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Shaping the Future of the Paris Agreement

Author: Rob Bailey, Chatham House
Dec 11, 2017

African Union Expert Brief A view from the AirParif Generali balloon shows the Eiffel Tower through a small-particle haze as air pollution levels rise in Paris, France on January 23, 2017. (PHILIPPE WOJAZER/REUTERS)

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It has been a rocky year for the climate. The Trump administration’s announcement in June that it will withdraw the United States from the Paris Agreement dealt a heavy blow to the nascent climate regime. Fortunately, it has not proved terminal. Other signatories have not used the exit as an excuse to do the same. If anything, it appears to have had a galvanizing effect among governments, which have unanimously reiterated their commitment to the accord. Syria’s announcement in Bonn, Germany, at this year’s Conference of the Parties (COP) that it too will join leaves only the United States outside the tent.

The Paris Agreement was designed to withstand this kind of upheaval. Because the pledges governments make to reduce emissions are nonbinding and unilateral, based on national circumstances, there is no quid pro quo dynamic as happens during rounds at the World Trade Organization (WTO). Hence, the United States’ withdrawal does not cheat other countries of anything.

However, the United States was one of the Paris Agreement’s key architects and is the second-largest emitter in the world, so it will certainly be missed. Under the Barack Obama administration, the United States played a critical role among developed countries in setting the terms for a global accord. And it orchestrated a crucial dynamic with China in the run-up to the Paris Agreement through a series of joint announcements that signaled a deal was in the cards. With the United States now on the sideline, a leadership vacuum has emerged at a time when there remains a lot of work to do. Three areas in particular require attention: setting the rules of the game, increasing the ambition of emissions-reduction pledges, and developing the global climate regime beyond the United Nations Framework Convention on Climate Change (UNFCCC).

Setting the Rules of the Game

Paris left some important operational details to be resolved prior to the agreement’s implementation in 2020. These have been the focus of governments at subsequent COP meetings, including the most recent conference in Bonn.

The first set of questions relates to the frameworks for submitting, monitoring, and reviewing the adequacy of governments’ pledges to reduce emissions, known as Nationally Determined Contributions (NDCs). To what extent should the format of NDCs be standardized? How should progress be reported and verified?

A second set of issues relates to what has been called the “solidarity agenda,” by which developed countries provide finance, technology, and technical support to help developing countries meet their climate commitments. Important and potentially divisive questions persist about accounting and reporting of climate finance to ensure that developed countries follow through on their promises. For example, many developing countries want a register of developed countries’ finance commitments, as this would improve accountability and allow developing countries to plan based on reliable estimates of future climate finance. However, some developed countries are reluctant to make commitments that could tie the hands of future governments.    

The final question concerns how parties should assess progress toward their NDCs and collectively raise their pledges to close the gap between the emissions reductions they have pledged and those necessary to achieve the Paris Agreement’s goal of limiting the rise to well below 2°C. This gap is significant. The United Nations estimates [PDF] that, in aggregate, the current pledges deliver only about a third of the emissions reductions needed to achieve the 2°C goal. Or, put another way, ambition needs to triple. The Bonn meeting made some progress here, obtaining agreement on a framework for the Talanoa Dialogue, a series of consultations among COP parties in 2018 that will take stock of progress and consider options to “enhance ambition” in time for countries to resubmit their pledges in 2020.

Increasing Ambition

While the Talanoa Dialogue provides an important opportunity, a wholesale increase in the ambition of national governments is unlikely to emerge from a formal UNFCCC process alone. Negotiators could not revise their countries’ NDCs even if they want to—these decisions can only be made at the highest levels of government. Greater collective ambition, therefore, requires intensive diplomacy and the use of moments such as international summits and meetings of the Group of Seven (G7), Group of Twenty (G20), and Clean Energy Ministerial. The objective should be to create the kind of positive momentum that emerged in the run-up to the Paris Agreement. And this is perhaps where the absence of the United States will be most keenly felt. This time, there will be no U.S.-China dynamic. The world’s two largest emitters will not be setting the pace.

China is still in the game, however, and should comfortably meet its NDC pledge to peak emissions by 2030, despite a small uptick this year. China could therefore conceivably submit a more ambitious NDC that is still safely achievable and then use this to unlock pledges for deeper emissions reductions from other governments. Moreover, this could be a smart economic move for China. As a leading exporter of renewable energy technologies, with plans to achieve market dominance in batteries and electric vehicles, China stands to benefit from more ambitious climate action overseas.

President Xi Jinping’s speeches defending the international trade and climate regimes in response to greater U.S. isolationism have led some to hope that Beijing could fill the leadership vacuum. However, China is naturally cautious and unlikely to spearhead a global effort to raise NDC ambition. The question, then, is not whether China will lead, but whether China can work in alliance with progressive countries to catalyze more ambitious NDCs by 2020.

Ambition Beyond the UNFCCC

More ambitious NDCs should drive faster emissions reductions, pulling technologies along their cost curves and making it cheaper for governments to raise ambition further. NDCs are therefore very important, and a failure to increase ambition at the first opportunity would be a major setback.

However, as many U.S. states and cities have demonstrated, climate action need not be confined to national governments. It is possible for subnational and nonstate actors to increase ambition while NDCs stagnate: one analysis estimates that, in sum, the commitments of such groups in the United States could deliver half of the discarded U.S. NDC. Other analyses [PDF] suggest current subnational and nonstate commitments could make a significant contribution toward closing the emissions gap, if they are met and do not simply displace actions that would have happened anyway. Governments have made some progress in recognizing the proliferation of pledges from businesses, cities, and regions within the UNFCCC process, but there are valid concerns about how much confidence can be placed in such announcements and the extent to which they may overlap with one other or NDCs themselves. For example, businesses are not obligated to fulfill the pledges they made in the run up to the Paris Agreement nor have their progress independently monitored and verified. It’s also difficult to ascertain the extent to which commitments from businesses and subnational governments are truly additional—a city’s pledge to reduce emissions is redundant if national policies mean it would happen anyway.  Establishing a mechanism to accurately account for the actions of nonstate and subnational actors that avoids double counting is an important area for development.

Meanwhile, governments are creating new fora for cooperative climate action. The Mission Innovation coalition has agreed to collectively accelerate investment in clean energy research and development through shared commitments. Similarly, the Powering Past Coal Alliance, recently launched by Canada and the United Kingdom, sees member countries assume commitments to phase out coal power without carbon capture and storage. It now counts twenty countries among its membership and aims to have fifty by this time next year. Such clubs can help like-minded governments make progress on more focused agendas, and are likely to form an increasingly important part of global climate governance. Other promising opportunities for climate clubs include the livestock sector, responsible for almost 15 percent of global greenhouse gas emissions (but almost completely absent from NDCs), and carbon pricing.

Finance has also become an important new arena for climate governance, and it will be the primary focus of French President Emmanuel Macron’s upcoming summit on December 12. The challenge here is to mobilize capital for low-carbon investment and to ensure the resilience of the financial system to climate change. Areas for progress include using new disclosure requirements to help investors assess the risks to business models and asset values posed by climate change and climate policies; incorporating climate risks into regulatory and supervisory schemes; and encouraging multilateral development banks to adopt lending priorities in line with climate objectives. The G20 has been particularly active on finance, establishing a Green Finance Study Group and mandating the Financial Stability Board’s Task Force on Climate Related Financial Disclosures.

The Challenge Ahead

Historic as it was, the Paris Agreement was only ever intended to be a stepping stone. It left important details to be defined, and it put in place a process to incrementally close the yawning emissions gap through a regular process of pledge and review. The task before governments now is to agree on the details by the end of 2018, providing an opportunity to review the adequacy of current NDCs, and enhance them by the time the agreement becomes operational in 2020. After this, the next chance to raise ambition is 2025; waiting until then would delay action, increase costs, and ultimately lengthen the odds of achieving the Paris goals.

However, with no obvious international leader to set expectations and mobilize other countries, the politics look challenging. Leadership is not absent, but it is diffuse—spread among multiple governments and subnational and nonstate actors. The challenge for climate diplomacy over the next three years is to harness this diversity and focus it on raising NDC ambition.

Global Memos are briefs by the Council of Councils that gather opinions from global experts on major international developments.