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Jan 01, 2016

Paris Climate Summit: International Commitment to Reduce Emissions

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The Paris climate summit (also known as COP21) adopted the Paris Agreement on December 12, 2015, creating binding procedures and non-binding emissions targets for participating nations. The Agreement was approved by 195 countries and will become effective once 55 countries accounting for at least 55% of global emissions have acceded to it.

While hailed as a breakthrough agreement to avert the harmful effects of climate change, it does not legally require emission cuts from any country or region. However, the transparency provisions and the requirements to establish, every five years, country-specific commitments to reduce emissions, are binding and promise to maintain focused attention on climate issues for the foreseeable future.  

The Paris Agreement embodies the commitment to reduce global emissions from peak levels as soon as possible and imposes this obligation on all countries, rather than only on developed countries. Countries pledged “to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century,” which reflects the commitment to get to “net zero emissions” between 2050 and 2100. This is important because the UN’s climate science panel has stated that net zero emissions must happen by 2070 to avoid dangerous warming.

Five Objectives of the Agreement

Broadly speaking, the Agreement achieves five objectives.

First, the Agreement sets aspirational goals to limit worldwide increases in temperature. Specifically, the text seeks to limit the increase in the global average temperature to “well below 2 degrees Centigrade above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 degrees Centigrade above pre-industrial levels.” The 1.5-degree centigrade commitment seemed unachievable as recently as a few months ago, and constitutes a significant improvement on the 2-degree centigrade increase that nearly 200 countries had previously agreed to during the 2009 Copenhagen Climate Conference.  

Second, the Agreement prompts countries to set national targets for reducing greenhouse gases, or GHGs. Before the Paris Conference began, more than 180 countries had submitted pledges to cut or curb their carbon emissions (in the form of “intended nationally defined contributions” or INDCs). Scientists concluded, however, that these INDCs would lead to a 2.7-degree centigrade rise or higher. As part of the deal, countries will be required to submit new emissions-reduction pledges every five years, starting in 2020. While the Agreement does not require countries to increase commitments for emission reductions, the goal is to pressure them to consider stronger action over time, and ideally, as emissions reduction technology becomes more readily available at lower price points.

Third, the Agreement establishes transparency rules to help pressure countries into achieving their proposed emissions reductions. These rules will also help others verify that nations are constraining their emissions in line with their commitments. Given the absence of binding requirements concerning actual emissions, we presume that international pressure, rather than international law, would be brought to bear against non-compliant countries.

Fourth, the Agreement encourages developed countries to offer financial support to poorer countries to help them reduce their emissions and adapt to climate change. This is because poorer countries will need help in adopting clean energy and adapting to climate impacts from increased global temperatures. Although the Agreement’s $100 billion annual commitment by developed countries to poorer countries is non-binding, this provision is likely to further pressure developed countries to assist poorer countries with climate change adaptation costs and clean energy development projects. The Agreement provides that the countries “intend to continue their existing collective mobilization goal through 2025,” meaning that the flow of $100 billion a year will continue beyond 2020. By 2025 the Agreement contemplates an increase of that amount, “from a floor of $100 billion.”

Fifth, the Agreement addresses, albeit in limited fashion, small island nations’ concerns regarding loss and damage from climate change. However, no liability or compensation provisions in favor of island nations were included in the final draft.

Looking Ahead

The Paris Agreement reflects a consensus view among nations that carbon emissions must be reduced significantly over the coming decades in order to avoid potentially catastrophic global average temperature increases of three degrees centigrade or higher.

By requiring evolving commitments to reduce carbon emissions, the Paris Agreement makes clear that renewable energy will be a crucial part of the world’s future energy mix.  The Agreement should also unlock significant public and private sector investments in carbon-neutral or carbon-reducing technologies.  Investors should anticipate increased national and regional preferences for renewable energy, which by their nature do not involve the combustion of fossil fuels and the discharge of carbon-based emissions.

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