Representatives from the 196 nation signatories to the United Nations Framework Convention on Climate Change meet in Lima over the next two weeks. They are there to agree the shape of a deal to stabilise the climate which is to be fleshed out and finalised this time next year in Paris. Before he heads south to participate, Jonathan Shopley assesses whether COP20 will amount to more than ‘a hill of beans’.

The COP20 Climate Conference in Lima: Will it amount to more than ‘a hill of beans’?

A word about beans 

Phaseolus lunatus, or lima beans to be precise, are grown for their edible seeds.  They trace their origins to the North of Peru where they were domesticated around 2,000 B.C.  During the Spanish rule of Peru (1542–1824), lima beans were exported to the rest of the Americas and Europe in crates labeled “Lima, Peru”, and the name stuck.

At the end of the film “Casablanca”, Humphrey Bogart turns to Ingrid Bergman and says: “Ilsa, I’m no good at being noble, but it doesn’t take much to see that the problems of three little people don’t amount to a hill of beans in this crazy world”.  

So, will the climate aspirations of the nations of the world gathering in Lima from the 1st-12th December amount to more than a hill of lima beans in this crazy climate conflicted world?

Lima – a staging post on a new route

COP20 - Lima

At the first Conference of the Parties (COP1) to the UNFCCC in Berlin in 1995, work began on a binding treaty, the Kyoto Protocol.  It was signed into force in 1997 at COP3 in Kyoto, and was set to run to the end of 2012.  Efforts to construct a replacement treaty at COP15 in Copenhagen in 2009 famously failed, so a weaker version was adopted to run to 2020.  In parallel, work on a new agreement to take force in 2021 and to be finalised at COP21 in Paris in 2015, is underway.  Lima’s COP20 is a critical staging post to that objective.

The Kyoto Protocol was designed as a top-down binding treaty.  It was flawed from the start.  Only developed nations had binding greenhouse gas reduction targets, while developing countries did not.  Over the last 10 years China (a developing country under the Kyoto Protocol) has grown into the world’s largest greenhouse gas emitter and second largest economy.  The US did not ratify the Protocol.  That means the two largest economies were not aboard, and the Kyoto Protocol could never deliver an absolute reduction in global greenhouse gas emissions – the ultimate objective to stabilise climate.

Against that backdrop, COP 15 did mark a change in course – it saw the major emitting nations (both developed and developing) commit to taking actions that will prevent a global temperature increase of more than 2oc above pre-industrial levels – in other words, to reducing greenhouse gas emissions in absolute terms.

And more importantly, over the past five years, the UNFCCC has changed tactics.  Although COP17 in Durban 2011 launched the current phase of negotiations with the objective of signing a binding agreement in Paris, that goal will be impossible for many reasons. None is more fatal than the fact the US will not be able to pass a Treaty while Obama has no control over the upper and lower Houses of U.S. government, and China is highly unlikely to sign a treaty without the US aboard.

So gradually, the pathway to success has changed direction.  Talk is now of ‘bottom-up’, rather than ‘top-down’; of a ‘Framework of Various Approaches’ (FVA) within which ‘Nationally Determined Contributions’ (NDCs) can be measured, reported and aggregated into a globally consistent action plan; and, of ‘New Market Mechanisms (NMMs)’ to extend and potentially link the 40 or so sub-national and national emissions trading schemes that have emerged during the past 10 years.  

Measures of success for Lima

That suggests there are two critical measures of success for the Lima COP as a staging post to Paris.

First, in order to make the NDCs meaningful, they will need to be based on common systems of accounting to ensure ‘clarity, transparency and understanding’.  Without that we won’t be able to aggregate the bottom-up numbers to figure whether we are on track for a stable climate.  The UNFCCC has to coax nations to agree a framework for accounting without which the numbers, commitments and plans are meaningless.

That takes us to the second measure of success.  Nations have been asked to prepare their Intended NDCs (INDCs) by March 2015.  Lots of work already has been done on this by many of the high emitting nations.  This is a hugely important issue as highlighted by PwC’s Low Carbon Economy Index (2014). It reports that on current trends, the 2oc carbon budget will be spent by 2034. De-carbonisation of 6% each year is needed to keep on track, compared to the 1% being achieved currently. Lima will be an opportunity to gauge whether we are on track, or have a realistic chance of getting on track.

Reasons to be optimistic

There are a number of things in the run-up to Lima which could help make this staging post a productive one.   

Together, the U.S. and China account for a third of global greenhouse gas emissions.  In November, these two nations announced actions to “inject momentum into the global climate negotiations on the road to reaching a successful new climate agreement next year in Paris”. The U.S. committed to cut net greenhouse gas emissions 26-28 percent below 2005 levels by 2025 and China announced targets to peak CO2 emissions around 2030, with the intention to try to peak early, and to increase the non-fossil fuel share of all energy to around 20 percent by 2030.

Also in November, The Intergovernmental Panel for Climate Change (IPCC) issued its 5th Assessment Report which underlines the imperative to take early action to avoid high social and economic costs of climate change. It also makes the case that required technologies are in play, and that the benefits of early action can turn this from a risk to an opportunity for sustainable economic growth.

Ban Ki Moon’s Climate Summit in New York City was another important brick in the wall and demonstrated an unprecedented mobilisation of civil society, businesses, cities, sub-national and national governments in support of action on climate.  A report launched at the Summit by ‘We Mean Business’ -- a coalition of businesses pressing for bold action on climate -- revealed that progressive businesses investing in low-carbon technologies are seeing an average internal rate of return (IRR) of 27%.

A nasty thing about lima beans

Cyanide is present in many plants, including lima beans. It’s there to stop herbivores from feasting on them, and evolution has devised an ingenious poison delivery system. Lima beans store cyanide in an inactive form attached to sugar molecules, and have a separate enzyme that activates it only when the two come into contact. A grazing animal does just that, and the ingested cyanide in poison form stops cells in the animal from using oxygen, and it suffers and may die from a molecular form of asphyxiation. Boiling lima beans releases the cyanide, which is why we are able to eat them without ill effect.

One of the most controversial themes at all COPs is ‘the equity issue’ – how to account for the fact that developed countries’ contributions to historic greenhouse gas emissions far outstrip those from developing economies, and that developing economies are not willing to take on reduction targets that constrain economic development. If that isn’t thorny enough, there is the fact that climate change is already affecting some of the poorest nations which need, and will need, increasing assistance in adapting to climate impacts. When these issues conflate, it’s like biting down on a raw lima bean. When mitigation gets mixed with the equity issue, asphyxiation usually follows. Many previous COPs have only narrowly escaped total collapse.

Back in 2010 at COP16 in Cancun, the concept of a Green Climate Fund (GCF) to finance developing countries’ responses to climate mitigation and adaptation was approved. The goal is for the GCF to disperse climate finance of around $100 billion a year by 2020. The Fund is up and running and heads to Lima with funding contributions of around $10bn from both developed and developing countries, and with the possibility of leveraging many times more in private sector co-funding. Whether this will be enough to boil off the cyanogenic content lurking in the Lima proceedings remains to be seen.

What business wants from Lima

Past COPs have seen business frustrated by the slow machinations of international climate politics.  This one has the potential to take things on a different and more rewarding course.  The test will be whether the COP moves from the entrenched mindset of “costs to be avoided” and “burdens to be shared” to one which is framed as “opportunities to invest” and “problems we can fix”.  

So, it’s less about how much money is in the GCF, if the numbers can be added up, whether the totals make sense …. and more about whether we are on track to a Paris COP that marks the unequivocal beginning of a low carbon economy and delivers a wide range of investable opportunities for the private sector.

If the slow simmer of activities over the last year cooks up a change in pace and ambition, business will be looking at more than just a hill of lima beans -- possibly a Machu Pichu-sized feast of opportunity.