As the dust settles on the weekend’s Climate Action Summit, co-hosted by the UK, France and the UN, we wanted to shine a spotlight on the headlines coming out of the summit, what they mean for the future of the Paris Agreement, and how they will affect businesses.
The UN secretary general Antonio Guterres kicked off the summit by urging leaders to declare climate emergencies in all countries until emissions were reduced to zero overall, starting with meaningful cuts now. Alok Sharma, the COP26 president, said: “People will ask ‘Have we done enough to put the world on track to limit warming to 1.5°C and protect people and nature from the effects of climate change?’ We must be honest with ourselves – the answer to that is currently no.” He warned the summit that the world is in danger of missing the Paris climate target.
While the summit was well attended with over 70 world leaders, including China’s President Xi Jinping, the European Commission President Ursula von der Leyen, and Pope Francis joining the virtual event, the outcome was not as substantial as we could have hoped as there was an absence of new commitments on reducing greenhouse gas emissions (despite the clear increase in leadership from China, the EU and the UK). However, it has been reported that China has vowed to nearly triple its wind and solar capacity in the next decade and that it will look to reach the peak of its emissions before the end of the decade. This, clearly, would have a huge impact on carbon emissions, as well as on the renewable energy sector generally.
The summit was scheduled to coincide with the five-year anniversary of the Paris Agreement. This landmark accord, which was agreed at COP21, saw rich and poor countries align and come together in an international treaty on climate change to keep global heating to well below 2°C. No less than 196 countries agreed to the goal of limiting global warming to well below 2°C, preferably to 1.5°C compared to pre-industrial levels, the scientifically advised limit of safety. The Paris Agreement works on a five-year cycle of increasingly ambitious climate action carried out by countries. The next iteration of the nationally determined contributions were due to be confirmed at COP26 in Glasgow in November 2020, but this has been delayed to 2021 due to the COVID-19 pandemic.
We wanted to mark the fifth anniversary of the Paris Agreement by taking a look at the successes, the ongoing challenges and what the future holds for this landmark accord.
- Political momentum – The Paris Agreement has proved to be remarkably resilient. When President Donald Trump began the process of withdrawing the US, the world’s biggest economy and second biggest emitter, some commentators feared a domino effect would take place. The key axis of the EU and China remained intact and there was thankfully no mass exodus. The bottom up approach of the Paris Agreement, with governments having to approve nationally what they bring to the international table via the nationally determined contributions, has helped to reinforce the accord’s resilience. China, South Korea, Japan and the EU all stepped up their contributions when the US was walking away.
- Mainstreaming 1.5°C – The inclusion of 1.5°C as an aspirational limit on global warming was a big victory for the vulnerable island nations and leading environmental NGOs. 1.5°C had previously been dismissed by major powers, but increased reporting on the difference half a degree would make to millions of lives helped to ensure this aspirational target was included. Over the past couple of years, recognition of limiting global heating to 1.5°C is commonplace among many nations and within many businesses. However, current pledges are projected to increase global heating by 3.6°C. 1.5°C gives us a 50% chance of holding climate change to something that the world thinks it can manage. 3.6°C is what you will find in the fiction section of the bookshop.
- Normalising net zero – Net-zero emissions targets are now commonplace. There is also a powerful movement of net-zero emission targets within the corporate world with businesses often setting more aggressive targets than country-level commitments. Climate science suggests you cannot reach 1.5°C without going carbon neutral. Net zero is a way of conceptualising what 1.5°C means in practice.
- Businesses are taking action on climate – The French Presidency of COP21 had a focus on engaging with business leaders and that engagement has reaped rewards, especially as corporations have sometimes stepped in to make up for a lack of national action. The number of companies setting science-based targets is increasing exponentially and more than 1,100 companies worldwide are leading the zero-carbon transition by setting emissions reduction targets in line with climate science through the Science Based Targets initiative (SBTi), and DLA Piper is one of them. Businesses have also come together to take action at a sector level, such as the Fashion Industry Charter for Climate Action, and these have their roots in the Paris Agreement.
- Shift to renewables – The financing landscape has shifted in favour of clean energy, and many believe that the Paris Agreement sent the signal that renewables and clean technology were a worthwhile and safe investment. This year, renewable energy will make up about 90% of the new energy generation capacity installed around the world, according to the International Energy Agency, and by 2025 it will be the biggest source of power, displacing coal. This increase reflects the fact that wind turbines and solar panels are now competitive or cheaper than fossil fuel generation in many countries, and that is before factoring in subsidies.
- Rising emissions – Despite the landmark commitments made by signatories of the Paris Agreement, emissions have continued to rise globally. The UN Environment Programme (UNEP) reported that emissions rose from 50 billion tonnes in 2015 to 55 billion tonnes in 2019. While carbon output has reduced dramatically in 2020, due mainly to the impact of COVID-19, emissions have only decreased to the level that will be required every single year to achieve the Paris Agreement and that’s with transport, industry and commerce almost grinding to a halt during parts of the year. The prospect of a global green recovery from COVID-19 isn’t materialising across the board, with some countries pouring money into the fossil fuel economy to stave off a devastating recession, analysis for the Guardian reveals.
- Rising temperatures – November 2020 has been the world’s warmest since records began, and this year is on track to become the hottest year overall, according to the EU’s climate monitoring service Copernicus. The Independent has reported that across Europe, the January-November period was 0.5°C warmer in 2020 than in 2019.
- Rising fossil fuel production – Despite the growth in renewables and clean technology, the UN Environment Programme recently reported that nations are planning production increases of 2% a year and G20 countries are giving 50% more COVID-19 recovery funding to fossil fuels than to clean energy. Countries are on track to produce more than double the amount of fossil fuels consistent with a 1.5°C limit by 2030.
- Effects are already being felt and by the most vulnerable – Climate change is affecting every country on every continent. It is disrupting national economies and affecting lives. Weather patterns are changing, sea levels are rising and weather events are becoming more extreme. The populations of countries that have contributed the least to global warming are the most vulnerable to death and diseases brought about by higher temperatures.
Despite the challenges, there is once again a sense of optimism around what can be achieved with President-elect Joe Biden pledging to re-join the Paris Agreement on his first day in office, and China’s President Xi Jinping committing the world’s largest emitter to a zero emissions target by 2060. The key issue, though, is whether countries will meet these long-term targets. As Fiona Harvey points out in the Guardian, “making promises is one thing but major policy changes are needed now to shift national economies on to a low-carbon footing.” Only last week, the UK Climate Change Committee issued their sixth carbon budget, which included a high-level summary that the UK must cut emissions by 78% below 1990 levels over the next 15 years to be on course for their net-zero goal. However, there is hope as the UK Climate Change Committee’s analysis found that the future cost savings from no longer having to buy oil and gas almost offsets the GBP50 billion annual investment needed in low-carbon power, transport and home heating across the next three decades.
The transition demanded by the Paris Agreement and recent net-zero commitments will have profound effects on the roles of lawyers and professional services firms as we transform in line with the demands and expectations of businesses, stakeholders at all levels, wider society, and our planet. Legal teams are no longer just reacting to social and environmental issues, but proactively becoming involved in integrating material ESG risks and opportunities into organisations. Lawyers are experts in identifying and dealing with risk, and spotting trends in the evolution of regulations and this will be of paramount importance as businesses look to pre-empt and prepare for any changes relating to climate change legislation (click here to read our thoughts on how lawyers and in-house counsel will be at the heart of the transition towards a more sustainable future).
As we get closer to COP26, we can expect a plethora of new announcements and activity on climate action. And if President-elect Joe Biden’s promise to hold a climate summit of the world’s major economies within 100 days of taking office takes place, perhaps this might result in some of the new commitments which were notably absent at the recent Climate Action Summit in which the US was unable to play a meaningful role, for obvious reasons. Ahead of the COP26 conference, the world will be watching the remaining countries who have yet to sign up to long-term net-zero targets, as well as ensuring all countries have detailed plans for cutting emissions by 2030. As Tom Burke from E3G highlighted “we are beginning to see the restoration of political momentum to the need to tackle climate change. We know what we’ve got to do, we’ve got the technology we need to solve the problem. We know that it won’t damage our economy. What we’ve really got to do is get on with it, and deal with the really difficult problems, which are the political problems. So it’s very encouraging to see that this amount of political attention is being paid, and we are restoring momentum.”
So has the Paris Agreement been a success to date? On balance, absolutely. But there is a long road ahead, with businesses as well as nations required to make real and meaningful changes, and quickly.