26 NOVEMBER 2010
Nations assemble for climate change conference

Between 29 November and 10 December thousands of negotiators, business people, campaigners and scientists will gather in Cancun, Mexico.

Their aim is to breathe life into global climate policy following the failure to strike a deal at the 2009 Copenhagen summit.

Since 2009 doubts about the science, the switch from stimulus to austerity and political setbacks in Australia and the US have created a harsh backdrop.

As a result, expectations for significant progress at Cancun are low.

This is a further example of the reality adjustment that took place at Copenhagen.

At Copenhagen we got to see what these negotiations were at their heart - an economic negotiation like the Doha Trade Round, rather than an environmental summit.

Only for a small set of vulnerable countries like Tuvalu and other members of the Association of Small Island States is this still an environmental negotiation.

The issues
Sharp divisions remain between developed and less-developed countries.

The issues that divide the two sets of countries are not trivial and include responsibility for historic emissions, how to constrain future emissions while not stifling economic growth in developing countries, and whether the Kyoto Protocol is still the best arrangement within which to achieve progress.

However, there is scope to make some progress on issues such as adaptation, deforestation and technology, with hopes that a 'building block' approach on these issues might work.

Some of these issues can be advanced in isolation since they don’t rely on a clear view of what the final shape of an agreement might look like.

In other cases the trade-offs necessary to make progress are more obvious and straightforward for negotiators to make, for example new Climate Fund finance for transparency of measurement of emissions reduction.

But even in these areas it is hard to see past the deep fracture lines that divide developed and developing nations.

Modest progress likely

Inevitably, progress will be made but it is likely to be modest and incremental – there will be no rush of world leaders to declare ‘peace in our time’ or, as in Copenhagen, to rescue the negotiations from complete failure.

With a favourable wind, negotiators could leave Mexico with a set of interim decisions that build towards a modest deal in 2011 or 2012.

But a hard look at the geopolitical calendar suggests a comprehensive climate treaty before 2014 or 2015 is unlikely.

New Zealand’s position
In comparison with other countries represented at Cancun, where does New Zealand stand?

We are a developed nation, but share some characteristics of less-developed nations in our reliance on agriculture. We rely on forestry to deliver emissions offsets.

And we have shown a singular willingness to move ahead of trade competitors in implementing an emissions trading scheme.

These characteristics are reflected in the conditions that qualify the New Zealand medium term 2020 emissions reduction target.

And these characteristics would have to be accommodated in any international agreement that we signed up to.

But any such agreement is a long way off, and our negotiators’ immediate work at Cancun will focus on bedding in last year’s hard-won gains on forestry, facilitating agricultural production where it is most efficient (while curbing emissions) and ensuring other countries get on the pathway to pricing carbon.

Outcomes for New Zealand

Progress at Cancun could raise risks for New Zealand business.
But it also promises commercial opportunity - from progress on specific issues like financing and technology and from general progress of the New Zealand agenda.

New Zealand business will want the right balance to be struck between taking responsibility for emissions and seizing opportunities that arise from concerted action.

An acceptable balance would go some way towards protecting and growing jobs and investment while retaining the incentives to reduce emissions.

ENDS

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