Durban: Deferring Tough Decisions on Climate

DEC 2011 Source: Global Markets Institute

Narrow agreement reached at global climate talks in Durban

An agreement to discuss an agreement

With the expiration of the Kyoto Protocol looming in 2012, negotiations at the UN climate conference in Durban were dominated by discussions on a new binding treaty. Some parties, notably the EU, agreed to a limited extension of the Kyoto Protocol. The most widely publicized accomplishment was the Durban Platform: essentially an agreement to discuss a future global agreement. It keeps the possibility (but no real commitment) for a binding treaty alive. These developments were in line with our expectations outlined in “Next Stop: Durban—Moving Beyond the Kyoto Protocol.”

Incremental progress made on implementing Cancun Agreements

Notable, albeit incremental, progress was made on executing elements of the 2010 Cancun Agreements. Durban established a basic governance structure for the Green Climate Fund, which is meant to provide developing countries with long-term financing reaching $100 billion per year by 2020. However, key aspects are still unresolved, most significantly the specific sources of the funds. Delegates also agreed on details for the new Technology Mechanism and on parameters to improve transparency in monitoring mitigation actions.

Developing nations are vital for any future agreement

The real achievement was the engagement of advanced developing countries (referred to as the “BASIC” countries). These nations are already major energy users and greenhouse gas emitters. China is the world’s largest emitter, surpassing the United States and the EU. India is ranked fourth. Future developments in energy efficiency, mitigation and global cooperation will increasingly involve the advanced developing economies.

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Abby Cohen, CFA
Senior Investment Strategist and President, Global Markets Institute
Koby Sadan
Associate, Global Markets Institute
Rachel Siu
Analyst, Global Markets Institute