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Posted on Sustainabilitank.info on October 26th, 2015
by Pincas Jawetz (PJ@SustainabiliTank.com)

Convening from 19-23 October 2015, the Bonn Climate Change Conference was the last in a series of meetings under the UNFCCC in preparation for the 21st session of the Conference of the Parties (COP 21), scheduled to take place in November-December 2015, in Paris, France.

In their scenario note  ADP.2015.7.InformalNote), ADP Co-Chairs Ahmed Djoghlaf (Algeria) and Daniel Reifsnyder (US) identified the objective of the session as intensifying the pace of text-based negotiations among Parties, with a view to preparing the draft Paris climate package for presentation at the opening of COP 21.

At the end of the week-long meeting, Parties issued two non-papers, one containing draft agreement text and draft decision text related to the agreement (workstream 1 of ADP’s mandate) and the other containing draft decision text related to pre-2020 ambition (workstream 2).

The full and best reporting of what went on in Bonn can be found at: mail.google.com/mail/u/1/#search…
Summary of the Bonn Climate Change Conference, 19-23 October 2015, Bonn, Germany.

Going over the Summary it becomes clear – if it was not before – that there will be no UN document ready for the Paris meeting and that UN bickering will continue – be assured that some Arab State will find space to bash Israel. All what the UN can do is to bring the problem to the public’s attention, and it is left to the public to push their governments to make a commitment, that is in those countries where a public opinion counts.

Paris COP 21 of the UNFCCC will not be a wash. This thanks to the fact that over 150 countries have already presented their commitments to act on Climate Change. Take for instance the US where by now commitments from companies that are joining the American Business Act on Climate Pledge, bringing the total number of US companies that have signed onto the pledge to 81. Together, these companies have operations in all 50 US states, employ over nine million people, represent more than US$3 trillion in annual revenue, and have a combined market capitalization of over US$5 trillion.

And yes, in the EU, Japan, Brazil there are similarly industry commitments – pushed by the public. In China and India as well, the public pushes for government action on pollution of any kind and this includes a better understanding of Climate Change disasters.

In a more general way see the The International Energy Agency’s evaluation of the situation:

The IEA’s “Energy and Climate Change: World Energy Outlook” tells us that full implementation of the intended nationally determined contributions (INDCs) submitted to the UN Framework Convention on Climate Change (UNFCCC) by mid-October would decouple power sector emissions from electricity demand but would still lead to an average global temperature increase of around 2.7°C, which falls short of the declared “major course correction necessary” to stay below an average global temperature rise of 2°C.

The Outlook Special Briefing for COP21′ analyzes INDCs submitted by more than 150 countries, accounting for close to 90% of global energy-related greenhouse gas (GHG) emissions, and assesses in particular their energy sector-related impacts.

According to the briefing, given that energy production and use account for two-thirds of global GHG emissions, “actions in the energy sector can make or break efforts to achieve the world’s agreed climate goal” of staying below a 2°C temperature rise.

The briefing examines what the energy sector will look like globally in 2030 if all INDCs are fully implemented, and whether this will place the energy sector on a path consistent with the 2°C goal.

If implemented, the INDCs will lead to an improvement of global energy intensity at a rate almost three times faster than the rate since 2000. Emissions will either plateau or decline by 2030 in countries accounting for more than half of global economic activity at present. Of new electricity generation through 2030, 70% will be low-carbon.

The IEA estimates that the full implementation of the INDCs will require US$13.5 trillion in investments in energy efficiency and low-carbon technologies through 2030.

And excerpted from a bright blogger for Huffington Post (UK):

Over the past three decades annual climate talks under the United Nations banner have become part of the Zeitgeist of a large movement. They draw government officials, think tanks, civil society, journalists and the occasional hipsters into negotiations over which ride trillions of dollars and our future well-being on Earth.

Expect a lot of drama at the next instalment, taking place in Paris in late November – early December.

Heads of state will make grandiose pronouncements.

Negotiators from 190 countries will huddle, whisper, argue over words for days and bargain in stuffy rooms in a style that would make bazaar traders proud.

Civil society will push for strong outcomes, prod for more climate finance, demonstrate occasionally (a welcome activity in Paris), express anger followed by frustration before going home let down again.

The press and the public will turn an inattentive, occasional eye to the 45,000 people gathered in Paris, then turn their attention away.

The private sector, two-thirds of global GDP and employment, will be largely absent (it is not formally represented in the negotiations) and mostly ignore the whole thing.

At the end, governments will cobble together a weak agreement to set emission reduction targets. Some will declare a major win, others will accurately note that we need to do much, much more. Then everyone will go home in time for the Christmas holidays and most of COP21, as the Paris UN gathering is known, will be forgotten.

Deeply buried in this cacophony are two emerging themes with the potential to significantly impact the private sector.

National Low Carbon Business Plans

A Paris climate agreement, no matter how wobbly, will involve more than 150 countries publishing mini business plans for their economy describing what each will do to help limit global warming to 2 degrees Celsius by 2030. In typical UN jargon, these low-carbon business plans are known as INDCs, short for “intended nationally determined contribution.”

The INDCs are the driving force of COP21 and will become the development pathway for all countries. Weak and general at first, they will become stronger and more detailed over time.

Two major consequences will follow.

First, multi-trillion dollar investment opportunities for the private sector will be clearly delineated, while others, far from where the country is heading, should be avoided.

For example, India’s business plan shows it wants to increase its clean energy generation capacity from 36 GW today to a whopping 320 GW by 2030. Similarly, China wants an extra 775 GW of renewables by 2030, on top of its existing 425 GW, the US wants to add an extra 179 GW and the EU another 380 GW.

Taken together, that’s double the world’s current renewable energy installed capacity (excluding hydropower) in investment potential, all of which comes with strong institutional support now that it is anchored in an INDC.

Second, the breadth of these INDCs means that within a few years, all finance will be climate finance; and all bonds will be green bonds.

We already know the commitments in Paris are nowhere near enough: The US, Europe, and China alone use up the world’s entire carbon budget by 2030. Therefore it’s reasonable to expect that they will get tougher, tighter and more precise with time because countries will be under increasing pressure to deliver, as climate change hits all of us harder and harder.

Post-2020 (the INDCs will most probably be reviewed in five year cycles), there is therefore likely to be a “wall of shame” hitting anyone who invests in non-INDC compatible, non-climate friendly technologies. In fact perhaps we will see “black bonds” emerge, highlighting investments that are increasingly unacceptable and at risk of being stranded because of their high emissions.

INDCs will make green investments even more mainstream than they are today and ensure that dirty investments are avoided on a long-term scale.

Loss and Damage

“Loss and damage,” another major theme in Paris, could have enormous financial consequences.

“Loss and damage” refers to the need to account for the impact of climate change, for example on a small island nation losing territory because of sea level rise. An element of climate negotiations for several years, its significance could be enormous for insurance companies, reinsurers, financial analysts and the markets.

Governments will continue to argue whether loss and damage is a euphemism for liability and compensation. Richer nations will end up ensuring that the answer is vague, and that therefore they can’t be held liable and won’t have to pay compensation.

However, the door is likely to be kept open for clever lawyers to use the “loss and damage” aspects of a climate change agreement to launch claims against companies: Victims of climate change will aggressively try to go after corporate polluters for compensation, particularly the likes of Exxon, Shell and BP who have known about climate change for decades but either buried the evidence or ignored it to accumulate profits at the expense of our collective health and well-being.

The results of these claims could be shocking for many. The Dutch proved earlier this year that climate liability lawsuits can stand up in courts.

The business and the financial world will be markedly absent from Paris, but should closely monitor the evolution of INDCs and of “loss and damage” in Paris. These could upend how they currently do business.

From the above, we conclude that COP 21 of the UNFCCC in Paris will have picked up from where COP 15 of Copenhagen left the Climate Change issue. Copenhagen was where the Kyoto stillborn Protocol was buried by Obama bringing for the first time the Chinese on board, now it will be the Obama-Xi alliance that will bring most true Nations on board. And let us not forget Pope Francis and the ethics of “we are the creation’s wardens.” This resonates very well with much of the public and helps the businesses that will move green.

We will not go to the opening of the Paris meeting, but will be there for the end – this so me can evaluate the outcome which promises to have practical value.

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