The illusion of 70 percent

By Rene Golangco / Business Sector Representative, Member, Advisory Board, Climate Change Commission, Manila

This is a cautionary tale. It is 11:59 p.m. December 9, 2015. You fall into a deep slumber. You dream you are the passenger in the fifth car of a five-car collision. The fourth and fifth cars are metaphors for countries similarly situated as the Philippines in the climate-change debate, i.e., vulnerable and shouting out for attention in the world stage; the collision is the continuing saga of the global interplay on climate-change issues; the car is one’s environment. Your car is badly damaged as a result of the incident. You feel the loss, the damage.

You now view one of your proudest assets as being brought to a state of great disrepair, perhaps you may eventually declare it a total loss. Or seek out someone of higher authority to make that declaration for you. There is confusion, and there arises an immediate sense for confrontation. You want someone to pay for the damage you assess you incurred. The big question is: Who will pay for it? The drivers in the first, second, third and fourth cars sympathize with your anger, your frustration. But the finger-pointing begins right there and then. No one seems to want to acknowledge moral responsibility, whether full or partial. Much less, assign legal responsibility. Especially the driver of the first one, a 2-ton truck. Everyone at the scene of the incident sympathizes with you—yes it is tragic, they feel your pain [the participants all say, including the pedestrian kibitzers now gathered around].

As everyone else equally feels having incurred a loss and damage of varying degrees, there is no consensus who should bear ultimate financial responsibility. And before you know it, everyone starts to leave the scene of the incident one by one. The drivers, the police investigator, the witnesses, the kibitzers and hawkers; with departing messages left like “my insurance representative will be in touch with you,”  “call my lawyer,”  “here’s my card and number, call me next week,” “if you wait a little longer, the media will arrive.” And as the scene empties out, you unexpectedly experience self-doubt—did you, perhaps, contribute to the incident by some facet of negligence. Were you observing traffic regulations at the time of collision; do you rate yourself a responsible driver overall? Then, in a flash, you wake up. Welcome to the COP 21 meeting in Paris, France.

Climate change is no longer an illusion to the majority; the science has overcome the myth. But are the goals being debated upon thereon partially illusionary in themselves?

The Philippines is without doubt a country in self-doubt, consistently ranked as one of the topmost vulnerable countries subject to extreme conditions caused by climate change. No one disputes this fact anymore in this modern age. But how do we organize our battle plan versus climate change in the world stage. Let us study the immediate scene of the incident.

On October 1, 2015, a formal document was directly forwarded to the United Nations Framework Convention on Climate Change (UNFCCC) office in Bonn, Germany. It was entitled, “Intended Nationally Determined Contributions [INDC] Submission of the Republic of the Philippines.” The UNFCCC is the United Nations-designated international multilateral institution charged with overseeing the global engagement on climate change. For this year’s Conference of Parties (COP 21) meeting in Paris, all participating countries (over 180  countries in varying roles) were requested to submit their respective INDC for consolidation into the climate-change talks ongoing.

As of this writing full text documents from COP 21 to reflect the conclusion of agreements have yet to be released or circulated to the public. But one thing is for certain, the talks and negotiations are confusing and confrontational. Just like the five-car collision incident illustrated earlier. The negotiations appear to be evolving into a North-versus-South, a have-versus-have-nots struggle, with climate change morphing into the single rallying point for the many declared economic and environmental dislocations among differing national boundaries around the world.

The currency employed is the level of greenhouse-gas (GHG) or carbon-dioxide (CO2) emissions standard. Whereby those countries perceived suffering the most damage from climate change profess the most innocence as to actual liability, and thereby further claiming loss compensation from those other countries perceived to be most culpable and liable for emitting the highest or much higher GHG emissions levels. The compensation level comes in two tranches:  1) the moral accountability, often called climate justice, and 2) the financial accountability, often referred to as climate finance.

For this purpose, we shall limit the parameters to the Philippine conditions. As an investment banker of longstanding, one acquires the discipline to first analyze the legal documentation and definition of terms, to be followed by the negotiation posture. These, in pursuit of a final objective. The first benchmark appears to stand on weak foundation.  The Philippine INDC was submitted under the authorship of former Climate Change Commission Commissioner Lucille Sering (aided by Climate Change Office Deputy Executive Director Joy Goco). By sequence, Goco announced that Sering resigned her position in September 2015. Yet, a covering letter dated October 1st (attaching the INDC) submitted to the UNFCCC on its face was signed by Sering. The INDC document itself was not signed by the President of the Philippines, as chairman of the commission; for such a critically important international document outlining official commitment/s  of the republic, the chairman’s imprimatur should be required. The commission is composed of three commissioners, plus the President of the Philippines as its chairman; only the chairman can call for a meeting of the commission. At the moment, in addition to Sering’s resignation, Commissioner Sonny Alvarez’s term lapsed last October, with newly-appointed Commissioner Emmanuel de Guzman serving the unfinished term of resigned Commissioner Yeb Sano. In further contrast there is no showing of a Climate Change Commission en banc meeting convened for the purpose of approving the INDC, and authorizing its release and/or submission to the UNFCCC. In the investment banking jargon, therefore, the document forwarded may have appeared formal in form, but it likely may not have been official in character.

Early on in this administration, President Aquino correctly determined that, perhaps, the better utilization of state resources toward combating climate-change effects over the country’s economy and environment was to address the more pressing and more impacting implementation of adaptation options available to the government —national and local. The President ordered for the immediate enhancement and expansion of disaster risk-reduction and management measures nationwide. Effectively then, the President set and directed the climate-change response policy more toward the adaptation pillar in the Climate Change Act of 2009, with the mitigation  pillar garnering a second degree of emphasis given the limited financial resources. For definition of terms, mitigation refers to all efforts and means at reducing GHG emissions. Adaptation refers to all efforts and means to address climate-change issues other than GHG emissions reduction.

So it is with great surprise, as one reads through the INDC, that in the whole document there appears only one quantifiable measure of targeted achievement being committed to the UNFCCC—greenhouse-gas emissions reduction. Specifically, Sering’s INDC set an extremely ambitious goal: “The Philippines intends to undertake GHG [CO2] emissions reduction of about 70 percent by 2030 relative to its BAU scenario of 2000-2030.”

There is a glaring disconnect here. Not only is the sole quantifiable measure of targeted achievement set under the October 1, 2015, document not in consonance to the stated policy of the President of the Philippines, it appears infirm in other relevant aspects too, as follows :

1. The director general of the National Economic and Development Authority (Neda) appears not to have been consulted in the preparation of the INDC. This is a critical lapse. He chairs the Philippine Council for Sustainable Development, a vital organ charged with evaluating and recording the impacts of any and all projections of commitments to be made by national government agencies (the commission being one) to bilateral and multilateral institutions, as they ultimately redown into commitments of the Republic of the Philippines. How will Philippine economic growth targets, and derivative projections therefrom, be influenced by the macro INDC commitments of the Climate Change Commission to the UNFCCC, for example. These are hard questions that need quantified answers before an international The Neda is also a member of the advisory board of the commission.
2. The Department of Agriculture (DA)—one of the major players for any GHG emissions-reduction program to succeed—did not seem to have been participation in the INDC process. As another member of the advisory board of the commission, the DA’s input is deemed organic to said process. Other line agencies may be similarly placed.
3. On its face the INDC’s sole quantifiable measure of targeted achievement lacks a most crucial element—a verified emissions baseline year reference. From which the measure of success may be calculated in the future. Without it, the ambitious 70 percent emissions-reduction target for 2030 translates to a meaningless figure.

The INDC may be designed to fail.

The INDC fails to make mention of any figures as to a financial claim/s  for either climate justice or climate finance for the Philippines. The second benchmark of negotiation posture thereby appears structurally weak, as well. Any serious claimant knows well to incorporate a specific amount for damages and/or loss in any confrontation process. Is there still any doubt the COP 21 is an open venue for confrontation processes? Our claims will surely go way past COP 21.

It may be good to emulate the emissions reduction-setting initiatives of the larger economy nations. But we have our unique requirements. Classified as an island-state nation, the Philippines is a country that is in need of multilateral assistance more on the adaptation measures, rather than on the mitigation (GHG reduction) measures. Globally, precisely because we are such an insignificant contributor to global warming (estimated at only one-third of 1 percent of global CO2 emissions), the country cannot realistically look forward toward securing any significant proportionate share and global attention re: any future green climate fund allocation—the ultimate objective in our negotiation posture—based on the mitigation argument plea alone. This is why honest brokering is necessary and demanded of our negotiators.  The much stronger argument for negotiation posture in the climate conferences should lie with seeking the deserved climate-finance support for Philippine adaptation measures. Let us be honest and straightforward with our counterparties. And to realistically secure such climate-finance support, quantifiable costs (on adaptation measures) must be spelled out/provided in the document. One has to lay the financial basis to any serious claim toward climate justice and/or climate finance. As indicated in the illustration above, everyone is claiming and disclaiming accountability;  and for those who may just offer compensation, they want to know where the money is going to settle a claim. Such is a business decision to be made by the accountable nation, for its own reasons.

And as to the mitigation front we already have existing enacted laws that deal with the mitigation issue, actually; for example, we have the Clean Air Act, the Biofuels Act, the Renewable Energy Act, the Ecological Solid Waste Management Act. Enforcement of the enacted laws is what is direly needed in this country to fight the war against GHG emissions. Financial penalties are attached to violations of these Acts. And are we therefore not double-dipping at the till on this issue—when we go to the climate conference for support on mitigation, then, at the same time, make earmark allocations in the General Appropriations Act during the annual fiscal budgeting process under the same purpose?

In conclusion, this writer was asked in an interview at CNN Philippines recently as to my opinion of a targeted objective of 100-percent  decarbonization in the world by year 2050? My reply was, 2050 is so far off as to render any budgetary planning process to combat the recognized environmental ills moot and inutile. In addition, this writer cannot realistically imagine a world devoid of carbon fuels. It will always remain the cheapest form of energy source. And with the ever-increasing world population, the hunger for energy to light up and feed the earth’s inhabitants simply cannot be wholly met by clean energy (alternative + renewable + energy efficiency) sources. In the mind of this writer, inasmuch as it is the holy grail of committed climate- change advocates like yours truly, a 100-percent decarbonized world at any time is an impossibility. Unfortunately, currently the COP 21 is almost equally overshadowed by the international war on terrorism ; consequently it is hoped the world leaders’ attentions can be focused momentarily to push to achieve a binding agreement in Paris, incorporating enough features as to make the same enforceable, lasting and payment-friendly.

At this moment, the 70-percent GHG reduction target set in the Philippine INDC appears to be a galaxy away. 2030 is only 15 short years away. The country is not situated in Scandinavia or Upper Mongolia with the unlimited resource of heavy year-round winds; our hydro and geothermal resources are largely identified already and presently being tapped; solar and biomass have no shortage of fuel stock, but requiure heavy private-sector financing support, which remains illusive. Energy efficiency does not get official respect; the Department of Trade and Industry removed it from its most recent investment priorities/incentives plan. The push to 70 percent will surely shut down the Philippine economy, initiate an energy crisis, and will provoke massive unemployment and civil unrest.

The Department of Energy continues to issue permits for coal-fired power projects at a rate at least six times more than that for clean-energy projects. A more moderate target is necessitated. The investment banker’s instinct is taking over the environmentalist’s aspiration.

The Filipino people need to be totally aware of the consequences behind the illusion of 70 percent. A national government long-term economic plan should never be captive to a false premise. Otherwise, further budgetary waste and misdirection will accrue. At best, a lower carbon economy is what is achievable in the journey to 2030. The dream of a 100-percent decarbonization of the Philippine economy and environment is a false start.