Climate change talks and DE: a rare opportunity for consensus

What is the role of decentralized energy (DE) in the current debate and international negotiations on climate change? Fresh back from Bali, Jeff Bell argues that DE is perhaps the only approach that offers the potential for reaching a mutually satisfactory consensus for all the parties involved.

Between 3 and 15 December 2007 more then 10,000 delegates met on the Indonesian island of Bali to try to come to some agreement for a realistic way to deal with the problem of climate change à‚— a problem officially recognized by the great majority of the countries in the world. The meeting marked the 13th time the members of the United Nations Framework Convention on Climate Change (UNFCCC) treaty have come together to negotiate a universally acceptable way to approach the problem. The issues at hand were extraordinarily complex and progress towards a solution that would be acceptable to everyone was understandably slow.

The Bali Action Plan was the result of laborious and passionate negotiations
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It is not difficult to see why moving forward on this issue is so difficult and progress so time-consuming. Even getting two friends to agree on a solution can be painfully difficult if there are differences in priorities, information or opinion. In Bali there were representatives from over 190 countries, speaking a similar number of languages; each nation had its own vested interests.

On the table was everything from forest practices and nuclear energy to trade ramifications and climate science. To muddy the waters further, many uncertainties remain surrounding the scope of the problem and the appropriateness of the various solutions being proposed.

One solution that surfaced repeatedly at the meeting, and indeed is often cited in the larger climate change debate, is decentralized energy (DE). Because DE focuses on renewables and vastly increasing the efficiency of fossil-fired generation, it is widely viewed as one means of reducing greenhouse gas emissions.

Outcome of the meeting

The Bali conference received considerable international media attention and some viewed the summit as the most significant climate change meeting since Kyoto in 1997. The resultant five page ‘Bali Action Plan’1 was the result of laborious and passionate negotiations. The main consensus outlined in the document is to finalize a new agreement to replace Kyoto in 2012 prior to the conclusion of the COP15 meeting to be held in Copenhagen in 2009. Several clauses in the agreement are directly relevant to DE. All of the key points will have important ramifications for DE markets including the call for an increased emphasis on adaptation to climate change, a call for accelerated technology transfer and a plea for improved financing mechanisms aimed at mitigation and adaptation. More specific clauses which could be a boon to DE markets include the call for a sector-based approach, a requirement for economic diversification and the need to consider ‘ways to accelerate deployment, diffusion and transfer of affordable environmentally sound technologies’.

Background to climate negotiations

The UNFCCC is not a climate change treaty that prescribes specific actions, but rather an agreement to come to an agreement à‚— a way of ensuring that all nations are engaged in the discussion. The basic premise is that by signing up to the UNFCCC a country recognizes the problem of climate change and agrees to explore ways of addressing the problem. 190 countries in the world have signed the UNFCCC treaty. The source of much of the disagreement one hears about in the media is actually in reference to an amendment to the framework agreement à‚— the Kyoto protocol. The protocol is not so much a treaty about how to reduce emissions, but a treaty which states that emissions be reduced. The controversial part of the protocol is that there are binding emissions targets. Together the parties to the protocol must reduce emissions by 5.2% below 1990 levels by 2012.

The protocol came into force in February 2005, before the 11th conference of parties held in Montreal, Canada. The trigger for the protocol to come into effect was when at least 55 parties ratified the protocol, collectively representing 55% of carbon dioxide emissions from developing countries (called Annex I in the document text). It was therefore with the ratification by Russia that the Kyoto protocol went into effect and it will remain in force until 2012 à‚— after which the UNFCCC process is in doubt.

The Kyoto protocol, as its many critics are quick to point out, is imperfect; however, to date it is the one piece of diplomacy that has resulted in the most concrete action in response to climate change. Most nations that now track the emissions of greenhouse gases and other pollutants will likely cite Kyoto as the inspiration for beginning to track this information. All the developing countries party to the protocol have now submitted four greenhouse gas inventory reports (quantification of sources and sinks) known as ‘National Communications’. In addition 134 developing countries have voluntarily submitted ‘National Communications’. So thanks to Kyoto, baseline information on pollutants, such as greenhouse gases, is much more readily available around the world.

Another success resulting from the Kyoto process has been the creation of various carbon markets with values totalling billions of euros. The biggest of these is the EU Emission trading directive, but there is also the Clean Development Mechanism and the Joint Implementation, as well as a host of smaller trading schemes around the world, such as the Regional Greenhouse Gas Initiative in the north-east of North America, the Australian Carbon Trading Scheme and others.

These initiatives are often criticized and in some cases the criticism is well deserved. The initiatives have, however, already given rise to many positive results. For one, pollution is now a much more common, and increasingly important, factor in general business decisions, especially decisions made by larger businesses. Also, they have helped spur more than 854 concrete projects that, according to UN auditors, will reduce greenhouse gas emissions by 1114 GtCO2 between now and 2012. These accomplishments should appeal to even the harshest Kyoto sceptics.

Much of the momentum that has been created by the realization of the Kyoto protocol is in danger of petering out unless a post-2012 agreement is reached. For example, those organizations that are building businesses around the growing emission trading frameworks are concerned their investments will lose value or their business model will become irrelevant. Mandatory emissions trading markets and voluntary markets, such as those emerging in the United States and elsewhere, have witnessed extraordinary growth in recent years and their continued success may depend on agreements that replace the Kyoto protocol.

Establishing a post-2012 agreement is thus the focus of much of the current international climate change negotiations. At the same time, other points that took a lot of time and resources in order to reach current consensus are in danger of being lost, including the ‘common but differentiated responsibility’ clause,2 or even the binding nature of the agreement.

DE and climate change

At the heart of the climate change negotiations are three issues:

  • gathering scientifically accurate information on the scope of the climate change problem
  • developing realistic ways and frameworks to allow us to mitigate dangerous climate change (reduce GHG emissions)
  • facilitating projects that allow communities to adapt to the expected unavoidable changes in climate.

Climate change is also a debate that involves many sectors, from agriculture and forestry to transportation and energy. Using the jigsaw puzzle analogy, if you look at the portion of the climate change puzzle dealing with energy, decentralized energy is arguably the most important piece. Decentralized energy is especially relevant to the climate change negotiations because it is simultaneously a means of addressing two of the three main issues: mitigating climate change and adapting to climate change.

Decentralized energy is defined as ‘electricity production at or near the point of use, irrespective of size, technology or fuel used à‚— both off-grid and on-grid.’ It includes on-site renewable energy, high-efficiency cogeneration (CHP), and industrial energy recycling and on-site power. DE, in all its forms, is therefore a much cleaner way of generating electricity and thus a great way of reducing greenhouse gas emissions.

DE is also a means of helping communities adapt to climate change. According to the UN appointed Intergovernmental Panel on Climate Change (a group of the top climate scientists selected by each member nation), climate change will likely result in a greater number and severity of storms. Because decentralized energy, by definition, uses technology that generates power on site, it removes considerable pressure from the most brittle part of the electrical system: the wires.

DE, in other words, can help areas with a well-developed grid or areas that are becoming electrified for the first time to become more resilient by reducing the area’s dependence on wires à‚— the part of the system most likely to be damaged by severe weather. DE also helps adaptation because it reduces the reliance on fuel supply chains that are often interrupted as a result of severe weather.

Not only is DE an ideal technical solution to climate change mitigation and adaptation, but it is also a solution that is very politically attractive for various reasons. All of the parties to the UNFCCC, including those who have been most vocal in their objections to a post-2012 solution, have a domestic (if burgeoning) DE industry which, if developed, could contribute to economic growth. The USA, for example, has traditionally opposed Kyoto and obstructed any climate change agreements with binding targets on the grounds that such an approach has negative economic implications.

The concern is that if, for example, the US steel industry was forced to reduce emissions then steel manufacturers in other jurisdictions without carbon constraints (India and China are most often cited) would gain a competitive advantage at the expense of US manufacturing jobs. Other nations have cited similar apprehensions.

Promoting DE as a climate change solution neatly sidesteps these objections. For example, if the United States aggressively supported energy recycling technology (such as capturing waste heat for power generation) in the steel industry, it could simultaneously reduce emissions and develop a valuable product for export (waste heat-to-power technology and expertise), all while developing and diversifying the domestic steel market and building employment opportunities.

An agreement stating that a certain percentage of new demand for power must be met using decentralized technology (a form of binding target) is likely to be politically palatable to the EU and developing nations, as well as those parties who have traditionally opposed binding targets. Why? Because all of these nations are currently home to an emerging DE industryà‚ and thus all regions stand to gain economically even as emissions are reduced. In short, a global ‘cogeneration directive’ (analogous to the EU initiative) or ‘clean energy standard’ (analogous to many North American initiatives that require a certain percentage of demand or supply to be from DE) could appeal to negotiation groups that have traditionally been opposed to one another.

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Put another way, DE provides a common ground where the differing diplomatic goals of the various negotiation blocks can be moved forward in a mutually beneficial way. Table 1 on page 32 summarizes the typical negotiation positions of various member parties of the UNFCCC and how DE can help advance their position.

DE and current negotiations

So if DE is such a great way of making everyone happy, what is its role in the current climate change negotiations? In short, it appears frequently in the literature of many of the negotiating parties and also in the recommendations of the multitudes of non-government and environmental groups that have been observing, criticizing and advising the various parties. To date, it is very rarely espoused as a single approach; rather the various technologies employed within DE are promoted separately.

Documents call for more cogeneration, for example, or more energy efficiency or more renewables, but not for more ‘decentralized energy’. But there are some indications that this may be changing. Negotiating parties may begin to recognize the common traits of the various technologies in the DE portfolio and begin to talk about DE as a distinct but complementary approach to ‘renewables’ or ‘efficiency’. In short there are some emerging clues that DE may be surfacing into the lexicon in which the negotiations swim. The three most convincing pieces of evidence in support of this hypothesis come from very different places.

IPCC recognizes DE

The IPCC (Intergovernmental Panel on Climate Change) in its recent Fourth Assessment Report from Working Group III (which assesses the practicality of various climate change mitigation approaches) has sections on ‘renewables’ and ‘cogeneration’, but also ‘decentralized energy’. Indeed the chair of the working group spoke on the decentralized energy panel that was recently organized by the World Alliance for Decentralized Energy at the Bali meeting (see the WADE information on pages 83à‚—85 for more).

Dr Bert Metz highlighted the climate change mitigation potential of decentralized energy, alongside other panellists who stressed the growing role of DE. The fact that ‘decentralized energy’ is now on the list of climate change mitigation strategies espoused by the IPCC should not be overlooked.

Establishment of the Asiaà‚—Pacific partnership

Another emergent fact that suggests DE may be becoming mainstream jargon arises in the main forum of negotiation outside the UNFCCC. The Asiaà‚—Pacific Partnership on Clean Development and Climate is an initiative that was launched by six major world economies. Together Australia, India, Japan, China, South Korea, and the United States and Canada (which joined later) account for more than 50% of the world’s greenhouse gas emissions, energy consumption, GDP and population. Officially the Partnership is designed to complement the UNFCCC process, although some commentators have publicly expressed doubts about this.

Either way, one of the eight ‘task forces’ that has been formed under the auspices of the partnership is ‘renewable energy and distributed generation’. This shows that partner nations recognize ‘distributed generation’ (a synonym for DE) as a key area with potential.

Renewed focus on sectoral approach

The last clue suggesting DE may be emerging as an important area of consensus is the increasing prominence of a ‘sectoral approach’ within the UNFCCC process. Basing post-2012 agreements, at least partially, on an approach whereby emission cuts are tied to economic sectors rather than geographic regions is a tactic that enjoyed increased interest in Bali and is likely to rise on the agenda as negotiations go forward. Item 1.(b)(iv) of the Bali Action Plan specifically calls for ‘consideration of cooperative sectoral approaches and sector-specific actions’ as the negotiations proceed. Such a sectoral approach opens the door for DE because, no matter which sector one talks about,à‚ DE can play an important part in reducing emissions in thatà‚ sector.

For example, in the forestry sector, using the by-products of forestry to generate power rather than simply burning themà‚ can help reduce emissions. Taking the building sector as another example, replacing heat-only boilers or air conditioners with CHP systems can reduceà‚ emissions. In heavy industry too, including DE can play an important role in minimizing greenhouse gas emissions. For example, in the most energy intensive industries (steel, cement and aluminum) both top and bottom cycle cogeneration technologies can turn heat that would otherwise be wasted to good use à‚— thus reducing emissions.

The climate change challenge is often framed in the context of ‘stabilization wedges’ meaning that no one solution will, by itself, reduce pollution by sufficient amounts to solve the problem. This is a useful way of looking at the problem and it is true that a diversity of solutions should be adopted simultaneously. DE can make a significant contribution to reducing emissions in most ‘wedges’ that have been proposed.

DE is gaining traction

At Bali there was some evidence that DE is gaining impetus as an important part of the solution. But whereas the nuclear lobby and the coal lobby, for example, are very well funded and have a strong united voice at the negotiating table, the DE lobby has tended to be underfunded and represented by a mixture of unco-ordinated players. Because technologies in the DE portfolio are so diverse they do not lend themselves as easily to promotion with a unified voice. Also DE has not yet enjoyed the endorsement of the IPCC in the same way as carbon capture and storage (CCS).

The CCS mitigation approach, which basically involves capturing greenhouse gases at their source and burying the gases underground, has benefited from a 2005 special report on the issue, authored by the IPCC. Partially as a result, CSS was high on the international agenda and was repeatedly emphasized as a realistic approach which should be embraced by the international community despite the fact that the technology is not yet economic. DE markets could certainly benefit from a similar special report authored by the IPCC.

The fact that many DE technologies (especially fossil fuel-fired engine-based cogeneration systems) are already extremely cost-effective would likely mean that such a report would raise the profile of DE sufficiently to translate into significant capacity of actual projects.

Although a disproportionate section of the debate time at Bali was used to espouse CSS or nuclear energy, a diversity of groups alluded to DE technologies in their position statements. Groups as diverse as the World Alliance for Decentralized Energy, The International Energy Agency, Greenpeace International, The World Wind Energy Council, the Businessà‚ Council for Sustainable Energy, Climate Action Network International, the European Renewable Energy Council, ICLEIà‚ à‚— Local Governments for Sustainability, the International Gas Union, Practical Action and the Energy and Resources Institute, and the Women in Europe for a Common Future all demanded DE as part of the solution in one way orà‚ another.

DE was, in turn, called the ‘most cost-effective solution’, the ‘most realistic solution’, the ‘safest and most secure solution’ and the ‘democratic’ solution.


During 2007, leading up to Bali, climate change rose up the international agenda. Europe announced that it would aim to reduce its emissions unilaterally by 20% below 1990 levels by 2020 à‚— 30% if other industrialized nations join. The US president organized and hosted a major international climate summit showing that America is, once again, willing to engage in the climate change debate. The IPCC released its Fourth Assessment Report: Climate Change 2007, which concluded, in language more certain than ever, that climate change is both a real danger and is the result, at least in part, of human activities. The IPCC was subsequently awarded the Nobel Peace Prize for its efforts (shared with Al Gore).

The profile of DE was similarly raised in 2007 with various major governments around the word championing the approach, including the US government, the Thai Government, the UK government and the Chinese government as well as the EU. As we move forward neither climate change nor DE is likely to lose ground on international political agendas.

As the international negotiations lead us to Copenhagen in 2009 (via Poznan in 2008), the issues at hand are unlikely to become any less complex and solutions any less clear. DE however may just offer one option that is unlikely to leave an unpleasant taste in anyone’s mouth.

Jeff Bell is Program Director with the World Alliance for Decentralized Energy (WADE), based in Edmonton, Alberta, Canada.



2. The differentiated responsibility clause states developed nations have the most responsibility to reduce emissions (because on a per capita basis they are responsible for a much higher proportion of the emissions both historically and currently), but all nations must play an active part depending on their capacity.

Climate change a distraction?

Despite there being a great degree of consensus in the scientific community that climate change is a real problem, one still comes across a surprisingly large number of cases in the popular media of those who remain sceptical. Arguably the whole debate of whether or not climate change is caused by humans is a distraction. There are numerous arguments for moving towards a less carbon intensive energy system, even if one ignores the climate destabilizing effects of greenhouse gases. That there is a near-perfect correlation between reducing greenhouse gases and general reduction of air and water pollution is one such argument.

Wherever fossil fuels are used for transportation, for fuel or to generate electricity a wide array of air pollutants are a natural by-product of the combustion process. Therefore measures aimed at reducing ‘carbon’ will also have the added benefit of reducing pollutants such as mercury, acid rain or ground-level ozone. Policies aimed at decreasing carbon emissions in the power sector will also result in reduced import dependency, reduced vulnerability to price fluctuations and more.

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