Developed countries in the Convention must ‘take into consideration’ the impacts of the ‘response measures’ [in 4-2-8(h) and 4-2-10]. An interpretation is that victims of mitigation measures such as energy efficiency or alternative energy policies in the North could be compensated for decreased sales. This idea, regularly put forward in the UNFCCC by the Saudi Arabia, is mostly seen as an insult to vulnerable countries such as SIDS, where impacts of climate change are of a much greater magnitude.
Now that a wave of energy transition is sweeping the world, with 100 big cities and 43 vulnerable countries committing to 100% renewable energy, and insistence that oil should stay in the ground, no Party can be seen as responsible for lost sales of oil products. Markets, recent technologies and individual actions by citizens or businesses are responsible for this development, not Parties.
This concept shouldn’t be a laughing matter anymore. Diversification by fossil fuel dependent industries or countries is not only necessary for the climate. It also makes business sense. A new article in the draft (4-9-e former 4-9-f in L6), applicable to all Parties, insists on ‘resilience of socio-economic systems’ and on ‘economic diversification’.
Fortunately, some progress is being made on this unilaterally. Saudi Arabia’s GDP (market exchange values) in 2014 was about US$753 billion; the value of its total export was about $373 billion, of which oil alone stood for $285 billion. The value of oil revenues has declined to only 38% of its GDP. Saudi Arabia should be proclaiming its success, and showing others how to diversify their economies in such a way. The Saudi example demonstrates that there is no need for Article 3.15’s cooperative mechanism to address the adverse effects of response measures.