Post-Paris Agreement: how likely does implementation in 2016 look?

Ruth Galligan -
We reported towards the end of May on the Paris Agreement – the call for countries to “hold the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C”. What’s happened since then? The 2016 Bonn Climate Change Conference schedule of meetings recently completed. Last week France became the first G7 and G20 country to ratify the Paris Agreement. Our diplomats have not been idling. This article looks at outcomes of the Bonn talks and forthcoming (and potentially influential) negotiations in European climate change policy this summer.

New signatories

The Paris Agreement opened for signatures on 22 April 2016. Countries signing it that day totalled 175 (the largest number of first-day signatures to an international agreement), with 15 ratifications. There have been two further signatories since then. Several countries promised to ratify the Agreement in 2016 – including Canada, the US and China. The US and India have both since pledged to ratify the Agreement “as soon as possible this year” after joint talks at the beginning of June. France was the first G7 and G20 country to ratify the Agreement last week. Canada and China appear to be working to a similar timetable of ratifying by the end of the year. So we can see some progress.

What happened at Bonn? 

The overarching focus of the talks concentrated on developing rules and tools for putting the Agreement in to action. Countries worked on how the commitments will be accomplished. This included: how countries will put forward their mitigation commitments and adaptation actions; how they will report and assess progress; how they will ramp up action over time; and, how to prepare for entry in to force in late 2016 or 2017. Terms of Reference and various committees were formed. One of the key ones being the Paris Committee for Capacity Building (PCCB) which it is planned will play a key role in shaping and steering the capacity building needed to ensure countries take effective and ambitious climate action.

A new UNFCCC Secretary was ushered in – former Mexican Foreign Minister Patricia Espinoza – in the place of the outgoing Secretary Christiana Figueres. Plans were also made for the next Conference of the Parties (COP), to be held in November in Marrakech.

EU ETS review and a French carbon price corridor

On Monday 20 June EU environment ministers discussed whether the proposed revisions of the EU’s carbon market for phase 4 (beyond 2020) are likely to bring the EU’s flagship climate instrument in line with the Paris Agreement. Proposals include increasing the pace of emissions cuts, better targeted carbon leakage rules, and two new funds for low-carbon energy and energy sector modernisation. Commentators suggest that proposals are too little too late – the EU ETS may not even be fit for purpose. Steeper than 2.8% emissions reduction year on year are required to limit global warming to below 1.5°C. It is thought that to reach the Paris Agreement’s climate objectives,the carbon price should be over €40/tonne. The price has hovered around the €5-6/tonne mark for several weeks, and we don’t expect this to rise until the Market Stability Reserve kicks in in 2019. The EU ETS is not necessarily dead but will take considerable reform before it becomes more likely to deliver what is needed to be in line with the Paris Agreement.

How will France’s proposed carbon floor price or price corridor influence the dynamic? It has been suggested that this is unlikely to boost emissions reductions as, pitched at about €30/tonne, this is insufficient to motivate real reductions, and it is aimed at improving the bottom line for France’s nuclear generation fleet. The price differential between French and British power will be reduced – likely to reduce the business case for sale of French power in the UK via the interconnector. This could impact on security of supply for the UK.

What does all of this matter? 

Progress towards implementation of the Paris Agreement through sustained and regular UNFCCC dialogue in conjunction with the anticipated EU ETS negotiations could play a part in stimulating the carbon market. Yes it’s unlikely that we will see carbon prices rise significantly until the introduction of the Market Stability Reserve in 2019 but the direction of travel for carbon prices can be considered to be a positive one. The strengthening of climate change policy at a global level and persistent dialogue can only put pressure on the dirtiest of markets – e.g. coal – and provide a boost for clean energy. The EU ETS review is critical in maintaining pressure after the excitement of the Paris Agreement. Countries like France deciding to ‘go it alone’ amongst a sea of EU member states will put pressure on others to follow suit with a carbon price floor. Whether they do will remain to be seen and of course, motivations for doing so will vary, but pricing carbon in this way could be a useful tool in mitigating emissions if priced in at the right level.

Until at least 55 countries covering 55% of global emissions have acceded to the Paris Agreement it cannot enter into force once. How long will it take to achieve this? If those countries that have promised to sign this year do so (including the US, China and Canada) it is possible that the Paris Agreement could be brought into force before the target date of 2020 – in 2016 or 2017. That would be an immensely positive step and could generate momentum for deeper emissions cuts sooner. The credibility of countries’ pledges will then be what counts – how effectively will they deliver on their promises?

We’ve left mention of Brexit until last deliberately – we haven’t heard the last of this for a very long time to come. What does the ‘Leave’ vote mean for the Paris Agreement? The UK accounts for less than 2% of global emissions but the signal indicated by the UK’s next steps on the Paris Agreement will be of greater significance to countries around the world. The UK has recently approved the fifth carbon budget carbon budget - to reduce UK greenhouse gas emissions in 2030 by 57% relative to 1990 levels. This is a clear signal of intention. The next would be to ratify the Agreement at an individual state level. The current Government is faced with a huge raft of complexities to sort out. It is hard to gauge where this might be placed in the list of competing priorities. It is also difficult to suggest at what point in the process of disentanglement from the EU and how it will choose to shape the future of its climate change policy framework. The climate change crisis does not go away because the UK voted to leave the EU. There will remain a need for the population, environment and livelihoods to be protected from the impacts of climate change. It’s another watching brief.