Bloomberg News

Loophole Inserted in Climate Accord Augurs U.S.-China Clash

December 15, 2011

Dec. 15 (Bloomberg) -- The deal struck by United Nations envoys this week to fight climate change gives the biggest polluters three options for a wider agreement by 2015, setting the stage for renewed discord between rich and poor countries.

Negotiators from more than 190 nations agreed Dec. 11 to spend up to four years drafting a “protocol, legal instrument or an agreed outcome with legal force” to take effect by 2020. While the European Union says that calls for a treaty to limit fossil-fuel emissions in all countries, two of the world’s three biggest air polluters, China and India, signaled they expect to be assigned looser limits in the final accord. EU carbon permits are headed for their biggest weekly drop since June.

“The phrase ‘agreed outcome with legal force’ is new,” Lou Leonard, a lawyer and director of WWF’s climate change program in Washington, said in an interview. “They just made it up. We don’t know what it means.”

With a dose of ambiguity, envoys now embark on years of more talks on how to get all nations to curb emissions, aiming to eventually regulate multinational polluters from U.S. Steel Corp. to China Petroleum & Chemical Corp. Negotiations failed in Copenhagen in 2009 after the U.S., China, India and the EU got bogged down in divisions over a new treaty’s legal form.

EU Climate Commissioner Connie Hedegaard said that including the alternate wording of “legal outcome,” as favored by India, would have given some countries a potential loophole to escape obligations under a new agreement. “We need the opposite,” she said on Dec. 11. “We need clarity. We need to commit.”

Carbon Permit Drop

Carbon allowances under the EU’s emissions-trading system, the world’s biggest cap-and-trade program, were little changed today at 6.38 euros as of 7:18 a.m. in London, headed for a 19 percent weekly drop.

The language in the deal stems from a last-minute compromise after the two-week-long UN talks dragged on two days past their scheduled close, to about 5:30 a.m. on Dec. 11. The envoys from the U.S., India, China, the EU and Brazil huddled out in the open on the plenary floor at about 2:40 a.m. until they came up with legal phrases acceptable to all.

Indian Environment Minister Jayanthi Natarajan had earlier fought to add “legal outcome” as an alternative to a possible new “protocol” or “legal instrument” to cut global greenhouse gases. The EU, which arrived in Durban pushing for a new legally binding climate treaty involving all nations by 2015, rejected India’s language as too weak.

Historic Concept

The phrases “protocol” and “legal instrument” were accepted by the EU because those concepts were the basis of negotiating the 1997 Kyoto Protocol. That’s a legally binding addition to the existing climate treaty that is now viewed as outdated by many industrialized nations because it only orders cuts from them, and not from fast-expanding economies such as China and India.

The U.S. never accepted Kyoto because of this omission.

India’s Natarajan accused rich nations of trying to set conditions that would rob poorer economies of their right to develop along the same lines as industrialized countries in prior centuries.

“We aren’t talking about lifestyle sustainability that many of the children of more fortunate countries than ours have, we are talking about livelihood sustainability,” Natarajan said in a speech at the Dec. 11 meeting in Durban, winning thunderous applause. “How do you a give a blank check and give a legally binding agreement to sign away the rights of 1.2 billion people and many other people in the developing world? Is that equity?”

Chinese envoy Xie Zhenhua followed her speech by saying his country supports India’s position. He painted industrialized nations as hypocrites for making demands on poor countries while failing to meet their own pledges to reduce emissions.

Chinese Stance

“We’ve been talking about this for 20 years and it’s still not being done,” Xie said. “We want to see your real actions.”

China earlier spoke in Durban about taking on mandatory targets only after 2020 and only if certain conditions are met. Like India, it has been more willing to have voluntary measures.

India, China and the EU later agreed to replace “legal outcome” with “agreed outcome with legal force.” The U.S., which won’t support a new treaty unless China and India are held as accountable for their actions as industrialized countries, helped come up with the language aimed at mollifying both sides.

‘Legal Outcome’

“‘Legal outcome’ is something India wanted a lot,” the lead U.S. climate envoy Todd Stern told reporters around 6 a.m. after the meeting in Durban concluded. “It’s just a little vaguer, a little less certain what that might be. There’s more ambiguity.”

The U.S. and EU and others wanted something with a “little more legal certainty to it,” he said. “The phrase ‘an agreed outcome with legal force’ just sounded a little meatier than a ‘legal outcome,’ nothing more scientific than that,” according to Stern.

The EU’s Hedegaard called the UN agreement for new negotiations a “major step forward.”

“Everyone must do something, some more than others but whatever we agree to we must be equally accountable for it,” she said in the Dec. 11 interview.

Stern said that while there are “technical variations on the theme,” he believes all nations understand “we’re talking about a legal agreement of some sort or another.”

India and China may view the matter differently, according to Sunita Narain of the New Delhi-based Center for Science and Environment.

Greater Legal Status

“My understanding is that the language gives India and China some maneuvering room,” Narain, director general of the lobbying group, said in an interview.

Spokesmen for India’s Natarajan didn’t respond to a request for comment.

Alden Meyer, who has been following global climate-treaty negotiations for more than two decades for the Union of Concerned Scientists in Washington, said his understanding from lawyers is that the meaning of the legal language in the Durban agreement “depends on the circumstances.”

Since the more vague language of “agreed outcome with legal force” is alongside the stronger terms “protocol” or “legal instrument,” the former may be viewed as an agreement with “greater legal status in terms of treaty interpretations than if it were listed by itself,” Meyer said in an interview.

WWF’s Leonard said the opposite may be true in that a court may decide the three different terms were used to indicate three different potential levels of legal status to a new agreement.

Meyer added that any legally binding treaty, as seen with Kyoto, is no guarantee that countries will adhere to its requirements to cut emissions. “It won’t bind a country that wants to be a scofflaw,” he said. “The only real compliance mechanism is public opinion and fear of voters. That’s the test.”

--With assistance from Alex Morales in Durban. Editors: Todd White, Amanda Jordan

To contact the reporters on this story: Kim Chipman in Durban, South Africa at kchipman@bloomberg.net; Natalie Obiko Pearson in Mumbai at npearson7@bloomberg.net.

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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