A lot has been said about how national climate efforts under the Paris Climate Agreement will usher in a new energy future, but few have noticed another important change that COP21 heralds: for the first time non-state actors will start playing a prominent role in climate action, write Rolf de Vos and Kornelis Blok of consultancy Ecofys. The Agreement contains a number of decisions that will give private actors a semi-official status in future climate policy. In addition, Paris will boost carbon pricing schemes for the private sector, even if they are barely mentioned in the text of the accord.
At the COP21 climate conference in Paris in December, a considerable part of the official Blue Zone, the heart of the Conference, was reserved for business activities, such as the ‘Business Hub’ led by the World Business Council for Sustainable Development and the International Energy Trading Association. Clearly the UNFCCC, the hosts of the conference, had decided to make ample room for business representatives. This led to a fruitful parallel dialogue taking place between policymakers and the private sector – in addition to the dialogue among the policymakers – which had a marked impact on the final agreement.
But the involvement of the private sector had already started before Paris. In retrospect, it was UN Secretary General Ban-Ki Moon’s Climate Summit in September 2014 in New York which was the gamechanger in building a bridge between business and negotiators. This event, held in parallel to the normal ongoing climate negotiations under the UNFCCC flag, was the first occasion at which the international community of government leaders really started talking with the frontrunners in business and also with local authorities.
This was not apparent yet at the UNFCCC Climate Summit in Lima in 2014, where business input was still modest. But during 2015 many follow-ups took place, such as the Business Climate Summit in May in Paris, the UN Climate Week in September in New York and other regional events.
One of the outcomes of this dialogue was a strong emphasis on carbon pricing to come out of the negotiations. True, carbon pricing is only mentioned once in the Paris agreement, which may have come as a disappointment to many. However, in the corridors of COP21 carbon pricing received strong support among politicians and business leaders. The most visible result of this activity was the official launch of a high level panel of heads of state, including Angela Merkel and François Hollande, and CEOs of multinationals on the first day of the event advocating carbon pricing.
Basically, what will happen is that the Kyoto flexible mechanisms like CDM (clean development mechanism) and JI (joint implementation) will gradually be replaced
This panel and the ‘leadership coalition’, an initiative of IMF and the World Bank, are a guarantee that carbon pricing, currently applied by some 40 countries, will be adopted by many more states in the next decade. Already more than 80 countries have announced plans for carbon pricing in their climate change pledges (INDCs).
The importance of carbon pricing is confirmed by the Paris Agreement, although not very explicitly. Article 6 contains provisions for countries to achieve their “intended nationally determined contributions” through “cooperative approaches”. It refers to a “mechanism” that will be set up to facilitate “voluntary cooperation” among countries.
Basically, what will happen is that the Kyoto flexible mechanisms like CDM (clean development mechanism) and JI (joint implementation) will gradually be replaced. Although the cooperation referred to typically takes place at the state level, experts expect that this will also allow for easier linking of carbon pricing markets. When countries start trading credits on a large scale, many will prefer delegating this trade to the private sector markets. Indeed, article 6 explicitly refers to “private entities” that can be commissioned by countries to participate in these efforts.
But the decisions in the Climate Agreement will allow businesses to become involved in other ways as well. For instance chapter V of the Decisions in the Agreement contains four paragraphs that are a strong recognition of non-state efforts. Countries “welcome the efforts of all non-Party stakeholders to address Climate Change”, it says. They invite ‘non-Party’ stakeholders (jargon for companies and cities/regions) to scale up their efforts and to demonstrate them via the UNFCCC website, and they also recognise that tools such as domestic policies and carbon pricing are important.
Already 11,000 commitments from 4,000 companies and local authorities have been registered on the UNFCCC website, and that number is expected to grow in the coming years.
Another important decision is that two high-level representatives (‘champions’) will be appointed, at least for the period 2016-2020, “to facilitate the successful execution of existing efforts and the scaling-up and introduction of new or strengthened voluntary efforts, initiatives and coalitions.” These champions, probably people on the level of former heads of state, will have the task to connect the negotiations to non-state actors. Their ultimate goal is to encourage all non-state actors to increase their engagement in the processes.
Each year, the international community of policymakers, business, financial institutes, NGOs and local authorities will jointly discuss the progress regarding climate action and policies, and jointly commit to further ambitions
To this end the champions will, among other things, prepare a ‘high-level event’ that will be held in conjunction with each Conference of Parties. The most important input for this high-level event will be a summary for policymakers, “with information on specific policies, practices and actions representing best practices and with the potential to be scalable and replicable, and on options to support their implementation.”
In other words: each year, the international community of policymakers, business, financial institutes, NGOs and local authorities will jointly discuss the progress regarding climate action and policies, and jointly commit to further ambitions. This means that the prominent place of non-state actors has now been formalized, at least until 2020.
Thus, the impacts of Paris are not only to be found in the formal Paris Agreement, with its national climate plans , but also in the decisions that include non-state actors in the process. Our prediction is that this structured cooperation will effectively build the bridge between policymakers and business that has been advocated in this Blog over the last year.
Rolf de Vos (firstname.lastname@example.org, @qqmulti) is senior consultant and journalist at consultancy Ecofys. Kornelis Blok is scientific director of Ecofys and professor Energy Systems Analysis at Delft University of Technology.
This is the seventh and last post in the Ecofys Paris Climate Blog, hosted on the Energy Post website. The Ecofys Paris Climate Blog tried to bridge the gap between business and policymakers in the run-up to the UN Climate Conference in Paris. It looked at how climate policies interact with business and how business can contribute to climate policies.