meeting of parties to the 1992 U.N. Framework Convention on Climate Change (UNFCCC) in Paris, the global community agreed to limit the pace of global warming caused by greenhouse gases and the attendant changes in the Earth’s climate. Specifically, the Paris Agreement commits signatories to the goals of holding the increase in global average temperatures to 2 degrees Celsius above pre-industrial levels, increasing the ability of nations to adapt to the climate change now inevitable while at the same time shifting to low-carbon patterns of development, and mobilizing capital to achieve these objectives.
Following ratification last month by the European Union and other major economies, the Paris Agreement entered into force on Nov. 4. Today, in Marrakech, Morocco, the 22nd Conference of the Parties
(COP22) kicks off as countries turn to the task of establishing their respective contributions to the global effort and how to implement them.
The Paris Agreement represents a departure from the approach adopted in the 1997 Kyoto Protocol to the UNFCCC, which mandated emissions cuts by the industrialized countries, without any such commitments for emerging economies. The Paris Agreement introduces a system of Nationally Determined Contributions (NDCs), which are actions proposed by each signatory. This framework allows each signatory to accept country-specific emissions reduction targets and the obligation to show the rest of the global community its progress in meeting those targets. This encourages all major emitters, irrespective of their status as developed or emerging economies, to take part in the Paris approach, as the U.S. Special Envoy for the talks, Dr. Jonathan Pershing, stressed in a recent speech.
For example, alongside the U.S. and the European Union, China and India have ratified the Paris Agreement and announced their NDCs. Saudi Arabia, though not a signatory to the Paris Agreement, has stated its intention to pursue economic diversification that will co-benefits in the form of reduced greenhouse gas emissions and adaptation to the effects of climate change; under the Kyoto Protocol, the Kingdom had no binding targets.
Mobilizing Resources to Address the Challenge
These developments, plus rapid progress across the globe in the switch to low-carbon sources of energy (see a related blog post
), give rise to greater optimism that the global community can make headway to reduce emissions and hopes that we can avert the worst effects of climate change. At the same time, there is mounting evidence of climate change impacts, in terms of sea-level rise, rising global temperatures, droughts, the changing ranges of numerous species, and the advance of infectious tropical diseases into previously more temperate areas. These effects worsen conditions in many countries already beset by conflict, political instability and the lingering economic fallout of the financial crises beginning with the 2008 financial collapse, and in some instances the impacts of climate change may in fact have helped trigger political instability and conflict.
The effects of climate change are increasingly palpable, but humanity may now have fashioned an effective framework for addressing it. So now what? In Marrakech, the parties will advance efforts to mobilize the enormous resources needed to address the challenge. Estimates of the gap between the financing being mobilized and the amounts required may vary, but this gap is substantial. One estimate from the Climate Policy Initiative puts current flows at about $400 billion annually, while $800 billion are needed according to a USAID study from 2015. However, pools of capital available in pension funds, reserve funds, sovereign wealth funds and insurers, for example, dwarf these figures. OECD estimates, for instance, suggest amounts on the order of $90 trillion.
The challenge is to mobilize the enormous sums needed to upgrade and adapt critical infrastructure, energy systems and economies in ways that will generate the financial returns needed to attract private investment. Further, the multiple benefits of these investments need to be documented, quantified and publicized to build public support for policies that will help drive them. For instance, efforts to decarbonize energy production can deliver economic savings now that solar photovoltaic energy is dramatically less expensive, even cheaper than fossil in many cases.
At the same time, there are indirect economic benefits from the switch to renewable in the form of improved public health resulting from reduced air pollution, and corresponding savings. Also, there are numerous instances where subsidies and public policies foster wasteful energy use or construction in areas increasingly vulnerable to damage from rising sea levels and more powerful storms. One way to encourage more rational investment and consumption patterns is to ensure that the costs of carbon emissions, and the economic impacts of climate change, are accurately reflected so that markets can better allocate resources to less carbon-intensive economic activity and infrastructure that is less vulnerable to future climate change impacts.