A Train to Paris: Liability and Compensation Concerns for the 2015 Climate Agreement

by M. Hafijul Islam Khan (ELP 2011), Bangladesh and Ms. Sharaban T. Zaman - working with Centre for Climate Justice-Bangladesh (CCJ-B) and involved with climate negotiations

Image iconkhan1-300x300_2.jpgIn response to growing concerns about climate change, the global community adopted the UN Framework Convention on Climate Change (UNFCCC) in 1992. The Kyoto Protocol (KP) was adopted five years later in 1997 at the third Conference of the Parties (COP 3), with legal commitments for mitigation and an agreement for a five-year commitment period from 2008 to 2012 to meet the mitigation commitments. Negotiations for a second commitment period of the KP ended in 2012 with an agreement for an eight-year commitment period which is rife with political and legal challenges. On the other hand, the Bali Action Plan (BAP) adopted at COP 13 in 2007, ended without any agreed outcomes. However, it influenced the launch of a new process at COP 17 to negotiate a new agreement to be adopted at COP 21 in 2015 in Paris.

The road to Paris is quickly coming to an end with upcoming mandates to adopt an agreement by December 2015. The agreement may be adopted in various forms including a protocol, another legal instrument or an agreed outcome with legal force. In the absence of a predetermined specific legal form of the proposed agreement, parties of UNFCCC agreed on a draft text at COP 20 in Lima in 2014. The draft will be negotiated further throughout the year and an agreement will be made in December 2015 in Paris. This article particularly examines the negotiating text related to loss and damage associated with climate impacts and looks at the liability and compensation tension for the 2015 agreement.

The midnight negotiation of an extended day at the COP 20, with the collaborative efforts of Least Development Countries (LDCs), Association of Small Island Countries (AOSIS) and the African Group made it possible to bring the issue of loss and damage into the preamble of the COP 20 decision. Throughout the discussions, several groups proposed that adaptation by itself and loss and damage related to climate change should be two separate streams for negotiation, highlighting the limits of adaptation. However, others, particularly developed countries, pushed to incorporate adaptation as a negotiation stream without loss and damage in reference to the decision of COP 17. At the end, the Lima negotiating text incorporated two paragraphs on loss and damage within the Element Number E for adaptation and loss and damages (loss and damage is within brackets), and a number of proposals from different countries are included thereby.

A number of opinions and positions emerged from these different proposals of the Lima text, such as: mitigation and adaptation will not be sufficient to address all losses and damages and hence there is a need for a separate stream for loss and damage; need for establishment of a compensation regime; reference to the Warsaw International Mechanism (WIM) for loss and damage; reference to loss and damage is not necessary; WIM can serve under the new agreement with additional modalities that should be agreed upon; no institutional arrangement necessary for loss and damage; and WIM to be strengthened separately from the agreement.

The Lima negotiating text was further discussed in Geneva in February 2015 and Parties of the UNFCCC provided new proposals, including additional views on loss and damage along with other elements of the text. In the Geneva text, an introductory paragraph was proposed to acknowledge that loss and damage is the result of inadequate mitigation and adaptation. This provided arguments supporting the need of a separate financial stream for loss and damage beyond adaptation. More controversially, proposals were made to establish a compensation regime by the governing body of new agreement or by the WIM, or to establish a financial technical panel under WIM. Another suggestion was for an additional international mechanism to address loss and damage specifically, which would be defined under a new protocol and would also be subject to authority and guidance of a governing body under the new protocol. There are three main challenges involved with negotiating loss and damage in the new agreement: establishing a separate stream for loss and damage beyond adaptation, establishing a compensation regime, and anchoring the WIM into a new agreement with modalities and procedures for further development.

Image iconLima-text-discussion-in-Geneva-session-Photo-Credit-Sharaban-T.-Zaman-300x125_2.png Lima text discussion in Geneva session. Photo Credit - Sharaban T. Zaman

Recognizing loss and damage with the compensation and liability approach in the new agreement is primarily important for developing countries. However developed countries have been clear in their disassociation with the item of loss and damage, which pertains to compensation and liability. It’s worth mentioning that an effort to establish a compensation approach to climate policy was taken by AOSIS prior to the adoption of the UNFCCC and this was not incorporated into the UNFCCC adopted in 1992. However, the negotiation for a new climate agreement to be adopted in Paris provides an opportunity to advance the issue of loss and damage as a third pillar of the climate regime through establishing a liability and compensation mechanism. So, the authors, who are involved with climate negotiations as a core team member of LDCs climate negotiator group and with an observer status with the Legal Response Initiative (LRI), an NGO based in UK respectively, suggest building a common position within the G-77 and China negotiation block in order to successfully establish a liability and compensation regime in the Paris Agreement.

Moreover, coordinated efforts, particularly from LDCs, AOSIS and other vulnerable states such as African countries are needed throughout the year to articulate their proposals regarding a compensation regime in the negotiating text, particularly in upcoming negotiating sessions. The train carrying the negotiation text of the Paris Agreement, stopped in Geneva in February, and is now moving towards the Bonn session to be held in June. The modified text from June session will move to upcoming August and October sessions accordingly, and finally it will reach to Paris in December of 2015. The liability and compensation approach for loss and damage is a crucial issue for the 2015 climate agreement. LDCs, AOSIS and the African countries need to start their coordinated journey towards Paris for establishing a compensation regime for loss and damage.