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Thursday, 24 December 2015

The Climate Just Changed For The Better: the Paris Deal at COP21 on 12 December 2015


Lecture delivered at Anna University, Chennai, India on 23 December 12 pm.

Dr. Albert Schram

We are faced now with the fact that tomorrow is today. Over the bleached bones and jumbled residues of numerous civilizations are written the pathetic words “Too late”. 
(Martin Luther King, New York, 4 April 1967.


Today, at Anna University in Chennai (India) I would like share few thoughts on the global climate change negotiations, and the outcome of the recent Conference of Parties held in Paris (COP21). I do not pretend to be an expert in the field. For over 2 decades, I merely observed the development of climate science, and the interaction of scientists with policy makers, in particular when Inter-Governmental Panel 4th Assessment Report (IPPC-AR4) was presented at the European Commission in Brussels in 2007.

My interest in the climate change debate, and countries' long-term sustainable development was first raised in 1993 during the lectures and classes of Professor (now Lord) Nicholas Stern at the London School in Economics, the later author of the 2007 Stern Report on climate change. Later, I published in international journals as an environmental economists on various institutions designed to curb emissions (Alpizar, Requate & Schram 2004, Schram & Hussey 2009).

First, I will give a brief overview of the changes in approach that led to the results at COP21. Secondly, using knowledge use theory, I will show how the attempts to make climate change appear an unstructured problem failed, because in reality it had already become a well structured problem. Finally, I will argue that the role of non-state actors and social media has been, and will continue to be, decisive in achieving climate change goals in the future.

Run up to Paris Conference of Parties (COP21)

In the years after the Conference of Parties COP15 Copenhagen conference, which ended in acrimony and produced no accord, unsurprisingly progress in international climate negotiations has been slow. This month, however, almost miraculously at COP21 in Paris a consensus between states was reached and an agreement was signed.

What led up to this surprising results? First, the science behind climate change has gradually become more solid, and consequently at COP21 the decision making problem had now become more structured. The science has now become unequivocal and climate change caused by human emissions is acknowledged to be real, except by a small group of climate change deniers, who represent limited agendas supported specific interest groups.

The Intergovernmental Panel on Climate Change (IPCC) is the panel of over 800 scientist set up by the United Nations in 1988 as preparation for Rio Summit in 1992. Its conclusions reflect the global scientific consensus. It has established robust processes to review all scientific evidence and publish its findings based only on valid and reliable evidence. For its accomplishment, the IPCC won the Nobel peace prize in 2007.

We argue here that the last 7 years the main evidence on climate change and its impact was already established beyond scientific doubt. In its 5th Assessment Report, published in November 2014, the IPCC estimates that in a business-as-usual scenario the average temperature would increase by somewhere between 2.5º Celsius and 7.8º Celsius by the year 2100, after having already increased by almost 1º Celsius over the last century (IPCC 2014). A similar conclusion, however, was arrived at in IPCC 4th Assessment Report published in 2007, and further elaborated upon in the Stern Report (IPCC, 2007) (Stern, 2007).

Better science for evidence-based decision was undoubtedly a factor in the success of COP21, but here I will focus mostly on the second development: the changes in the approach to the negotiations and the new dynamics brought in by social media.

After COP 21 in Paris there is much reasons for optimism, even though some environmentalists are disappointed that the agreement did not commit firmly to limiting global warming to 1.5º Celsius or even 2º Celsius above pre-industrial levels by 2050. The global goal agreed upon limit in Cancun COP19 in 2010 was to try to aim for an increase of no more than 2º Celsius. Those countries - including the Pacific Island countries - who were aiming for higher reductions of global warming below 1.5º Celsius in Paris, in our view did not have the scientific evidence to back up their claim, and seem to have ignored the earlier decision taken at COP19. Some of these countries send large delegations to Paris, but that in itself is not effective if their claims are backed up by solid evidence. Their concern is understandable, however, since in the Pacific Papua New Guinea and Solomon Islands are in the top 10 of countries most likely to be heavily affected by climate change. Almost all of the other countries on this list have ongoing civil wars, and governments with little control over large swaths of their territories.

What were in our view the major changes regarding the climate change negotiations at COP21?

a- Pragmatism won over legalism

In the scholarly literature on the least costly way to reach emission targets, the political economy dimension of reaching and enforcing any international agreement on climate change was increasingly taken into account.

After the failure of the Copenhagen conference, the world seemed to have abandoned the idea of having a common commitment and a uniform carbon price. Increasingly, it was realized that it is not only “what”, but that “how” matters. It was easier to focus on what you want (e.g. a 2º Celsius target), than on how to structure the negotiations, and create enough flexibility to get a sufficiently large number of countries on board.

In order to get the negotiation going, first, the issue of the transparency of transfers between high income and low income countries needed to be addressed. Secondly, it was realized that international commitments must be feasible, to be credible and enforceable. Thirdly, implementation had to be supported by verifiable, valid and reliable information. It was realized that any agreement would have enormous enforceability problems. As a consequence, aiming for non-binding agreement and defining a review process using the carrot and stick approach was the only feasible option. What are the advantages of this approach?

First, and most importantly, participation is now comprehensive, with 188 countries offering individual commitments, called Intended Nationally Determined Contributions (INDCs), including China, and India, both large emitters.

The Paris deal takes some steps toward transparency in monitoring, reporting, and verifying countries’ progress. Starting in 2023, countries are to report every five years on compliance with their emissions targets. The US and Europe had to push China and India to agree to this, but without transparency, the INDCs would not be credible.

Secondly, there is now room for countries to take different growth and reduction paths. After all an explicit commitment is better than setting lofty goals for the distant future without implementing any concrete and funded policies that give reasons to think that these goals would be met. The agreement has not many mandatory elements, but it includes a process of future assessment and revision of targets. Every five years, the parties will take stock and renew the commitments. Targets can be adjusted in light of future developments to be more or less aggressive, depending on observed effects, and those predicted by scientists.

Thirdly, the agreement contains mechanisms to facilitate international linkage, including scope for residents of rich countries to finance emissions reductions in poor countries. Countries that want to develop particular technologies, made separate statements, such as India and France launching a solar alliance. Others, such as New Zealand, Netherlands and USA among others, formed a coalition to promoted tradeable permit mechanism to achieve emission reductions.

The irony was noted that the American President George W. Bush, who never formulated any major climate change policy initiative, was the one advocating the bottom up “pledge and review” mechanism, instead of binding commitment as in the Kyoto Protocol. Because of his administration's lack of action, however, nobody took this idea seriously, until the Obama administration started to work on it, making it more precise and enforceable. The European and the Obama administration made it a workeable concept for the climate negotiations.

b- Transparency and speed won over vague and distant promises

The impact of IT and social media has changed something fundamental in all aspects of everyday life, including business and negotiations about international agreements.

A case in point is Volkswagen's attempt to conceal the true emissions of its diesel engines, a few months before COP21 took place. A single engineer in the USA working for an NGO discovered the irregularity, and then with his team worked incessantly to bring out the truth.

A plan to conceal emissions may have worked in yesterday's more opaque and slower world. Today, following on the revelation, immediately Volkswagen's stock price plunged with 50%, writing billions of its book value. In this new smaller and faster world, hiding risks for investors is not an option any more. Risks produced by not adequately addressing GHG emission adequately have become a reality. This must have been at the back of the minds of many of the delegates at COP21.

What happened after the revelation, is that all other car companies made sure their houses were in order. More importantly, they announced new investments in less carbon intensive technologies. Now the regulators took action. In a more transparent world, undesirable actions can quickly be curbed by regulation. This shows that carbon risk is real, because of the regulatory risks.

c- Participation won over top-down imposition

At COP15 in Copenhagen, the failure to get China and India on board was a major cause for failure to reach an agreement. Clearly, a different approach needed to be found to keep the major players fully engaged in the negotiations.

The Kyoto Protocol approach of a binding agreement imposed upon countries had a number of fundamental flaws. The emission rights would be allocated among countries and then could be traded. The allocation formula, however, was based on historical emissions, which meant that countries which had emitted more, would receive more rights. Inevitably, this approach widened the rift in the negotiations between the developing and the developed countries.

Another fundamental flaw was the lack of a uniform carbon price. It has been estimated that these rights would have a price of US$80 to US$100 when a 2º Celsius reduction was aimed for. In practice however carbon trading mechanism, such as the European Trading System would only cover part of the emitters. Due to effective lobbying efforts, the regulated sectors would assure a generous supply of emission rights, causing the price to collapse to a level close to zero.

These flaws of a top down approach led to a academic debate on how to create more flexibility without making agreement entirely unenforceable. On the one hand, entirely voluntary pledges will probably not solve the underlying free riders problems associated with public goods. On the other hand, a top down approach with determined caps such as the Kyoto protocol runs into major implementation issues, and lack of participation from a large number of countries.

Knowledge Use Theory

How policies are developed will vary from country to country, but how demand and supply of science for policy are reconciled can be applied to international negotiations as well, and modelled as follows (Shaxon 2009):

Climate change was converted from an unstructured problem as it was maybe 30 years ago, to a moderately structure problem at the start of the century to finally a well structured problem, in which regular dialogue between policy makers and scientist generates policy options based on evidence. In our view, this happened around the publication of IPCCs 4th AR in 2007.

What those opposed to a deal or climate change deniers were trying to do was to make it appear as if climate change was an unstructured problem, and the states were being silly trying to regulate “the weather”. Ban Ki-moon, Secretary-General of the United Nations said it well: “What was once unthinkable has now become unstoppable.”

Knowledge use theory show us that the style and content of the science-policy dialogues will evolve depending on how well structured a particular issue is. Over the last 3 decades the climate change debate shows us how problems can be converted into well structured policy issues, at which point a breakthrough becomes possible.

Non-State Actors and Social Media

The activity on social media around COP21 was without precedents. Many government leaders and heads of state used their personal twitter accounts to make their viewpoints known. Usually unglamorous and drab international civil servants managed to create a certain “buzz” around Paris, which helped to spread essential information and evidence, useful for getting support from the NGOs and forging a consensus.

The NGOs forum, which always accompanies these type of international negotiations, were concerned about a possible lack of follow through, so drew up a “Paris pledge for Action”. At some point in the social media the dividing line between the UN and the NGOs even became blurred: after the accord was reached on 13 December, Christiana Figueres, the executive director of UNFCC tweeted on 16 December: “Turning point is here! Join the wave of change. Sign the Appel de Paris: COP21”

As a consequence of all this social media buzz, those trying to spread misinformation or defending outdated viewpoints could easily be ignored, since government leaders themselves (or their social media officers) made their viewpoint known directly to the public. Those in India, for example, who argued that Paris Deal was a bad thing and India sold out, where countered by tweets from Prime Minister Modi and other themselves. Immediately and straight on their mobile phones. On 13 December, the Indian Minister for the Environment Prakash Javdekar tweeted: “It's a historic day. What we have adopted is not only an agreement but a new ‘chapter of hope’ in the lives of 7 bn people.” The Indian Prime Minister Modi ‏tweeted: “Outcome of #ParisAgreement has no winners or losers. Climate justice has won & we are all working towards a greener future.”

Final Remarks

Climate change caused by human emissions is real, and the science is unequivocal. Over the past 30 years the climate change issues has been converted from an unstructured issues to a well-structured issue mainly because policy makers helped build a solid scientific consensus. At this point, states, civil society, industry and international organizations could come together to do a deal that seemed impossible earlier on.

Undoubtedly, the Paris deal is a historic milestone. Its consequences will shape development of our markets and societies in the year to come. The general direction to a carbon neutral, and carbon risk free society has been shown. Ban Ki-moon, Secretary-General of the United Nations said it well: “Markets now have the clear signal that they need to unleash the full force of human ingenuity and scale up investments that will generate low-emissions, resilient growth...”

Finally, we hope that the US$100 billion pledged for climate finance for developing countries, a significant part will go to further research broadening the evidence base in those countries, as well as the two countries particularly at risk in the Pacific, who have shown through meaningful participation to have their house in order to deal with climate change mitigation and adaptation.

COP21 Paris Agreement.

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