Making Paris relevant to the real-world is a challenge – but it’s important; many of the targets and words here are just hot air without money
By Gerard Wynn in Paris
The Paris conference has convened about 40,000 members of governments, NGOs, the media and so on. Representatives from just about every country on Earth are here.
The idea is to reach a new global agreement on climate change. But what does that mean?
Let’s canter through the kind of agreement we can expect at the end of the conference, on December 11.
We already know the broad outlines. Countries have offered voluntary national emissions targets, to slow global growth in greenhouse gases, by 2025 or 2030.
To make these voluntary targets more accountable, the deal will add a framework, including a legally binding commitment to agree new climate action every five years, towards a long-term target of eliminating greenhouse gas emissions by the end of the century.
Here are some issues for the real world.
1. A financial system for meeting a 2 degrees Celsius (2C) target.
Implementing the voluntary climate pledges made in Paris will need near $1 trillion investment annually in low-carbon energy technologies, according to the International Energy Agency. That is more than double annual investment now. Paris is focused on adding about $100 billion annual climate finance in 2020 and after, i.e. a long way short.
2. What sectors, products and technologies can benefit from Paris?
Many of the national Paris climate pledges support renewable energy. But cutting emissions will require many more ways of changing business, such as driving down consumption dramatically, and shifting the business models of energy companies.
It is sometimes unclear how Paris will help. But what Paris will see by the end of these two weeks is a long list of investment announcements: after all, why waste a great PR opportunity? These press releases may show which sectors are the flavour of the month.
3. What does Paris mean for a global carbon price?
Investors often say that the only way really to shift trillions of dollars is with a global carbon price. In theory, a carbon price can cut across the economy, making it more expensive to pollute.
In that way, it could engage investors and corporate boards alike. The trouble is, a global carbon price is nowhere in sight, and it is unlikely that Paris will change that.
4. Funding innovation could help.
While carbon pricing does not have much traction yet in Paris, the conference kicked off with a big commitment to double annual R&D by a clutch of major economies.
And that was supported by enterpreneurs like Bill Gates and Mark Zuckerburg. Could innovation drive a low-carbon shift, without the need for big, set-piece policies like carbon pricing?
5. Emissions measurement is key.
The VW scandal showed it’s easy to lie about emissions. Imagine how much easier it is to get them wrong by mistake! The Paris targets are based on emissions data which have been unreliable in the past, to put it mildly.
While there will be much fuss in Paris about reporting emissions, to make pledges more accountable, what if the measurement is wrong?
Monitoring is also increasingly important at the corporate level, as investors put polluters under pressure to report their CO2. What are the business opportunities, and the risks of getting it wrong?
6. Can land use emissions un-do the Paris commitments?
In a related point, there are opportunities for loopholes too. For example, the Eurpoean Union does not include emissions from burning biomass pellets imported from the United States.
But the United States does count the negative emissions of its forests. In other words, there is scope for double-counting, which matters for the credibility both of a Paris agreement, and in this case biomass energy.