The Paris Agreement opened for signatures on 22 April 2016 – 175 countries signed it that day (the largest number of first-day signatures to an international agreement), with 15 ratifications. Several other countries promised to ratify the Agreement in 2016 – including Canada, the US and China.
While this was a landmark occasion for a ground-breaking agreement how well can we expect the Agreement to deliver? This blog takes a whistle-stop tour of some of the key factors in its favour and those that make it more difficult to believe the Agreement will work, plus what the Agreement could mean for big business and large energy end users.
Working against the Agreement
The Paris Agreement calls for countries to “hold the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C”. That’s great, but there’s a big “but”. The agreement doesn’t identify or provide for clear quantitative emission greenhouse gas restrictions imposed upon Parties to the Agreement. Despite lobbying from certain countries, neither is there an overall carbon budget attached to the Agreement. It does not therefore provide a definitive or clear outcome and it is thought by some that there is a lack of a system to make countries accountable for that delivery. In some commentators’ eyes, the Agreement is not even legally binding.
Added to this that current climate policies are unlikely to deliver the aims of the Agreement, its efforts could perhaps be said to have the odds stacked against it.
Working in favour for the Agreement
So far it doesn’t sound like we’re giving the Agreement much credit or chance to shine. In its favour though, it’s the first time in the history of international climate policy that a regular and ongoing process has been established to ratchet up or increase action by all countries (the “ambition mechanism”). In practice that means that every five years until the global temperature has stabilised, the countries signed up to the Agreement must together regularly re-evaluate progress made and submit a progressively ambitious climate action plan (compared to the previous). This, it is hoped, is what will make the Paris Agreement different to preceding policy. The aim is that this mechanism provides for a dynamic and long-lasting accord that has the inbuilt flexibility to respond to the evolving science of climate change, technological and economic opportunity and fluxes in public support for action.
The acknowledgement of “differentiated responsibilities” enshrined in the Kyoto Protocol for countries’ varying socio-economic starting points, abilities and appetites for climate action is reflected in the Paris Agreement. This agreement acknowledged that all countries should take action – albeit at different speeds.
Coupled with $100 billion a year in climate finance for developing countries by 2020 and a commitment for further finance to be agreed by 2025, these are positive moves – but considered by some to maintain levels of support rather than increase funding. Finance for adaptation however remains largely off-radar and is considered to be broadly lacking from the Paris Agreement.
An opportunity: will the Agreement amount to anything?
For big business and large energy users, the Paris Agreement presents a huge opportunity. Over 100 companies from across the world committed to align their emissions reductions targets in line with the level of decarbonisation necessary to keep global temperate increase below 2°C. In addition, just over 50 companies set targets of 100% renewables, and the financial and insurance sectors promised to aid the transition to renewables. All such commitments are a huge boon to their public relations – if they deliver on their promises of course. Let’s not forget that reducing carbon emissions can support sensible energy price risk and volume management strategies.
The Paris Agreement will enter into force once at least 55 countries covering 55% of global emissions have acceded to it. How long will it take to achieve this? If those countries that have promised to sign this year do so (including the US, China and Canada) it is possible that the Paris Agreement could be brought into force before the target date of 2020 – in 2016 or 2017. That would be an immensely positive step and could generate momentum for deeper emissions cuts sooner. The credibility of countries’ pledges will then be what counts – how effectively will they deliver on their promises?