Paris in Focus

Next week, on April 22nd, the environment will come under focus as the world celebrates another annual ‘Earth Day’; this one bears more significance than most as world leaders gather at the United Nations in New York to sign the Paris Agreement. As the Paris Agreement will no doubt gain extra media attention next week, we look at the ‘need-to-knows’ of this historic accord.

Haven’t they already agreed?

The signing is the second of three steps before the Paris Agreement takes effect with the first being the adoption of the text by negotiators at COP21. The final stage will be the ratification by individual nations at a later date.

What’s the big deal?

This is set to be the largest single-day signing of an international agreement and represents a monumental diplomatic feat as almost every nation reaches a consensus on the need for concerted efforts to mitigate and adapt to climate change.

Didn’t we know that already?

For years there has been overwhelming scientific consensus on the dangers of climate change under a ‘business-as-usual’ scenario however political logjams have marred any significant international efforts to curb greenhouse gas emissions. The innovative approach to discussions in Paris were widely regarded as being key to achieving successful negotiations.

So what did they actually agree?

The text of the agreement centred around a few key numbers:

  • Limit global warming to 2°C (while aiming for 1.5°C)
  • 189 countries submitted targets in the form of Intended National Determined Contributions (INDCs) accounting for 99% of global emissions
  • Countries must re-assess their targets every 5 years (from 2023); they cannot lower them and are encouraged to set more ambitious targets over time

The final question is when will it take effect? The agreement needs to be ratified at a national level by 55 countries representing 55% of emissions.  It is possible that enough countries will move it through the approval process for that to happen this year however given the varying domestic approval timelines, 2017 is more likely.

In the meantime, there are constant and growing efforts from businesses, organisations and individuals around the world to reduce their own impact. Progress has been slow to get to where we are now but the pace is accelerating; the more we do, the more we abate the negative impacts of climate change and next Friday will be one step further along the path.

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Budget 2016 – A missed opportunity?

We heard from the Chancellor George Osborne yesterday as he set out government spending plans and it certainly offered a mixed bag for the energy and environment sector. It was framed as a budget of long-term solutions, “putting the next generation first”, which was promising following the recent Paris Agreement, however this claim has since received some criticism from representatives of the ‘green economy’.

There were undoubtedly some positive announcements and there was an obvious effort to streamline energy efficiency requirements for businesses. Following a consultation on the future of the energy efficiency tax landscape it was finally revealed that the CRC scheme is to be abolished. In the form it has adopted, the CRC is a tax rather than a ‘commitment’ and, recognising this, the levy will be collected through an increase in the Climate Change Levy (CCL) after the 2018-19 reporting year.

The obligation for large companies to report on their greenhouse gas (GHG) emissions will remain. In the consultation, GHG reporting through the ESOS regulations was highlighted as a successful driver for energy efficiency investments. CO2balance are conducting a review of our ESOS experience and will publish the results in the coming weeks.

A single energy and carbon reporting scheme is to be introduced from April 2019 that integrates the requirements from climate change agreements (CCA), the ESOS regulations and the EU emissions trading scheme (EU ETS). In the short-term, not much will change but a single reporting system and tax will be seen as an improvement for any company negotiating the current overlapping policies and schemes.

Those looking for a drive towards a low-carbon, energy efficient future however have found few positives. After the last Budget the CCL also applies to electricity generated from renewable sources who will be impacted by the increase and policies to support and encourage the renewables sector were again, scarce. This dearth is one reason the UK has slipped in the ‘Renewable Energy Country Attractiveness’ table and with the announced tax cuts for oil and gas it does not seem as if the Government has much ambition to climb it again.

In the first Budget since the Paris Agreement and in the face of record-breaking global temperatures over the first two months of the year, many felt there was an opportunity to send a strong signal to bolster the ‘green economy’ in the UK. This ‘budget for the next generation’ however, was particularly notable for its failure to mention climate change at all and has left many feeling that, perhaps, this was an opportunity wasted.

The Paris Agreement: Look beyond the imperfection

 

On Saturday December 12, 2015, applause and cheers broke out throughout the conference hall at COP21 in Paris. It was celebration mixed with relief. The result is the first agreement requiring all nations, rich and poor, to pledge action on climate change, with the aim of restricting global warming to “well below 2C above pre-industrial levels”, and to strive to “limit it to 1.5C”.

The Paris Agreement represents a marked shift when juxtaposed against the last 21 years as the climate circus rolled on from place to place, conference to conference, with very little to show for itself. Each of these spectacles, Berlin Mandate, Kyoto Protocol, Marrakech Accord to name a few (notice the change in outcome name for political purposes) have been hailed by the climate champions and politicians as major breakthroughs. Their overall impact plus or minus, zilch.

I should probably admit that over the last number of years I believed the publically financed jamboree that is COP should be declared defunct and unfit for purpose, with emancipation a necessary pre-condition for progress on managing climate change. But the COP circus beat on, boats against the current. Or so it seemed.

Fast forward to December 2015. The Paris Agreement and the supporting decisions are a diplomatic triumph, an act of true global co-operation of historic significance. The diplomats have done their job and have set ambitious climate goals. The Paris agreement points the world in the right direction with sophistication and clarity, against a backdrop of 21 years of negotiations that achieved very little. A remarkable outcome. Our first question is, how did this happen?

The climate community and wider debate has matured. It has done away with a top-down deal and instead replaced it with a voluntary bottom-up deal. This bottom-up approach is made up of voluntary intended nationally determined contributions (INDCs in UN jargon) from all 195 signature countries. Unrealistic, top-down absolutism has been replaced with pragmatic, bottom-up flexibility. The importance of this should not be understated. It became clear to the UN climate envoy that a legally binding top down deal in which a global per-capita carbon budget was divided up between nation states was doomed to fail. The only framework that would be accepted was one which was essentially voluntary. This should not be misrepresented as the global community reducing overall ambition on climate change. It was simply the result of a growing understanding of methods in which ambitious climate goals might actually be met, rather than procrastinated about. After all, the Kyoto Protocol was binding, and when it suited them Canada, Russia and Japan simply walked away from it, with no penalties whatsoever. Binding is not the solution in this context. Action is the solution. Imperfect action, but action nonetheless.

This shift in acceptance of the necessary imperfection in the Paris Agreement has not been universal. Idealists and cult like climate change ultras still exist in activist groups, academic circles and around negotiating tables. These groups would seek to sacrifice action on the sanctum of perfection. Unfortunately for them the truth is, the developed world is never likely to penalise itself for its historical carbon emissions profligate as they so long for. Of course there is merit to the fact that it should (see link to a previous blog of mine) but unrealistic to think it will. Neither will the rich world allow the developing world a turn at the emissions helm and allow them to run the planet close to the edifice as the older nations struggle to compete and grow. What matters most is that developed and developing countries have agreed to be pragmatic.

This new pragmatism matters. It embraces a certain reality. A zero carbon, zero fossil fuel world, has more in common with the simulated reality in the movie The Matrix than it has with Planet Earth at the present time. Fossil fuels are the main source of CO2 emissions. Fossil fuels represent circa 80% of global energy consumption. They are at the absolute heart of our economies. However, 2015 is the first year that the world could dare to dream about a clean energy low carbon future. The cost of clean energy has been coming down rapidly. This falling cost of clean energy technologies gave policy-makers at Paris growing confidence that shifting to a low-carbon future is not an unaffordable pipe dream, but something that can, gradually, be delivered.

The Paris Agreement should also be seen as a product of the year 2015. In what was a momentous year for clean energy growth, oil prices took a huge nosedive hitting 11 year lows, with the hydrocarbon industry in disarray in some quarters. Advocates of clean energy however, must restrain their Schadenfreude at this sight. False solutions such as divestment need to be avoided. As far as divestment goes it is fine. But that is not very far. Paris did not nor should it ever have looked to deliver an extinction event for fossil fuels. To wish for this as some have is to underestimate the scale of the challenge ahead. Fossil fuels have done mankind a service, in broad accord with the political consensus of an earlier time. Paris should be seen as the first step in what will no doubt be a difficult divorce between the world economy and fossil fuels, a divorce that is well and truly underway.

Of course, there is still room for the cynics, the extremists who would seek to deride Paris as a sham agreement, to focus on the inherent imperfections of an agreement involving 195 different parties. At this point we must openly acknowledge the truth, grim as it is. The voluntary INDCs at the heart of the agreement do not yet add up to a 2C limit, much less a 1.5C limit. Furthermore, it is not obscene to suggest the Paris Agreement could end up a failure. Or it could partially succeed, with current commitments honoured and future ambitions diluted. Determined as some of the INDCs are, far more ambition will be needed in future to hit its goals. But anyone who thinks that this is a Achilles’ heal is thinking obtusely. The Paris Agreement contains a powerful ratchet mechanism, repeated every 5 years, for ever-increasing ambition. Forces now at work will act inexorably to push up not rein back ambition on climate. Ambition. Ambition. Ambition.

Global agreements are necessary for global problem-solving and collaboration around a shared goal. The urgent, long overdue challenge of implementation now begins. We would do well to look beyond any imperfection and acknowledge that the Paris Agreement is a turning point in the world’s fight against unmanaged climate change.