Climate agreement signals to business to invest, innovate

Fourteen major U.S.-based companies signed a C2ES-organized statement earlier this year urging the adoption of a new global climate agreement that would get all the major economies on board, provide stronger long-term direction, and hold countries accountable.

On December 12, 2015, nations reached a landmark climate agreement in Paris that accomplished exactly that aim.

The Paris Agreement commits all countries to contribute their best efforts, sets up a system to hold them accountable, and promises stronger efforts to address the causes and consequences of climate change in the years ahead. It sends a signal to ramp up investment and innovation in a clean energy and clean transportation economy by:

  • Providing Long-Term Direction – The agreement calls for achieving a “balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century.” This goal, which is another way of expressing a progressive decarbonization of the global economy, provides the clear signal to markets to shift long-term investments toward energy efficiency and other lower-carbon alternatives.
  • Addressing Competitiveness – All major economies support the new agreement, which commits all parties to put forward their best efforts through binding commitments to submit and maintain nationally determined contributions (NDCs), to regularly report on them, and to strengthen them over time. More policy clarity and visibility will ease concerns about global competitiveness and about potentially double-counting carbon reductions.
  • Promoting Transparency – Parties are encouraged to map out their long-term strategies for reducing greenhouse gas emissions. They are also required to regularly report on their progress in implementing their contributions to the agreement and participate in procedures holding them accountable. This enhanced transparency system, which covers all parties, makes it easier for companies to anticipate regulatory risks and economic opportunities.
  • Facilitating Carbon Pricing – The Paris Agreement requires parties to ensure the integrity of international transfers of emissions units they are relying on to meet their contributions and prohibits double counting, facilitating the growth and credibility of the global carbon market, a cost-effective tool for reducing emissions.

The C2ES statement was endorsed by Alcoa, Alstom, BHP Billiton, BP, Calpine, HP, Intel, LafargeHolcim, National Grid, PG&E, Rio Tinto, Schneider Electric, Shell, and Siemens Corporation.

They supported strong action in Paris because they recognize the rising environmental, social, economic, and security risks posed by climate change. And that delaying action only increases the risks – and the costs.

In the lead-up to Paris, businesses, states and cities in the U.S. and around the world played a key role in demonstrating climate leadership and urging national governments to do more.

In the days since Paris, many business leaders have praised the agreement:

“The Paris agreement is a major milestone in orchestrating a global response to the climate challenge,” said PG&E Corporation Chairman, CEO and President Tony Earley. “It sends a clear signal to business that policy makers around the world are committed to fostering a low-carbon economy. California and its utilities have shown that, working together, it’s possible to invest in clean energy while growing the economy at the same time.”

“The U.S. government and many U.S.-based companies recently have stepped forward to make significant climate action pledges. Collectively, those pledges – if ultimately delivered upon – move the U.S. into a position of global leadership in dealing with climate change,” said Stephen Harper, Global Director for Environment and Energy Policy at Intel Corp. “The COP agreement reached in Paris reinforces those leadership actions by creating a transparent mechanism for other countries to follow our example – and that of the EU and China, collectively mounting a credible response to the climate challenge.”

“The Paris Agreement is an historic milestone and puts us on the path to address climate change,” said Nate Hurst, Sustainability Innovation Officer at HP. “The actions taken by our world leaders inspires HP to continue innovating solutions that reduce energy use and lower GHG emissions across our technology portfolio, operations, and supply chain—and help our customers and business partners do the same. Together, we can create a brighter future for everyone, everywhere.”