27 January 2016

  |  CBI America

Update

A global climate deal requires national implementation

The global climate deal carefully crafted in Paris at the end of 2015 marked an ambitious and momentous step forward in tackling climate change. With nearly 200 countries committed to keeping global temperature rises “well below” the 2oC pre industrial average, and an aspiration of below 1.5 oC, the deal gives business a framework to work with.

A global climate deal requires national implementation

The CBI report, A Climate for Growth, published in 2014, set out what business wanted to see from the Paris negotiation, and the deal delivered on these fronts. The deal commits nations to tackling climate change by keeping global temperature rises in check, and sets in place a mechanism requiring nations to provide a new nationally determined contribution every five years to make headway on their previous commitment. This marks progress, especially from the talks at Copenhagen in 2009, and a positive outcome of the deal in Paris for business is the attention paid to carbon markets – a number of which are already in operation.

Ultimately, the actions of national governments will determine the deal’s success. While there are no legal obligations or sanctions in place to enforce the commitments, which could be seen as a pitfall, it is clear is that there is a notable political will and pressure to deliver on national commitments. The United States pledged at Paris to reduce its greenhouse gas emissions by 26-28 per cent below its 2005 level in 2025, which is particularly notable given that the U.S. currently accounts for around 16 per cent of global greenhouse gas emissions from fuel combustion and some industrial processes.

A concern in the U.S., will be the impact actions to tackle climate change may have on industrial competitiveness. However, President Obama highlighted in his State of the Union address, that it is also an opportunity to invest in clean technology and build on existing industries. For example, the U.S. solar industry, Obama argued, now employs more Americans than the coal industry.

Obama is not without opposition and the outcome of the presidential elections will shape the domestic agenda on climate change. Republican presidential frontrunners Donald Trump and Senator Ted Cruz have questioned and gone so far as to deny climate change. That said, as recently as 2008, Republican presidential nominee John McCain had supported cap-and-trade to tackle carbon emissions and climate change. In the Democratic field, Hillary Clinton and Bernie Sanders have pledged to promote renewables and support the Clean Power Plan.

Regardless of the outcome of the election, however, business remains committed to tackling climate change. The will of the business community is demonstrated by over 150 companies who have signed the White House’s American Business Act on Climate Pledge, voicing support for a global agreement, and setting company specific goals such as reducing carbon emissions, water usage, and waste-to-landfill. Together, the businesses that have signed the pledge employ nearly 11 million people, across all 50 states and represent over $4.2 trillion in annual revenue.