Synthesis of UNFCCC Climate Change Conference in Cancun, Mexico
29 November – 10 December 2010
Overall Summary
Governments met in Cancun, Mexico, from 29th November until 10th December 2010, for the 16th Conference of the Parties (COP16) under the UN Framework Convention on Climate Change, and the 6th Meeting of the Parties to the Kyoto Protocol (CMP6). As a result of extensive negotiations, the COP and CMP adopted the Cancun Agreement—a set of decisions that will eventually lead to a new post-Kyoto regime and a new treaty. The Cancun decisions set in place the working groups and committees to develop the details of the institutional mechanisms that were established in Cancun to deal with adaptation, mitigation, financing, technology transfer, REDD+ and capacity building.
A major part of the success in Cancun can be attributed to the Mexican Government. Their tireless efforts before and during the meeting, as well as their diplomatic skills, consultations, and respect for transparency, made this conference the COP where the corner was turned and the negotiations within the UN framework were again seen as providing useful outcomes.
The Negotiation Process
Following the Copenhagen summit in December 2009, many governments expressed a loss of faith and trust in the multilateral climate negotiations. Through extensive consultations during 2010, the Government of Mexico was able to effectively rebuild the confidence of nearly all governments and the Cancun summit has been widely hailed by governments as generating a new momentum in the negotiations process. Under the leadership of the Government of Mexico, parties felt the negotiations were conducted in an inclusive, transparent, and trust-building way. In particular, the involvement of Ministers in Cancun managed to balance political guidance with transparency. Ministers were requested to convene in working groups on specific issues open to all delegations. These groups then reported their progress to the formal negotiating sessions allowing Mexico to compile them into a party-driven decision text that was adopted.
In the final adoption process, however, the COP President—HE Patricia Espinosa, Minister of Foreign Affairs, Mexico—was met with opposition from one member state, which expressed strong concerns over environmental integrity and the outlook for the Kyoto Protocol. Previously under the UNFCCC, the customary understanding of “consensus decision-making” has been that if one country does not agree with one item, no decisions were adopted and negotiations continued. However, the COP has never formally accepted firm rules or procedure for decision-making. In Cancun, despite strong objection from one party, the COP—under the leadership of Minister Espinosa—adopted the Cancun decisions, and so overturned for the common operational procedure in the UN system that decisions can only be taken by consensus. Although the COP did formally note opposition, the decisions were adopted on the understanding that one country could not “veto” a deal that is supported by all other governments. Cancun therefore sets a new precedent for international climate negotiations—one in which opposition from one party is not necessarily able to derail negotiations. The consequences of this precedent will become clear in the future, no doubt through discussions about what constitutes majority consensus.
The session concluded at around 6am on Saturday 11th December. Almost all governments expressed a renewed energy to build on Cancun and continue working in the same spirit together next year towards COP17/CMP7 in Durban, South Africa. It is important to note in this regard the active role and participation of China and India in the negotiations in Cancun, as well as the collaborative positions of the US, BASIC countries and Venezuela. Indeed, in his closing remarks, Indian Environment Minister Ramesh, supported by a standing ovation, proclaimed “we have restored the confidence of the international community in this process and in multilateralism. This Cancun outcome gives us the confidence to look ahead and take on climate change together.”
The Outcome
The Cancun outcome is made up of a “balanced package of decisions” under the two-track Bali Road Map. Although not a treaty, the decisions are formal agreements under the COP and CMP, and many governments from across regional groupings hailed this package as laying the foundation for a post-2012 climate regime. The decisions cover both the Convention and the Kyoto Protocol negotiating tracks. Under the Convention is a comprehensive set of decisions, including all parties, which set up a wide variety of new instruments, mechanisms, and processes under the UNFCCC. The agreement reaffirms that negotiations will continue on with the goal of codifying a new treaty in the future. Decisions taken under the Kyoto Protocol complement this by agreeing to continue work, with a view to a second commitment period under the Kyoto Protocol for relevant parties in 2013. To note is that the commitments declared thus far in both tracks fall short of ensuring that the temperature rise remains below 2 C by 2050.
Importantly from a development policy perspective, the Cancun package affirms “that addressing climate change requires a paradigm shift towards building a low-carbon society that offers substantial opportunities and ensures continued high growth and sustainable development.” Indeed, the entire agreement is infused by statements that stress the importance of sustainable development and poverty eradication. This is a welcome development for the UN/DP. Indeed, many sentences resemble UNDP discussion papers and messages.
On specific operational issues, there are few references in the package to any organizations, including the UN. The World Bank is named as the interim trustee of the Green Climate Fund and a new independent secretariat will be set up to govern the new fund. Details of the delivery of finance will be determined in 2011. The Group of 77 and China have always argued that the fund warrants a new organization, while a number of developed countries have always argued that the fund should be under the purview of the World Bank. 2011 will therefore be a crucial year for the UN to define its role in the climate regime as details of the institutional issues on the fund—and indeed many other operational issues—are elaborated.
Detailed analysis of the Cancun package can be found in the sections below with special emphasis on the adopted text that is relevant to UNDP.
UNDP in Cancun
Overall, this was a good COP for UNDP, with high visibility and an active delegation. In addition to supporting delegations’ requests for technical assistance and discussion on various elements of the negotiations, UNDP delegates were involved in identifying the policy and programming implications of the parties’ positions and decisions taken as they evolved. UNDP also participated in a number of successful outreach activities, including bilateral discussions and over 50 side events.
UNDP Administrator Helen Clark headed the delegation on the 7th and 8th of December. The Administrator participated in the One-UN high-level side event that showcased the UN’s collective work on climate change as well as in a number of other side events. She conducted numerous high-level bilateral meetings and press briefings. The Administrator participated in a joint press conference with the Prime Minister of Grenada (on behalf of the Alliance of Small Island States), Denmark’s Minister for Climate, Energy and Gender Equality, and World Bank President Robert Zoellick to announce a new US$14.5 million partnership for supporting renewable energy in small island developing states.
UNDP’s participation in side events was extensive, often serving as a host, panelist or participant in events addressing capacity building, gender, migration, REDD+ and CDM. A summary of UNDP’s engagement with these events will be forthcoming.
Technical Analysis of Outcomes
Mitigation
The Cancun package does not present clear definitions on the second commitment period to the Kyoto Protocol. However, in Cancun, governments committed to working toward this and to avoiding a gap between the first and second commitment periods. The Kyoto Protocol decision does, however, note the mitigation pledges to be submitted under the Cancun decision under the Convention, and reaffirms that the Kyoto mechanisms (e.g. Clean Development Mechanism, Joint Implementation, Adaptation Fund) remain active and available to Kyoto parties.
Under the Cancun decision on long-term cooperative action, a new regime for mitigation actions and reporting has been created. This outline of this new regime is detailed in the agreement and will be further developed in 2011. This has many implications for development policy and UNDP programming, including:
• Developed countries will submit detailed information on their pledges and proposed actions to the Secretariat. These actions will be subject to international monitoring, reporting and verification (MRV), subject to the development of new guidelines in 2011. Initially these submissions will be comprised of those already communicated to the Secretariat since Copenhagen.
• As per the Bali Action Plan, developing countries will also now undertake mitigation actions under the UNFCCC process.
• The Cancun Agreement “encourages governments to prepare low-carbon development strategies in the context of sustainable development”. Moreover, “developing countries will undertake nationally appropriate mitigation actions (NAMAs) in the context of sustainable development”. At this stage, the agreement contains no details on what will constitute a NAMA; however, it requests the UNFCCC Secretariat to organize a workshop as soon as possible to understand the variety of NAMA definitions, as well as the relationship between strategies and NAMAs.
• Decides that developed country parties will provide financial, technological and capacity building support for preparation of NAMAs and enhanced reporting, probably through the new fund (see below).
• The agreement invites developing parties to voluntarily submit information on their NAMAs to the Secretariat, as was done by many developing countries after Copenhagen. Initially the Secretariat will compile this information into a document; however, the agreement also creates a “registry” to be managed by the Secretariat that will house this information.

• The registry will list NAMAs seeking international support, support available from parties, and support provided for NAMAs. In a separate section, domestic unsupported NAMAs will be listed. The Secretariat will regularly update the registry.
• For NAMAs that receive international support, international measurement, reporting and verification of actions will take place. Guidelines and modalities for this will be elaborated in 2011.
• For those NAMAs that are not internationally supported, developing countries will undertake domestic MRV and report their actions through new, enhanced national communications every four years. In addition, countries will be required to submit biennial reports that include GHG inventories and information on mitigation actions, needs and support received. These biennial reports will then be subject to International Consultation and Analysis (ICA) by experts in consultation with the country concerned. Again, guidelines will be developed for domestic MRV and new national communication/biennial report methodologies in 2011. Financial support for these activities will continue to be provided under the Convention funds.

Market Mechanisms and Crediting
• Under the Convention decisions: On sectoral crediting of NAMAs (whereby sector-wide actions are funded by issuing carbon credits for verified reductions) the decision proposes launching a SBSTA work stream next year to design a mechanism and invites submissions from parties and international organizations. In the meantime the text encourages international organizations to pursue readiness activities.
• Under the Kyoto Protocol decisions: Three major amendments were made to the CDM:
1. The inclusion of Carbon Capture and Storage (CCS) as an eligible CDM project activity. The decision launches a workstream to create methodologies for this.
2. The creation of a loan facility for countries with ten CDM projects or less. The facility will have an implementing agency (to be selected) that will administer the system. The decision acknowledges that it could be an UN agency. The agency will be selected by the UNFCCC Secretariat using criteria such as proven experience in establishing and running grant or loan schemes targeted at developing countries for the financing of CDM, the ability to operate effectively for project activities in all developing countries, and sufficient financial strength.
3. The inclusion of standardized baselines within the CDM for projects.

Adaptation
• Under the Convention decisions, the Cancun Adaptation Framework was established. This framework has an extensive list of activities, including support to adaptation planning, programmes and projects, vulnerability assessments, strengthening institutional capacities, disaster risk reduction, and knowledge and information sharing.
• The agreement mandates the COP’s body for implementation (the SBI) to establish a process to enable Least Developed Countries and any other developing countries to formulate and implement National Adaptation Plans (NAPA’s). These plans will identify medium and long-term adaptation needs and developing and implementing strategies to address those needs.
• Networks play a prominent role in the Framework. The agreement calls for the establishment of regional centres and networks, as well as an international centre to enhance adaptation that will be established in a developing country.
• Cancun also establishes an Adaptation Committee under the Convention, which will promote the implementation of enhanced action on adaptation. The Committee will provide technical support and guidance, strengthen and consolidate relevant information, promote synergies and strengthening engagement with national, regional and international organizations, centres and networks. Importantly, it will also serve as a “match-maker” for funding by providing information and recommendations. The UNFCCC is requested to compiled submissions by parties on the composition of and procedures for the Committee.
• The Cancun agreement establishes a work programme for losses and damages under the Convention to consider approaches to reducing the negative impacts for developing countries. However, the thorny question of defining “vulnerability” was not elaborated in the text.

• Under existing arrangements under the UNFCCC there were also a number of important developments:
o The work programme on issues facing least developed countries (LDCs), including the Least Developed Countries Expert Group (LEG) has been extended for five years
o The Nairobi Work Programme, generating lessons learned from adaptation implementation, has also been extended while its purpose is reviewed in light of the new Cancun Adaptation Framework.
o [Details on the Least Developed Countries Fund and Adaptation Fund are contained in the Finance section below]
Finance
• The financial mechanism of the UNFCCC will be substantially changed by the Cancun package.
• On sources of funds, parties formally recognize the “fast start finance” pledged in Copenhagen and will report information on their delivery to the Secretariat by May 2011, 2012, and 2013. The Cancun Agreement also adopts the goal of mobilizing $100bn per annum by 2020 from multiple sources, and takes note of the work of the High-level Advisory Group’s report in this regard.
• The Cancun Agreement establishes the Green Climate Fund (GCF) as an operating entity of the financial mechanism of the UNFCCC, alongside the GEF. The fund will:
o be accountable to and function under the guidance of the COP.
o support projects, programmes, policies, and other activities using thematic windows to be designed
o be governed by a board of 24 members of parties representing UN regional groupings
o be serviced by a trustee that will be limited to financial management and reporting (including combining with other funding sources for investment purposes). The trustee will be accountable to the Board. The World Bank will serve as the interim trustee subject to review after three years
o be supported by an independent Secretariat
• The GCF will be designed and set up by a transitional committee of 40 members (15 developed countries; 25 developing countries). The UNFCCC Executive Secretary will convene the initial meeting of the transitional committee, which will be open to observers. Relevant UN Agencies, IFIs, MDBs, the UNFCCC Secretariat and GEF Secretariat are all invited to second staff to support the transitional committee.
• Many details about the new fund remain to be dealt with by the transitional committee, including selecting/establishing the Secretariat of the fund, the financial instruments that will be used by the fund, and the funding windows and access modalities. This includes defining processes of multilateral implementation, as well as the modalities for direct access.
• Overarching the new fund, as well as the GEF and Adaptation Fund, will be a new Standing Committee on finance under the Convention. This body will improve coherence and coordination, rationalization of the various parts of UNFCCC funding, mobilization of resources, and MRV of financial flows. In addition, the review of the GEF’s work programme in Cancun notes that GEF and AF activities must now be reviewed and reconsidered in light of the new fund. This will review will report in COP17. In the interim period before the new fund is established, however, governments have called for increased donations to the Least Developed Countries Fund (LDCF) and Special Climate Change Fund (SCCF) managed by the GEF.
REDD+
• The Cancun Agreement establishes a formal REDD mechanism, including readiness, pilot and results-based phases. Eligible activities are reducing emissions from deforestation and forest degradation, conservation of forest carbon stocks, sustainable management of forests, and enhancement of forest carbon stocks.
• The mechanism requests parties to develop a national strategy/plan, a national emission/forest reference emission level (of subnational on an interim basis), a robust national system for measurement, reporting and verification of actions (including at the subnational on an interim basis if needed), and a system for monitoring and reporting compliance with safeguards (elaborated in an annex to the Cancun decisions).
• The mechanism acknowledges that the readiness and pilot phases require significant capacity building and technical assistance. In terms of long-term, results-based performance, the agreement requests negotiations to continue on possible forms of results-based payments (i.e. public or private/market-based).
• The agreement does not specifically make reference to the interim REDD+ partnership or institutions; however, it calls on relevant international organizations and multilateral and bilateral channels to support the mechanism.

Technology
• The Cancun Agreement decided to formally establish a Technology Mechanism under the Convention. The mechanism will have three components: 1) Technology Executive Committee (TEC); 2) Climate Technology Centre (CTC); and 3) Climate Technology Network (CTN). The TEC replaces the Expert Group on Technology Transfer under the Convention from 2011.
• To note are the similarities between the technology and adaptation mechanisms, both composed of a committee, an international centre and networks at national and regional levels.
• In 2011, the TEC will design the CTC and CTN, as well as determine the criteria for selecting the host of the CTC. The TEC will include observer organizations and key resource people/organizations in this work, as is the case with the EGTT.
• The remit of the Technology Mechanism as a whole is extremely large, including R&D, deployment and diffusion or soft and hard technologies, national systems of innovation, development of technology action plans, and technical assistance. Intellectual Property is not referenced in the text.
• Within this, the CTC will focus on technology needs assessments, information provision, trainings, building capacity for countries take make informed technology choices, encourage collaboration with relevant stakeholders and institutions at all levels, and facilitate the network of organizations, institutions, and centres.
• The TEC, CTC, and CTN will report to the COP individually on an interim basis until the relationship between them is fully elaborated.
• Negotiations will continue in 2011, alongside the new TEC, to further articulate the remaining details of the mechanism, including the process for selection the host of the CTC, which could be a combination of UN agencies, including UNDP. The World Bank and the GEF have also informally expressed interest in hosting/supporting the centre.

The existing technology transfer work under the UNFCCC—mainly through the GEF—will now be reviewed with a view to harmonizing work between the new mechanism and GEF programming. This discussion will report at COP17. Parties decided that the GEF will not provide interim CTC functions, as the GEF had originally proposed. Indeed the newly proposed technology mechanism goes far beyond addressing global environmental benefits, the mandate of the GEF.
Capacity Building
• The Cancun decisions reaffirm that capacity-building is essential to enable developing countries to participate fully in addressing the climate change challenges.
• The agreement acknowledged that “capacity building is cross-cutting in nature and an integral part of enhanced action on mitigation, adaptation, technology development and transfer, and access to financial resources.” Importantly, this provided some clarification on the relationship between capacity building and other thematic areas. UNDP has been strongly arguing that capacity building was not a standalone activity but needed to be firmly embedded in all mechanisms and processes under the Convention.
• The package also includes text on the nature of reporting on capacity building support and activities. Parties agreed that developed countries would continue to list information on the capacity building support they have provided through their national communications and developing country parties will continue to submit information on progress made in enhancing capacity to address climate change in their national communications. Both developed and developing countries parties are also invited to submit this information to other channels, including submissions to the UNFCCC.
• The text requests that parties consider further ways to enhance the monitoring and review of effectiveness of capacity building. While some parties argued that indicators are essential for ensuring the effective implementation of capacity building measures, others requested further clarification on how such indicators could be developed and utilized effectively. To note in this regard: in August 2010 UNDP hosted, as the request of governments, a side event on its experiences in capacity building and monitoring of capacity building activities. The background paper for this side event is available.

• Throughout the discussions there were divisions on the potential for capacity building support to be increased. Developing country parties argued that the text should call for an increase in support for capacity building activities from the Global Environment Facility. Many developed country parties stated that this increase in support is already available to countries because developing countries may prioritize capacity building projects they wish to undertake through the GEF. There has also been much discussion about how capacity building funding will be represented in the Green Climate Fund; this will be elaborated by the fund’s transitional design committee in 2011.
• In the capacity building discussions under the Kyoto Protocol, capacity building for CDM projects, particularly in Africa was emphasized. UNDP, among other international partners, was requested to continue enhancing and coordinating their capacity-building activities under the Nairobi Framework.