In lieu of a top ten list to close out 2015 or set the agenda for 2016, we focused on the reactions to the Climate Conference in Paris to find some “good stuff”:
Our pragmatic rule of thumb on policy quality at any level is to test whether relevant voices on all sides of the debate complain about it and say something positive when pressed for it. The Paris Agreement meets the test: on binding content, the Agreement stops way short of charting a real path to limit global temperature rises to 2 degrees Celsius; and the monetary commitments from developed to developing countries to allow for and enable equitable economic development while limiting climate change are not binding. (The voices of climate deniers and coal companies are generally no longer deemed relevant on the global stage – interestingly, at COP#19 in Warsaw only two years ago, the coal industry was still being heard.)
Yet, what impresses us most is the pragmatism underpinning the Agreement that allows for contextually appropriate solutions everywhere. Jennifer Morgan and Eliza Northrop from the World Resources Institute eloquently summarize the advantages of the Agreement’s legal form in a post, which we condense to a soundbite: binding intent and binding components for reporting and ongoing follow-up, all of which is expected to trigger compliant behavioral patterns on the international stage and guide context-appropriate policy, concrete emission targets and implementation mechanisms at the national level.
Infering from the news coverage, we should profusely thank both, Christina Figueres as well as the French diplomats in charge, for this global feat of pragmatism – it wouldn’t have happened if it wasn’t for their tireless commitments to make it happen, ironing out as much as possible ahead of time, identifying common ground, fostering consensus and skillfully managing negotiation protocol.
Paris created momentum: with China, the US, India and the EU publishing their sovereign emission targets ahead of the Paris meeting, all of a sudden a significant portion of the class, including some notorious rebels, had done their homework. Funding for renewable energy buildup was announced: the International Solar Alliance as well as the African Renewable Energy Initiative. This momentum and funding now can (hopefully) create better predictability of future energy frameworks, energy project viability and a price for currently economically ignored environmental externalities. In turn, it increases confidence for the private sector to align business strategies, invest and act.
Investor momentum will also push the private sector to act. John Authers of the Financial Times, a smart classic financial journalist with his finger on the pulse of the capital markets, identifies the Paris meeting as a turning point for investors, legitimizing their efforts to require the corporates in their portfolios to address environmental performance. It has been quite a rapid evolution from those few institutional investors that spearheaded the Principles of Responsible Investments (PRI) to making it a palatable mainstream concern. Case in point: his paper reported on an example in the mining sector a day prior.
Given the pragmatism, momentum and money that envelops the Paris Agreement, we’re starting into 2016 as hopeful optimists on the climate change action outlook – as does Bloomberg New Energy Finance’s Michael Liebreich, whose take on the road to Paris and the agreement is a great read in our view.