December 2010 – Update from COP16, Cancun

During the low key COP 16 meetings held in Cancun held from November 29th to December 10th, WLPGA had an active presence that reflected the importance that the issue of global climate change has come to represent for the LP Gas industry.

by Michael Kelly, Director of Market Development, WLPGA During the low key COP 16 meetings held in Cancun held from November 29th to December 10th, WLPGA had an active presence that reflected the importance that the issue of global climate change has come to represent for the LP Gas industry. This fortnight of negotiations specifically tried to avoid the problems and pitfalls that beset the negotiations of 2009 in Copenhagen which despite the presence of numerous Heads of State and unparalleled media scrutiny were widely considered a failure and a blow to the prestige of the United Nations Framework Convention on Climate Change (UNFCCC), the body under which the Kyoto Protocol is housed. Partly to avoid some of the unruly crowd problems associated with Copenhagen and partly to deal with the very real security concerns that exist in Mexico, the meeting was split between two sites, the Moon Palace, the centre for the negotiations, and the CancunMesse, the centre for the exhibitions and side events. Although facilities on both sites were good, the former was extended over a huge hotel complex making it difficult to manage logistically while the latter seemed to be empty most of the time. Transport by buses between the two sites and between the hotels and the CancunMesse worked well (except on the first day) the whole arrangement was generally a bit “difficult” with the majority of delegates being forced to spend up to 2 hours a day on buses to and from the conference. This had a direct impact on the tone of the negotiations. WLPGA Director of Market Development, Michael Kelly, attending his sixth COP and WLPGA First Vice President, Kimball Chen represented the industry as part of the Business and Industry Non Governmental delegation (BINGO). This delegation which groups together all the business associations and companies that are involved in the negotiations at an intergovernmental level is one of the most powerful of what is known in UN-speak as “civil society major groups”. Each group is allowed a certain amount of official input into the process and access to the negotiators. As part of the BINGO delegation Kimball was asked on November 29th by the International Chamber of Commerce (ICC) to deliver a statement during a negotiating plenary session. Speaking on behalf of the BINGO delegation, he said: “We urge governments to develop post-2012 actions that will provide business with the conditions it needs to meet urgent climate and energy challenges while maintaining robust economic growth.”He stressed the need to stimulate private sector investment in efficient and low-emitting technologies, set the conditions to speed up the deployment of existing and advanced technologies and provide a level playing field to spur competitive innovation. WLPGA was also a sponsor in the first World Climate Summit held on December 5th and 6th. The event convened more than 800 delegates and 140 business, finance, and government leaders such as President Calderon of Mexico, Sir Richard Branson, Ted Turner, Lord Stern, Mary Robinson, and UNFCCC Secretary General Christiana Figueres. Kimball spoke in a panel during the event on the issue of low carbon transportation. The result in Cancun cannot have been seen as more different than the failure to come to a decision in Copenhagen. The self-congratulatory celebrations following the (almost) unanimous acceptance of the final decision was as much relief as of achievement, relief that the multi-lateral process had finally made progress after several years of stalemate. It was also well-justified congratulations for the efforts of the Mexican government and, in particular, the President of COP-16, Minister Espinosa whose sterling efforts throughout the year had steered the conference to its successful conclusions. Outcomes: From the LP Gas industry point of view there are three focus areas emerging from the negotiations:

The first is the decision to establish a Green Climate Fund run by the UN with the World Bank serving as the initial trustee. Developing nations will be afforded significant power on the board of this Fund. The decision’s text also includes an agreement to fast-start ($30 billion by 2012) and long-term finance commitment ($100 billion annually by 2020). This is an area that the CCWG will continue to monitor to find out how the funds will be distributed and if there are opportunities for our industry to benefit.
The second is the establishment of a system for crediting nations for reducing deforestation through the Reducing Emissions from Deforestation and Forest Degradation (REDD). Again this is potentially beneficial in the long term for our industry as reducing deforestation often means, among other things, moving lower income populations from wood and other forms of biomass to fuels such as LPG.
Finally was the reformation of the CDM which didn’t make much progress. Considerable time was spent on CDM issues, both concerning transparency of decision-making on how new projects and modalities are assessed and accepted and the review of the mechanics of the mechanism itself. Not much came out of the discussions, partially because the CDM is tied by convention to the Kyoto Protocol and unless the Kyoto Protocol is extended post 2012 for a second commitment period, the CDM could theoretically disappear. Although this is highly unlikely. This should not impact the CDM LPG project that Repsol Peru is currently shepherding through the pipeline which as we have discussed in the past could serve as a template for CDM eligible LPG projects around the world.