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The Cost of Carbon Pricing: Competivevness implications for the mining and metals industry
In May, 2011 the International Council on Mining and Metals (ICMM) established a climate change program with the goal of ensuring the continued competitiveness of the industry in a low carbon future. While the strong preference of the industry is an eventual global regime with a common carbon price, ICMM’s members are open to operating in national regulatory environments that are fair and transparent. To that end, ICMM commissioned a report with the International Institute for Sustainable Development (IISD) that begins to assess how best to develop carbon pricing policies that achieve a transition to a low carbon economy without compromising the ability of national industries to compete internationally. This article represents a summary of that report.

Options in recycling revenues generated through carbon pricing

Options in recycling revenues generated through carbon pricing is one in a series of three reports that describe our recent work in those respective areas. The other publications look at responding to the risks associated with the physical impacts of climate change and impacts of carbon prices on the competitiveness of commodities in four regions.

ICMM’s second principle for climate change policy design states that climate change-related revenues should be used to manage a transition to a low carbon future. Specifically, they should be used to support the development of climate-friendly technologies and to help exposed economic sectors and populations adjust to the costs associated with a carbon limited future.

This report examines how 16 regulatory authorities (representing regional and national governments) are managing their carbon revenues. As far as we are aware, this is the most comprehensive review of current revenue recycling activities that has been published. It is our hope that this analysis will help to inform the public policy debate around this critical issue.

The cost of carbon pricing: competitiveness implications for the mining and metals industry

The objective of this report is to assess how best to develop carbon pricing policies that achieve a transition to a low carbon economy without compromising the ability of national industries to compete internationally.

The assessment is based on a survey of the current policy environment, new research quantifying the impacts of climate change policies on member companies, a series of interviews with members and an assessment of policies based on ICMM's Principles for climate change policy design.

The geographic regions analyzed include the European Union (EU), South Africa, Australia, Canada and the US, as well as sub-national jurisdictions within the US and Canada, namely California, Quebec and British Columbia. These are regions where ICMM member companies have a significantproduction presence and where there are climate policies currently in place or under development.

Four commodities are included in the analysis: iron ore, copper, aluminium and coal. These commodities encompass a range of widely produced and used outputs and a variety of extraction and production techniques in a number of locations globally.

Adapting to a changing climate: implications for the mining and metals industry

Adapting to a changing climate: implications for the mining and metals industry is one of a series of three reports that describe our work in those areas. The other publications examine options for revenue recycling out of carbon pricing policies and the impacts of carbon prices on the competitiveness of commodities in four regions.

There is a growing awareness that a changing climate and its impacts represent a physical risk to mining operations and installations. Investment funds and reporting regimes such as the Carbon Disclosure Project are seeking information on how companies are planning for impacts - such as rising sea levels or water scarcity - associated with a changing climate.

This report addresses three key issues. Firstly, it explains why it is important for the mining and metals sector to understand the impacts from a changing climate and to develop strategies to adapt. It then looks at relevant climate impacts and how mining and metals companies can evaluate risks and opportunities associated with those impacts. And finally, it examines the available options for adapting to climate change impacts.

The role of minerals and metals in a low carbon economy

The mining and metals industry is well placed to contribute to the resolution of the climate change challenge. Many mining and metals companies are measuring, managing and reducing their own greenhouse gas (GHG) emissions. More significantly the industry is also supplying the materials needed to build a low carbon future. This latter role is less well understood and is the focus of this publication.

A range of technologies exist to reduce the emissions intensity of power generation, including renewables and carbon capture and storage (CCS). The mineral and metal requirements for the physical structures of both wind turbines and solar panels are significant. Applying CCS technology would also increase metal requirements due to the additional infrastructure needed to capture, transport and store CO2 emissions.

This paper explains that although the exact pathway to a low carbon future is not yet known, a number of viable elements are well understood in the areas of energy efficiency and low carbon power generation. All of these low carbon technologies will require mineral and metal inputs. The widespread adoption of these technologies has the potential to change global metals demand compared with demand from current technologies. This change in demand will also affect the emissions associated with metals production.

Mining for climate solutions

2 June 2011

John Drexhage argues that the mining and metals sector has plenty to contribute to the transition to a low-carbon economy.

In the February edition of Environmental Finance, it was reported that I had recently “crossed the aisle” to take up a new position as director of climate change at the International Council on Mining and Metals (ICMM) – a CEO-led body mandated to improve sustainability performance in the sector.

Co-Chairs’ Summary of the Geneva Dialogue on Climate Finance

Following an invitation by Switzerland and Mexico, high - ranking representatives from 46 countries and the European Union , the Chair of Ad Hoc Working Group Long - term Cooperative Action under the United Nations Framework Convention on Climate Change (UNFCCC) and the UNFCCC Executive Secretary met in Geneva, Switzerland from 2 to 3 September 2010 . Following up on the Petersberg Climate Dialogue, t he meeting focused on issues around financing cli mate action and took place in an informal setting with the objective of generating dialogue to facilitate agreement at the UN Climate Change Conference in Cancún , which will be held in Mexico from 29 November to 10 December 2010 . Ministers and other high level Party representatives had an open and fruitful exchange in Geneva. The Co - Chairs have laid out a summary of the main me s sages below. These have been drafted in a non - exhaustive fashion , intended to facilitate continuing constructive n egotiations towards Tianjin , Cancun and beyond. As the Co - Chair s noted, w e are in an ‘evolutionary’ stage of the negotiations, working towards constructive decisions at Cancun that will demonstrate progress towards a comprehensive agreement.

The Emerging International Climate Change Regime: Opportunities and challenges for the Canadian agricultural sector

Canada’s agricultural sector will be affected by policy decisions that respond to the climate change challenge. At the international level, decisions under the United Nations Framework Convention on Climate Change (UNFCCC)—such as the stringency of targets; the role of the land-use sector in offset markets; and the rules for accounting of GHG emissions in the land use, land-use change and forestry (LULUCF) sector—could affect Canadian farmers. The domestic policy response in Canada and other countries could raise concerns around agricultural offsets, competiveness and increased production of biofuels. Dealing effectively with climate change in a manner that accounts for the Canadian agricultural sector will require efficient and effective mitigation policies that follow best practices, capitalize on mechanisms in an international agreement, and avoid interference with global market development and access.

This paper examines some of the challenges and opportunities for the Canadian agricultural sector that may arise out of the evolving national and international climate change regimes. The paper first describes mitigation potential in the agricultural sector in Canada. It then examines biofuels, agricultural offsets in an emission trading scheme and competitiveness concerns. The paper concludes with a summary of implications for policy development in Canada.

Action on Implementation of Copenhagen Accord Most Critical for Canada

The government of Canada has decided that its climate change response will be closely linked to that of the United States. However, Canada does not yet have a full elaboration of how it will meet its Copenhagen target of a 17 per cent reduction from 2005 levels by 2020, and is unlikely to develop such a plan until there is clarification on how the United States will meet its target. While Canada may need to wait for the United States before deciding on a carbon pricing system, that should not stop Canada from exploring other initiatives to reduce greenhouse gas emissions, concludes a new paper released today by the Canadian International Council (CIC).

Climate Change and Foreign Policy in Canada: Intersection and Influence argues that the Copenhagen Accord has the potential to develop a solid foundation and framework to help countries begin to respond effectively to climate change. Strong action is needed in Canada and other developed countries.

Climate Change and Foreign Policy in Canada: Intersection and Influence

This paper examines the Canadian climate change and foreign policy dynamic, analyzing strengths and failures of existing policy and prospects for new policy in the areas of federal-provincial relations, international diplomacy, energy security and trade, multilateral trade, international peace and security, and development cooperation. Linkages and intersections that exist or might develop between climate change policy and foreign policy are explored, and recommendations are put forward.

Clean Energy and Climate Action: A North American collaboration Washington Expert Dialogue Report – Summary of key messages

IISD and the Pembina Institute supported an expert dialogue on clean energy and climate action in Washington, D.C. The event was hosted by hosted by Gary Doer, Canadian Ambassador to the United States, and Marc LePage, Special Advisor on Climate Change and Energy with the Canadian Embassy. A select group of participants from government, industry and policy research institutions discussed opportunities and challenges in furthering a continental approach to climate change and clean energy. This brief report provides an overview of the event, key themes and main messages discussed by the participants.

In the Market for Climate Change Action: Market mechanisms and the achievement of global emissions reductions

Resolution of the question “Who pays and how much?” will be a major determinant of any future international agreement on climate change. New international market mechanisms play a fundamental role in creating both the space and incentives for greenhouse gas emission reductions. This commentary addresses the need for robust uses of international market mechanisms, particularly for Canada. A robust framework for market mechanisms within a future agreement could set the groundwork for a much broader shift in how development takes place at the most fundamental levels.

Status of the UNFCCC Negotiations: Outcomes of the Bonn Climate Change Talks

This paper provides an overview of the status of the international climate change negotiations, with an emphasis on the outcomes of the Bonn Climate Change Talks in March–April and August 2009. The paper examines the main issues at stake in the negotiations, with an emphasis on the four pillars of the Bali Action Plan: mitigation, adaptation, technology and financing. The concluding section discusses critical issues that will impact the negotiations.

International Carbon Market Mechanisms in a Post-2012 Climate Change Agreement

This background paper provides an overview of the role and profile of international carbon market mechanisms in a new international post-2012 climate change regime. The paper first reviews the three market-based instruments under the Kyoto Protocol and then examines a range of possible market mechanisms under consideration in the international climate change negotiations, including allocation-based market mechanisms, REDD mechanisms and an expanded CDM. The concluding section discusses critical issues that will need to be considered in choosing and furthering developing international market mechanisms for a new regime.

Encouraging Developing Country Participation in a Future Climate Change Regime

This paper explores how major developing economies might become effectively engaged in a post-2012 climate change regime. The paper sets out a synthesis of how an international climate deal might play out and proposes a phased approach to a safe climate to encourage deep cuts in global greenhouse gas emissions by 2050. Under this phased approach, advanced developing countries only take on commitments after 2020 if developed countries meet a collective 2017 emissions reduction goal.

This paper is one of a series of three reports examining how to engage developing countries in a post-2012 climate regime. This paper is informed by the other two papers in the series, Financing Mitigation and Adaptation in Developing Countries: New Options and Mechanisms and State of the Carbon Market: How the future market can encourage developing country participation, and should be read in conjunction with those reports.

Market Mechanisms for Sustainable Development in a Post-2012 Climate Regime: Implications for the Development Dividend

There is broad consensus in the international talks on a post-2012 climate change regime on the need for some perpetuation of the CDM—a market mechanism for sustainable development (MMSD). Regime options under discussion will impact on the “development dividend” of a post-2012 MMSD, affecting quality (sustainable development), quantity (volume of CERs) and regional distribution. This paper examines four regime options—increasing the scope of the CDM to include additional sectors, differentiation of developing country eligibility, expanding the CDM, and a fund-based mechanism—and their potential impacts on the three elements of the development dividend.

A Way Forward: Canadian perspectives on post-2012 climate policy

Parties to the United Nations Framework Convention on Climate Change and Kyoto Protocol agreed on the Bali Action Plan in December 2007. The plan sets out a process to negotiate a post-2012 regime by December 2009. This book provides analyses from a Canadian perspective on the four main elements of the Bali Action Plan: mitigation, adaptation, technology development and transfer, and financing and investment.

In this book, IISD examines emerging approaches and options for post-2012 climate change cooperation, focusing on salient Canadian sensitivities and perspectives, and how Canada might contribute to the development of a robust and equitable climate change regime. The first chapter provides context for the analysis by examining the national circumstances in which Canada will develop and negotiate a position under the Bali Action Plan. The second chapter addresses how the post-2012 regime may address the urgent need for mitigation, and the basic fact of economic growth, particularly in developing nations. The analysis includes international and domestic perspectives, describing how the various possible elements of an international agreement fit with Canadian interests. Using this lens, the subsequent chapters look at adaptation, technology, and financing and investment-reviewing the options and assessing how Canadian strengths and interests might best be addressed.

Climate Change and Global Governance: Which Way Ahead? (Excerpt)

In this excerpt of a chapter in "A globally integrated climate policy for Canada" (edited by Steven Bernstein, et al. University of Toronto Press, 2008), John Drexhage, IISD's Director of Climate Change and Energy, argues that to address the multi-faceted climate challenge we face, governance efforts must evolve beyond the current global regime-building model, and that environmental and development policies must become much better integrated.

Climate Change and Global Governance: Which Way Ahead?

In this paper, IISD's John Drexhage looks at the climate regime. From the paper: "My argument has more to do with the current reluctance of major economies—including three of the top four global emitters—to submit their GHG emission activities to strict, internationally binding commitments. If, for example, a mitigation regime strictly under the UN means further delay in the U.S. on a post-2012 agreement, due to its Senate being unable to ratify such an agreement, then why not try and set up an alternative structure, even if only as an initial step? Or, given the challenges faced in ratifying any international binding agreement in the U.S. Senate, could we actually envision a situation where the UN regime would apply everywhere but the U.S.? And if so, what would motivate major developing country economies to agree to submit to a system the U.S. would refuse?"

Market Mechanisms for Sustainable Development: How Do They Fit in the Various Post-2012 Climate Efforts?

This new report, developed under IISD's Development Dividend Project, takes a first step at understanding the implications of the various possible climate regimes on the shape and iteration of a market mechanism for sustainable development (MMSD). The paper begins with an analysis that considers the range of options being proposed for the post-2012 regime and then asks what potential role an MMSD might play in these regimes, and what the various sorts of MMSDs might imply for the nature of the overall regime. The second part of the paper examines characteristics of regime structures—targets, differentiation, transition and governance—as they relate to an MMSD and development dividend considerations.

Climate Change and Foreign Policy: An exploration of options for greater integration

Climate change is one of the greatest challenges of this century. Increasing evidence of the impacts of climate change and that human actions are contributing to changes in climate highlights the need for action. There is an increasing realization in the international community that achieving the consensus and commitment needed to take action requires positioning climate change in a broader foreign policy context.

The ostensible goal of Western foreign policy is to provide stability and security as a foundation for human well-being, global freedom and prosperity. However, in today’s increasingly inter-connected world, the traditional instruments of diplomacy are not always effective in tackling global threats. Established alliances and procedures are hard-pressed to be effective against a threat such as climate change, when the cause (greenhouse gas emissions) is not the ambition of any one “hostile” power. Addressing the climate change challenge requires new thinking in foreign policy—thinking that considers engagement on climate change not only in the sphere of environment, but also outside the environment box.

This study examines opportunities for a broader framing of the climate change issue in a number of foreign policy areas of the Ministry of Foreign Affairs of Denmark: diplomacy and international relations; energy security; peace and security; trade and investment; and development cooperation.

Co-authored by IISD's John Drexhage, Deborah Murphy, Oli Brown, Aaron Cosbey, Peter Dickey, Jo-Ellen Parry and John Van Ham; and Richard Tarasofsky and Beverley Darkin of Chatham House.

Canada in a Post-2012 World: A Qualitative Assessment of Domestic and International Perspectives
Canada in a Post-2012 World explores Canadian and international perspectives on establishing a sustainable, global regime for climate change action. It provides a set of analytical tools to help frame Canadian perspectives on the range of international options being considered for a post-Kyoto world, and an initial assessment of how Canadian sensitivities and perspectives might be received by critical Parties in the global community. One common theme that emerges is that the threat of climate change is real—some impacts are already visible—and Canada needs to respond in a meaningful way that works to position the country as a leader in a clean energy future.
Governing Climate: The Struggle For A Global Framework Beyond Kyoto
The papers in this book, written by international climate experts, explore three key building blocks of the future climate regime. First, a number of ideas on how to broaden the current cap-and-trade regime are discussed. Second, the role of technology is explored. Lessons from past successes are reviewed with a view to developing options for their most effective use over the near future. Finally, the issue of financial flows to developing countries is addressed, including the issue of mainstreaming assistance for climate-change response.
Which Way Forward? - Issues in developing an effective climate regime after 2012

A post-2012 climate change regime will need to balance the diverse needs of all countries while striving to prevent the potentially serious economic and social consequences of the impacts of climate change. A common understanding of the issues associated with four key elements of a potential post-2012 climate change regime could support the emergence of an internationally acceptable approach to this critical issue.

This publication, a series of discussion papers prepared by IISD to support Canada's efforts to prepare for COP-11/MOP-1, examines four main elements of a potential post-2012 climate change regime:

  • the need to ensure sustainable economic development;
  • the effective development and penetration of clean technologies;
  • the establishment of an effective international carbon market over the long term; and
  • the integration of adaptation in development and natural resource management decision-making.
Realizing the Development Dividend: Making the CDM Work for Developing Countries
(Phase I Report)
The CDM has a host of objectives not directly related to climate change; it aims to bring host countries socio-economic and environmental benefits through technology transfer and foreign direct investment. In short, it aims to deliver a "development dividend." Based on an extensive consultation process, this paper assesses the state of the emerging CDM regime, asking whether trends presage a strong performance in this context. It addresses three concerns: that the quality of the projects is not what it could be; that the quantity is not what it needs to be, and that the distribution of investment is skewed in ways that exclude most poor developing countries. The paper concludes that the CDM has great potential for sustainable development, but only if some changes are made. It offers a number of recommendations.
Where to Next? Future steps of the global climate regime
This paper captures the outcomes of an international collaboration of experts from Japan, Norway, Germany, China, the United States and Canada on the options for the development of a post-2012 climate change regime. The paper highlights areas of common ground among the researchers while also identifying alternative pathways towards the goal of addressing climate change over the long-term.
Realizing Opportunities: Emissions Trading in Manitoba
In January 2004, the Task Force on Emissions Trading and the Manitoba Economy released its report. The task force, chaired by the honourable Lloyd Axworthy, made 17 recommendations regarding economic and environmental opportunities for Manitoba as part of Canada's proposed domestic emissions trading system. The recommendations stem from three overarching conclusions: (1) Manitoba has a natural advantage in offsets and clean electricity; (2) 2008, the planned start date for the trading system, is too late; and (3) we need to get the trading system right in the long run. David Runnalls, IISD's President and CEO, was a member of the task force and IISD served as secretariat.