Will COP 21 prove the Goldilocks Principle? Kyoto, too strict; United Nations Framework Convention on Climate Change, too lenient; COP 21, just right?
Why should COP 21 succeed where previous climate change agreements failed and what does this mean for UK businesses?
Posted on 17 December 2015.
From 30th November to 11th December 2015 world leaders from all 196 countries present came together to thrash out a climate change mitigation deal that has been termed “the best chance we have to save the one planet we have” by the United States President Barrack Obama. This was COP 21 (the Conference of Parties 21).
The main aim of the Paris pact is to restrict rising global average temperatures to “well below” 2oC levels (with a more optimistic view of 1.5oC), when compared to pre-industrial levels, by the end of the century. Long term emissions reduction targets will be achieved by all countries having short term commitments, called Intended Nationally Determined Contributions (INDCs). The INDCs will be reviewed every 5 years with progression achieved at every stage to ensure there is no backsliding.
It is important to note that there are no explicit legal implications for countries to actually adhere to these commitments as the drive to act is expected to come from the respect for the deal and the individual state’s desire to be perceived by the global community as ‘doing their bit’.
This is a bottom-up scheme, driven by the countries themselves and not by the UN imposing sanctions from the top-down. However, it has been agreed (again not as a legal requirement) that a minimum of $100bn per year shall (not should, a common theme of this agreement) be made available to aid developing countries in their INDCs.
This generous attitude has already been exhibited by China who has made $3bn available in climate finance for vulnerable countries. This may be in part due to their escalated levels of premature death linked to localised pollution which rose to 1.6 million last year.
So, what is the difference between this particular summit that has been hailed as such a monumental success and all those that have come before? Mainly it is much more sympathetic to developing countries, allowing for increased contributions as and when they feel able to make them. Developed counties have also committed to pledging significant aid money to support the endeavours of the developing countries and have themselves accepted blanket emissions reductions targets across their whole economies from the first INDC in 2020.
There is a feeling that COP 21 may have finally achieved the delicate balance of sanctions, incentives and ramifications. After the United Nations Framework Convention on Climate Change in 1992 which stimulated little or no concrete commitment from participating countries and the Kyoto protocol which imposed such harsh sanctions that it scared major countries off (notably the USA), Paris seems to have found a happy middle ground that is just right.
Finally, what are the possible future implications for UK Businesses? Most importantly this scheme will not replace the EUETS (EU Emissions Trading Scheme) and will run in parallel. The most likely outcome of this will be to increase the price of carbon emissions even further as countries strive to restrict their emissions. The rising price that power suppliers will have to pay for carbon emissions means an increase in their overheads which will inevitably lead to these costs being passed on to consumers.
There will undoubtedly be further ramifications once the UK releases its INDC, but this is not expected until next year at the earliest. Until then it is important that UK businesses do all they can to reduce energy consumption as COP 21 looks to be another mechanism that will lead to further increases in utility prices.
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