues raised in the speech, only the economy, foreign affairs, and the social safety net had as many words devoted to them.

Why would a President who has recently made only glancing reference to climate change double-down on one of the most contentious issues of his first Administration?  A second failure on climate would go down as a signature feature of the Obama legacy—and not a positive one.

Hurricane Sandy and Mayor Michael Bloomberg’s clarion call on climate change just days before the 2012 election were undoubtedly part of the reason for the President’s decision.  But the speech itself provides a deeper explanation.  With his young daughters standing a few feet away, Obama declared that failure to respond to the threat of climate change “would betray our children and future generations.”  No President has ever faced an issue whose consequences will last so long.  Historians a century now could see it as his most tragic legacy.

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The DR’s National Energy Commission leads by example using Net Metering to reduce monthly bills. This solution also provides surplus renewable energy to the grid, reducing the country’s total amount of fossil fuel-based energy.

Since October 2012, the energy sector in the Dominican Republic has been in the spotlight as a result of President Danilo Medina’s efforts to deal with the country’s larger fiscal crisis. Over the years, decisions made within the sector have led to an unsustainable level of debt, poorly maintained infrastructure, and a reliance on fossil fuels that, in 2010, cost the government US$2.6 billion.

With all of this attention, the opportunity exists to overhaul the floundering electricity sector and bring it in line with the country’s vision of a sustainable future. The Dominican Republic has a stated goal of obtaining 25 percent of its energy from renewable sources by 2025. And at the recent United Nations climate talks in Doha, Qatar, Mr. Omar Ramirez, Executive Vice-President of the Dominican National Council for Climate Change and the Clean Development Mechanism (CNCCMDL), said the country will reduce its carbon emissions 25 percent from 2012 levels by 2030.

These are ambitious targets for a country that relies on fossil fuels for more than 90 percent of its primary energy. But they can be achieved if decision makers seize this moment and embrace new thinking. It will not be enough to just add more generating capacity to the mix. Real reform will come when subsidies not longer hide the true cost of fossil fuel use, when renewable energy promotion is prioritized, and when energy sector agencies are structured in a way that provides transparency and accountability and is in line with stated long-term energy goals.

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Renewable energy development is critical to climate adaptation efforts for numerous reasons, including its minimal use of increasingly scarce water resources. (Source: ClimateTechWiki).

For countries that are particularly vulnerable to climate change—especially developing countries—the lack of urgency in the recently ended United Nations climate talks failed to reflect the reality back home. In many of these places, the effects of climate change are already taking their toll on social and economic development, not to mention human lives. So it’s no surprise that throughout the halls and meeting rooms of the 18th Conference of the Parties in Doha, Qatar, the most vulnerable countries made it abundantly clear that—for them—adaptation, not mitigation, is the number-one priority.

The impacts of climate change are mounting. Shifting rainfall patterns are already affecting Kenya’s agricultural sector, and the increasing frequency and severity of extreme weather events are necessitating rebuilding in numerous Caribbean countries. But unfortunately, both adaptation and energy, a critical area for development, are consistently shortchanged in climate negotiations. Of the “fast-start financing” provided by Germany in 2010 and 2011, only 28 percent was allocated for adaptation projects, while mitigation received 48 percent of the funds (the rest went to REDD+ and multipurpose activities).

Meanwhile, the energy sector’s contribution to greenhouse gas emissions, and the emission reduction opportunities that the sector presents, hardly made it into the recent discussions. When renewable energy is brought up, it is most often in the context of mitigation, highlighting how a shift away from fossil fuel-fired power generation can reduce emissions and slow further climate change.

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I visited Berlin a week after President Obama’s reelection, and came away envious of the strategic clarity and political consensus that mark Germany’s new energy strategy. After months of watching Democrats and Republicans bash each other with vacuous and contradictory rhetoric about where our country’s energy future lies, it was refreshing to see that one of our key allies has a plan—and is implementing it.

Despite having a relatively weak solar resource, strong domestic policy has enabled Germany to dominate the global solar PV market (Source: REN21).

In 2012, Germany got more than 25 percent of its electricity from renewable energy, up from 5 percent in 1995 and 10 percent as recently as 2005. Since 1995, the U.S. share of renewable electricity has hardly budged—going from 10 percent to 11.5 percent.) At the same time, Germany has rapidly increased its energy efficiency, and reduced its carbon dioxide emissions and dependence on imported fossil fuels. Government plans are even more ambitious—at least 80 percent of the nation’s electricity is to come from renewables in 2050.

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This article was originally published in Outreach Magazine. The original can be found here.

The latest UN climate negotiations are underway in Doha, Qatar but the talks need a stronger focus on energy's role in climate change. (Source: UNFCCC)

More than half of all human-caused greenhouse gas emissions result from the burning of fossil fuels for energy supply. Even excluding traditional biomass, fossil fuel combustion accounts for 90 percent of carbon dioxide (CO₂) emissions. Against this background, it is surprising how limited a role energy is playing in the ongoing climate negotiations. And yet this discussion could be instrumental in refocusing the debate about what is necessary and what is possible in both the areas of climate mitigation and adaptation—bringing it back down from the current inscrutable spheres of negotiation tracks, subsidiary bodies, parallel sessions, ad-hoc working groups, and special meetings (which, let’s be frank, nobody outside the negotiators understands anymore).

First, a focus on energy shows how far we are from solving the climate crisis. Energy-related CO₂ emissions grew 3.2 percent in 2011 to more than 31 gigatons—despite the economic crisis. We know that if we don’t want to lose track of the 2-degree Celsius threshold of maximum warming that would hopefully avoid major disasters, energy emissions must decline by at least one third to 20 gigatons in 2035, despite expectations that energy demand might double in the same time frame.

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