Climate Adaptation

Reflections on COP21 and the Paris Climate Agreement

IIEP Director Prof. Stephen Smith and GW’s Director of Sustainability Dr. Kathleen Merrigan represented GW as UNFCCC Observers for the final week of COP-21 in Paris.


This blog post is an edited version of tweets and notes from IIEP Director Stephen Smith‘s stay in Paris for the COP21 climate conference, from December 6-12.

The Setting

Paris was a City of Christmas Lights. The Eiffel tower flashed stroboscopically every hour, while also displaying messages about climate change issues. And there was enough brilliance also at the COP21 climate conference to reach a pretty good conclusion.

eiffelCOP21

Central Paris and the COP21 convention area had extra security. The Champs–Elysse Noel carnival was crowded with families, though vendors of gaming and stocking-stuffers and snack booths said business was way down due to the recent terrorist attacks.

Many of those present at COP21 expressed a sense of being present at a world historic event. The conference center was filled with drama throughout the week.

The Drama Built in the Final Days

The biggest issues were termed “differentiation, ambition, and finance” (in other words, the obligations of developing countries, the target maximum warming level, and who would pay). Successive draft agreements with scores of alternative phrasings set side by side in brackets were printed and poured over by negotiators and observers. At least once, delegates were seen waiting in line at the documents booth to get a still-warm revised version. Remaining wording differences contained some controversial assumptions about technology progress, and critically, many nuances of legal obligation – could any one of these wording differences sabotage an agreement?

Dramatic Conclusion

Early afternoon on December 12 – a day after the conference had been scheduled to end – the proposed final version was distributed to 196 parties (country delegations) and placed online. All multiple wording choices had been eliminated in a final up-or-down version of the document. The drama reached its peak when the conference president, French Foreign Minister Luarent Fabius, said:[1] I’m looking at the room, I see the reaction is positive, I’m hearing no objection, the Paris climate agreement is accepted!” and gaveled the process completed. The conference plenary hall, where all delegations were present, rose as one to their feet with cheers and applause. But it was a long and difficult process to get there.

Problems of Consensus

For years it seemed dubious that a COP forum could reach a meaningful agreement. Consensus on formulations involving more than one hundred countries is very unusual. For example, since 2001, WTO negotiations have gone nowhere; and regional country subgroupings became the basis for new (ratified or proposed) trade agreements. But no economy can function without underlying institutions –formal and informal rules of economic life. What could be done for climate negotiations if there were just a couple of holdout countries? In a bankruptcy, a judge can compel holdout creditors to accept a “haircut”; similar arguments have been applied to sovereign debt crises or in particular to banks in a developed country holding debt of a developing country facing insolvency. The UN Security Council can take action against a country that is acting in a way to threaten the peace or the security of populations (particularly genocide). Plausibly, in an extreme scenario, action for global climate protection could become a Security Council matter. So should complete consensus trump everything on global climate agreements? But consensus has been the COP rule and somehow had to be worked with.

The Role of Intended Nationally Determined Contributions

Can country contributions lead to a better and sustainable equilibrium – one that addresses free riding at least to an acceptable extent? Perhaps side pressures and side inducements – or the opprobrium of responsibility for a failure at COP21 – was great enough, even for countries with a lot of money to lose such as Saudi Arabia. The Obama administration’s leadership role at COP21 was of great importance if not essential.[2] Does agreement suggest that the international economy is moving to a new equilibrium regarding acceptable climate practices? In the agreed framework – a key difference from the earlier Kyoto Protocol – each country submits an “Intended Nationally Determined Contribution,” or INDC. Each country prepares and submits an INDC with its greenhouse gas mitigation and climate adaptation commitments and how it will achieve them. It is good news that by now most countries have submitted INDCs formally to the UN, including even Bolivia, Sudan, and Venezuela.[3] It is new to this agreement that every country – developing as well as developed – will present their plan to the world and update it at least once every five years with the condition that each country’s new plan is strengthened. Also, the INDC process gave a recognized forum for countries that want to take a lead, including several in Europe, to continue to do so, being able to point to agreement of other countries, even if not binding.

NOAA and NASA at US Pavilion – COP-21 included what could be described as a mini-World’s Fair with dozens of country and regional pavilions; but many found the US Pavilion the most impressive with its presentations of climate science research.

NOAA and NASA at US Pavilion – COP-21 included what could be described as a mini-World’s Fair with dozens of country and regional pavilions; but many found the US Pavilion the most impressive with its presentations of climate science research.

The Role of Agreements among Subsets of Countries

In addition to the individual country INDCs, in the COP negotiation process, key groups usually involved big-emitters of greenhouse gases (rather than regional groupings as in recent trade agreements). As the World Resources Institute reports,[4] China is by far the world’s largest greenhouse gas emitter, accounting for more than a quarter of all greenhouse gases. Additionally, the U.S. share is over 14% – more than double that of China on a per capita basis. Add European Union emissions[5] to those of the US and China and you account for half of greenhouse emissions. Then add India, Russia, Japan, and Brazil, to account for over two-thirds of all emissions. From the viewpoint of reaching agreements these seven actors are relatively few compared with the 196 countries that were parties at the COP21 meetings.

Small numbers agreements can provide a big start. Probably most important was September’s U.S.-China agreement announced during Xi Jingping’s White House visit, that China ensures that its carbon pollution peaks by 2030, while US emissions fall at least 26% by 2025 (from 2005 levels). It is clear that this and other pre-COP21 joint statements of agreement mattered. Such bilateral or small-group agreements were complemented by larger-coalition formation that evolved during the process of COP21 itself, notably including the “High Ambition Coalition,” which grew to include the US and more than 100 other developed and developing countries. While prior declarations have emphasized the goal of keeping temperature increases to now “well below” 2 degrees Celsius above pre-industrial levels, this Coalition pushed for explicit recognition of a new aspirational target: a promise to “pursue efforts” to contain the global temperature increase to less than 1.5 degrees Celsius. The weakened “pursue efforts” language seems to have been in part a compromise with Saudi Arabia, which wanted no mention of a 1.5-degree aspiration because it implies the need for relatively rapid phase out of fossil fuel use. China apparently disliked the High Ambition 1.5-degree proposal also, calling it a kind of performance (i.e. a publicity stunt). However, the very act of making 1.5C a reference point may have real effects.

The Central Role of Market Mechanisms and Technological Progress

The agreement commits countries to a transition to non-carbon based economies by the end of the century. This is credible in part because of the central role of market mechanisms; parts of the agreement – perhaps even its signals – facilitate and incentivize private capital flows into renewable energy and other climate-benefiting investments. Private initiatives also spur complementary green energy investments, as seen from the fanfare accorded to the Bill Gates-led Breakthrough Energy Coalition (dubbed the 30-billionaires club).

Attention is needed also to agriculture, which causes almost 25% of greenhouse gas emissions. The agreement features a prominent role of preserving and reestablishing nature in reducing greenhouse gas emissions in a cost effective way – that also supports the nearly half of humanity that depends on natural resource based livelihoods. It appropriately stresses better planning of human land use, but also highlights the value of preservation of intact ecosystems and biodiversity in nature. Incentives are to play a key role.

The UN Remains Centrally Important

It is not obvious, but simply agreeing to state shared aspirations could lead to real change. Today, individual countries provide substance, and agreements move up toward multinational agreements as different groups of countries reach accords, which was critical to the culmination of COP21. The UN is providing real leadership, through a framework for setting goals and targets that reflect scientific knowledge; basic behavioral economics suggests that reference point setting can make a real difference. Smaller sets of countries can build up agreements that result in movement toward these goals. Local governments and other state actors, environmental campaigners, and corporations in various sectors can build on the 1.5-degree goal as a framework for pushing policy and philanthropic goals, or taking corporate actions that create good will (and even may end up saving money). For example, an often-seen protest sign read “Keep it in the Ground” – apparently some estimates suggest that ¾ of all fossil fuel reserves will have to be left un-mined or undrilled to prevent greater than 1.5C warming. Talking with a few of these campaigners (some of them students active in the divestiture movement), and sensing their fervor, my guess is that this movement grows quickly.

Mini Eiffel Tower at the Convention, which became one of the sites of protest demonstrations and posters.

Mini Eiffel Tower at the Convention, which became one of the sites of protest demonstrations and posters.

Higher Aspirations as Global Insurance

Among other things, having such a 1.5-degree aspiration provides more insurance: 2 degrees C might be the best available estimate of a threshold for unacceptable damage, but this estimate might be too high. Extra insurance always costs more, but it can be worth it to reduce the risk of catastrophe. And in general, targets often get missed by a little bit in relation to a publicized visible reference point: so better to overshoot 1.5 degrees by half a degree than to overshoot 2 degrees by a similar amount. Another reason to seek more stringency is because technical evaluations have suggested the INDCs submitted so far – even assuming they will be fully realized in practice – still result in much higher expected warming (about 2.6 degrees C).

Country Insurance

The insurance theme was sounded in various ways. As expected, progress and problems of providing rainfall insurance to farmers were discussed. My interactions at the conference clarified and stressed the need of developing countries for country-level climate insurance, living as they do with increasing risk and uncertainty. While that point is clear, I hadn’t appreciated the scope of substantial activities already implemented. Two groupings of countries, one in the Caribbean and the other in Africa, have been willing to pay into such funds despite their limitations, making this a more commercially viable strategy. Payouts to participating countries have already been made. But so far, these insurance systems have important limitations. Participants agreed that there were significant opportunities for improvement, including risk that measurements will be wrong or indeed that the wrong kinds of data measurement will be prioritized. Likely, there may be some related incentive issues to be resolved.

Some final notes.

GW Elliott School MA graduate, Koko Warner, who later received her PhD from the University of Vienna, is now an Academic Officer at the United Nations University in Vienna; she has focused a lot of her attention on the climate insurance field, and she has emerged as an important voice in the climate adaptation policy debate. Of course, learning about such important work by GW graduates is very rewarding.

Conversation with Dr. Koko Warner, Elliott School alum.  Also pictured with us is Isaac Anthony, CEO of The Caribbean Catastrophe Risk Insurance Facility

Conversation with Dr. Koko Warner, Elliott School alum. Also pictured is Isaac Anthony, CEO of The Caribbean Catastrophe Risk Insurance Facility.

Going forward, there are plenty of opportunities for important research projects. Some address questions about climate insurance. Others will address unsolved problems in mechanisms for mobilizing and allocating funds for climate adaptation in least developed and vulnerable countries. Generally, there is a need for more integration between the setting of targets and economic analysis of costs and benefits of alternative strategies to achieve them. Much research, policy analysis, and political balancing remains to be done.

But this month, in the City of Light there was also Enlightenment. Enough at least to remind us that the world is not yet covered in darkness.

[1] * Je regarde la salle, je vois que la réaction est positive, je n’entends pas d’objection, l’accord de Paris pour le climat is accepted!” The last two words were in English

[2] It also seemed that US leadership helped mitigate diplomatic damage done by the 2014 Snowden revelations that NSA spying tipped off US negotiators on other countries’ strategies at a prior COP.

[3] See http://www4.unfccc.int/submissions/INDC/Submission%20Pages/submissions.aspx

Technically each new plan has to be at least as strong as its predecessor but it is referred to as a ratchet. Stronger contributions are needed because so far the individual country commitments do not add up to nearly enough mitigation to keep temperature rises to below 2 degrees C.

[4] See http://www.wri.org/blog/2015/06/infographic-what-do-your-countrys-emissions-look.

[5] The EU of course is really up to 28 actors, but on environment policy EU countries have been far more unified than on fractious topics like fiscal and monetary policy and immigration.

About

Stephen C. Smith is Professor of Economics and International Affairs at the George Washington University where he currently serves as Director of the Institute for International Economic Policy. He received his PhD in economics from Cornell University and has been a Fulbright Research Scholar, a Jean Monnet Research Fellow, a Brookings Visiting and Non-Resident Fellow, as well as an IZA Research Fellow. Professor Smith is the author of Ending Global Poverty: A Guide to What Works (Palgrave Macmillan, 2005); co-author with Michael Todaro of Economic Development (12th Ed., Addison-Wesley, 2014); and co-editor with Jennifer Brinkerhoff and Hildy Teegen of NGOs and the Millennium Development Goals (Palgrave Macmillan, June 2007). He is also author or coauthor of approximately fifty journal articles, and numerous other publications. (Further details at https://www.gwu.edu/~iiep/ssmith/).

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