New Year’s resolutions are typically about self-delusion and politicians have taken up climate change as their goal. Like a lot of us, they say “this time is for real” and “this time is different”. As we are approaching the Paris Climate Conference, everyone is anticipating a deal that will put the world on a path toward limiting temperature increases to 2°C by 2100. However, past conferences have mostly ended in disappointment, with solutions usually being put off for future years.
More of the Same? Deadlock and Stagnation
Taking previous COPs as the measuring stick, expectations for Paris should be conservative at best. In fundamental terms, we have not seen the substantial political shift necessary to produce the type of binding agreement that would be necessary to ensure reaching the 2 degree target. In fact, US Secretary of State John Kerry has already indicated that Paris will not produce an internationally binding document. The legal nature of the Paris document is contentious. Some analysts have proposed a legal hybrid. According to this model, targets themselves would not be binding, but countries would be required to demonstrate that they have put in place measures consistent with their pledges.
While the EU is progressive on climate change, it is not the leader that it needs to be. More importantly, when taking a look at the targets submitted by countries in the run-up to the conference, the picture is a sobering one. It is certainly true that the so-called
Additionally, the recalcitrance of the big players remains as a central problem. A 2 degree solution is an impossibility without significant commitments by the US, China and India. The first two are already the biggest emitters, and India, with its vast coal reserves, growing population, and a hunger for energy, will soon join them at the top. The US is traditionally skeptical when it comes to climate change, although executive action by the Obama Administration has moved the goalposts to a certain degree. One of the reasons why an internationally binding treaty is unlikely to be produced in Paris is the simple fact that it would not pass the US Congress. On the other hand, China has pledged that its emissions will peak by 2030. Yet, keeping the 2 degree target in mind, this is unlikely to be enough. Moreover, analysis showed that Chinese emissions in previous years were underreported significantly.
A third obstacle is the absence of a global carbon price. Theoretically, a price on carbon would likely be the most efficient solution to the climate problem. While there is no carbon price, fossil fuel subsidies remain significant. Depending on how subsidies are defined, global annual estimates feature numbers as high as US$ 5.3 trillion. These are not only damaging to the climate, but also burn holes into government’s budgets. Subsidies distort the playing field, and help to prevent renewable energy from competing on an equal basis. What is more, the money spent on these subsidies vastly outstrips the amount committed to climate finance. The supposedly lofty goal of US$ 100 billion per year in financing that is meant to go to the Green Climate Fund is a relative pity compared to what governments spend on subsidising oil, gas and coal.
The climate economy: the new normal?
For all this doom and gloom, there are good reasons why this time might truly be different after all. Success can be defined in all sorts of ways. And the Paris conference is taking place against the backdrop of positive developments that are gaining strength regardless of what countries agree to at the conference.
A solid argument can be made that renewable energy has places around the world. Wind, solar, biomass and other forms of renewable energy compete with fossil-fuel based energy for market shares. From a psychological perspective, this is significant. Promoting renewable energy is as much about establishing a particular narrative as it is about driving technological progress. This is a necessary condition for the kind of mainstreaming that is absolutely essential for renewables to take off. This relates in particular to the expected growth in energy demand in the developing world. Prices for solar modules have dropped off a cliff, from $76.67 a watt in 1977 to 60 cents a watt in 2015.
On July 25th, renewables met 78 percent of Germany’s energy demand, demonstrating that, even today, we are able to manage a transition to a carbon-free energy system. Different experiences in a number of countries have shown that there are multiple paths towards an energy transition, ranging from a mixture of incentives and citizen initiatives (for example in Germany and Denmark) to a more business and consumer focused approach in the US. China has pioneered the state-led approach, investing incredible amounts of money in its renewable energy infrastructure.
The new energy system comes hand in hand with a novel conceptualisation of what a climate economy can be. The talk of the town are the so-called co-benefits. In a nutshell, what this means is that climate change is no longer seen as an environmental issue, but as cutting across the whole economy. For a while now, climate change has been mainstreamed by international development organisations. Energy access in Sub-Sahara Africa in particular is an area where renewable energy has significant advantages. However, domestically, climate change as a decidedly economic issue is only now beginning to pick up steam.
More people are starting to highlight the health implications associated with climate change. In addition, the climate economy framing has been very much focused on innovation. Thus, how we respond to climate change can be a driver of sustainable growth. Moreover, climate activists have appealed to investors by highlighting the existence of a carbon bubble. Fossil fuel divestment has become a buzzword. Even the Exxon Mobils and Shells of the world will struggle to survive without access to finance. Once the climate economy becomes the new normal, there will be no need for international negotiations anymore.
Politically, there are shifts underway which mirror the new philosophy behind climate economics. In Canada and Australia, traditional laggards on the climate change front, an election and a party-internal struggle have produced new leaders who seem to be stronger on climate related issues. In the US, the Obama administration has made climate policy one of the pillars of the President’s second term, having put in place the Clean Power Plan and blocked the proposed construction of the Keystone XL pipeline, which would have transported Canadian tar sand destined for export.
Lastly, at this year’s G7 meeting in Germany, leaders announced their intention to phase out fossil fuels by the end of the century. These moves matter more in symbolic than in substantial terms. But they entrench the sense that a process of rethinking the underlying assumptions has set in. More and more, political leaders are expected to present plans and come up with solutions as part of the normal political process. Studies suggest that millennials are much more likely to perceive climate change as a real and tangible problem. The new climate generation that is just now finding their political voice could therefore be the X-factor in generating the political pressure needed to drive home national solutions.
With this in mind, the prospects for success in Paris should be re-evaluated. Having an agreement, and preferably a binding one, would be a significant step towards a 2 degree limit. But it is far from the only solution. If the only measure of success is whether or not countries agree to cap warming to 2 degrees at the COP, then failure is guaranteed. We already know that. By contrast, if we look at what type of discourse Paris produces, what signals it sends to both markets and politicians, as well as to citizens, a successful outcome is very much a possibility. The fact that countries have handed in somewhat ambitious INDCs is a feat in itself, however inadequate they may be.
What is more important is what kind of impetus the post-Paris environment creates. Does it reflect new thinking? Does it reinforce the narrative of the new normal? If so, that is significant. The battle may be lost in Paris. The war can still be won.