Paris Agreement

The Paris Agreement

Negotiators gather for COP 21 in Paris, December 2015. Image courtesy of the UNFCCC, via Flickr.

The Paris Agreement strengthens the global climate effort by requiring all countries to set climate goals and by establishing new mechanisms to hold countries accountable and to build ambition over time.

The agreement was reached in December 2015 and entered into force 11 months later.  In June 2017, President Trump announced that the United States would withdraw from the agreement.

A Paris Primer
C2ES answers questions on the talks leading to the Paris climate accord, how the agreement works, key legal issues, the agreement’s status, and next steps.

Summary of the Paris Agreement
A closer look at the core elements, including commitments on emissions, adaptation, finance and transparency, and steps to promote carbon trading.

C2ES Statement on Paris
U.S. leadership and a groundswell of support from mayors, governors and CEOs helped deliver the landmark agreement. 

C2ES Statement on U.S. Withdrawal
The decision to withdraw ignores the many U.S. business leaders – and the strong majority of Americans – who want the United States to stay in the Paris Agreement. 

Business Support for Paris
Leading U.S. companies organized by C2ES signed a letter to President Trump and full-page ads in major newspapers urging him to keep the United States in the agreement.

Toward 2015 Dialogue
C2ES brought together top negotiators from two dozen countries for a series of in-depth discussions that forged common ground on key issues for Paris.

COP 21 Initiatives
A sampling of the many initiatives launched at the Paris Climate Conference by companies, city, state and local governments, and other non-state actors.

Additional Resources:

C2ES Policy Briefs:

Video:
Elliot Diringer briefs the Business Roundtable and members of the C2ES Business Environmental Leadership Council on the Paris Agreement

Major companies back Paris Agreement

Media Advisory

November 15, 2016

Contact:

US: Laura Rehrmann, rehrmannl@c2es.org, 703-516-0621

Marrakech: Anthony Mansell, mansella@c2es.org, 202-384-0774 (cell) 

Major companies back Paris Agreement

Hear from companies at livestreamed event today

MARRAKECH – At an event today at COP 22 in Marrakech, the Center for Climate and Energy Solutions (C2ES) will highlight climate action by business, including a recent statement signed by 11 leading corporations in support of the Paris Agreement.

The event, to be held at the U.S. Center at the U.N. Climate Change Conference, will feature remarks by senior representatives of Berkshire Hathaway Energy, Ingersoll Rand, Mars and Microsoft. They are among the more than 150 U.S. firms that have committed to specific climate actions as part of the American Business Act on Climate Pledge.

The event occurs at 4 p.m. Marrakech time (11 a.m. EST) and will be livestreamed. 

C2ES Executive Vice President Elliot Diringer will highlight a statement organized by C2ES and signed by 11 major companies based or with major operations in the United States welcoming the Paris Agreement's entry into force, and pledging to work with governments to implement their contributions.

The statement, released when the threshold for entry into force was reached in October, says the Paris Agreement establishes “an inclusive, pragmatic and, hopefully, durable framework for progressively strengthening efforts globally to address the causes and consequences of climate change.”

The statement was endorsed by Berkshire Hathaway Energy, Calpine, HP Inc., Intel, LafargeHolcim, Microsoft, National Grid, PG&E, Rio Tinto, Schneider Electric, and Shell.

“As businesses concerned about the well-being of our investors, our customers, our communities and our planet, we are committed to working on our own and in partnership with governments to mobilize the technology, investment and innovation needed to transition to a sustainable low-carbon economy,” the statement says.

It says the Paris Agreement facilitates stronger private sector action by providing long-term direction, promoting transparency, addressing competitiveness, and facilitating carbon pricing.

“Many companies recognize the costly impacts of climate change, and see investment and growth opportunities in a clean-energy transition,” said C2ES President Bob Perciasepe. “These companies are taking action and are looking to governments to help lead the way.”

Read the full business statement: http://bit.ly/Biz4Climate

EVENT DETAILS:

CHARTING A LOW-CARBON COURSE FOR THE U.S. ECONOMY

Tuesday, November 15, 2016, 4 p.m. – 5 p.m. local time (11 a.m.-Noon EST)?U.S. Center, Blue Zone, Marrakech

Senior officials from major corporations discuss ways business leadership can help achieve climate goals in this live-streamed event co-sponsored with the Edison Electric Institute (EEI).

•    Cathy Woollums, Senior Vice President, Environmental Services and Chief Environmental Counsel, Berkshire Hathaway Energy

•    Nanette Lockwood, Global Director, Policy and Advocacy, Ingersoll Rand

•    Kevin Rabinovitch, Global Sustainability Director, Mars Incorporated

•    Tamara “TJ” DiCaprio, Senior Director of Environmental Sustainability, Microsoft

•    Elliot Diringer, Executive Vice President, C2ES

•    Eric Holdsworth, Senior Director, Climate Programs, EEI

For reporters in Marrakech, C2ES will also host a second side event:

Post-Election: The Outlook for U.S. Climate Policy

November 16, 2016

6 p.m. – 7:30 p.m.

IETA Pavilion, Blue Zone

•    Nathanial Keohane, Vice President, Global Climate, Environmental Defense Fund

•    Josh Klein, Senior Professional Staff, Senate Foreign Relations Committee 

•    Matt Rodriquez, Secretary for Environmental Protection, California

•    Cathy Woollums, Senior Vice President, Environmental Services and Chief Environmental Counsel, Berkshire Hathaway Energy

•    Elliot Diringer, Executive Vice President, C2ES

C2ES Resources

•    UNFCCC Climate Transparency: Lessons Learned

•    Key Issues in Completing the Paris Climate Architecture

•    Linking Non-State Action with the UN Framework Convention on Climate Change

About C2ES: The Center for Climate and Energy Solutions (C2ES) is an independent, nonprofit, nonpartisan organization promoting strong policy and action to address our energy and climate challenges. Learn more at www.c2es.org

UNFCCC Climate Transparency: Lessons Learned

UNFCCC Climate Transparency: Lessons Learned

November 2016

by Jennifer Huang

Download the fact sheet (PDF)

The Paris Agreement establishes an “enhanced transparency framework” to build mutual trust and confidence and to promote effective implementation. This framework combines common reporting and review requirements for all parties with “built-in flexibility” for developing countries. The agreement requires that parties, in elaborating the operational details of the transparency framework, build on experience with existing transparency arrangements under the U.N. Framework Convention on Climate Change (UNFCCC). Over the past year, developed and developing countries have shared their experiences with the existing transparency system in a variety of public forums. This brief highlights key lessons learned that can help inform the design of the Paris transparency framework.

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The enduring power of US-China climate leadership

US-China FlagsIt would have been hard to imagine just a few short years ago that the United States and China would – together – be the ones driving a stronger global response to climate change.

For years, each claimed inaction by the other as an excuse for not doing more. But with their simultaneous acceptance today of the Paris Agreement, the world’s two largest economies and emitters committed themselves to a low-carbon future, and solidified a new global framework that will keep pressure on all countries to keep doing more.

The precise mix of motivations varies between the two. But fundamentally, the heads of both the United States and China have assessed the risks and opportunities presented by climate change, and they have decided it is in their nations’ interests – and is their responsibility as global leaders – to do more.

How faithfully the two countries now follow through on their commitments will depend in part on a host of shifting political and economic currents, and who assumes the reins in the years ahead.

But with their leadership up to and since last year’s Paris conference, the United States and China have helped establish new mechanisms and unleash new energies that ensure a staying power beyond the comings and goings of individual governments.

With the Paris Agreement, countries have applied the lessons of a quarter-century of fitful climate diplomacy to create a new framework that offers the best hope ever of an effective international response.

The agreement binds countries to a set of processes requiring them to: tell the world how they’re going to fight climate change; report regularly on how well they’re doing; undergo review by experts and by other countries; and, every five years, say what they’ll do next.

It is, in essence, institutionalized peer (and public) pressure. And if it works as designed, the agreement will over time strengthen confidence that countries are doing their fair share, making it easier for all to do more.

Beyond the agreement itself, and the role of national governments, Paris also will keep nurturing stronger action through its powerful “signaling” effect. For many mayors, governors, CEOs and other real-world decision makers, Paris was a catalytic moment, and its signals continue to resound.

From Warren Buffett, who cited Paris in his annual letter to shareholders as further impetus for Berkshire Hathaway’s multibillion-dollar investments in renewable power, to Moody’s, which is now taking countries’ Paris pledges into account in rating future investments, mainstream business is internalizing the Paris goals.

Mayors, too, are reading Paris as a cue for stronger action. In a new Global Covenant of Mayors for Climate & Energy, more than 7,000 mayors in 119 countries pledged to set climate goals beyond those of their national governments. C2ES recently joined with The U.S. Conference of Mayors to form the Alliance for a Sustainable Future, bringing mayors and business leaders together to forge collaborative approaches to cutting emissions.

In the long run, this activation of mayors, CEOs and other “non-state actors” could prove as decisive as the actions of national governments in determining the success of Paris.

No one moment and no one agreement can ensure the long-term transformation needed to keep climate change in check. But today’s U.S.-China announcement is the latest in a series of breakthrough moments that could mean the difference between a successful low-carbon transition and a future of climate calamity.

 

 

 

A bright future for the International Solar Alliance

Rooftop solar panels in central India.

Photo courtesy Coshipi via Flickr

A bold initiative to vastly expand solar energy in developing countries recently reached two major milestones toward its ultimate goal of mobilizing $1 trillion in solar investments by 2030.

In late June, the World Bank Group signed an agreement establishing it as a financial partner of the International Solar Alliance, providing more than $1 billion in support. The Bank Group will develop a roadmap and work with other multilateral development banks and financial institutions to mobilize financing for development and deployment of affordable solar energy.

The news follows the June 7 joint announcement between India and the United States to launch an initiative through the Alliance focusing on off-grid solar energy.

The International Solar Alliance was announced at the Paris climate conference in December by Indian Prime Minister Narendra Modi and French President François Hollande. It was one of many new initiatives involving business, civil society, and public-private partnerships launched in Paris.

The alliance will comprise 121 countries located between the Tropic of Capricorn and the Tropic of Cancer that typically have 300 or more days of sunshine a year. Companies involved in the project include Areva, HSBC France and Tata Steel. 

According to the Renewable Energy Policy Network for the 21st Century (REN21), global solar capacity experienced record growth in 2015, with the annual market for new capacity up 25 percent over 2014. More than 50 gigawatts were added, bringing the total global capacity to about 227 gigawatts. That’s about 10 percent of the total amount of electricity the U.S. produced in 2015.

In developing and emerging economies, affordable financing is a challenge. The alliance will work to expand solar power primarily in countries that are resource-rich but energy-poor by mobilizing public finance from richer states to deliver universal energy access. Strategies include lowering financing costs, developing common standards, encouraging knowledge sharing and facilitating R&D collaborations.

President Hollande laid the foundation stone of the International Solar Alliance at the National Institute of Solar Energy in Gurgaon, Haryana in January, marking the first time India has hosted the headquarters of an international agency. The Indian government is investing an initial $30 million to set up the headquarters. The French Development Agency has earmarked over 300 million euros for the next five years to finance the alliance’s first batch of projects.

The solar alliance complements India’s own ambitious solar energy goals, which include a 2030 target of 40 percent of electric power capacity from non-fossil fuel energy sources as part of its intended nationally determined contribution to the Paris Agreement. India also plans to develop 100GW of solar power by 2022, a 30-fold increase in installed capacity. 

The growing support for the solar alliance is evidence of rising political momentum around the world to act on climate change and transition to a low-carbon economy. Look for a third major milestone in September, when the Alliance meets for its inaugural Founding Conference in Delhi.

U.S. can reach Paris Agreement climate goal; more needed

U.S. can reach Paris Agreement climate goal, but more will be needed

New analysis breaks down estimates of future emissions reductions

WASHINGTON – Existing and expected policies can take the United States most of the way toward its Paris Agreement goal to reduce greenhouse gas emissions, and the remaining reductions can likely be achieved through a mix of additional policies, city and business action, and technological innovation, according to the Center for Climate and Energy Solutions (C2ES).

As part of the landmark global climate agreement to be signed Friday by more than 150 nations, the United States set a goal of reducing net greenhouse gas emissions 26 to 28 percent below 2005 levels by 2025. In a new paper, C2ES outlines how expected and in-place policies could reduce U.S. emissions by as much as 22 percent.

“To get all the way to the goal line, we’ll need concerted efforts across multiple fronts. But the goal is definitely within reach,’’ said C2ES President Bob Perciasepe.

U.S. net emissions are already down about 9 percent from 2005 levels due to market- and policy-related factors, including a shift in electricity generation from coal to natural gas, growth in renewable energy, level electricity demand, and improved vehicle efficiency.

The C2ES business-as-usual forecast, drawn from a number of analyses, projects an additional 5.6 percent reduction in net emissions through such policies as greenhouse gas standards for vehicles and the Clean Power Plan.

The rest of the anticipated 22 percent in emissions reductions is expected to come from new, higher estimates of future carbon sequestration and additional measures under development, including steps to strengthen fuel economy standards for medium- and heavy-duty trucks, reduce methane emissions in the oil and gas sector, and reduce hydrofluorocarbons (HFCs).

Filling the remaining gap of at least 270 million metric tons carbon dioxide equivalent will require further steps, such as additional federal policies, technological advances that lower the cost of emissions reduction, and stronger efforts by cities and businesses.

“We’ve seen unprecedented support from cities and businesses for the Paris Agreement and climate action,” Perciasepe said. “Cities and businesses should press forward with their efforts, and we need to quantify their progress and learn from their examples to help the United States reach its climate goal.”

Read the analysis.

Additional Resources

About C2ES: The Center for Climate and Energy Solutions (C2ES) is an independent, nonprofit, nonpartisan organization promoting strong policy and action to address our energy and climate challenges. Learn more at www.c2es.org.

How the US can meet its climate pledge

The following was published in March 2016 on the EcoWomen blog. View the original post here.

By Manjyot Bhan, Policy Fellow, Center for Climate and Energy Solutions

I let out a cheer when Leonardo DiCaprio mentioned climate change during his Oscars acceptance speech. But concern about climate extends far beyond the red carpet.

Religious leaders, military officials, mayors, governors, business executives, and leaders of the world’s nations are all speaking about the need to address the greenhouse gas emissions that threaten our environment and economies.

Last December, world leaders reached a landmark climate agreement at the UN Climate Change Conference (COP 21) that commits all countries to contribute their best efforts and establishes a system to hold them accountable. COP 21’s Paris Agreement also sent a signal to the world to ramp up investment in a clean energy and clean transportation future.

The U.S. committed to reduce its greenhouse gas emissions 26-28 percent below 2005 level by 2025. The U.S. Environmental Protection Agency (EPA)’s Clean Power Plan was touted as a key policy tool to help reach that goal. However, with the recent surprise stay of the rule by U.S. Supreme Court, can the U.S. still meet its climate pledge? Simply put, yes.

Under the Clean Power Plan, the EPA sets unique emissions goals for each state and encouraged states to craft their own solutions. It is projected that the rule will reduce power sector carbon emissions at least 32 percent from 2005 levels by the year 2030.

Last month’s stay does not challenge “whether” EPA can regulate—the court has already ruled that it can—but rather “how” it can regulate. And the stay is not stopping many states and power companies from continuing to plan for a low-carbon future.

Some of the key ingredients that led to success at COP 21—national leadership and a strong showing by “sub-national actors,” including states, cities and businesses—will also be fundamental to U.S. success in meeting its climate goals.

recent event in Washington—held by the Center for Climate and Energy Solutions and New America—outlined the gap between existing policy trajectories and the U.S. goal. A secondary outcome of the meeting also explored how federal, state, and local policies and actions can leverage technology to close the gap.

An analysis by the Rhodium Group found that even without the Clean Power Plan, the recently extended federal tax credits for solar and wind energy will help significantly. Existing federal policies on fuel economy standards for vehicles and energy efficiency also support the U.S. goals, as well policies in the works to regulate hydrofluorocarbons and methane emissions from oil and gas operations.

States and cities made a strong showing of support for the Paris Agreement, and they have emerged as leaders in promoting energy efficiency and clean energy.

Additionally, many states are continuing to work toward implementing aspects of the Clean Power Plan. And even those not doing public planning are discussing ways states and the power sector can collaborate to cut carbon emissions cost-effectively. Last month, a bipartisan group of 17 governors announced they will jointly pursue energy efficiency, renewable energy, and electric and alternatively fueled vehicles. The Clean Power Plan stay can be looked at as giving states more time to innovate.

More than 150 companies have signed the American Business Act on Climate Pledge committing to steps such as cutting emissions, reducing water usage and using more renewable energy across their supply chains. One hundred companies have signed the Business Backs Low-Carbon USA, which calls the entire business community to transition to a low-carbon future.

Following the court’s stay, many power companies came out in support of the rule or reaffirmed plans to work toward clean energy and energy-efficiency.

2015 UNEP report suggests that beyond each countries’ individual commitments, actions by sub-national actors across the globe can result in net additional contributions of 0.75 to 2 gigatons of carbon dioxide emissions in 2020. While it is hard to accurately quantify the specific contributions of U.S. states, cities, and businesses in reducing emissions, they have the potential to accelerate the pace at which the U.S. meets its climate goals.

 

What's ahead for carbon markets after COP 21

The following was published in the February 2016 edition of Biores, a publication of the International Centre for Trade and Sustainable Development.

By Anthony Mansell, International Fellow, Center for Climate and Energy Solutions (C2ES)

The new climate deal includes several provisions relevant to market-based emissions reductions efforts. 

At a UN conference in Paris, France in December countries agreed to a new framework for international cooperation on climate change. The “Paris Agreement” ties together nationally determined contributions (NDCs) with international rules and procedures to ensure transparency and promote rising ambition. Paris also provided a future for international market mechanisms as a tool for countries to fulfil their NDCs.

Many NDCs submitted as part of the Paris process demonstrate an enthusiasm for market approaches. Sixty-five governments say they will use international markets and another 24 will consider using them in the future. Many groups such as the Carbon Pricing Leadership Coalition (CPLC) urged support in Paris for the use of market mechanisms and a ministerial declaration issued by 18 governments at the close of the conference was designed to send “a clear signal to the global carbon market…that there is an important role for markets in the post-2020 period.”

The Paris Agreement includes provisions that can advance carbon markets in two ways: by ensuring there is no double counting when countries engage in emissions trading, and by establishing a new mechanism to facilitate trading. In both areas, however, the text provides only broad parameters and important details remain to be decided. This article addresses the current state of carbon markets, their history in international climate agreements, and relevant provisions of the Paris deal – including issues still to be negotiated before it comes into effect.

Carbon market context

Carbon pricing is currently in place in 38 jurisdictions, according to the World Bank, encompassing both carbon taxes and emissions trading schemes (ETS). A number of additional policies are scheduled to enter force between now and 2020 including carbon taxes planned for Chile and South Africa. Ontario will develop an ETS similar to neighbouring Québec and US states Washington and Oregon are considering the same. In terms of scale, the most significant will be a new national ETS in 2017 across China, the world’s largest greenhouse gas (GHG) emitter.

Not all carbon market programmes seek to trade internationally; some focus solely on domestic emission reductions. Nevertheless, bottom-up linkages are already occurring. For example, California and Québec have linked their cap-and-trade programs, making carbon allowances and offsets fungible between programs. There are also ongoing discussions in California about using sector-based offsets that reduce deforestation – known as REDD+ – from Acre, Brazil and Chiapas, Mexico. The EU Emissions Trading System (EU ETS) and Swiss ETS have agreed a link, pending ratification by each.

In addition, the International Civil Aviation Organisation (ICAO) is to decide by the end of this year on the design of a global market-based mechanism (MBM) to reduce emissions from aviation. The MBM would come into force in 2020, around the same time the Paris Agreement aims to be in place.

History of international market mechanisms

Market-based approaches are not referred to in the founding 1992 UN Framework Convention on Climate Change (UNFCCC) document, but were integral to the design of its first sub-agreement, the 1997 Kyoto Protocol.

Under Kyoto, participating developed countries have binding emission limits – “quantified emission limitation and reduction commitments” – inscribed in Annex B of the agreement. They are allocated “assigned amount units” (AAUs) in line with those targets and, to enable least-cost emission reduction, are permitted to trade AAUs and other certified emission units.

Kyoto established three methods for transferring units – either emission allowances or emission reductions – between countries. International Emissions Trading (IET) allows countries that have reduced emissions below their targets to sell excess allowances to countries whose emissions exceed their targets. Joint Implementation (JI) allows Annex B countries to earn emission reduction units (ERUs) through emission reduction or removal projects in other Annex B countries. The Clean Development Mechanism (CDM) allows Annex B countries to earn certified emission reduction (CERs) credits through emissions-reduction projects in developing countries.

Emissions trading under the Kyoto Protocol relies on international oversight. All transfers are tracked using a registry called the International Transaction Log (ITL). A common accounting standard applies to all countries with emission targets. An executive board must approve the methodology CDM projects propose using. Finally, under the Protocol, only the international transfers it sanctions are considered legitimate to fulfil a country’s emissions-cutting obligations.

The Kyoto model provides important infrastructure for an international carbon market. Common accounting procedures ensure that any transfer meets an internationally agreed level of environmental integrity. An AAU allocated to Switzerland represents a metric tonne of emissions measured using the same standard as an AAU allocated to Norway. Common offset methodologies give a blueprint to replicate in projects across the globe. The CDM has been able to issue 1.4 billion credits – each representing a metric tonne of avoided emissions – and mobilise over US$400 billion in investment using this international rulebook for managing offset projects. Moreover, when countries submit their national GHG inventories, any recorded transfers can be verified by checking the international registry thereby reducing the potential for emissions double counting.

The Kyoto Protocol's market mechanisms have, however, lately encountered shrinking participation. One reason has been a reliance on the EU ETS as a source of demand, where low economic growth and restrictions placed on the types of credits has created a generous oversupply of CDM credits.

The Paris Agreement and carbon markets

The Paris Agreement establishes a fundamentally different framework from Kyoto. Rather than binding emission limits, which readily lend themselves to market approaches, the new climate regime requires all parties to undertake nationally determined contributions of their own choosing. As of writing, 187 countries had put forward NDCs, presenting various 2020-2030 target reduction dates.  These contributions are not legally binding and come in many forms, ranging from absolute economy-wide targets to peaking years, carbon intensity reductions, and so on. A new transparency system will apply to all parties, but will be less prescriptive than the accounting of AAUs that underpinned the Kyoto Protocol.

Fitting market approaches into this new landscape poses a different set of challenges. In a literal sense, the Paris Agreement is silent on markets, in that the term does not feature in the text. This is not unusual, the Kyoto Protocol also did not include the term. Instead, the new agreement houses markets under Article 6, geared towards addressing “voluntary cooperation” between parties in achieving their NDCs.

Article 6 recognises that parties may choose to pursue voluntary cooperation in implementing their NDCs. If these “cooperative approaches” involve the use of “internationally transferred mitigation outcomes,” or ITMOs, robust accounting shall be used to avoid double counting. The use of ITMOs are voluntary and authorised by participating parties.

The same article also establishes a mechanism to contribute to GHG mitigation and support sustainable development. The new mechanism will be under the authority of meeting of parties to the Paris Agreement. It has four listed aims including to promote greenhouse gas mitigation while fostering sustainable development; incentivise and facilitate participation by public and private entities who are authorised by a party; contribute to reduction of emissions level in host country, which can also be used by another party to fulfil its NDC; and deliver an overall reduction in global emissions. In addition, emission reductions occurring from the new mechanism must not be double counted. A share of proceeds will be used to cover administrative expenses and assist developing countries to meet the costs of adaptation, which is similar to the share of proceeds under the CDM, a portion of which was channelled to the Adaptation Fund. Article 6.8 and 6.9 contain a framework for promoting “integrated, holistic and balanced non-market approaches.”  

So what comes next? When the CDM, JI, and IET were established under the Kyoto Protocols, the details were not finalised until the Marrakech Accords four years later. Similarly, the COP21 outcome sets a work plan for negotiators to deliberate and decide how the Paris system will work, to be addressed in upcoming UNFCCC meetings.

Cooperative approaches accounting

The existing UNFCCC accounting system is bifurcated between developed and developing economies. Under the Convention, GHG inventories are required each year for industrialised countries, while these are included in national communications submitted every four years for developing nations.

The Paris Agreement establishes an “enhanced transparency framework for action and support,” with built-in flexibility to take into account national capacities. Under this framework each party must submit a national greenhouse gas inventory. An accompanying decision elaborates that all countries – except least developed countries and small island developing states – shall provide these inventories at least biennially.

On markets the Subsidiary Body for Scientific and Technologic Advice (SBSTA) will develop and recommend guidance on how to apply “robust accounting” for cooperative approaches, for adoption at the first session of governing body of the Paris Agreement, known as the CMA . Countries will need to be “consistent” with this guidance, but not necessarily follow it strictly. How to determine if a country’s accounting is consistent is not clarified in the Paris agreement, though it will likely be reviewed as part of the new transparency system.

Pending decisions will provide greater clarity on a number of issues. On ITMOs, it will be useful to define the scope of what can be considered a “mitigation outcome” transferred between countries. Under Kyoto, AAUs serve as a unit of account for transferring obligations, but also define the scope of accepted international transfers. In other words, only transfers involving AAUs are accepted when submitting national GHG accounts. Parties will also need to consider whether other forms of co-operation – such as Japan’s Joint Crediting Mechanism (JCM), which is similar to the CDM, or the bilateral linking of two ETSs –would be considered ITMOs. Transfers involving one or more countries without absolute economy-wide targets could complicate the methodology needed to avoid double counting.

On the accounting system, the CMA could take an active role in facilitating transfers, including through a central registry similar to the ITL. Alternatively, in a more decentralised system, it may require that parties maintain their own accounting – such as double-entry bookkeeping – and rely on the transparency arrangements to provide oversight. The provision referencing ITMOs also requires parties to “promote sustainable development and ensure environmental integrity.” The SBSTA guidelines will need to define these terms and how countries will meet them when undertaking transfers.

Paris “mechanism”

Another accompanying COP decision recommends that the CMA adopt “rules, modalities, and procedures” for the new mechanism at its first session. The parameters for these are: voluntary participation authorised by each party involved; real, measurable, and long-term benefits related to the mitigation of climate change; specific scope of activities; reductions in emissions that are additional to any that would otherwise occur; verification and certification of emission reductions resulting from mitigation activities by designated operational entities; experience gained with and lessons learned from existing mechanisms and approach adopted under the Convention.

This leaves much to be hammered out by governments. A key area to address will be the type of system. The new mechanism may continue to credit at a project level. A Brazilian proposal in Paris envisioned a mechanism similar in scale to the CDM, referred to as an “enhanced CDM,” or “CDM+.” Conversely, in prior discussions for a “new market mechanism” (NMM), both the EU and the Environmental Integrity Group negotiating group have proposed a scaled-up or sector-based crediting mechanism.

The future of the Kyoto flexibility mechanisms is also unclear, in particular whether the new mechanism will succeed the CDM and JI, or will sit alongside either of these. The Paris Agreement does not mention the CDM or JI, but notes that the new mechanism should draw on the experience gained from existing mechanisms. Similarly, it is unclear whether units generated under the Kyoto mechanisms will be eligible for compliance after 2020 and if so, whether they will need to be converted to an alternative credit type to conform with credits issues under the new mechanism.

Negotiators may also decide to transfer project methodologies over from the CDM to apply to the new mechanism, discard some of these existing approaches, or move away from project level crediting altogether as noted above. They may also consider other methodologies used outside the UNFCCC. Finally, the Paris Agreement frames sustainable development on a par with GHG mitigation, so parties may require measured sustainable development outcomes to be eligible for crediting.

Parties will need to decide on governance arrangements for the new mechanism. The CDM is managed by an Executive Board of ten government officials, comprising one member from each of the five UN regional groups, two other members from parties included in Annex I, two other members from non-Annex I parties, and one representative of the small island developing states. Similarly, JI has a supervisory committee (JISC) to oversee the verification of projects. The new mechanism could incorporate governance from either of these existing platforms.Guidance on rules and procedures will also need to be clarified. The CDM and JI have existing procedures for developing projects that are ultimately credited. Countries could transfer these rules to the new mechanism or adopt new procedures.

Given the breadth of views across governments on the role of market mechanisms, reaching conclusions on these issues will be challenging. The slow progress since 2011 in the UNFCCC toward a “framework for various approaches” (FVA) and NMM demonstrated the difficulties in gaining consensus on the subject. Nevertheless the importance afforded to international markets by many countries in their NDCs implies there is a strong impetus to find a workable system for international transfers.

Efforts beyond UNFCCC

It is possible that initiatives undertaken outside the UNFCCC will inform efforts within. The Carbon Market Platform established under the G7, for example, is a strategic political dialogue that can complement the UNFCCC in developing guidance on accounting for international transfers. The system that ICAO builds could seek consistency with the Paris Agreement. For example, it would be beneficial if credits used for compliance in the UNFCCC and ICAO are fungible, to prevent project developers choosing between separate customers. It remains to be decided what types of international credits will be used for compliance in the ICAO MBM, but this should take into account the emergence of the new mechanism. In addition, the accounting system used by ICAO should at least be consistent with that used under the Paris system, insofar as this would avoid the double counting of units used for compliance in both ICAO and the UNFCCC.

Unfinished business

Paris reaffirmed carbon markets as an instrument for meeting climate goals. Outside of the agreement itself, groups such as the CPLC are building strong momentum for market approaches as a key component to meeting the mitigation targets set by NDCs. COP21 did not, however, finalise a new system of international carbon markets or cooperative approaches. Accounting for ITMOs and other forms of voluntary cooperation require elaboration and guidance. The role of the new mechanism remains to be negotiated. And if these talks become stalled, as was the case for the FVA/NMM deliberations, interested countries may pursue bottom-up linkages elsewhere rather than continue to search for solutions within the UN climate talks. The pace and extent of progress under the UNFCCC will determine how central a role multilateral platforms will play on these issues in the future and the prospects of a truly global carbon market.

How the Paris Agreement will bring transparency to climate action

COP 21 in Paris (Image Courtesy UNFCCC Via Flickr).

A central issue in the Paris climate talks was strengthening “transparency” requirements to hold countries accountable for their commitments. This means closer scrutiny of steps taken by developing countries, in particular, and many are understandably nervous.

But in presentations in the sidelines of the negotiations, two developing countries – Singapore and Chile – said their early experiences with the existing transparency system were less onerous than they’d feared. Their key message: You learn by doing.

The existing transparency system, established in 2010 in Cancún, consists of two parallel processes: one for developed countries, and a less stringent one for developing countries. Under both processes, countries submit biennial reports describing the steps they’re taking to meet their emission goals. These reports are then considered by technical experts and by other parties.

The Paris Agreement calls for replacing these processes with a single system requiring all countries to work toward the same standards of transparency and accountability.

Although the agreement promises support to help developing countries build the capacity to meet these standards, many worry the new requirements will be burdensome. Others are wary of being judged harshly, particularly when they have had little experience closely tracking their emissions or undergoing international review.

So far under the current system, 16 developing countries have submitted biennial reports describing the efforts they are taking to limit or reduce their greenhouse gas emissions. 

Paris Climate Conference - COP 21

In a landmark agreement that charts a fundamentally new course in the two-decade-old global climate effort, governments meeting in Paris adopted a pragmatic deal that holds countries accountable and builds ambition over time.

The Paris Agreement

C2ES Resources

C2ES Events in Paris

December 3
Press Briefing with Bob Perciasepe and Elliot Diringer.
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December 4
The American Business Act on Climate Pledge
Leaders from the White House, C2ES and American corporations discuss how U.S. businesses are leading the way in climate action and investment.
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C2ES Blog Posts

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