COP26 Week 2: Progress to Date, with Suzi Kerr

Notable Quotes

• Why Indonesia might have backed out of a global deforestation agreement: “Many in Indonesia are recognizing the enormous value to people in Indonesia from managing their land better and avoiding massive exploitation … but the problem is that people can’t see a clear pathway toward better use of land that will bring greater development benefits than the current destruction.” (5:55)
• Future climate summits should prioritize action, not pledges: “The [commitments] that I find most useful are those that are really focused on practical implementation … This is where COPs need to go in the future. Now that we are very close to finalizing the Paris Agreement rules, we can move from a really heavy focus on pledges—which can just be talk and greenwash—to really focusing on sharing [best practices] and rewarding concrete action and, of course, calling out inaction as well.” (10:41)
• Reframing climate finance: “I find it problematic when we talk about the countries who will be providing some of the extra money as ‘donors.’ It suggests something about the power relationships between the countries. New Zealand will not be transferring money to a country like Chile just out of altruism—we will be doing that because New Zealand wants a stable climate … It’s to the mutual benefit of everybody in the world.” (22:38)

Top of the Stack

• Tears of Rangi: Experiments Across Worlds by Anne Salmond

The Full Transcript

Kristin Hayes: Today I’m talking with Suzi Kerr, chief economist at Environmental Defense Fund (EDF). Suzi’s areas of expertise include emissions pricing, climate change policy, land use, and—most relevant for this podcast episode—international climate cooperation. Suzi originally hails from New Zealand, where she helped found Motu, an economics and public policy research institution serving the needs of Kiwi decisionmakers. 

Suzi is my second guest in our three-part series on COP26. She’ll be sharing her reflections on the action to date, with a particular lens on developing country interests. I’m sure you’ll enjoy both he]]r insight and her delightful accent as much as I do. 

Good afternoon, Suzi. Thank you so much for taking time out of your schedule to talk with me today and to reflect on this first week of the COP.

Suzi Kerr: Kia ora, Kristin. It's such a pleasure to join you today.

Kristin Hayes: Good. Well, I offered only a very brief introduction at the beginning. I wanted to hear a little bit more about you and your background before we turn to the COP. Why don't you tell our listeners and myself—you're certainly known to the RFF family—but it'd be great to just hear a little bit more from you directly about your background.

Suzi Kerr: Thank you, Kristin. I have had, as many of you know, a long and wonderful relationship with Resources for the Future. In fact, Motu, which is the research institute I founded in New Zealand, was based very directly on Resources for the Future because I admired it so much. It's wonderful in my new role as the chief economist at Environmental Defense Fund to have the opportunity to really combine RFF's strengths with EDF's very different ones.

In terms of me, I'm absolutely passionate about trying to help shift the economic environment so that instead of economic actors causing the climate crisis and economic drivers pushing us towards climate crisis, we can instead help guide the shift towards a stable climate and a vital earth where everyone can thrive.

I'm also particularly passionate about the critical importance of working closely with people in the developing world who, soon, by 2030, will be doing 70 percent of global emissions. Because they are producing 70 percent of global emissions, the mitigation of those emissions has to happen in their countries; that doesn't mean that they have full responsibility for making that happen or bearing the costs of that mitigation, but they need to be deeply involved in the actions involved.

I guess also because I am from New Zealand, from such a little country, I do feel a particular affinity for small countries that can sometimes be left out of solutions and whose potential for leadership is sometimes underappreciated. I think that makes my background different from a lot of the commentators and people working in this space.

Kristin Hayes: I think that's one of the reasons that I was most excited to bring you into this conversation, too. You do bring that different international background, that different international perspective—obviously, New Zealand being a relatively small island state has its own climate challenges in a way that can inform our conversation. It's great to talk with someone who brings a fresh perspective to the podcast.

Suzi, thank you again for walking us through what's been happening so far. It's been a very busy week of announcements at the COP with governments making commitments related to coal financing and the actual use of coal, related to the control of methane emissions, and halting and even reversing deforestation.

So, some major commitments are coming out of the COP so far. I'd like to start with a question about that last issue, that issue of deforestation, as there have been some reports just this morning—here we are in November 5, about six days into the COP—that Indonesia, which is one of the key players in any conversation around deforestation, has backed away from its collaborative international commitment made just a few days ago.

I wondered if you could say more about how that's unfolded and reflect on what that says about the tension between climate commitments and development concerns faced by developing countries.

Suzi Kerr: Yes. For EDF, halting tropical deforestation is one of our key missions and one of the things we're focusing on most heavily at COP. It's an opportunity that we only have in the short term because once deforestation has happened, it takes an enormously long time to restore those ecosystems again. We see this as a really, really urgent thing that we can do that will have long-term value.

Our work particularly focuses on strengthening the way carbon markets can support that. One of the values of carbon markets is that they can reduce the tension between climate action and development concerns. A key question we face now is how those of us who are outside of Indonesia can stand with those who are trying to help ordinary Indonesians and the climate. The Lowering Emissions by Accelerating Forest finance (LEAF) Initiative, which EDF has been deeply involved with, enables the creation and trade of truly high-integrity carbon credits. The recent commitment announced at the COP of nearly 20 billion from public and private sources towards avoiding tropical deforestation is a part of standing with the Indonesians, but we've got a really long way to go to make those funds work on the ground and to scale up to the much larger resources that are urgently needed globally.

The Indonesian environment minister said that forcing Indonesia to reach zero deforestation by 2030 is clearly inappropriate and unfair, and in some ways, I agree with that. Forcing any country to achieve a goal like this is not only unfair but impossible, but I don't think that's what we are really seeing here. This was an agreement that Indonesia did sign up to.

What we're partly seeing is the inevitable internal differences and pressures as many in Indonesia are recognizing the enormous value to people in Indonesia from managing their land better, avoiding massive exploitation—which doesn't always bring benefits to ordinary people—but the problem is that people can't see a clear pathway towards better use of land that will bring greater development benefits than the current destruction. Of course, powerful interests are still reaping enormous financial gains from that destruction, and we're seeing all of that play out in politics. That's not unusual relative to what we've seen in our own countries.

The environmental minister of Indonesia also really stressed that the massive development, and, I'm quoting here, “The massive development of President Jokowi's era must not stop in the name of carbon emissions.”

I completely agree that development in Indonesia that improves the wellbeing of all Indonesian citizens, and particularly those who are still in poverty, does need to continue. Where I think we differ from what she's saying is in terms of the vision of what that development actually looks like because development doesn't have to involve ongoing deforestation.

There's a really lovely example in Mato Grosso in Brazil where they've shown how forest protection and development can really go hand in hand. This example is compelling because it's on a large scale, it's in a developing country, and it's really lasted for a long time. The little story is that, as many of us are aware, deforestation has been a huge issue in the Amazon for a long time. In Mato Grosso, which is one of the states, deforestation was steadily rising, and it reached over 18,000 square kilometers in 2004. But in that year, Brazil started its plan for prevention and control of deforestation. Over the next eight years, Mato Grosso reduced deforestation by 90 percent, and that didn't come at the cost of agricultural production—soybean production went up by 50 percent, and the number of cattle even increased by 10 percent—they did that through the intensification of agriculture, so they had a strategy that dealt with the underlying causes of the deforestation and that really brought broad benefits. The most compelling thing about this is that even though Bolsonaro in the last few years has really tried hard to undermine these efforts, they haven't been lost. So, this has stuck, and that's the sort of change that we really want to see in Indonesia as well.

Kristin Hayes: I wanted to follow up on something that you said right at the beginning of your commentary here too, which is about the idea that deforestation and development are coupled. Are the benefits to communities also more sustainable when deforestation is taken out of the equation?

Suzi Kerr: So, most developed countries have had a period of massive deforestation in the past as part of their development track. And some of that is essential because the populations have grown and we need to feed people, but in most cases, it's massively overshot. We've cleared a whole lot of land that we wish we hadn't cleared, and we regret that. Many, including New Zealand, where I'm from, have put a lot of effort over the last 50 or more years into restoring forests that we destroyed in places where forest was actually the best use of the land. We’re also seeing this in developing countries: Costa Rica is an example where there's a really huge effort to reforest; China is putting an enormous effort into reforesting. So, we have a responsibility to help others avoid our mistakes that didn't lead to benefits to people. But we also need to understand the pressures that they face. We face those same pressures, and we failed to address those in the past. Being realistic about this and working with them instead of sort of throwing rocks, I think, is helpful.

Kristin Hayes: Well, thank you. We talked about one specific commitment which was related to deforestation. As I noted at the outset, there have been a number of announcements made to date, and we're only in week one. But of the ones that have come out so far, which strike you as the most consequential? That's part one of my question. But I also wanted to ask which ones strike you as most fragile? Which are the most unlikely to either be unable to come to fruition or might have more tenuous agreement from their country parties?

Suzi Kerr: The ones that I find most useful and hence, possibly consequential, are those that are really focused on practical implementation, development of concrete lower emission transition strategies, addressing the barriers to implement them, and allowing real action going forward. I think, overall, this is where COPs need to go in the future. Now that we are very close to finalizing the Paris Agreement rules, we can move from a focus really heavily on pledges—which can just be talk and greenwash—to really focusing on sharing experience and rewarding concrete action, and of course, calling out inaction as well. That’s not to say that we don't need more ambitious pledges, but a pledge on its own is not enough.

I'd like to focus on some of the clean energy announcements, not because these specific ones are necessarily the most important, but they offer some really interesting examples. There are a couple that really focus on how to transition to a clean energy economy. One is the Global Energy Alliance for people on the planet; that involves a $10 billion commitment from governments and the private sector, which sounds quite big, but needs to leverage $1 trillion a year of climate investment. What they're doing is really trying to create more favorable investment environments, and it's working between the private sector and the public sector to make that happen, which I think is also a real shift that's been happening over the last five years or so to better combine the efforts of government and private sector.

Another one that I think is really interesting, but kind of geeky… but no, this is Resources for the Future, we're allowed to be geeky.

Kristin Hayes: I was going to say that our audience will eat it up. Please feel free.

Suzi Kerr: There is one called the Net Zero World Initiative. It's a heavily US-involved one. with the Department of Energy working with a number of countries, including Nigeria, Egypt, and Chile. They're really trying to develop highly tailored, actionable technology roadmaps, so getting into the nitty-gritty of what needs to happen, how it would happen, what needs to be invested, and what technologies we need to develop or adapt. That gets us out of the sort of high-level talk into what we actually need to see happen, and that creates strategies that we can then fund, we can track implementation, et cetera. So, I think that sort of thing is terrifically helpful.

Then the other area is in the financing for transition. We need to work out how we're going to get that transition to happen, but it is going to need a huge amount of money. An example of that is the Statement on International Public Support for the Clean Energy Transition, which involves 26 signatories, including some really big ones. That has three interesting and critical components. One is getting out of financing the bad investments—the ones that are inconsistent with the goals that we're trying to achieve—and that can be particularly powerful because it's pretty unambiguous: you either are investing in these bad things or you're not. There can be some ambiguity around gas investments, but around coal, there is no ambiguity anymore and around a lot of exploration, et cetera.

The second is getting more finance into the clean energy transition. That's very important, though a little harder to know because there are a lot of different sorts of investments involved there, but terrifically useful.

The third is encouraging others to follow suit. This is really critical. There has been a lot of hesitancy, particularly in the private sector, with some companies not wanting to try to influence the government or to take a leadership role within their sectors. That can be very, very uncomfortable. But only action by all of us—not only to change our own behavior, but at the same time to use our influence to support and encourage others to change—that's what creates a positive spiral for change. Something I'm realizing more and more is that we all have more power and influence than we think, even if it's only on a very personal scale. It's so easy to say, “I wish that they would do something.” But this is not a “they” issue. This is an “us” issue.

Kristin Hayes: Last week, my guest Rachel Cleetus and I spent some time talking about the importance of climate finance commitments and how that was really critical at this COP. And as you just mentioned, any initial commitments need to leverage much more significant, much larger commitments as well. I wanted to take that one step further and just ask if this particular COP is successful at generating pledges that really are designed to leverage very significant resources, $1 trillion dollars or more.

Can you remind me and our listeners what still has to be determined in terms of how those resources would get allocated? Is that the next step in the process? Is that understood even as these conversations are ongoing? Or is there a whole mechanism of getting money to developing countries that still has to be worked out?

Suzi Kerr: That's a challenging question, and I'll answer part of it. There are mechanisms already set up for distributing parts of that $100 billion of the climate finance pledge. I am personally quite skeptical about how effective those can be. I don't want to come across as being too negative because I think we have to do everything now. We're in that stage where we don't want to say no to anything.

But when you look on a global scale at what is really required for developing countries to mitigate at an economically efficient rate, the modeling tells us that that requires about 2 to 4 billion tons of carbon units transferred. If you think about this through a carbon market point of view, or if you think about this just in terms of money, that's $200 billion a year in terms of what is essentially grants or money transferred to developing countries—not loans, but money that is beneficial directly to those countries. So, $200 billion a year. And the amount of capital that those payments then need to leverage is well over a trillion a year. So $100 billion in climate finance—much of which may be loans—is only a drop in the bucket. We need to really do much, much bigger, and we need to scale up. The scaling up can't come from governments; governments just don't have that sort of money available. That's just not possible.

But also how the money is used is really critical, and that's one of the challenges with some of the existing mechanisms for getting that money out. Will it just be like a lot of the aid in the past and be used just to serve the interests of the donor countries? That’s a real risk. It won't necessarily bring the benefits and the changes we think. Will the donors, if they are actually controlling the levers of how the money is used, actually share the power in how that money is used? Even if the donors are well-intentioned, will it actually lead to additional climate action? We don't have a good track record on that. A lot of money does go in in the same way as it's gone in for aid. It doesn't necessarily lead to the impact that we think it's going to be.

I think there are a few principles that we need to look for in order to get the money that is transferred to really make an impact. The payments need to be results-based as far as possible. They need to be tied to seeing actual change, and they need to be based on results that are as large a scale as possible and ideally up to the country level, because otherwise, in a complex economic system, you might get gains in one place, but you'll tend to see those offset by losses elsewhere or over time. When we look at transformational change, the only way you can see that—really—is at the system-wide level. Those payments also need to provide confidence and resources to developing countries: they need to know that the money is going to keep coming, and that if it’s going to be results-based, it really will arrive. They need to be getting technical support and help to develop learning networks that will allow them to make changes.

The challenge is not just finance. Even if the money is there, in some instances, the politics or the technical challenges are barriers as well. And developing countries need help to leverage private capital because the government money is just never going to be enough. Some of the developing countries are not able to access private capital very easily. They're not necessarily able to negotiate very well with private capital providers, so they need some support so they can engage in an equitable and effective way.

Kristin Hayes: Your reference to results-based finance makes me recollect a conversation that I think was quite prevalent in past COPs, which was related to monitoring, reporting, and verification (MRV), or the idea that in order to know if investments are really results-based, there has to be a robust MRV system in place in order to know that and to reassure donor countries that their dollars are going to good use, but not so burdensome that, as you wisely pointed out, it becomes a blockade and barrier to countries who are receiving those funds being able to use them as they see fit. Is there any conversation at this COP that you're aware of that deals with MRV? Where does the conversation on that stand?

Suzi Kerr: Transparency is rising as probably one of the largest ongoing issues in terms of getting good action on the ground. Anyone who has done game theory at any level knows that you can't cooperate unless you can see what other people are doing. The way that we see what other people are really doing and achieving is through national inventory activity. We need to have sound national inventories for more countries done more regularly and keep improving them in quality. Countries are beginning to do that, but they need technical assistance in some cases to make that happen. They need to be encouraged, and that needs to be an ongoing effort to make that sort of stuff visible.

I want to take a little bit of a sidetrack. I find it problematic when we talk about the countries that will be providing some of the extra money as donors. It suggests something about the power relationships between the countries. New Zealand will not be transferring money to a country like Chile just out of altruism—we will be doing that because New Zealand wants a stable climate. This is more like trade. We are buying these reductions. It's to the mutual benefit of everybody in the world in terms of climate. I think framing it as donor and recipient suggests that the donor should have control over how that's used. Shifting that balance is actually critical to us solving this.

Kristin Hayes: Great. Well, Suzi, we're almost at the end of our time here. I wanted to ask you one last substantive question. I'm going to follow up on something that I asked Dr. Cleetus last podcast. I put to her this question of what a successful COP would look like. Now that we're a week into this very critical meeting, I guess I'd like to pose that same question to you. Given what's unfolded so far, what would you say that a successful COP looks like to you from here on out?

Suzi Kerr: A couple of different things. First is a very big but also quite small thing. We are very close to having the rulebook established for the Paris Agreement. The outstanding part is the rules for international carbon markets under Article 6. I would love to see that agreed upon so we can draw a line under that and just get on with the implementation. In my opinion, most of the really important Article 6 trading is going to happen under what's called Article 6.2, where the rules are relatively simple, and the principles are all relatively well-agreed and understood already. The final agreement is just going to enable a lot of things that are already developing to happen without barriers.

More broadly in terms of what we'd like to see out of COP—and I think this is the critical thing from COPs, always—is that people come out feeling motivated, energized, mobilized to get on with action and implementation and go back and fight for even more ambition, and come out with new ideas of how they can do that. It's about maintaining and building the ongoing momentum.

Kristin Hayes: I heard a really interesting phrase expressed by, I believe, a political reporter— I apologize that I can't remember the name—he mentioned that one of the most important currencies at a COP is hope, and that is something that can be extremely difficult to come by in the context of climate change, and in terms of climate negotiations. But as he said, it is a critical currency here. I think your sense that people need to feel energized, need to feel like they can actualize some of the ideas that are coming up; it really speaks to that sense that hope is an important currency in these meetings and beyond.

Suzi Kerr: Can I add something to that? When you say that, I can hear Greta Thunberg in the back of my head saying, “I don't want your hope,” and I'm not quoting her accurately here. But I think that underneath that hope there has to be trust—growing trust among all the actors, across the countries—that we are actually all in this together, and that we're actually doing stuff, and out of that builds real hope, not a sort of fake hope.

Kristin Hayes: Right, the kind that's underpinned with action, not the kind that's underpinned with promises.

Suzi Kerr: Exactly. Yes.

Kristin Hayes: That makes a lot of sense. Well, Suzi, this has been great. I really appreciate it. Let me close with Top of the Stack, our regular feature. And certainly, you're welcome to recommend anything you've been reading that relates to COP26—there's certainly a lot of content coming out related to the COP—but also anything else that might have been of interest to you recently that's on the Top of your Stack. So, anything you'd recommend to our listeners?

Suzi Kerr: I'd like to step way down underneath COP, something where it's probably hard to draw a direct connection. It's a wonderful book that I keep coming back to and thinking about, and it's called Tears of Rangi: Experiments Across Worlds. It's by an anthropologist in New Zealand called Anne Salmond. What it is is an exploration of the very early days in New Zealand during which European ideas predominated, and particularly the idea of what's called the “Great Chain of Being,” which has these pictures where God is at the top and then the white male humans, and it goes right down to the less and less important things, down to nature at the very bottom. That was a very European way of thinking about the world. When the first Europeans arrived in New Zealand, they started to engage in really quite a serious way with Maori, and this Great Chain of Being idea collided with Maori conceptions of how humans and nature live together in this complex web of deep relationships and interdependence. It's really about the relationships and not the sort of linear approach.

The book takes that idea and helps those who aren't so deeply philosophical see how those ideas are now playing out in New Zealand as we are addressing these issues of climate change, water pollution, and deep structural inequities of income and power, and how the solutions to that in some ways require us to change the fundamental ways through which we think about out the world.

I found it to be a fascinating and challenging approach that deeply resonates with me because I have lived in New Zealand, in a place where these sorts of ideas have become a natural part of the way we think. We're not even aware that it's a Maori concept, but we just think differently. I find that terrifically powerful. The book’s not an easy read, but for those who are up for it, it’s beautifully written, and there are some fascinating stories and examples in there.

Kristin Hayes: Fantastic. Well, that sounds great. Suzi, thank you again. I hope you enjoy the second week of the COP, understanding and watching what happens from here, and it's great to have your insights. It's been a pleasure, and I really thank you for taking the time to talk with me today.

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