The record-breaking participation to the signing ceremony of the Paris Agreement (PA), held in New York on International Mother Earth Day (22 April, 2016), marks a first important step towards its entry into force. Yet, challenges remain for turning commitments into action. Key technical and political elements are still to be detailed in policy areas such as mitigation (including cooperative approaches), adaptation, loss & damage and climate finance. This article looks into the work Parties will need to do in the upcoming years to address such gaps and, more in general, to overcome the major operational limitations currently characterizing the PA.
Keywords: Paris Agreement, Signing ceremony, Entry into force, mitigation, Adaptation, Loss & Damage, Climate finance
JEL Classification: K33, Q54
Suggested citation: Calliari, Elisa, D'Aprile, Aurora and Davide, Marinella, Paris Agreement: Strengths and Weaknesses behind a Diplomatic Success (May 2, 2016). Review of Environment, Energy and Economics (Re3), http://dx.doi.org/10.7711/feemre3.2016.05.001
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The Paris Agreement (PA) has been opened for signature on April 22nd 2016, on Mother Earth Day. To celebrate the occasion, Secretary General Ban Ki-moon organized a day-long special event at the UN headquarters in New York, involving a wide number of Heads of State and Government together with business representatives, youth and civil society organizations. The vast majority of UNFCCC Parties (175) signed the PA on that day, including all major emitters like the United States, China, the European Union (EU), Russia, India, and Japan. The remaining 22 Parties have time until April 21, 2017 to sign it. On the same day, 15 developing and small island states also deposited their instruments of ratification, opening the way towards the entry into force of the agreement.
Despite the encouraging premises, the path towards the implementation of the Paris framework remains an uphill struggle. In this article we focus our attention on two main challenges. The first deals with the entry into force of the agreement, depending on the ratification processes to be nationally undertaken by Parties. Assuming that political momentum will be kept, we reflect on the conditions to be addressed in case of an early entry into force. This circumstance would also put the uncompleted and weak elements of the PA in the spotlight, as many elements are still to be detailed on the assumption of a 2020 entry into force. We thus look into the work Parties will need to do to address these gaps and, more in general, to overcome major operational and political limitations currently characterizing the PA. In particular, attention is drawn on challenges to be addressed in key policy areas, namely mitigation, cooperative approaches, adaptation, loss & damage (L&D) and climate finance.
What if the PA entered into force before 2020?
The double threshold of the PA requires the ratification by at least 55 Parties accounting for 55 percent of global GHG emissions. Ratification processes vary across countries, with many large and middle sized GHG emitters needing parliamentary approval -a process which is likely to require some time. The case of the EU is particularly cumbersome, as it requires prior ratification by all 28 member states. Nonetheless, the pledges by US and China to ratify the agreement as early as possible in 2016, coupled with the record-breaking number of signatures on April 22, could even prefigure an early entry into force. According to UNFCCC executive secretary Christiana Figueres, 2018 may be the decisive year (Reuters, 2016). The entry into force of the PA before 2020 “would have a catalytic effect” and “would also serve as a strong incentive for all Parties to the Convention to ratify the Agreement as soon as possible” (UNFCCC, 2016).
An anticipated start of the PA would create unexpected conditions to be addressed. Several elements are still in an early stage and the work on them may not be completed for an anticipated CMA (the new acronym for “Conference of the Parties serving as the Meeting of the Parties to the Agreement”). These elements concern, for instance, the common standards and transparency criteria that countries will have to follow in preparing and communicating their Nationally Determined Contributions (NDCs), the scope and operational rules of the envisioned mechanism to transfer “mitigation outcomes”, the modalities and procedures of the compliance committee in charge of facilitating the implementation of the agreement’s provisions, and the modalities and rules to regulate financial cooperation, support and transfers under the Paris framework.
Moreover, once the deal becomes effective, only Parties are bound by obligations/entitled rights under the agreement, and are responsible for governance, oversight, leadership and decision-making (UNFCCC, 2016). This could result in crucial decisions being taken by a limited number of countries, with those having not ratified merely participating as observers. In order to avoid this situation, the CMA could be convened , according to the agreement provisions, and then suspended. It would be resumed at a later stage, so to allow more countries to ratify and fully participate in the decision-making process. This hypothesis would guarantee the process’ inclusiveness but also frustrate it with unwelcome breaks.
The ambition gap
Although the NDCs (Nationally Determined Contributions) certainly represent a breakthrough in terms of participation to such an international effort and they show a more ambitious endeavor towards de-carbonization as compared to previous attempt, current efforts are not sufficient to maintain global warming below the level of 2°C by the end of the century. As many recent studies have shown (CAT, 2015; UNEP, 2015; IEA, 2015), the emissions gap between the full implementation of unconditional NDCs’ mitigation actions and the least-cost emission path to the 2°C target in 2030 ranges between 14 and 16 Gt CO2eq on average. In addition, commitments do not represent a veritable increase in terms of emissions reduction, resulting to be only 4 Gt CO2eq lower than the levels determined by current policies and therefore “far from enough” (UNEP, 2015). Similarly, projections indicate that current governments’ initiatives are not fully consistent with the 2030 pledges, meaning that further measures are necessary to achieve the mitigation targets stated in the NDCs (CAT, 2015).
Translating these figures into estimated temperature increase above pre-industrial levels in 2100, values range from 3.5°C (UNEP, 2015; Climate Interactive, 2015) to a more optimistic scenarios leading to 2.6/2.7 °C (CAT, 2015; IEA, 2015). The difference in temperature can, however, be explained by the different assumptions made by models on the post 2030 period.
It is indeed very important not only to look at current pledges but also to keep countries committed and increase the level of efforts in the long-term. This is why the global stocktake (GS) will be a key mechanism to guide countries towards the achievement of more and more ambitious objectives. The periodical review of progress along with the concept of “progression over time” toward the “highest possible ambition”, represent indeed the only instruments the PA will rely on to ensure its objectives are met.
A new era of carbon markets?
With the aim of increasing ambition, the PA recognizes the possibility to embark on voluntary cooperation, including “the use of internationally transferred mitigation outcomes”. In theory, these “cooperative approaches” will allow all parties to engage bilaterally or multilaterally in different types of international cooperation on mitigation, sustainable development and possibly also adaptation. Even if the term “markets” is not explicitly mentioned, it opens the way for a renewed international carbon market that, rising from the ashes of the Kyoto Protocol’s flexible mechanisms, will likely perform better. The perspective of a “Carbon Market 2.0”, as many called it, had been welcomed by those that consider it as an opportunity to enhance mitigation efforts, reinforce existing carbon mechanisms and spur private investments (Widge, 2015).
It is difficult to understand now what kind of cooperation could emerge and how they will relate with the flexibility mechanisms under the current regime (CDM and JI) but the language seems to support the at least the linking of national emission trading systems. However, practical implementation will pose future negotiating challenges especially related to the environmental integrity and transparency provisions as well as to double counting.
In addition, even with a solid infrastructure, demand will likely be scarce, as only around a handful of the about 90 countries that opened to the use of carbon markets in their NDCs are likely to be buyers (EDF & IETA, 2016). In the near term, these uncertainties along with the lack of details about the future of old and new mechanisms will barely send a strong signal to businesses looking for market opportunities.
Adaptation and L&D: more symbol than substance?
The PA brought to the long awaited “political parity” between adaptation and mitigation. This was achieved by setting a long term adaptation goal besides that on mitigation, and by outlining a similar cycle of action for adaptation communication (AC) and NDCs. The language employed, however, is substantially less stringent, although this could signal an attempt not to place excessive reporting burdens on developing countries. For instance, the submission and the periodical update of AC are not binding, and other prescriptions are softened by adding the wording “as appropriate” to the stated obligation.
Yet, the main criticality regards the way progress towards the global qualitative goal on adaptation will be assessed through the GS. The decision accompanying the PA is silent about the development of methodologies or indicators to this aim. Some proposals had been advanced on the way to Paris. For instance, AILAC (2014) had suggested targets to be tracked (assets at risks, economic losses, national funding for adaptation), while the African group had proposed a quantitative goal on adaptation finance, reflecting adaptation needs and costs (African Group, 2013). Further discussion will be therefore needed to understand how the different individual adaptation efforts will be assessed towards the achievement of the collective goal.
As for the (somehow related) issue of Loss and Damage (L&D), the achievements enclosed in the PA are more symbolic than substantial. Granted, developing countries scored an historic victory by obtaining a dedicated article on L&D (Article 8) and by crystalizing the permanence of the Warsaw International Mechanism (WIM) in the UNFCCC architecture. However, the PA basically confirms the explorative rather than operational mandate of the WIM, with this fact ultimately reflecting the ongoing disagreement on what exactly constitute L&D and how it should be addressed.
Where is the money?
One of the key gaps between current commitments and necessary action is finance. The richest countries promised to fulfil their USD100 billion per year commitment by 2020 and extended it for another five years, but the scale of financial resources required to implement the national obligations are much larger. Financial requests to implement the NDCs amount to around USD3,500bn over the period 2015-2030, of which around USD400bn explicitly requested from international donors. Given that not all countries specified their financial needs in their NDC, the overall picture was estimated to draw near USD4 trillion (The Guardian, 2016).
The Green Climate Fund, one of the entities entrusted to mobilize financial support to developing and most vulnerable countries, has risen around USD 10 billion in pledges (as of February 2016). In 2015 it approved the first eight projects to be financed, for a total initial GCF investment of USD 168 million (Green Climate Fund, 2016 b). In 2016 it plans to fund 22 projects with USD 1.5 billion (Green Climate Fund, 2016 c).
Besides the clear inconsistency between the resources made available and the level required, Paris’ climate finance framework will need also common procedures and standards to account, track and assess financial transfers and to achieve the promised equal balance between mitigation and adaptation. These elements are still a blind spot and its determination represents both a challenge and an opportunity in the next years.
Undoubtedly, the PA represents a crucial step in the history of global climate action and its political importance goes far beyond the limitations its legal text might have. After decades of negotiations, the deal features a shared language and vision needed to have both developed and developing countries fully engaged in the fight against climate change. Importantly, it also sends a strong signal to the private sector by telling business and investors that the path towards a low carbon and resilient society is the only to be taken.
Nevertheless, a careful reading of its text reveals that many elements still needs to be detailed in order to support the full implementation of the agreement. Much of the “refining effort” is explicitly assigned to the newly created Working Group on the Paris Agreement (APA), who will meet for the first time in Bonn this May. The definition of pending details will be of paramount importance for safeguarding the ambition of the deal.
Yet technical work cannot substitute for political will. The momentum built in Paris and confirmed in New York will be key in determining the effective implementation of the agreement. This is especially true when considering the PA institutional architecture, based on voluntary contributions framed in legally binding procedures, and its compliance system relying on shared awareness and peer pressure. National governments’ commitments and international institutions’ oversight will be decisive in keeping the system on track in delivering an effective, consistent and fair global response to climate change.
African Group (2013), Submission by Swaziland on behalf of the Africa Group. In respect of Workstream I: 2015 Agreement under the ADP.
AILAC (2013), Adaptation in the ADP. Joint submission of AILAC and Mexico.
Climate Action Tracker (2015), 2.7°C is not enough – we can get lower.
Climate Interactive (2015), Climate Scoreboard
Environmental Defense Fund (EDF) and the International Emissions Trading Association (IETA) (2015), Carbon Pricing: The Paris Agreement's Key Ingredient, April 2016
Green Climate Fund (2016 a), Pledge Tracker (accessed: April 22, 2016).
Green Climate Fund (2016 b), Project Briefs 2015.
Green Climate Fund (2016 c), Status of the Fund’s portfolio: pipeline and approved projects.
International Energy Agency (IEA) (2015), Energy and Climate Change: World Energy Outlook Special Report, Paris.
Reuters (2016), U.N. climate chief predicts Paris deal will take effect early.
The Guardian (2016), Poor countries must find $4tn by 2030 to avert catastrophe, says climate study, by John Vidal.
UNFCCC (2016), Entry into force of the Paris Agreement: legal requirements and implications. Information note.
United Nations Environment Programme (UNEP) (2015), The Emissions Gap Report 2015: a UNEP synthesis report.
Vikram Widge (2015), Carbon markets in the Paris Agreement - an early holiday gift. World Bank blog.
Unpacking the Paris Agreement, by Elisa Calliari, Aurora D'Aprile and Marinella Davide
Policy Seminar on "Unpacking the Paris Agreement" by Elisa Calliari, Aurora D'Aprile and Marinella Davide: slides and video