Last Tuesday, the European Union ratified the Paris Agreement, the landmark international agreement dealing with the mitigation, financing and adaptation of greenhouse gas emissions. With the EU ratification, enough nations have ratified the Agreement, representing a sufficient percentage of the worldwide production of greenhouse gases, for the Agreement to take effect on November 4, 2016. Presently, more than 190 nations have signed the Agreement, of which around 76 have ratified it. In September, the U.S. and China mutually announced that the world’s two largest economies – and the two largest emitters of greenhouse gases – were ratifying the Agreement.
The Paris Agreement is an accord within the United Nations Framework Convention on Climate Change (the “UNFCC”). The stated goal of Agreement is to reach “global peaking of greenhouse gas emissions as soon as possible.” More specifically, the countries signing the Agreement agreed to attempt 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 above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.”
Each nation signing on to the Agreement agreed to be ambitious in determining the contribution it will make to the overall goal (referred to as “nationally determined contributions” or “NDC”), which individual contributions are to be reported every five years. The U.S., for example, has agreed to cut emissions by up to 28% by 2025 as compared to 2005 levels. There will not be, however, any mechanism to force a nation to set its NDC or any enforcement capabilities if a nation fails to meet its NDC.
The ability of the United States to achieve its Paris targets could be affected by a decision by the D.C. Circuit Court of Appeals’ to a challenge brought by 27 states trying to block the federal Clean Power Plan which, if upheld, would limit CO2 emissions from power plants, the largest source of U.S. greenhouse gas emissions. According to an analysis published last month in Nature Climate Change, even if the United States implements all current and proposed policies, including the Clean Power Plan, it would miss its 2025 target by as much as 1.5 billion metric tons of carbon dioxide per year—roughly 20% of the nation’s total emissions.
Despite these limitations, President Obama hailed the implementation of the Paris Agreement: “If we follow through on the commitments that this Paris Agreement embodies, history may well judge it as a turning point for our planet.” The President continued to assert that the Agreement “gives us the best possible shot to save the one planet we’ve got.”
Not everyone agrees with these sentiments. House Speaker Paul Ryan has said the “Paris climate deal would be disastrous for the American economy.” He continued to claim that if the Agreement was enacted the “abundant, low-cost energy that we have unlocked will now be shut in the ground, eliminating the economic growth and jobs that come with development.”
The oil and gas industry is right to be concerned about how international agreements such as the Paris Agreement will impact energy development in the United States, particularly the development of the nation’s shale oil and gas reserves. Furthermore, oil and gas operators in the United States may see themselves subject to previously unknown liabilities for claims brought by individuals and groups under the authority of agreements such as the Paris Agreement. This potential liability will be subject of discussion and analysis in subsequent postings on this blog.