The Renewable Resources Report

The Road to Paris and Beyond

From November 30 to December 11, 2015, representatives of almost 200 national governments and tens of thousands of civil society observers will meet in Paris for the 21st Conference of the Parties (COP 21) to the United Nations Framework Convention on Climate Change (UNFCCC). In early October, World Resources Institute (WRI) hosted RNRF’s round table on this topic with Jennifer Morgan, Global Director of WRI’s Climate Program [read the accompanying post for background information on the negotiations]. Volume 29 No. 4 of the Renewable Resources Journal features “The Road to Paris and Beyond,” an article discussing the climate negotiations in greater detail. Originally published by the Centre for Climate Change Economics and Policy and the Grantham Research Institute on Climate Change and the Environment, this piece delves into the issues that must be addressed for successful international climate cooperation.

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The likely outcome of Paris will be a central, universally applicable, legally-binding agreement associated with the intended nationally determined contributions (INDCs) by countries to restrain and reduce emissions, but the achievement of these contributions will likely be non-binding internationally. While some believe that legally binding and enforceable obligations would be superior, this is not necessarily the case. Participation in international agreements is voluntary, and different countries have varying motivations and capacities for participation. In current circumstances, the authors believe that a more flexible approach has helped increase engagement in the process by some of the most important countries (including the United States, China, and India) that may have been alienated by a more centralized agreement.

If emissions reductions ultimately occur at a national scale, then what is the purpose of international cooperation? According to this article, cooperation is needed, among other reasons, to:

  • Help finance and technology flow to the best projects, and to improve domestic institutions to that end
  • Ensure the processes and outcomes of this transition are equitable and legitimate.
  • Generate political momentum for domestic reforms and counterweigh the political power of vested interests
  • Spur innovation and cost reductions in new technologies and processes and their adaptation to local circumstances
  • Provide direct incentives for mitigation in residual areas where local costs continue to outweigh local benefits

 

Net-zero emissions

The first key to successful climate cooperation is to understand the problem and what a successful response would ultimately require. In 2014, global emissions were around 51GtCO2e (gigatonnes of carbon-dioxide-equivalent). In order to be on a plausible 2°C pathway, emissions should be:

  • Around 35GtCO2e in 2030
  • 20GtCO2e in 2050
  • Roughly zero, and possibly net-negative, by the end of the century

Emissions reductions on this scale would require an “energy-industrial revolution.” The most urgent priority for decarbonizing the global economy is to decarbonize the electricity sector. Since coal is the single largest contributor to global greenhouse gas emissions from energy, there is a particularly strong case for international cooperation to phase out unabated coal. It is reasonable to put the onus on developed countries to decarbonize electricity well before mid-century, thus fueling the innovation and cost-reductions in key technologies that will enable developing countries to follow suit.

 

Equity

Equity and justice are intrinsically and instrumentally important issues in the international climate negotiations. Although rhetoric surrounding equity discussions often refers to sharing “burdens,” much of the transition to a low-carbon economy can be rightly characterized as a beneficial opportunity. Countries have the opportunity to improve their economies and societies in the context of dynamic changes in technologies, prices, institutions and norms, the benefits of which are magnified by international collaboration. Under the UNFCCC’s principle of “common but differentiated responsibilities and respective capabilities,” a promising way forward is to embrace complementary transitions wherein “rich” countries embark on a strong and early transition to low-carbon and climate-resilient economies, while developing countries undergo a similar transition supported by finance technology and knowledge from developed countries and the private sector.

 

Domestic institutions, policies, and politics

Domestic institutions, laws, policies, and political configurations that foster ever-greater ambition with regards to climate action are an important catalyst for countries to raise their ambition over time. It will be important for countries to:

  • Develop new, or utilize existing, state development/green investment banks to lower the cost of capital for low-carbon infrastructure and institutions for zero-carbon innovation
  • Undertake nationally appropriate reforms to improve the domestic investment climate and lower the cost of capital for low-carbon projects and facilitate technological innovation
  • Design and sequence low-carbon policies and institutions in ways that take account of the politics and political-economy of structural transition

 

Finance for sustainable development

Financial support for sustainable development in poorer countries is critical to an effective climate response. To get investment flowing in a sustainable way, it is important to have access to the right forms of finance, put towards the right infrastructure, at the right time. Fortunately, sustainable investment opportunities are plentiful, and now it the right time to invest in low-carbon growth. In many developed countries, the private sector has record levels of savings and liquidity, and long-term real interest rates are low. Many resources are currently unutilized or underutilized and can instead be invested in activities and infrastructure that have strong economic/social rates of return.

 

Innovation

Innovation in general is impeded by market failures along the innovation chain. Low-carbon innovation is further undermined by its high capital requirements and the mispricing of many existing good and services that are central to climate change. Low-carbon innovation is dangerously underfunded throughout the world. The following would be valuable to fostering innovation:

  • Scaled up public research & development funding
  • Public-private regional networks focused on the development and demonstration of new and locally-adapted technologies and processes
  • Expanded and better coordinated deployment support policies

 

Dynamic elements of the Paris agreement

Success in Paris hinges largely on whether the new agreement contains elements that create pressure to scale-up ambition in the years following COP21. These elements could include:

  • Clear long- and medium-term shared goals based on climate science
  • Recognition of the gap between those goals and the commitments pledged under the agreement at that point in time, and provision for a regular, science-based assessment of aggregate emissions embodied in existing commitments and comparison with emissions reduction pathways for 2°C and 1.5°C
  • Acknowledgement that the Paris agreement is intended to be a dynamic instrument, embodying a shared expectation that parties’ commitments must rise over time in order to bridge the emissions gap, and therefore that their 2015 INDCs are to be treated as starting points or minimum commitments, to be revised upwards over time
  • Encouragement of parties to adopt domestic institutions, laws, and policies that can be expanded over time as conditions for reducing emissions become more favorable, and to explain how these enable the achievement of their INDCs and the progressive raising of ambition
  • Encouragement of parties to submit long-term decarbonization plans soon after the Paris conference
  • A mechanism for a regular (e.g. five-yearly) major review of commitments at which time all parties are expected to raise the ambition of their commitment
  • Recognition in the agreement of diverse and significant contributions made by agents that are not parties to the agreement (e.g. subnational governments, cities, businesses) and the potential that exists for these agents to raise their ambition over time and in turn facilitate greater ambition by parties

 

Volume 29, No. 4 of the Renewable Resources Journal is available for free download.

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