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Jonathan Shopley reviews preparations for the big Climate hoedown in Paris in December and anticipates some new moves that are good news for business. Read more ….
The last time the 196 nation signatories to the United Nations Framework Convention on Climate Change gathered to negotiate a successor to the Kyoto Protocol in Copenhagen in 2009, it was all “shake, rattle and roll” and business was something of a wall flower, watching proceedings in dismay from the sidelines. Political resolve to agree meaningful global GHG emissions reduction targets was shaken – so severely it all fell apart. The few billion dollars rattling around in the empty promises by developed economies to help developing countries make the transition to low carbon growth didn’t persuade them to play ball. And so the whole exercise was rolled over for six years.
Now that six years is up, and the Parties are gathering again this December in Paris to have another go at it. This time its “Pivot, Ratchet and Party”, and business is very much invited.
Get ready for the pivot
A word most widely used to describe the Paris Summit is ‘pivotal’ as there are well founded reasons to expect a significant positive change in direction at COP21. Ineffectual top-down negotiating processes heavily influenced by world super-powers have been replaced by bottom-up processes in which all nations make a self-determined contribution to reductions -- Indicative Nationally Determined Contributions or INDCs. The Green Climate Fund set up to support low-carbon transformation in least developed countries has received public and private funds, and is beginning to move the needle.
Business, previously held at arm’s length from the convoluted political machinations, has been invited to contribute its views, its innovation potential and its capital. Progressive businesses have RSVP’d by getting in amongst it, calling for political courage and commitment to price carbon, to set scientifically informed GHG reduction targets and to provide the clarity and consistency that will encourage business to make the long-term investments required to transform the global economy.
Many of the stand-out initiatives I mentioned in my last blog on Climate Week in New York City in September (the Paris warm up) where either led by business - for example, RE100’s growing membership of influential corporates making a commitment to 100% renewable energy; supported by business – like the launch of the UNFCCC’s ‘Climate Neutral Now’ platform which heard Microsoft and Marks & Spencer talk about their long-standing commitments to carbon neutrality; or, NGO-led initiatives embraced by business – such as the WRI / CDP/ UNGC / WWF coalition’s ‘Science Based Targets’.
Credit also is due to the 126 nations that have submitted their INDCs which cover 86% percent of global greenhouse gas emissions according to analysis by the World Resources Institute (WRI). The cautiously ambitious INDCs already submitted by China and the US have the two major economies that didn’t have targets under the Kyoto Protocol back in the tent.
Watch out for the ratchet
However, ongoing analysis by PwC indicates that so far, the aggregate rate of reductions in those INDCs is less than half of what is needed to meet scientifically informed reductions targets. ‘Ratchet’ is fast eclipsing ‘pivot’ as the most used word in the pre-Paris narrative. No one close to the preparations for Paris anticipates a signed and sealed deal that will click seamlessly into place in 2020 and set us on course for a stable climate by 2050.
What Paris is most likely to deliver is an agreement to which every country has made an individual commitment, and which will form the basis of further tightening during the five years to 2020, and then at five year intervals thereafter. It will be that ratcheting up of ambition that will test the old fault lines of developed vs developing countries, and the extent to which individual nations seek to protect their legacy fossil fuel energy resources and assets.
Get ready to party
Paris will focus on the INDCs and how those can be knitted together into a coherent international agreement. The public commitment and leadership of Obama for the US and Xi jinping for China and the coordinating efforts of the EU on behalf of its 28 members have that process off on a good start.
The UK, historically a recognised leader in national climate policy, is digesting the latest report, ‘The scientific and international context for the fifth carbon budget’, from its independent Committee on Climate. It sets out the climate science and global circumstances that will inform its advice to Government on the fifth carbon budget which is due to be published at the end of November, ahead of the COP21 talks in Paris. The Committee has confirmed that the UK’s goal to reduce greenhouse gas emissions by at least 80% by 2050 remains in line with the international commitment to a maximum of 2°C warming.
Over a quarter of the INDCs pay particular attention to the lowest-cost path and competitiveness issues. Countries like Brazil are hinting they’ll go further and faster with their absolute reduction targets, particularly those associated with rainforest protection – but only if other nations come to the party. The INDCs are taking on a new role – acting in some instances as national investment prospectuses with which to encourage countries and the private sector to co-invest in each other’s low carbon projects. Norway has for many years directed meaningful sums from its sovereign funds into forest protection in responsive countries like Indonesia. In the Americas, states including California, Quebec and states in Mexico are formulating plans to link their efforts through emerging sub-national Cap & Trade initiatives.
Peter Bakker, CEO of the World Business Council for Sustainable Development (WBCSD), and keynote speaker at our recent event to examine the changing relationship between business and policy, called out three reasons why business is ready to play a key role. First it has become clear that the cost of action on climate is now lower than the cost of inaction; second, corporate strategies that address climate risks have become a critical part of a business’s license to operate; and, third, there is no greater opportunity for growth. And the 200+ corporate members of the WBCSD see substantial opportunities for growth in the transformation of cities, the protection and enhancement of land and ecosystems, and the transition of global energy systems.
Do's and don'ts for Paris
So, while Paris is going to be pivotal, don’t get caught up in the rollercoaster ride that is the mood-music for every climate summit. The gathering of world leaders, celebrities and civic society activists in a hard to follow melee of mini triumphs and failures will prompt the usual seasonal COP pessimism.
Rise above that, and Paris will emerge as the start of collaborative, transformative action at scale – “the start of implementation, the end of talk” according to Bakker. And pace yourself, there will be lots of hard, rewarding work to do after the party.