Finance and how to address loss and damage from the impacts of climate change in vulnerable developing countries look set to dominate the UN Climate Summit which starts today, according to global professional services consultancy PwC.

An advance briefing by PwC's Climate Change team previewing the key areas likely to be high on the agenda at the 12 day COP19 conference in Warsaw, said that while the science called for urgent action on climate change, urgency was not a trademark of the climate talks. however, the terrible events now taking place in the Phillippines which has provoked public debate about the role of climate change in the disaster, may concentrate minds on the urgency of the issue.

Having agreed to extend the Kyoto Protocol to 2020 at COP18 in Doha, participating governments are expected to start the negotiations of a successor treaty in earnest at COP19 in Warsaw. PwC said given the formal deadline for the negotiations is not until 2015, the question was how much could be expected from the discussions.

Low expectations for meaningful progress?

According to PwC, discussion earlier this year covered finance, ambition, equity and nearly came unstuck over UN procedure, so there are low expectations for meaningful progress. This may be an over-cautious view - the summit follows the publication of the Intergovernmental Panel on Climate Change’s (IPCC) latest report which showed that it will only be possible to avoid the worst climate impacts if substantial and sustained action starts now. 

PwC’s Low Carbon Economy Index shows that on current trends, the two degree global carbon budget will be exhausted by 2034 unless significant action is taken by countries. The key question is whether negotiators recognise that the countdown to agree a deal at COP21 in Paris has started or will the talks merely serve as a staging post for further talks. PwC said a number of issues are likely to drive discussion in Warsaw, including finance, loss and damage, the Durban Platform for Enhanced Action and procedural issues.

Heated negotiations likely on climate finance

In PwC's view finance is likely to continue to be one of the most heated parts of the negotiations. Developing countries are seeking a clear timetable for the capitalisation of the Green Climate Fund which could mobilise much of the $100bn by 2020. An expert group on finance is expected to report back to the COP on work this year to identify sources of funding which could include levies on carbon markets or new taxes in developed countries.

However, so far only the United Kingdom, Norway and the EU have committed resources to the fund. Others are demanding greater detail on how the money will be spent before sending money to a new UN fund. This includes the balance between adaptation and mitigation, how results will be measured, and the conditions and eligibility for accessing the fund.

Allowing a wide range of institutions, particularly from developing countries, to access the fund will be important to support the implementation of policies and programmes which catalyse low carbon and climate resilient investment. PwC said that finding effective ways to harness the expertise of the private sector would also be critical for establishing and operating the private sector facility of the fund.

Mechanism needed to address loss and damage from climate change impacts

Equity is an on-going topic in the international climate negotiations and this year’s talks are likely to continue the debate on the subject. In Doha, there was an agreement to explore a mechanism or institutional arrangement to address loss and damage associated with the impacts of climate change in vulnerable developing countries.

Developing countries will be looking to advance this discussion in Warsaw, including how such a mechanism would be financed. Vulnerability to the impacts of climate change is not only a genuine concern for the poorest and most vulnerable countries, it also puts the spotlight on the resilience and vulnerability of businesses operations and supply chains.

Durban Platform for Enhanced Action - arguing over the detail?

The Durban Platform for Enhanced Action is where the 2015 deal will be thrashed out. These talks are divided into two workstreams. The first is focused on the elements of a post-2020 framework for agreement by 2015, and the second is looking at how to increase ambition in the short term and bridge the gap between current pledges and what is needed to keep the two degree pathway feasible.

The process for reviewing national pledges is likely to be a key feature of Workstream 1. There is debate about whether it is sufficient for countries to make a simple emissions pledge or if there should also be an opportunity for countries and others to review and comment on those pledges.

Some Parties insist this should only be a one-step ‘pledge’, others are calling for a two-step ‘pledge and review’ process. Any one-off or periodic review of pledges is likely to raise further questions around the inclusivity and transparency of the review process, and how countries would be expected or required to respond to challenge. Creating the political space for greater ambition pre-2020 under Workstream 2 will be a key focus for developing countries, with submissions from Least Developed Countries Group and the Alliance of Small Island States calling for enhanced mitigation targets in the short term.

Procedural matters –will Russia delay progress?

The notion of consensus in the UNFCCC decision-making process has been interpreted in many ways leading to uncertainties, controversies and one or two setbacks in the negotiations over the last few years. Russia felt it had been bulldozed by the COP President into surrendering its carbon allowances or ‘right to pollute’ during the previous UNFCCC talks in Doha, Qatar.

At the talks in Bonn in June Russia raised objections to the Convention’s decision-making process and stalled the rest of the discussions in that negotiating session. Ukraine and Belarus supported the protest.

A recent submission by the Russians has reiterated that consensus is not synonymous to unanimity and has called for ‘Decision-making in the UNFCCC process’ to be tabled as a sub-agenda item. Observers will be watching whether Russia seeks to resolve this procedural issue first before allowing progress in other areas of the talks.

Global deal by 2015 will be extremely difficult

Dr Celine Herweijer, partner, PwC sustainability and climate change, and specialist in climate policy and financing, commented:

“Science calls for urgent action on climate change but urgency is not a trademark of the climate talks. A global deal by 2015 will be extremely difficult, given the complexity of so many nations, each with  different priorities, agreeing a common way forward. There are signs that a new approach is emerging however. One in which each country brings forward a national offer rooted in their local context into an international agreement that has legal force. Warsaw will be about testing out this new shape for a global climate deal, one that will hopefully mean that by Paris 2015 countries can reach an agreement and finalise commitments. Critical will be making sure these offers add up to keep climate change below 2C. A warmer world is one we cannot afford to be in.”