The Asia-Pacific Partnership on Clean Development and Climate (APP), a relatively young international initiative established alongside the UN Framework Convention on Climate Change, was first covered by COSPP in the May–June 2007 issue. Here, Christoph Holtwisch takes a second look at the Partnership and the likelihood of its stimulating new distributed generation capacity.

The Asia-Pacific Partnership on Clean Development and Climate (APP or AP6) is a very new phenomenon in international climate policy with important effects on the traditional climate regime formed by the UN Framework Convention on Climate Change (FCCC) and its Kyoto Protocol (KP) and likely impacts on the development and transfer of distributed generation (DG) technologies. In its own view, the APP is a grouping of key nations to address serious and long-term challenges, including anthropogenic climate change.

APP partners Australia, China, India, Japan, South Korea and the US represent roughly half the world economy and population, energy consumption and global greenhouse gas emissions (see Figure 1). For that reason, this ‘coalition of the emitting’ is – and will be – a central factor in international climate policy.

Figure 1. APP states and their (projected) global greenhouse gas emissions
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Development and enlargement of the APP

After secret negotiations, the APP was announced on 28 July 2005 at an Association of South East Asian Nations (ASEAN) regional forum in Vientiane in Laos by a Vision Statement which is now an integral part of the APP Charter. The official creation of the APP happened at an inaugural ministerial meeting on 12 January 2006 in Sydney, Australia, by the Charter, accompanied by a Communique and a Work Plan.

The second meeting of the Policy and Implementation Committee (PIC) of the APP took place from 18 to 21 April 2006 in Berkeley, California, and produced Guidelines for the Task Forces of the APP and for their Action Plans. At the third PIC meeting in Jeju in Korea from 11–13 October 2006, additional Guidelines for flagship projects were made and the Action Plans developed by the Task Forces were accepted by the PIC. On 4 April 2007, a further Guidance to the Task Forces and a Procedure for adding new projects to the APP were published.

The fourth PIC meeting took place in Tokyo, Japan, on 19 and 20 July 2007. It produced the Forms for project registration and status report already foreseen in the Procedure and the Guidance.

The second ministerial meeting of the APP took place in New Delhi, India, on 15 October – an event at which Canada’s joining of the partnership was announced (Canada was an observer at the fourth PIC meeting and stated its interest in joining at that point). It has also been suggested that New Zealand, Mexico and some ASEAN states could join in the future. The EU could be a potential technology partner in the future too, but it has been more sceptical towards the APP because of the dubious position of this agreement towards the Kyoto Protocol.

Character, aims and potential of the Partnership

The APP forms a non-legally binding political soft law regime. This is stated expressly and indicated by terms like ‘compact’ (instead of treaty), ‘partners’ (rather than parties) and ‘nations’ (instead of states). Therefore, participation in the APP is on a totally voluntary basis. Nevertheless, the APP should not be underestimated because, in the end, political obligations are crucial even in international law that does not contain effective enforcement. While the Vision Statement uses the misleading expression ‘non-binding’, which led to criticism, the Charter prefers the term ‘non-legally binding’, which indicates clearly that the APP is meant to be politically binding. Surprisingly, the Charter tries to look like an international law treaty, which is one reason why it is overestimated by some observers.

The APP follows the ideal of sustainable development with interlinked environmental, economical and social sub-aims. It contains the first connection of climate protection and energy security in an international agreement. The APP recognizes that renewable energy and nuclear power will represent an increasing share of global energy supply, but stresses that fossil fuels underpin their economies now and for the foreseeable future. The continued economic use of (cleaner) fossil fuels is consequently at the core of the APP policy. Therefore critics view it as purely a coal pact. This is too simple, but, without doubt, the technology of carbon capture and storage (CCS) is one of the central technological options for the APP.

Instead of reducing absolute greenhouse gas emissions, the APP only intends to limit the greenhouse gas intensities of economic activities which would lead only to relative emission reductions (compared to a reference case). This plan is an important difference towards the cap and trade architecture of the KP and much less ambitious than it. Even in the best case scenario – a global use of the APP approach with CCS – absolute greenhouse gas emissions would more or less double from now to 2050 (see Figure 2). Therefore, the APP ideas are clearly not enough to respond to climate change, but, nonetheless, they may play some role in dealing with this challenge.

Figure 2. Prognostic development of greenhouse gas emissions with and without APP scenarios
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Purposes and financing

The APP is meant to serve as a framework for an international co-operation between its partners and for the co-ordination of their national strategies (with the use of capacity-building). At its core, the APP is an agreement for the development and transfer of environmentally sound technologies. Economic freedom (with its legal and political aspects) is important for this as an enabling environment, so the APP contains an institutional dimension as well. The technology co-operation builds on a great number of existing bi- and multilateral political initiatives like the Methane to Markets Partnership and the Carbon Sequestration Leadership Forum, which are – like the APP – parallel tracks to the traditional climate regime. As the APP is not limited to special technologies (like distributed generation, or DG), it has the potential to build up as a future framework for these initiatives.

Having in mind the different national laws regarding intellectual property of technologies, all these matters are to be addressed on a case-by-case basis. Generally, the financing of the technology development and transfer will be the crucial point for the APP. The financial contributions of the APP partners are very limited and vague. For that reason, the inclusion of the private sector is fundamental for APP activities, or, as one spokesman said: ‘The real dollars we are looking for are the private sector dollars. We are talking tens of billions of dollars if not hundreds of billions of dollars. If we don’t get the investment sector, we can’t succeed.’

APP and DG

The first Work Plan of the APP focuses on power generation and distribution, as well as key industries. Eight temporary public-private Task Forces have been established in addition to the perm-anent political PIC and its Administrative Support Group (ASG):

  • Cleaner fossil energy (CFE)
  • Renewable energy and distributed generation (RDG)
  • Power generation and transmission (PGT)
  • Steel (STF)
  • Aluminium (ATF)
  • Cement (CMT)
  • Coal mining (CM)
  • Buildings and appliances (BATF).

The RDG Task Force is co-lead by Korea (Kijune Kim, Ministry of Commerce, Industry and Energy) and Australia (Gerry Morvell, Department of the Environment and Water Resources). The Action Plans developed by the Task Forces and the different projects contained in it were accepted by the PIC at its third meeting in October 2006. In May and July 2007, the PIC endorsed a small number of new projects for some of the Task Forces with the RDG Task Force being the first one to reach this point of implementation. Figure 3 shows the institutions of the APP and their inter-relationships.

Figure 3. The institutions of the APP and their inter-relationships
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The article by Thompson and Neuhoff in the May–June 2007 issue of COSPP introduced the RDG Task Force and its 24 projects of October 2006. The three new Australian project proposals were accepted at the third Task Force meeting in San Diego, California, in March 2007. They deal with design and development of a solar biomass hybrid cooling and power generation system (project 25), a fully integrated process for biodiesel production from microalgae in saline water (project 26), and new generation small wind turbines for remote power systems and grid connection (project 27). The majority of projects are lead by Australia or the US, and most of them will be implemented in China or India. The APP homepage contains a lot of further details on all projects of the RDG Task Force:

At its last meeting, the Task Force identified issues for focused attention too, including tariff reduction, intellectual property and – interestingly – commonality of framework for any future emission trading regime.

However, this Task Force is just one out of eight, and DG is a sub-topic of it only. The RDG Task Force summarized the role of DG as ‘a model that can significantly reduce emissions and promote greater cost efficiencies, as well as respond to the demographics of energy poverty, thereby increasing access to modern energy services’. According to the Work Plan, DG technologies are ‘ideally suited to mid-sized and smaller scale applications’. As such, even if it is impossible at this stage to predict the extent of future APP investment in these technologies, DG is indeed – as Thompson and Neuhoff state – a ‘key aspect to implementation’ of the APP with a ‘critical role’ among all Task Forces. This is particularly the case because DG offers many possibilities for synergistic cross-Task Force efforts.

Nevertheless, DG is definitely not at the heart of the APP because the focus of the APP is on the continued economic use of (cleaner) fossil fuels by using CCS technologies. DG is much less important and no more than part of a collection of other additional technological options.

APP and traditional climate action regime

While FCCC and KP are established regimes, the APP is a new parallel track. Officially, the APP is meant to be consistent with the principles of the FCCC and intended to complement but not replace the KP. Indeed, the APP is fully consistent with the FCCC principles, but the position towards the KP is more dubious. To be a complement, the FCCC must be the joint focal point of KP and APP, and also the latter must go beyond what is foreseen already in the FCCC. Therefore, the technology development and transfer rules of the APP must go clearly beyond the comparable FCCC norms.

Technology plays an important role in the FCCC, and there exists a special technology ‘framework’ dealing with the topic in a similar way to the APP and with many more projects. The APP is only one of the technological ‘partnerships’ foreseen as a component of this framework. As such, it does not have the potential to go beyond the FCCC and complement the KP. This is also the case regarding DG, which is addressed in the traditional climate regime as well.

Figure 4 depicts the schedule of activities of both the FCC and APP initiatives.

Figure 4 Technology development and transfer within and outside the FCCC in comparison
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But is the APP intended to replace the KP? Some statements of its representatives and also the timing of its meetings – mostly a few months before the FCCC/KP meetings – give this impression. It seems likely that the APP was set up as a competitive regime to the KP because the KP contains legally binding emission commitments which the APP partners oppose now (the US and Australia) or for the future (China, India, Korea and, maybe, Japan). The opposition towards the KP means that the US and Australia cannot use the flexible mechanisms of the KP, which allows additional technology transfer to developing countries (clean development mechanism) and transformation states (joint implementation).

Therefore, while the US and Australia oppose the KP and view the APP as an alternative to it, for China, India and Korea, it is a complement regarding technology transfer combined with an argument against future emission commitments. Japan simply widens its future political options with the APP. Overall, the APP is at least in great parts and for the future an opposing model against the central ideas of the KP – so far, it is intended to replace it.

The KP in its present form will expire in 2012. This leads to the question of whether the APP could be integrated into the steadily developing traditional climate regime after that. Because of the opposition towards the KP, such integration is conceivable only under the FCCC framework. Since the creation of the APP, the FCCC stressed its openness towards technology-orientated concepts, and the importance of such international partnerships was also mentioned at the Heiligendamm G8-summit in Germany, 6–8 June 2007. Nevertheless, a formal integration via a new technology protocol or a second technology decision is very unlikely because the first alternative would lead to a legally binding APP (against the declared will of its partners) and the second – non-legally binding – alternative would install parallel procedures and institutions to the existing technology framework (which would undermine it against the will of the other FCCC parties).

Therefore, only a non-formal integration is a realistic option which could lead to a fragmented but synergic ‘orchestra of treaties’ with a fruitful co-operation between the traditional climate regime and the APP – as regards DG too. To avoid the destructive potential of the APP, a peaceful coexistence is necessary at least.

Such a co-operation or coexistence is important because every technology-orientated approach needs market incentives for the development and transfer of technology. It may be an inconvenient truth, but these can be created only by external emission commitments (or other market mechanisms) if the internal financing of the APP cannot be strengthened by an extraordinary amount. International climate policy has to deal with the difficult task of combining the competing approaches of market pull (KP) and technology push (APP). Technology is an important – but only one – component in a portfolio of measures against climate change.

Nonetheless, we should be optimists like Sir Nicholas Stern, the economist who published a famous review report on climate change. He imagines ‘a real festival of technology, fired by constantly stricter commitments’. Beyond cleaner fossil energy with CCS, DG could be one of the most important technology options for that. Therefore, the APP could be a new vehicle for promoting DG development and transfer. The APP, however, has to clarify further the role it wants to play in this future – internally and externally.

Dr. Christoph Holtwisch is a lawyer and environmental manager. He is also a lecturer at the Fraunhofer Institute UMSICHT, Oberhausen, Germany.