The Path Towards a Free Emission Planet
Climate Change is the greatest challenge in the 21st Century
This year Dorian was recorded as the most powerful tropical cyclone and worst natural disaster in the history of Bahamas. The material and human damages were unprecedented with 40 deaths, 70,000 people left homeless and US 25 billion in insurance losses. Earlier in eastern Africa, Cyclone Idai claimed 1,000 lives and over 2 billion dollars in damages. Wildfires devastated significant forest areas in California, Brazil and Australia. The cumulative economic cost from natural catastrophes the past decade exceeds one trillion dollars which is equivalent to the GDP of Mexico.
Climate change is the grates challenge faced by humanity in the twenty first century. Scientific evidence is clear; last year, the Intergovernmental Panel on Climate Change (IPCC) concluded that the consequences of global warming are already being felt through more extreme weather, rising sea levels and diminishing Arctic sea ice. Limiting the increase of temperature to 1.5°C by the end of the century would reduce challenging impacts on ecosystems, human health and well-being.
Climate is a global good. Its preservation depends on global human needs and decisions, the technologies applied, and the scope and scale of consumption and production patterns adopted. It is for this reason that collective action is the only way to tackle climate change. In the international policy context, collective action is expressed through cooperation instruments that vary in terms of membership, scope, legal status, continuity, degree of institutionalization and, most importantly, effectiveness.
Innovating the International Climate Regime
Without doubt, the best known and most institutionalized international cooperation instrument is the United Nations Framework Convention on Climate Change (UNFCCC) which entered into force in 1994 and to date has a membership of 198 parties. The Kyoto Protocol from the UNFCCC set emission reduction targets to 37 developed countries and the European Union which collectively should have reached a 5% emissions reduction by 2012 with respect to 1990 levels.
Both the Convention and the Kyoto Protocol established a precedent of global collective action. They have also built capacities to tackle climate change at the regional, national and local levels. However, their results have been insufficient. On one hand, the emission reduction targets set by these instruments felt short with respect to the ambition suggested by science. On the other hand, a number of industrialized countries were unable to meet their commitments. Moreover, the Kyoto Protocol targets did not considered the participation of the United States, China and other emerging economies which nowadays represent the bulk of the global emissions.
After several years of negotiations to update the UNFCCC, an agreement was reached in Paris in December 2015. The Paris Climate Agreement is probably one of the most progressive international cooperation instruments ever adopted. Its commitments are in line with science as to stabilize the increase in the global average temperature to well below 2 °C and pursuing efforts to limit the temperature increase to 1.5 °C above pre-industrial levels. It is also binding and universal by including all the membership of the UN. Currently, 184 countries have submitted their National Determined Contributions (NDC) which include mitigation, adaptation and other measures leading to implement the goals of the agreement. The Paris Agreement also considers a long-term goal for adaptation as well as important provision on financing, technology, capacity building and transparency. While the sum of all mitigation commitments contained in NDCs is not enough to stabilize the increase of global temperature at 1.5 °C, the agreement is dynamic allowing for periodical revisions of NDCs to reach such target.
The Paris Agreement entered into force in November, 2016 and to this date 187 Parties have ratified it. However, there are significant challenges ahead to ensure its effective implantation. On one hand, there is a pressing need to keep parties engaged and committed in the face of social unrest and political transition in many countries. On the other hand, the implementation of the agreement must be in line with the socioeconomic realities of a modern world.
In the last years, countries around the world have experienced social unrest and political transitions with different implications on global commitments to address climate change. From announcements to withdraw from the Paris Agreement to denying the importance of the rain forest as a carbon reservoir, they have weakened trust in diplomacy and the international decision-making process. This is why international agendas must consider a broader scope of engagement with stakeholders beyond national governments. Subnational governments and cities in particular are key players in terms of mitigation and adaptation strategies. It is estimated that that cities are responsible for 70 % of global CO2 emissions and 70% of the cities are already dealing with the effects of climate change, and nearly all are at risk. Through the rulemaking process, legislators are essential to ensuring continuity of national commitments regardless of the shifts in executive branches. The civil society and the academia are also fundamental in terms of influencing policy makers through advocacy and sound scientific research.
The Power of Inclusion
In times of uncertainty in political processes and government engagement, the youth and the private sector will become fundamental forces to enhancing political will and leveraging the necessary resources to finance the transition to a free carbon economy. Inspired by the 16 years old Swedish activist Greta Thunberg, youth climate strikes engaged 6 million people around the globe in the past months. This is a phenomenon never seen before. The youth are the decision makers of today′s world. One fourth of the world′s population (about 1.2 billion people) are youngsters between 15 to 24 years old. They are the most educated and connected generation in the history, boosting productivity in labor markets, disrupting economies as entrepreneurs and innovators, and influencing millions from school children to politicians.
Today′s youngsters use information and communication technologies -internet, smart platforms and social media- as primary tools for work, knowledge, interaction, belonging and entertainment. Perceiving climate change as a risk to their development and wellbeing, they access diverse information resources from articles to photos, documentaries and media clips. They can even georeference their own city or locality and learn about the potential impacts and current policy responses.
Young people who are less than 30 years old, will become the decision makers of the next decade in all aspects of life, many of them already are. At the workplace, in the family, as scientist, politicians, innovators and entrepreneurs they will define the profile of the global economy and the burden on the planet′s carrying capacity. It is for this reason that the youth must be integrated into the climate decision making process at the international and national levels. Not only will they contribute with fresh and innovative ideas on tackling specific challenges, but their dissemination, sharing and convening potential is unparalleled. The Greta Thunberg and climate strikes phenomenon from last month have signaled only the beginning of a process that will certainly define the future of global politics.
In many ways, the private sector is already leading the transitions to a low carbon economy through investment in infrastructure, equipment, process reengineering, innovation and corporate social responsibility. Consumers around the world are more climate conscious. They are changing their lifestyles and are increasingly questioning the environmental footprint of the goods and services they demand. By the same token, many companies have realized that it makes business sense to invest in sustainable solutions to access niche markets, increase profits and to manage risk. However, governments will need to intervene in order to enhance and accelerate this trend. First, they need to strengthen regulations for emitters in all sectors. Then, they need to establish conductive frameworks for climate friendly investment by reforming energy laws, partnering with the private sector in key projects and improving transparency. Finally, they need to show case climate champions, foster innovation and make sure that solutions are widespread.
Carbon Pricing-the Way Forward to Finance the Transition
For the past two decades, climate change negotiations have introduced concepts such as decupling emissions from economic growth, green growth, low carbon development, decarbonization of the economy and net-zero emissions, among others. According to IPCC calculations, in order to reach the 1.5 °C average temperature increase by the end of the century, global emissions need to peak by 2030 and be neutral or net-zero by 2050. The transformation needed to reach this target is unprecedented because the foundations of the current economy are built on fossil fuels. It will imply changing our culture (specially skepticism about climate change and consumerism), replacing most of the energy infrastructure, shifting from carbon to clean technologies in all aspects of life, transforming our cities and urban development patterns, halting deforestation and capturing methane emissions from waste and livestock, among many others.
Beyond addressing cultural issues, which are generational and seem to be gaining momentum, the investment required to drive such transition is massive. The OECD estimates an amount of US $6.9 trillion dollars a year of investment in infrastructure to be consistent with a 2 °C goal of temperature increase. This figure is equivalents of the combined GDPs of India, Brazil and Korea or larger than the GDPs of Japan and Germany. International commitments on climate financing, which express the will of government to mobilize resources, fall significantly short compared with this figure. Hence, government budgets will not be enough to finance the infrastructure required for the transformation. Some recent estimations suggest an 80% share of private financing necessary to complement public funds. However, governments still play a fundamental role in engaging potential investors through different policy tools.
In a context of urgency to achieve carbon neutrality by 2050 and massive investment needs to support this path, carbon pricing is the only promising alternative to propel the transformation required. Carbon pricing is the most efficient tool for emission reduction because it immediately allocates the costs of pollution within the proper actors. It fosters innovation, investment, business development and competitiveness. In the past few years we have experienced an unprecedented embracement of carbon pricing instruments in different regions and by different actors.
Today, 57 carbon pricing schemes around the world are implemented or scheduled for implementation, covering over 20% of global emissions. In the same line, a growing number of companies around the world are adopting internal carbon pricing schemes. However, there are still many opportunities for broadening and deepening carbon pricing in different sectors and regions. The High Level Commission on Carbon Pricing recently concluded that the carbon price level consistent with achieving the Paris-1.5°C target is at least US$40-80/tCO2 by 2020 and US$50-100/tCO2 by 2030 (CPLC, 2017). This level is significantly higher than the current carbon price average. Higher carbon price levels will not only foster a reduction in emissions, but they will also spur the investment required for a low carbon economy.
2020-A Time for Definition
Twenty twenty will be a defining year for the climate agenda. The Paris Agreement will become operational and parties need to be ready to start its implementation. It marks the beginning of a new era of commitment and ambition to address climate change globally. While the Paris Agreement includes a number of relevant provisions, the most important one is the goal to keep the average temperature increase bellow 2°C and hopefully at 1.5°C. National mitigation commitments expressed in the 184 NDCs are not in track to reach this goal. Without considering the potential withdrawal of key countries from the agreement, the emission reduction pledged in Paris would lead to a global mean temperature rise between 2.9 °C and 3.4 °C by 2100. The current level of NDC ambition needs to be roughly tripled for emission reduction to be in line with the 2 °C goal and increased fivefold for the 1.5 °C goal.
The new era of global commitments and ambition must be comprehensive and wide-ranging. Political transitions and socio economic realities have shown that global commitments cannot be limited to national governments. An army of stakeholders and interest groups around the world is emerging to demand more ambition as well as more involvement in decisions and actions to address this global challenge. Governments and international decision makers must embrace this opportunity by designing solid frameworks of interaction and collaboration.
This past September, the UN Secretary General convened a Climate Action Summit in New York, where about 70 countries ratified their intentions to update their NDCs towards net-zero emissions by 2050. While the largest greenhouse gas emitters were silent or ambiguous about their intentions, many non-state players presented pledges to boost mitigation at all levels, including 10 regions, 102 cities, 93 global business and 12 major investors. Recognizing the fundamental role of young people in the climate agenda, a Youth Summit was organized in the framework Climate Action Summit in NY. Now the challenge is to translate these emerging commitments into emission reduction figures and to establish frameworks for continuity and transparency. The Marrakech Partnership for Global Climate Action is beginning to address such task.
The 25th Conference of the Parties of the UNFCCC (COP25) is currently taking place in Madrid. While COP meetings are complex involving a wide range of issues for negotiation, two areas deserve special attention: higher ambition and wider involvement. In terms of ambition, the 70 countries who expressed in NY their intention to update NDCs and/or transit towards net-zero emissions by 2050 account for less than 8% of the emissions worldwide. It is imperative to encourage more countries, especially high emitters to update their NDCs with more ambitious goals. The involvement of China is particularly important not only for being the largest emitter in the world but also because of the leadership it has gained after the US announced its withdrawal from the Paris Agreement. Other important countries due to the scale of their emissions and geopolitical influence are India, Russia, Japan, Brazil, Indonesia, Canada, South Korea, Australia, Thailand, South Arabia, South Africa, Turkey, Poland and Nigeria. Together with China, these countries represent 53% of global emissions and would take us close to the 80% range if we consider the European Union and the countries that ratified their net-zero emission intentions in NY last week. Further ambition could be attained by a solid involvement of non-state actors and by quantifying their corresponding emission reduction commitments in a comparable manner and based on principles of environmental integrity.
As mentioned above, non-state actors including provinces, regions, cities, and private sector entities present a massive opportunity for increasing the emission reduction potential. A growing number of them are already working on emission reduction strategies and some even have committed to net-zero emissions by 2050. In the United States for instance, more than half of the states have targets for clean energy, a number of them have adopted carbon pricing policies and California has the stringiest emission standards in the world. At the Climate Action Summit from last September, companies with a combined market capitalization of $ US 2.3 trillion dollars pledged to take action to align their businesses with science-based targets and the US$2 trillion-Asset Owner Alliance committed to transitioning to carbon-neutral investment portfolios by 2050. Besides the 102 cities that embraced the net-zero emission target by 2050, two thousand cities committed to strengthening their capacities in project preparation by 2030, placing climate risk at the center of decision making, planning, and investments.
Three challenges emerge from higher involvement of non-state actors. First, the Paris Agreement is conceived as a long term, legally binding instrument for state actors. Although the participation of subnational government and other non-state actors has been encouraged and facilitated for many years within United Nations climate negotiations, the decisions are binding only to state nations and it is difficult to monitor and enforce pledges from other actors. Second, non-state parties can advance international pledges unilaterally or within a region or a likeminded group; but they still need to overcome several filters in the jurisdictions where they operate. For instance, a subnational government adopting a progressive emission reduction agenda could be challenged by its own national government on legal, budgetary and even political grounds.
Finally, commitments and decisions within and outside the United Nations need to be better crafted to encourage broader participation of non-state actors. At the United Nations climate negotiations, a key decision scheduled for Madrid is to establish guidelines for carbon markets and financial flows mandated in Article 6 of the Paris Agreement. A solid decision in this area will enhance carbon pricing, participation of private actors and scale up financial resources necessary for the transition towards a net-zero economy. Outside climate negotiations, there are many opportunities for enhancing the participation of the private sector at international finance, trade, energy and business fora. But to advance these opportunities, climate change must be prioritized in both in national and international agendas.
Time is running out; global emissions must peak by 2030 and be neutral by 2050 if we are to reach the 1.5°C target recommended by science. The decisions we make individually and collectively in 2020 will determine the future of the planet. An army of enthusiasts is emerging all over the world with the conviction that political will can be persuaded, economies can be transformed, and governments can act upon their promises. The 2019 Climate Action Summit was a step forward in this direction, but more state and non-state actors will need to be engaged in order to make a difference. The outcome from COP25 in Madrid this week will gage how determined is world to continue the path towards a free emission planet.
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