UNEP2009-Industry sectoral approaches and climate action-from global to local level in a post-2012 climate framework-a review of research, debates and positions.pdf
UN I T E D NA T I O N S EN V I R O N M E N T PR O G R A M M EINDUSTRY SECTORAL APPROACHES AND CLIMATE ACTION:FROM GLOBAL TO LOCAL LEVEL IN A POST-2012 CLIMATE FRAMEWORKA Review of Research,Debates and Positions Copyright United Nations Environment Programme,2009This publication may be reproduced in whole or in part and in any form for educational or non-profit purposes without special permission from the copyright holder,provided acknowledgement of the source is made.UNEP would appreciate receiving a copy of any publication that uses this publication as a source.No use of this publication may be made for resale or for any other commercial purpose whatsoever without prior permission in writing from the United Nations Environment Programme.DisclaimerThe designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the United Nations Environment Programme concerning the legal status of any country,territory,city or area or of its authorities,or concerning delimitation of its frontiers or boundaries.Moreover,the views expressed do not necessarily represent the decision or the stated policy of the United Nations Environment Programme,nor does citing of trade names or commercial processes constitute endorsement.About this Discussion PaperThis Discussion Paper on Industry Sector Approaches to Climate Change is intended to assist negotiators,policy-makers and other interested parties in the definition,development and implementation of sectoral approaches.In doing so,it seeks to provide a broad introduction to non-specialists on the subject of sectoral approaches.Earlier drafts of this document were developed over 2008-2009 and circulated for comment to interested parties.This version of the Discussion Paper has been revised to provide for these comments and to reflect the outcomes of the last round of negotiations immediately prior to the 15th Conference of the Parties in Copenhagen in December 2009.At the time of completing this document much uncertainty remains regarding the nature and extent to which sectoral approaches will form part of a post-Kyoto climate framework,with the possible timing of their development and implementation also unclear.Of necessity this is a very fluid area,the direction of which could be significantly affected over a short time period depending on the outcome of the ongoing UNFCCC negotiations.In seeking to achieve its objectives,this Discussion Paper:providesanoverviewofsomeofthekeyissuespertainingtothe development of sectoral approaches as part of a post-2012 global climate change agreement(Chapter 1);reviews some of the more prominent publications andworkshop contributions of research bodies and think tanks on sectoral approaches that have been provided over the past two years(Chapter 2);outlinesthepositionsandactivitiesofkeyindustrybodiesonindustry sectoral approaches(Chapter 3);and providesananalysisoftheoutcomesoftheabovereviewsidentifying some of the key challenges,risks and opportunities associated with sectoral approaches and suggesting what is required,workable and politically realistic as possible solutions forapost-KyotoregimebeforereviewingtherecentUNFCCCnegotiations on sectoral approaches(Chapter 4).The Discussion Paper is based on a review that considers:researchpapersbyleadingpolicyresearchbodiesandthinktanks on the subject;variousbusinesspositionpapersonsectoralapproaches;thesubmissionsofPartiestotheUNFCCCnegotiationsduring2008-2009;theoutcomeofdiscussionsattheUNEPBusiness&IndustryGlobal Dialogue 2008;and theviewsofselectedindividualscontributingtotheUNFCCCnegotiations and/or involved in the development of sectoral approaches.This draft discussion paper has been prepared by Incite Sustainability(www.incite.co.za),led by Jonathon Hanks.It was done under guidance of the UNEP Division of Technology,Industry and Economics,and in particular Kaveh Zahedi,Climate Coordinator,and Cornis van der Lugt,Resource Efficiency Coordinator of UNEP.The information provided in this paper is the sole responsibility of the authors.The structure of some industrial sectors is so highly concentrated that just a handful of companies are responsible for producing a significant share of that sectors total greenhouse gas emissions worldwide.These sectors are thus a natural focus of policy-makers concerned with climate change.So-called sectoral approaches are seen as having the potential to broaden the range of contributions by all parties,including emerging economies,to greenhouse gas emissions reductions,and to help moderate competitiveness concerns in trade-exposed industries.The Centre for European Policy Studies(2008)For the African Group,this issue of cooperative sectoral approaches seems to be a tricky one and it cautioned about using it indistinctly for both developed and developing countries.In short,it should not create additional constraints or incremental costs for developing countries.For the G77 and China,sectoral actions should be voluntary and compatible with an open international economic system.In future discussions on this issue,it would be of the continents interest to consider the potential of cooperative sectoral approaches for the implementation of NAMAs in developing countries.Developed countries may contribute to their implementation through international sector-based programmes.African Ministerial Conference on the Environment(2009)Executive summaryFOREWORD 7EXECUTIVE SUMMARY 81 THE SECTORAL APPROACH TO CLIMATE CHANGE:INTRODUCTION AND OVERVIEW 121.1 A changing international policy context 121.2 Defining“sectoral approaches”141.3 Benefits of sector-based approaches 161.4 Limitations of sectoral approaches 161.5 Identifying appropriate sectors for a sectoral approach 171.6 Agreeing the scope of the commitment 192 RECENT RESEARCH ON THE SECTORAL APPROACH 202.1 World Resources Institute(WRI)202.2 International Institute for Sustainable Development(IISD)222.3 The Pew Center on Global Climate Change 232.4 Institut du dveloppement durable et des relations internationales(IDDRI)252.5 The Climate Group and The Breaking the Climate Deadlock initiative 262.6 Ecofys and GtripleC 292.7 Centre for European Policy Studies(CEPS)322.8 Centre for Clean Air Policy(CCAP)332.9 International Energy Agency(IEA)382.10 Organisation for Economic Cooperation and Development(OECD)443 INDUSTRY ORGANISATIONS AND THE SECTORAL APPROACH 483.1 International Chamber of Commerce(ICC)483.2 World Business Council for Sustainable Development(WBCSD)503.3 The Asia Pacific Partnership(APP)on Clean Development and Climate 523.4 The Aluminium sector 533.5 The Cement sector 563.6 The Iron and Steel sector 613.7 The Transportation sector 643.8 The Electricity sector 693.9 The Chemicals sector 703.10 The Oil and Gas sector 70Table of Contents4 SECTORAL APPROACHES IN A POST-KYOTO CLIMATE FRAMEWORK 744.1 Sectoral approaches and the post-Kyoto regime:A useful way forward?744.2 Should sectoral approaches be part of a post-Kyoto climate framework?744.3 Identifying feasible and effective options for sectoral approaches 754.4 What issues need to be addressed as part of a post-Kyoto framework?784.5 The UNFCCC Negotiations on sectoral approaches:Preparing for Copenhagen and beyond 814.6 Introducing sectoral approaches in the post-Copenhagen framework 86ANNEX I OVERVIEW OF PARTIES SUBMISSIONS ON SECTORAL APPROACHES 90SELECTED REFERENCES 94TablesTable 1 Ecofys evaluation of three sectoral approaches(ECOFYS,2008)31Table 2 Top ten non-Annex I countries for key industrial sectors(CCAP,2006)38Table 3 Summary review of the Aluminium sector 54Table 4 Summary review of the Cement sector 59Table 5 Summary review of the Steel sector 63Table 6 Summary review of the Air Transportation sector 66Table 7 Summary review of the Automobile Manufacturing sector 67Table 8 Summary review of the Maritime Transport sector 68Table 9 Summary review of the Power Generation sector 71Table 10 Summary review of the Chemicals sector 72Table 11 Summary review of the Oil&Gas sector 735United Nations Environment Programme(UNEP)|5BoxesBox 1 The Bali Action Plan and UNFCCC on Sectoral Approaches 13Box 2 WRI activities on sectoral approaches 20Box 3 IISD activities on sectoral approaches 22Box 4 Pew Center activities on sectoral approaches 23Box 5 IDDRI activities on sectoral approaches 25Box 6 The Climate Group activities on sectoral approaches 27Box 7 Ecofys/GtripleC activities on sectoral approaches 29Box 8 CEPS activities on sectoral approaches 32Box 9 CCAP activities on sectoral approaches 34Box 10 IEA/OECD activities on sectoral approaches 39Box 11 OECD activities on sectoral approaches 44Box 12 ICC activities on sectoral approaches 48Box 13 A carbon investors perspective on sectoral approaches 85Box 14 Providing for the core characteristics of sectoral approaches 88Box 15 Summary of the AWG-LCA Workshop on sectoral approaches 926|United Nations Environment Programme(UNEP)67United Nations Environment Programme(UNEP)|ForewordForewordScientific evidence of climate change in recent years,worse than predicted earlier in middle-ground scenarios,have raised the pressure on leaders world-wide to come to a global agreement.In our work with business and industry,UNEP has in the last two years also seen an increased sense of urgency among business leaders to reach agreement on basic principles and rules to enable decisive climate action in all industries.This came with a sense of pragmatism,as the business impacts and costs of inaction become increasingly clear.The ideal climate solution has to be a comprehensive one,mobilsing collaboration from all regions.At the same time pragmatic solutions need to be found so that full advantage can be taken of initial low cost opportunities.This applies particularly to those sectors that are highly energy intensive and most implied in the climate mitigation debate.In this respect,sector approaches have received careful consideration as one practical way of speeding up the pace of action.This is particularly relevant at national level,as Governments explore ways that best meet the realities of local markets.It is also relevant as we explore sound technologies and standards that are most appropriate in the context of an industry sector globally.Against this background,UNEP has convened a dialogue with business and industry representatives from all regions to assess the value of sectoral approaches and to consider what is achievable from the perspective of different industry sectors.What we have gathered from these discussions during 2008-2009 is that there is a general lack of understanding of what sectoral approaches would entail and in what ways they could help to speed up action whilst considering competitiveness concerns of different organisations and economies.What is clear is that the development of implementation modalities,including definition of financial support,efficiency standards,technology transfer and reporting boundaries need to take cognizance of the realities of individual industry sectors.This does not imply moving away from more optimal solutions that can be found in integrated,systemic approaches that cover full value chains across different sectors.Rather,it means taking a multiple strategy that seeks to advance the pace of action in a pragmatic fashion.Ongoing climate deliberations from global to local level in the months to come will determine to what extent sectoral approaches will be employed in defining the use of market mechanisms,new climate funds,national action plans,target setting and monitoring measures.This will require focused decision-making from leaders and managers both in the public and private sector.It will also require a concerted effort in capacity building,ensuring an improved understanding of industrial risks and opportunities and getting in place proper systems for data measurement,reporting and verification.UNEP is ready to continue working with Governments,business and industry partners and other stakeholders in building capacity so that implementation of a new agreement can advance.Our growing work programme with resource intensive sectors such as buildings,transport and others follows both a sectoral and systems approach.We trust that our partners and decision-makers generally will benefit from the overview provided in this report,setting out various options and industry positions that need to be considered.Sylvie Lemmet,Director,UNEP Division of Technology,Industry and Economics8|United Nations Environment Programme(UNEP)8Executive SummaryEfforts to develop a post-Kyoto agreement on climate change havebeenguidedbytheprovisionscontainedintheBaliAction Plan,concluded at the UNFCCCs 13th Conference of the PartiesinDecember2007.Article1(b)(iv)oftheBaliActionPlan(seeBox1)providesfor“cooperativesectoralapproachesandsector-specific actions”as part of national and international action on climate change mitigation.This Discussion Paper examines the potential role for such sectoral approaches(broadly defined)as part of a post-2012 climate regime.The paper is intended to assist negotiators,policy-makers and other interested parties in the definition,development and implementation of such approaches as part of national action plans.This document also seeks to provide a broad introduction to non-specialists on this subject area.Basedonacomprehensivereviewofthefindingsandsectoral-related activities of leading research organisations and key industry bodies,and on an assessment of the UNFCCC negotiations up to December 2009,the paper considers some of the critical questions and issues that need to be considered relating to the merits and implications of including sectoral approaches within a post-Kyoto climate framework.In the belief that sectoral approaches offer some potentially significant benefits as part of global climate mitigation efforts,the paper identifies some of the challenges associated with designing sectoral approaches that seek to find an appropriate balance between environmental effectiveness,economic efficiency,social equity,and political,technical and institutional feasibility.In doing so,the paper seeks to provide guidance to policy-makers on the following sets of questions:Whataresectoralapproaches?Whichsectorsmightbemostappropriatefordevelopingsectoralapproaches?Istheremeritinseekingtodevelopandimplementsectoralapproaches?ShouldsectoralapproachesbedevelopedwithintheUNFCCCprocess?WhatdecisionsareneededbyUNFCCCnegotiatorstodefinethepolicyfoundationforsectoralapproaches?Inimplementingsectoralapproaches,whatissuesdonationaldecision-makersneedtoconsider?This executive summary presents a brief synopsis of the key conclusions relating to each of the above questions that result from the study undertaken in this paper.What are sectoral approaches?A range of different activities have been identified and described as fallingundertheheadingof“sectoralapproaches”.Thelackofacommon understanding regarding the
