To be truly effective, global agreement on mitigation needs to:

• Define the total amount of carbon dioxide equivalent that can be emitted into the atmosphere over time.  In effect this establishes an emissions budget and provides a foundation for each country’s emissions entitlement from within the overall carbon budget. It also provides a firm basis for international trade in entitlements, which would substantially reduce the costs of global mitigation and improve prospects for strong mitigation.
• Recognise it will be impossible to achieve strong mitigation objectives whatever developed countries might do, unless there is an almost immediate slowing of emissions growth in China, followed before too long by slowing in other large developing countries. However, it will be necessary to provide a differentiated set of incentives to encourage widespread participation by developing countries. Otherwise developing countries may weigh the present cost of mitigation more highly than the future gains of avoiding dangerous climate change.  These incentives would need to include funding from developed countries to assist the technological transition and increased minimum levels of expenditure on research, development and commercialisation of low-emissions technologies.

The foundations upon which the United Nations Framework Convention began building an international agreement after Kyoto in 1997 were made all the more complex by the deep flaws that became embedded over time.

First, the artificial segregation of countries into two groups based arbitrarily on levels of economic development in 1992 led to the anomaly that only a small group of ‘developed countries’ were obliged to specify emissions reductions.

Second, these arbitrary classifications became increasingly irrelevant, as rapid industrialisation in major developing countries shifted emissions trends toward the developing world. The shift in emissions was accelerated by the Great Crash of 2008 which pushed geopolitical and economic weight away from the established industrialised economies of the ‘West’ toward China and the large developing countries.

With the long-term consequences of the Great Crash not yet understood and with the formalities of international relations still defined by a long-gone past, the Copenhagen climate change meeting in December 2009 was a critical test of multilateral cooperation within the new global power structure.

With the benefit of hindsight it is clear the much maligned Copenhagen meeting delivered a new framework for international cooperation on mitigation that took account of the new global power realities and strengthened constraints on global emissions. It has also kept alive the possibility of effective mitigation to achieve strong emissions reduction objectives.  This is a much under-rated achievement of Copenhagen to which Australia contributed significantly—particularly through its proposal for a transparent mechanism to capture voluntary contributions by all participating countries.

The Cancun Agreements reinforced the achievements of Copenhagen and marked a new beginning for international climate change efforts and provided building blocks toward comprehensive international agreement that brought together mitigation commitments and actions by developed and developing countries alike. Success at Cancun owed much to deft Mexican diplomacy as well as the hard-won gains struck in Copenhagen.

The main outcomes from Cancun are:

• To anchor under the United Nations Framework Convention the pledges made by developed and developing countries to the Copenhagen Accord, providing an agreed pathway to achieve major emissions cuts;
• The establishment of the new Green Climate Fund to support developing countries’ climate change responses, adaptation and technology needs;
• A REDD+ mechanism to deliver economic opportunities for developing countries to reduce emissions that result from deforestation;
• New measurement, verification and reporting and international consultation and analysis rules to ensure all countries can see what others are doing to tackle climate change;
• Agreement to provide strong and practical support for vulnerable developing countries to manage unavoidable climate impacts; and
• The establishment of a technology mechanism to help diffuse clean energy technologies around the world.

It will take some time for the full implications of the change in the international regime to emerge, but the shift to a bottom-up approach to mitigation has been decisive.

To date, 85 developed and developing countries representing over 80 per cent of global emissions and about 90 per cent of the global economy have pledged targets and actions under the now-anchored Copenhagen Accord.

With strong commitments from China and other large developing countries, the sum of commitments by developing countries to the end of 2012 is more satisfactory than those of developed countries alone.  But overall these commitments continue to fall short of what is required to meet an objective of holding temperature increases to around 2°C.

Another important factor is that both China and the United States accepted commitments under the new arrangements that would have been impossible under a binding regime, such as the Kyoto Protocol.  In both cases, higher ambition was achieved where binding commitments may have led to greater caution.

Perhaps most importantly, new arrangements for measuring, reporting and verifying emissions are a major step forward and, in the absence of treaty-like obligations, will provide improved certainty and over time, a foundation to better understand the comparability of different countries’ actions.

The current framework does contain gaps.  It is not clear how the shift toward the kinds of binding commitments that provide the basis for deep international trade in emissions entitlements will emerge.  However, groups of states, most likely neighbours in a region, could replicate many of the advantages of deep multilateral trade within regional trading systems.  This would reduce costs of mitigation and encourage greater ambition in participating countries.

The international agreement on climate change achieved at Cancun and Copenhagen is capable of supporting an historic change in trends on global emissions over the next few years.  There is a possibility that under the new measurement, verification and review framework, and as confidence builds, mitigation consistent with continued prosperity and strong economic growth will be offered by many more countries.

Nevertheless, it is unlikely that the world will achieve 2°C unless there is comprehensive and binding agreement on entitlements to emissions that adds up to the emissions constraints implied by that objective.  Many developing countries continue to value the Kyoto structure with its clear demarcation of binding commitments.  There will need to be deft diplomatic footwork around the next United Nations Framework Convention meeting in Durban in December 2011, to allow some formal retention of Kyoto language alongside substantive departure from its binary content.  And this in large part will depend upon the behaviour of many countries over the coming months.

Ross Garnaut is a Distinguished Professor at the ANU, a Vice Chancellor’s Fellow at the University of Melbourne and Adviser on climate change to the Australian Government. In November 2010 the Australian Minister for Climate Change and Energy Efficiency, Greg Combet, commissioned Professor Garnaut to update his 2008 Garnaut Climate Change Review. The Garnaut Climate Change Review – Update 2011 will be presented to the Australian Government by 31 May 2011.