COP VI: STATE OF THE NEGOTIATIONS

US POSITION

FOE has costed the US proposals in terms of cost per tonne of carbon to meet Kyoto targets. We believe that

If all sinks are included without limits of any kind, the US could achieve its Kyoto targets at a cost of less than $1 a tonne of carbon. The mid-range estimate is about $6 a tonne of carbon
If all sinks are included in Articles 3.3 and 3.4 of the Kyoto protocol but not in the Clean Development Mechanism, the cost of achieving Kyoto targets would be about $27 a tonne of carbon
If all sinks are excluded (except for Article 3.7: the so-called "fix for Australia") the cost would be about $31 a tonne of carbon.

[Assumptions: The costs are the average world price per tonne of carbon in the commitment period 2008 -2012. We have relied on a MIT/EPPA based model using August 1st submission data from parties. We assume hot air trading and no cap on use of mechanisms, and a $0 price for "business as usual" sinks, with all CDM projects and JI projects additional - i.e. they would not otherwise have happened]

The USA has moved towards the EU position of a positive list by proposing a preferential treatment for small projects in the CDM. They propose so-called 'automatic additionality' for energy related projects. For fossil fuel projects they propose 30 MW , for non-fossil fuel projects they propose a threshold of 75 MW. While this means that large-scale hydro would be disadvantaged, it would not give a kick start to renewable and energy efficiency projects, which is the purpose of the EU positive list proposal.

JAPANESE POSITION

The Japanese position in these talks is among the most reactionary of any country in the world. Japan's Kyoto target is a 6% reduction by 2008-2012. CO2 emissions in 1999 were 7.7% over the 1990 level.

Japan has repeatedly said that it will not ratify the protocol unless Article 3.4 additional activities and sink projects under the Clean Development Mechanism can be used without restriction in the first commitment period (i.e. up to 2008-2012). Like the USA, Japan wants to count "business as usual" sinks (e.g. existing forests) against its targets. It wants to count such activities as urban greening rather than cut fossil fuel use.

Japan also wants to re-label its existing foreign aid spending as CDM funding. Japan's annual ODA lending in the energy sector is comparable to that of the World Bank. Given that it rejects the argument that financing under the CDM should be additional (the G77/China and EU position), this would bring Japan windfall credits by simply re-labelling current spending as action under the CDM.

Japan is one of the last countries arguing for the inclusion of nuclear power in the CDM, and is resisting the exclusion of any technology such as large hydro, clean coal and large-scale plantations. Japan rejects any new funds and mechanisms to help least developed nations and small island states threatened by climate change. It also opposes binding consequences on non-compliance against the commitment under the Protocol.

LDC ISSUES

Almost forgotten in the scramble by rich developed countries to enlarge every loophole and avoid any action at home to cut emissions from fossil fuels, is the increasingly dangerous position of many developing countries. The small island states held a press briefing today in which they made it clear that they were already in grave danger from the effects of climate change, and were increasingly angry at the slow progress in the Hague and the obstructive attitude of the US, Japan, Canada and Australia in particular.

Likely climate change effects on these states include:

coastal erosion
loss of land to the sea
damage to freshwater supplies.

The island states rightly said that the Hague talks were "not just a matter of economics but a matter of survival".

GENERAL PROGRESS

1.Group A (Capacity building, technology transfer, adaptation and compensation issues to developing countries and other financial issues). Svend Auken, Danish environment minister claims that discussions on capacity building and technology transfer are close to agreement, although there remain outstanding issues of funding (which seems like a large potential hole). Saudi Arabia wanted a separate group on funding, Pronk decided Group A continue with this.

2.Group B (Flexible mechanisms - CDM, emissions trading, Joint Implementation) The issue of a cap on the extent of permitted use of flexible mechanisms remains intractable and is to be discussed further today. The G77 have put forward a new proposal on the issue yesterday and the EU is considering this in the next hours. India and US are to work out proposals on "fungibility" (the issue of the use of existing money "freed up" by income received under flexible mechanisms by developing countries and others).

The majority of countries are opposed to including any positive list of projects in the rules of the CDM.

3. Group C (Land Use, Land Use Change, and Forestry) Parties are simply repeating their positions. Yesterday's plenery session saw strong language from Michael Meacher on the problems of sinks. Canada, USA, Japan, and Australia are isolated in their attempts to secure massive windfall credits from Art 3.4. The G77, the new GC11 (Eastern European accession countries and Croatia), Russia and the EU are against this move, and even Umbrella group member Norway questioned the credibility of the US and Canada proposal, stating that there was no environmental justification for giving full credit for some activities and discounted credits for others. Australia proposed a cap on the overall use of sinks, but was opposed by the USA.

4. Group D (policies and measures, compliance and reporting) Australia is opposing any legally binding compliance measures. The Australian delegation has admitted it is in a minority, but Japan supported its position. The Russian Federation has complained that current proposals presumed guilt. Pronk continues to speak strongly in favour of a strong compliance regime. The US and Canada are proposing that parties in non-compliance have to make good in next period, with some additional (low) "interest". Poland (on behalf of the group of countries seeking accession to the EU) supported the EU's proposals for strong compliance.

There has been a major row over the composition of the Compliance Committee. China and the G77 support equal participation. Everyone else wants a majority to come from Annex I countries. This is a crucial issue for the G77 as they want to have a leverage on compliance procedures covering Annex 1 Parties.

Friends of the Earth contacts:

Now in The Hague at the COP6 Conference:
Press Officer: Ian Willmore 0044 7887 641344 (FOEI)
Climate Experts: Roda Verheyen 0044 7712 843216
Frances MacGuire 0044 7712 843460