“Accord de Paris c'est fait!” was the phrase blazoned across the Eiffel Tower and the Arc de Triomphe in December 2015 to celebrate the diplomatic success of the Paris Agreement after a decade of failed negotiations. This global enthusiasm left little room to address immediately the thorny question of implementing the Agreement and defining the tools that would determine its success. More than five years later, in the midst of a seemingly never-ending pandemic, and after COPs of mixed success, addressing the issue of implementing the Paris Agreement is now central to determining the future of the global fight against climate change.
Many obstacles and little time
Whilst the collapse in the cost of renewables has in fact offered decarbonization technologies that are economically and socially sustainable on a global scale, there are still many obstacles and little time left to tackle them. Politically, with the recent addition of Iraq, 191 of the 197 signatories have ratified the Agreement, and of the remaining six, only Turkey and Iran make a substantial contribution to global emissions. There have also been several events over the past year that offer a positive outlook on national decarbonization commitments—in particular the growing European focus on the Green Deal, the Chinese goal of complete decarbonization by 2060, the re-entry of the United States to the Paris Agreement and the ambitious climate policies proposed by the Biden administration. However, national policies still remain largely inadequate, with pledges that, according to analysis by the Climate Action Tracker, would currently lead to temperatures rising by 2.9 degrees Celsius by 2100—almost double the ideal target of the Paris Agreement of 1.5 degrees. Nearly every country has yet to propose policies compatible with this target, with key countries such as China, Russia and the United States that far exceed even the dangerous limit of 2 degrees.
Technology and development: the unresolved issues
There are also several unresolved matters, from technological issues (how to ensure an energy mix dominated by intermittent but also stable renewables) to development (how to support the boom in Africa’s electrification through renewables). In relation to this and other challenges, the COP26 in October 2021 will be central; a crucial event that already suffers from a one-year delay due to the pandemic. There will be four central themes: the first will be the definition of detailed rules for certain key aspects of the Paris Agreement, especially with regard to the transparency and reliability of national commitments (already in themselves determined exclusively at the national level), the definition of “carbon markets” (a key tool but still practically non-existent on a global level) and agreement on the time horizon of the “Nationally Determined Contributions,” NDCs, after 2025 (which must be shared). The focus must be on adaptation—largely neglected in favor of mitigation—and on a fund to cover climate damage, especially for the least developed countries. We must then organize climate finance capable of supporting the transition of these countries, often held back by limited investments and by high risk premiums for green investments, buffering in addition the brutal impact of the pandemic. Finally, it is fundamental that we define long-term objectives and strategies that are consistent with the target of 1.5 or 2 degrees by 2100, before the time window to implement them effectively closes. The Paris Agreement, however, is of a hybrid nature, tending to focus on non-legally binding aspects. Considering also the limited effectiveness of international agreements on the environment (not only the Kyoto Protocol but also, for example, CITES, a treaty to protect endangered plants and animals), national policies will actually be decisive, both in terms of absolute reduction of emissions and in the definition of environmentally, economically and socially sustainable models of decarbonization. Therefore, we examine below the policies of the four main global emitters (China, the United States, the European Union and India, in descending order of CO2 emissions).
In the context of the COP, China has traditionally led the G77, the group of emerging countries that puts pressure on industrialized countries to shoulder their responsibilities for historic emissions and make more funds available for climate finance. However, its impetuous economic growth has rendered this position unsustainable, and in fact China has gradually taken on greater responsibility for the climate. The pinnacle was reached with Xi Jinping’s December 2020 statement pledging to reach a peak in emissions by 2030 and carbon neutrality by 2060. Beyond the narrative, China has also contributed concretely to the decarbonization process, investing heavily in low-carbon energy sources (second only to the EU in terms of absolute values for the period 2010-2019). The investments have also been motivated by the geo-economic goal of achieving leadership in various sectors, such as photovoltaic panels in the 2000s and, more recently, electric vehicles and batteries. However, there is a disconnect between the declarations and strategic investments on the one hand and continued support for carbon-intensive sectors on the other.
China essentially invests in everything and requires increasing quantities of every energy source, from the most to the least polluting. Theoretically, China would have to shut down all of its coal-fired power plants by 2040 to meet the target of limiting global warming to 1.5 degrees. Despite the proclamations, the country is instead building new ones, moreover with accelerated approval of new projects in 2020. Choices in China have a huge impact: China currently consumes half of the coal used globally and is responsible for nearly 30 percent of the world's CO2 emissions. China also finances a quarter of coal-fired power plants under construction overseas, and the ambitious Belt and Road program is decidedly carbon-intensive. In the context of future negotiations, it will be important to monitor China's positioning on issues such as the carbon price and taxonomies for green finance. There will be international pressure to create a timeline for the decommissioning of coal-fired power plants, especially on countries with climate neutrality goals, but while these pressures are expected to have an effect on other Asian nations such as Japan and Korea, China does not seem willing to yield.
With the election of Joe Biden, the United States has regained a leadership position in climate change negotiations that had been lost in the Trump years. This will lead to their playing an increasingly important role in the months leading up to COP26. The United States will seek both to push other states to raise their ambition through climate diplomacy, and to promote reforms of global economic and financial governance to incorporate principles useful in the fight against climate change. More attention is expected on divisive issues such as insufficient green finance effort (including private investment), climate adaptation funds and the mechanism to address the losses and damage from global warming in developing countries. It will also be interesting to see how the plans to create a solid transatlantic climate partnership will materialize, given the American opposition to increasing carbon prices and possible US-EU geo-economic competition in certain supply chains, such as hydrogen and batteries. Meanwhile, the new president re-admitted the United States to the Paris Agreement with one of his first executive orders and the United States will organize a climate summit on April 22. The United States is expected to announce a new voluntary national contribution by COP26. However, reaching a credible target will require careful internal consultation of all stakeholders, which could take time. In the election campaign, Joe Biden promised climate neutrality by 2050, the complete decarbonization of electricity generation by 2035 and the efficiency improvement of four million buildings. To finance these plans, the proposal presented during the election campaign called for an increase in the corporate tax from 21 percent to 28 percent. In the first months of Mr. Biden's government, the priority was to manage the pandemic. The USD 1.9 trillion stimulus package approved in February focuses on helping families and businesses hit by the crisis, but it is not enough to stimulate green economic growth in the long term. This goal is instead pursued by the USD 3 trillion infrastructure plan that is about to be presented by President Biden's team. This plan foresees various expense items, including the upgrading of the electricity network and charging stations for electric vehicles. However, there is risk of a dilution of efforts. The plan is complicated by the debate on how to finance it, as US public debt is increasing and President Biden has pledged not to raise taxes for those earning less than USD 400,000 a year.
In the years following the signing of the Paris Agreement, the European Union confirmed its climate leadership, but engagement has increased considerably with the new Commission led by Ursula von der Leyen, which, through the Green Deal, has included under the umbrella of decarbonization not only energy policies, but also industrial and agricultural policies (with the Farm to Fork Strategy). The promotion of a systemic approach to decarbonization was one of the first and most important achievements of the new Commission, which a year and a half after its inauguration has already outlined numerous proposals to this effect—from the vast strategy for energy system integration to the strategy for the circular economy and the strategy for industry promoted at the beginning of 2020 (and already under review due to the pandemic). The Commission has also raised the ambition of European targets, agreeing in December 2020 on a 55 percent reduction in emissions, compared to the previous 40 percent; this increase is fundamental to achieving the new Commission's central climate policy goal of full decarbonization by 2050, a notable change from predecessor Jean-Claude Juncker, who largely neglected the EU's long-term goals. In this regard, the pandemic has been both a challenge and an opportunity for the current Commission, which has managed to channel a substantial part of the recovery funds under the umbrella of the Green Deal; 30 percent of the Next Generation EU funds (NGEU, which total EUR 1.8 trillion) must be dedicated to climate action, and the national plans must respect the principle of “do no significant harm” to the environment (DNSH). The mobilization of these funds has also reduced the traditional opposition of the countries of Central and Eastern Europe—Poland in particular—towards climate policies; however, it will not be easy for the Commission to effectively monitor use of these funds in a manner consistent with achieving climate objectives. The European Union also faces a complex situation in terms of global climate diplomacy. The US return to the scene is critical to the success of the Paris Agreement, but it obliges the Union to share the leadership that it failed to consolidate unequivocally during the absence of the Trump administration. Faced with increasingly fragile transatlantic relations, a lack of coordination on key issues such as the imposition of a carbon tax—an issue that both the Commission and several member states, such as France, are already urging strongly—risks transforming this potential cooperation into a risky competition or even a small carbon trade war. Also, the positive climate cooperation thus far with China may have suffered a setback following the sanctions launched by the EU in March 2020 and promptly responded to by a Chinese counterattack. This conflict could easily sink the China-EU Investment Agreement (key to regulating the climate impact of trade) and, in general, will cool relations between the two at a key moment for the future of the Paris Agreement. Finally, the EU will have to try to become the leader of a broader alliance in the climate field, engaging above all Sub-Saharan Africa. This objective is central to exploit the opportunities of the energy transition and to consolidate the EU’s soft power, but competition with regional powers, and especially with China, remains extremely high.
The Indian approach to implementing the Paris Agreement suffers from an ambivalence similar to that of China. India presented ambitious voluntary national contribution targets, goals that would reduce the carbon intensity of GDP by 33-35 percent and reach 40 percent of electricity generation from non-fossil sources by 2030. The policies in place, and in particular the targets to install 175 GW of renewable capacity by 2022 and 450 GW by 2030, should allow India to achieve its targets. The most promising developments in India involve solar power, including off-grid solutions in agriculture, such as solar powered water pumps. Narendra Modi’s government has already made enormous progress in terms of access to energy, showing that India has an extraordinary ability to implement ambitious plans in a short time, including in the energy sector. As in China, however, this promising picture contrasts with the Indian government's support for coal. Not only is there no decommissioning plan, but the government is planning additional coal capacity and has encouraged private investment to stimulate coal production in national mines, demonstrating its prioritization of security of supply and energy independence. In view of COP26, it will be interesting to monitor India's positioning on issues such as emission credits, fossil subsidies and the decommissioning of coal-fired power plants; India’s position on decommissioning could be similar to that of China. In general, it will be important to monitor how India intends to spend its stimulus package, which is equivalent to 10 percent of GDP. According to preliminary indications, the country could use this opportunity to develop national supply chains in electric mobility and in the production of renewable energy, thus becoming an impressive player in the growing global competition in this area.
The author: Lorenzo Colantoni
Researcher at IAI. He works as a freelance journalist and consultant, specialized on energy and environment, particularly in European policies. Lorenzo is collaborating with the Institute and its Energy Union Watch project based off of the recent initiative established by the European Commission.
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