The climate goals set at COP26 were ambitious. But through new coalitions and 'carbon border adjustments' they aren't out of reach in Europe or elsewhere, explain the European University Institute's Jos Delbeke and Peter Vis
UN Climate conferences, or ‘COPs’, come and go, year by year. The 26th Conference of Parties to the United Nation’s Framework Convention on Climate Change has just finished in Glasgow.
It has been a difficult COP, in particular due to COVID-19, though it did deliver three successful outcomes.
Ratcheting up ambition
First, the five-yearly upgrading of national climate pledges – ‘Nationally Determined Contributions’ or NDCs in the jargon – have been announced by many countries, including more ambitious long-term goals by all G20 countries.
That is important, as it confirms the functioning of the five-yearly ‘pledge and review’ architecture of the Paris Agreement.
The International Energy Agency (IEA) has suggested that collectively and if fully implemented, the pledges, would limit global average temperature increase to 1.8°C, which corresponds to the ‘well below 2°C’ goal referred to in the Paris Agreement.
The more ambitious 1.5°C goal has been confirmed as the preferred long-term objective, even if most observers see it as highly challenging.
It was also agreed to ‘revisit and strengthen' the 2030 targets in NDCs by the end of 2022 and accelerate efforts towards the phase-down of unabated coal power and inefficient fossil fuel subsidies.
The discussion now needs to move from making pledges to the fulfilment of the pledges made, and the bending of emissions trajectories towards zero within a timescale that will avoid the worst effects of climate disruption.
What makes it harder is that the process is based on voluntarism and peer pressure, without any binding sanctions for non-compliance.
Not only are the pledges self-determined, but they can be repudiated without consequence, as demonstrated by the US when it withdrew from the Paris Agreement. Fortunately the US has since re-joined, but the process remains fragile.
Coalitions of the willing
The second successful outcome was that to kickstart strengthened policies, groupings of countries and companies announced several specific climate actions: reducing methane emissions, ending deforestation, greening private finance, and accelerating the phasing-out of coal, amongst others.
Although these voluntary commitments vary significantly in terms of scope, participation, and financial provisions, they do hold real promise.
Some could serve as an example for the future, such as the one concerning the greening of the South African power sector, with its indication of specific investments in renewables and concrete steps for financing.
Solid methodologies are now needed to ensure these pledges are kept to, as making promises and resolutions is much easier than delivering on them.
Specific climate action coalitions are welcome, as they complement the Paris Agreement and can help strengthen policies countries now need to develop and implement.
Completing the Paris Agreement rule book
The third plus is that the Paris Agreement’s rule book is now complete, as negotiations on transparency and international carbon markets (the ‘cooperative approaches’ of Article 6) were finalised.
A new mechanism has been established, overseen by a newly-created ‘supervisory body’. It is crucial this body learns from the experience of the CDM Executive Board set up under the Kyoto Protocol, where lax standards and political interference led to an over-supply of credits of little financial, and sometimes environmental, value. An opportunity now exists to do better.
Increased amounts of climate finance from developed to developing countries will be forthcoming, even if more generous specific commitments were hoped for.
The key question, however, is not just how much money will be transferred, but how much public and private capital will be mobilised towards the huge amount of low-carbon investment necessary, both for mitigation and adaptation, across the globe.
A ‘middle way’ with border adjustments
Nobel Prize winner Professor W. Nordhaus has criticised the Paris Agreement as not fit for purpose due the absence of binding sanctions.
Instead, Nordhaus proposes the idea of ‘carbon clubs’. Like-minded countries wanting to be ambitious on climate action could agree to trade goods between each other without an extra climate charge, but imports into countries belonging to the club would have to pay a charge.
This would be justified on the grounds that production costs should be equalised between production within the club and imports from outside.
There would, at a stroke, be an incentive to join the club, and a consequence for not doing so.
For the European Union, which wholeheartedly subscribes to the Paris Agreement and multilateralism in general, the Nordhaus approach is asking too much.
There is, though, a middle way, embodied in how the EU Carbon Border Adjustment Mechanism is designed.
Imports into the EU of energy-intensive products would be subject to a charge aligned with what European producers of similar goods have to pay as a result of climate regulation.
Exemptions and rebates would apply to goods from countries whose climate policies align with those of the EU, whereas those without comparable policies would be subject to the charge.
Such a mechanism would enable the EU to be ambitious, as expected of industrialised economies under the Paris Agreement.
The modalities and terms of the Carbon Border Adjustment Mechanism must be worked out in more detail and ensured to be compatible with the World Trade Organisation’s rules.
But the logic is compelling. While it is true that such adjustments are not explicitly foreseen by the Paris Agreement, Europe’s greater ambition will contribute to the common good.
Frans Timmermans, Executive Vice-President of the European Commission, was busy at the COP explaining the rationale for the Carbon Border Adjustment Mechanism, and succeeded in limiting the animosity that was expected from some of Europe’s trading partners on this issue.
Indeed, this instrument is necessary to prevent production from ‘leaking’ away from Europe and relocating to jurisdictions with much less climate ambition, thereby undermining the ultimate goals of the Paris Agreement.
As climate ambition rises and regulatory costs increase, as is inevitable for first movers, the risk of carbon leakage increases. Just displacing energy-intensive production is clearly not the answer.
The least developed countries, can, of course, be given due allowance and revenues raised can be deployed to help global efforts.
The proposal of the EU on the Carbon Border Adjustment Mechanism does not exclude the possibility that several countries together create a club.
If, for example the EU, the US and China succeeded in creating a carbon club, it could open up a promising avenue for higher climate ambition without fear of carbon leakage, and create a strong incentive for other countries to join.
An ‘Implementation’ COP27?
While countries are sovereign as to the policies and actions they put in place, perhaps future COPs could usefully look at implementation.
No country has a monopoly of good policy ideas and experiences, and every country is different. It is by exchanging good practices, and comparing what works and what does not, that effective measures can be implemented that reduce emissions trajectories.
At COP27 in Egypt, countries will be asked to demonstrate that their policies for the coming decade are aligned with their long-term targets.
Why not turn that COP from a traditional ‘Conference of the Parties’ into a ‘Comparison of Policies’, focusing on implementation instead of targets?
Jos Delbeke is the former director-general of EU Climate Action, European Investment Bank climate chair and a professor at the European University Institute School of Transnational Governance. Peter Vis is a senior research associate at the EUI's School of Transnational Governance.