Yet another UN climate meeting has ended with the world community taking a few hesitant steps on a road on which they need to run if they are to reach their destination in time.  The outcome of Durban is a compromise where everyone can be happy with what they got or unhappy about what they failed to get or stop. But on the whole it represents some forward movement.

The most significant movement is in the agreement on developing a new “protocol, another legal instrument or an agreed outcome with legal force”, the last phrase being added at India’s insistence. This is to be negotiated by 2015 to come into force in 2020.  There is a clear recognition that the current 2020 mitigation pledges are not on target for containing the likely temperature increase to 1.5-2∞C. So even if the new obligations only kick in after 2020, expect some continuing pressure to live up to or do better than promise in the country review process.

The new post 2020 instrument will involve binding obligations on all countries, developed and developing.  But this does not rule out the application of the “common but differentiated responsibility” (CBDR) principle as the decisions at Durban, read as a package, recognise the importance of equity and space for development as elements that need to be taken into account.  In fact it may enshrine this more firmly in international law and also allow for binding obligations on finance and technology transfer.  That is why the Indian delegations dogged resistance to the idea of a legal obligation seems a little difficult to understand. 

Another welcome outcome is the agreement on a second commitment period for the Kyoto protocol, though expect some snags as the EU in Brussels raises questions about its compatibility with its own legislation.  This means that the Kyoto related CDM market in carbon credits will continue till 2017.  In fact it may work more smoothly because the meeting cleared a lot of methodological issues relating to the CDM. There is also a reference to a new trading mechanism in the context the successor arrangements to Kyoto which is yet to be worked out.

These are welcome developments for India because they reaffirm the differentiation of obligations between developed and developing countries and ensure the continuation of the lucrative carbon credit market from which many Indian companies benefit.  But in practice the Kyoto protocol will only cover about one-third of the emissions from the developed countries since USA is not in it and Japan, Russia and Canada have opted out of the second commitment period. That is why the post-2020 instrument is so important for enforcing the CBDR principle as it will bring the remaining two-thirds of developed country emissions into the legal framework.

How should the principles of equity and space for development be spelt out for the post 2020 instrument?  In the past we have relied on the notion of historical responsibility, which is also enshrined in the Framework Convention that provides the constitutional basis for legislation on this matter.  We have tended to focus on the cumulative emissions of the developed world which have preempted the space available for carbon emissions from the developing world, given the goal of containing ambient carbon to a level consistent with the 1.5-2∞C temperature rise.

The more extreme version of this focus is to argue that the developed world must compensate the developing world with cash for this occupation of available environmental space, an argument akin to the one that demands compensation for slavery.  But there is no ethical basis for insisting that children are responsible for the sins of their fathers.  In any case this approach generates cash, but not space for emissions for the developing countries. Another version hat creates space demands that the developed world roll back not just to zero net emissions but negative emissions  through establishing sinks that absorb carbon.  This is a bit like asking the persons of European origin to vacate Australia. New Zealand, Canada, USA etc. in order to provide space for Indians and Chinese to migrate there in millions.

The principle of equity will have to be formulated in terms that stand some chance of being accepted and not just as clever statements in a college debate. The key point is the need for space for development and meeting the energy needs of people who are moving out of poverty.  Fairness and justice requires that such persons should not have to bear the costs of adjustment. A certain base level of emissions per capita should be treated as a prior charge on available environmental space and only what remains is then to be shared out. The principles for apportioning this could be based on a fair sharing of the costs of adjustment.  But these are early days and there is much room for dialogue on how best equity and the need for space for development can be taken into account.

These climate negotiations are important.  But they are not the only game in town.  A bigger game is what has been called the Green Technology Race.  The main players right now are USA and China which invested $54 billion and $34 billion respectively in low carbon technology in 2010 according to the Pew Environment Group.  This was also the year when according to Bloomberg data the $187 billion investment in renewable energy (excluding large hydro) exceeded the $157 billion investment in new coal/oil/gas based power (excluding  replacements).  This is also the most promising space for action in India, judging by the response to incentives for wind and solar energy. 

It would appear that the players in the energy market are looking further ahead than governments perhaps because of expectations of how public policies will evolve over the life span of new energy investments.  That in fact is the connection between the global negotiating process and the market.  Clear signals about goals and time frames reduce the uncertainty attached to low carbon investments.  This signaling as also the smooth functioning of the carbon credit market, which exist only because of government set emission caps, may be the most substantial contribution of the climate negotiations. 

Global negotiations are important.  But the real locus of action is national and local for the energy transitions that we need which require huge changes in lifestyle, business models and energy governance.