(1/3) THE PERSONAL IS GLOBAL: A whistle-stop tour of climate change finance and how it affects us all whether we like it or not….

by | Jun 15, 2020 | News

  1. In this series of three linked initial blogs, I want to show you that however large the global figures for the production of Greenhouse Gases (GHG) generally and CO2 particularly may seem, climate change is a problem which can be broken down into manageable chunks, but that paying a price for tackling it is an inevitability for us all. Whether it is through general taxation, increased prices passed onto customers by corporates (once those corporates have taken steps to mitigate GHG production) or personal financial contributions to ‘green’ causes – we will all have to pay in one form or another. Indeed, as I set out at the end of these three linked blogs, one price may come in the form of a loss of freedom. But if we have no choice about meeting financial or other societal costs personally, then we are entitled to ask all who charge us (that is governments, the corporates with whom we deal or the suppliers of carbon mitigation plans to individuals): are we getting proper value? Or are we simply being taxed and charged for activities which will do little if any good at all?

 

  1. This is a valid question not just because of the equities at play when person A incurs cost over which he has little choice at the hands of (public or private) institution B, but also because, as we shall see below, the entire thrust of the United Nation’s approach to climate change is now one of ‘bottom up’. That is, having commenced by considering that only state actors had the organisational heft to make a difference to global GHG production it has now changed to encouraging activities by non-state actors of all sizes. The approach is that by widening the pool of those encouraged to take steps to mitigate their GHG production, the level of engagement fostered in all, is deepened. This is a laudable aim: after all, we are in an arms race with ourselves. The more we emit, the more we need to stop emitting.

 

  1. I shall look at these issues in three parts:

 

  • In this blog, I shall set out the first steps taken by the UN at Rio to tackle climate change
  • In the second connected blog, I shall follow through the developments at Kyoto, Copenhagen/Cancun and finally Paris
  • In the third connected blog I will briefly look at the operation of the carbon market, how efficacy is tested and record where this has led corporates and may lead individuals.

 

Each section is no more than the highest-level overview – intended to consist of around 1500 words and take no more than 5-6 minutes to read.

 

Where we are and how we got here: Rio

 

  1. Let us first deal with some large figures.

 

  • In 2017 the UK produced 460 million tonnes of GHG of which approximately 1/6th part arose from domestic production (excluding the use of motor vehicles)
  • you, and every other inhabitant of this country will, on average, be responsible for the production of between 4 and 5 tonnes of Carbon Dioxide (CO2) this year;
  • the world average is around 2 tonnes per person;
  • Mere Plantations Ltd (“MPL”) reasonably estimate that a single teak tree grown in optimal conditions in Ghana will remove around 4 to 5 tonnes of CO2 over the course of a 12-year growing cycle.

 

  1. The Paris Agreement of 2015 required countries to take such steps (see below) as would keep average temperature increases below 2°C and preferably below 1.5°C . The amount of GHG in the global atmosphere can only be reduced in one of two ways: reduce the amount being released into the atmosphere (‘mitigation’) and/or increase the amount of GHG which is being removed ‘sequestered’ from it.

 

  1. In terms of absolute reduction, the UK is a leading nation. The 2017 figures represent a 42% reduction as against a baseline of 1990 figures and this is notwithstanding an increase in the size of the economy of 2/3rds over the same period. So, job done? Unfortunately, not. Even the UK’s plan for continued reductions in emissions, when tested against the new target of reaching net zero by 2050 contained in s1 Climate Change Act 2008, will fall short. Further, it has become increasingly clear that, when taken as a whole, the planet is not going to meet the Paris Agreement reduction target.

 

  1. With all that in mind let’s review the trajectory taken by the UN to tackle this existential threat since 1992.

 

  1. As is well known, the first attempt to bring a global solution (ignoring for this purpose the Montreal Protocol of 1987 which dealt specifically with CFC gases) was the Rio Earth Summit of 1992 which set up the United Nations Framework Convention on Climate Change (“UNFCCC”) and an enduring system of annual meetings (“Conference of the Parties “COP”) by which UNFCCC principles were to be developed and implemented. (The COPS are known by their sequential number and/or the place where they met.) I will provide a fuller description of the operation of the UNFCCC and the further agreements reached under it in subsequent blogs for Mere, but for the present all that needs to be stated is the approach Rio took to respective responsibilities for GHG emission.

 

  1. At Rio it was decided (in very broad outline) to divide the world’s nations into two camps: on the one hand stood the developed nations (referred to as “Annex I countries”) and on the other, the rest. It was declared that each nation had a “Common but Differentiated Responsibility” (Zahar refers to this conveniently as “CBDR”). The essence of CBDR was that only the Annex I countries had a duty to actually reduce their emissions. The duty upon all the other nations was limited to simply developing as cleanly as they each could. Why should this be so? At first glance, there is force to it:

 

  • The Annex I countries were, in the main, the predominant polluters;
  • They had a longer history of polluting (of course few longer than that of the cradle of the industrial revolution, the UK)
  • They had had the benefit of economic growth based on such pollution – indeed more than that, they had often used that very growth to wield dominion over non Annex I countries with the intention of inhibiting their own development
  • They could best afford to incur the cost of mitigation.

 

  1. In addition, there was a set up a system of ad hoc economic support by the Annex I countries for the non Annex I countries. It is worth spending a moment to consider the nature of the funding flows this created because it forms the heart of any analysis of climate/carbon finance modelling and advice. In essence there were three forms

 

  • Funds to help a country mitigate (i.e. reduce) the level of Green House Gases) GHG it produces;
  • Funds to help a country adapt to the effects of climate change arising from GHG
  • Money to assist in transferring technology or to build capacity from one country to another, to allow that other to develop its economy cleanly

 

To complete this stage of our analysis, it should be noted that there are essentially 4 sources of carbon finance

 

  • Funds paid by individual countries to supra-national bodies for distribution by such bodies to developing countries;
  • Direct funding paid from country to country;
  • Money leveraged by the state from private in pursuance of some treaty obligation or another (i.e. the provision of ‘seed corn’ capital)
  • Purely private capital

 

  1. In the second connected blog, I will set out the problems encountered with the Rio approach and set out how the nations of the world sought to rectify them

MER QC

 

 1. I am a barrister in independent practice at 12 King’s Bench Walk, Temple, London EC4Y 7EL and Kings Chambers, Manchester M3 3FT. However, I write this blog in my capacity as an independent non-executive director of MPL

2. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_dat
a/file/776083/2017_Final_emissions_statistics_one_page_summary.pdf

3. These figures are derived from Dijkshoorn ‘Personal Carbon Trading: The Holy Grail for Severe Emission
Reductions’ [2019] 3 CCLR 208, citing Wallace ‘Public Attitudes to Personal Carbon Allowances: Findings
from a mixed-methods study’ (2010) 10 Climate Policy 4,386

4. https://www.gov.uk/government/publications/clean-growth-strategy

5. A target inserted into s1 by The Climate Change Act 2008 (2050 Target Amendment) Order 2019 (S.I.
2019/1056), arts. 1, 2

6. In this section, I largely adopt the analysis of Zahar, ‘Climate Change Finance and International Law’
(Routledge 2017)

7. It is most unfortunate that one of the many victims of COVID has been COP 26 Glasgow scheduled in
November 2020 but now adjourned