Seven things that will make or break a climate deal in 2015

In the months before the UN climate summit in Lima, Peru in December, a series of developments, many  of them unexpected, led to a sense of guarded but quite genuine optimism: the surprise US-China climate deal; a similar agreement with India with some tidy technology-sharing elements; an EU 2030 climate and energy plan that though lacking in ambition did at least just about keep within the scale of emissions cuts necessary to keep within the internationally backed two-degree warming limit.

For 2015, what are the biggest issues that will make or break a climate deal at the crunch talks in Paris at the end of the year, where either a global treaty will be signed or diplomats will have to admit defeat after more than two decades of effort?

1. Climate Finance

The deadlock over funding from the developed to the developing world remains bar none the biggest challenge in climate diplomacy. The historic impasse between these two sides over who bears the most responsibility for cutting emissions has to some degree been breached via the US-China deal and new language of the Lima Call to Climate Action. But talks almost fell apart amid open accusations of colonialism, news that Japan was spending its announced climate cash on Indonesian coal plants, and a climate finance kitty that barely amounted to $2.5 billion over the next four years. Even such cash as has been committed often is not new money at all, but just re-named aid money. Australia for example announced $200 million in climate finance at Lima. Every cent of it comes from already committed development assistance.

All official estimates have placed the cost of making the shift in the developing world to a low-carbon growth path at a minimum of hundreds of billions of dollars annually. Yet with a still tepid global economy that has never properly recovered from the 2008 crisis, governments in the rich world are simply not going to offer any more cash while imposing austerity at home. Developing countries are shifting the focus away from paying for mitigation of greenhouse gas emissions to that of paying for the “loss and damage” resulting from global warming, but it is unclear whether this is an easier a route to rich-world cash.

Climate finance may just be an unresolvable issue and poorer countries need to decide how they are going to respond in the face of such intransigence.

2. The Economy

The issue that pushed climate change off the top of everyone’s agenda after Copenhagen was the further unraveling of the global economy, particularly in Europe. 2015 shows signs of stabilization, notably in the U.S., but risks persist. Any significant deterioration such as a big slowdown or financial crisis materializing in China or other emerging economies or panic in the Eurozone periphery would push climate diplomacy still further down the agenda.

On the other hand, the sudden, sharp drop in oil prices in the latter half of 2014 is a gift to consumers and businesses and could be the jump-start that the world economy needs after years of economic weakness, which would make paying for climate change mitigation and adaptation both at home and abroad a more affordable proposition, and give the topic of climate change more face-time with policy-makers.

3. Oil Prices

While cheap oil makes climate change more affordable, such fossil fuel use is causing the very problem we confront. Any prolonged drop in oil prices will boost use of the stuff by consumers and firms. Already, modest improvements in the global economy were responsible in 2013 for the largest one-year spurt in atmospheric carbon dioxide since 1984, according to data that the World Meteorological Organisation released in September, even as global renewable power capacity in 2013 expanded at its fastest pace to date, according to the US Energy Information Administration. Conversely, economic malaise in Europe makes climate finance less manageable but, due to industrial stagnation, has been responsible for a great deal of the emissions reductions the EU has achieved.

At the same time, cheap oil makes some carbon-intensive extraction such as Alberta’s Tar Sands less viable—and some such projects have already been put on hold or cancelled. But the phenomenon also can undermine incentives to invest in renewable energy without additional subsidies, and can kill biofuels in particular. Given the increased carbon emissions from many forms of biofuels, few outside the biofuels industry will lose much sleep over this. But this also affects advanced biofuels research, such as algae-based fuels, which do not lead to land-use-change-related emissions effects.

Thus the very development that makes a climate deal more achievable paradoxically also increases scale of the ambition needed. It also highlights the importance of public-sector intervention to build infrastructure that can produce energy cheap enough to compete with low-priced fossil fuels, including vast new quantities of clean electricity for the presumptive coming electrification of transportation. However, greater focus on public spending hikes up projections for the cost of climate finance.

4. Ambition

For reasons of diplomatic politesse, the UN will simply review the climate pledges nations are to submit by an informal deadline of 31 March, and will not keep track of whether individual emissions cuts pledges are in keeping with the necessary scale of ambition to stay within the two-degree limit. There is also no agreement on whether these pledges will be legally binding.

Research from the Global Carbon Project published earlier this year shows that the two-degree goal is essentially unachievable without substantially more sharp emissions cuts—5.5 percent per year over the next 45 years. At a midpoint between maximally fair and maximally unfair sharing out of the remaining carbon pie, only Europe just about manages to be making the appropriate cuts. North America should reduce its emissions by about 5 percent a year; Japan, South Korea and Australia by about 5.5 percent; and China by at least 8.5 percent. And that is just to achieve a 50 percent chance of avoiding 2°C of global warming. Bump that up to a 66 percent chance, and the necessary global mitigation rate jumps to 7 percent per year.

Separate research on this “emissions gap” from the UN Environment Programme suggests that given the already announced pledges, we are on track for four degrees of warming. At some point this year, will a major climate player come out and announce that the two-degree goal is simply unachievable?

Nonetheless, the emissions cuts already announced are widely viewed as opening gambits. The question is how much will governments ramp up their ambition over the course of the next year?

5. The US Congress

Any decent global climate deal necessitates meaningful participation by the biggest emitters, China and the US. While the US-China deal didn’t signal a move toward the necessary scale of emissions reduction, it was a step-change for both nations. In 2015, all eyes will be focused on whether these two great powers can at least implement in policy what they have achieved in diplomacy.

Since US President Barack Obama’s flagship climate policy, the American Clean Energy and Security Act, went down to defeat in 2009 as a result of Congressional opposition, the American leader has shifted gears and embraced policies that employ executive actions that do not need to be put before the US legislature. This largely involves use of his regulatory power via vehicle efficiency standards and the country’s Clean Air Act to achieve emissions reductions at power plants.

This eco-perseverance has made the NGOs very happy, but avoiding the legislative process via executive fiat has risks. The Republicans in Congress are already investigating how they can block, delay or otherwise undermine the regulatory actions such as passing legislation allowing individual states to opt out of compliance until legal issues are settled that would give states the option of not complying with the EPA mandate until litigation on the issue is resolved, or restrict funding for enforcement

But even more worrisome is the reality that regulations alone will not be enough to achieve the 28 percent cut in emissions promised in the deal with Beijing. And for that, he will have to navigate an antagonistic Congress. On the bright side, for all their bluster over climate, Republicans have said that their priorities for the next Congress will be immigration and healthcare, issues far removed from global warming. And polls are consistently now showing popular opinion to be in favour of taking more ambitious climate action.

6. The Chinese Five Year Plan

Conversely, China’s commitments under the climate deal were already largely in play as part of a pre-existing mass build-out of wind, solar and nuclear infrastructure. In this respect, the People’s Republic is the only major power engaged in anything close to the scale of infrastructural transformation needed to avoid catastrophic climate change.

All eyes should be focused on the next Five-year Plan, which is to be crafted over the course of 2015. The FYP’s general guidelines are currently under consideration, to be approved by mid-February, further developed in the spring and summer, and then significant debate over the details at the Fifth Plenary Session of the Communist Party’s central committee in the autumn. Ahead of the Paris UN climate summit in December, the question will be whether China ups the ante or maintains the course already announced. Without any significant advance in China’s ambition, few other powers are likely to advance their own.

7. Climate Diplomacy

Countries are to submit their own reduction pledges by March rather than having these apportioned out at the UN level, to be reviewed for compliance by the UNFCCC. This “bottom-up” approach will likely be embraced in any final deal, with states submitting their own plans for emissions cuts instead of the UN monitoring “top-down” targets. Balking at oversight by an independent and unelected body is an understandable defence of national sovereignty, and such an approach will make any final agreement easier to get through Congress. But this format by definition makes such a document an expression of hope that nations will work to prevent catastrophic climate change, rather than a guarantee that they will achieve a specific greenhouse-gas emissions reduction by a set date—a situation that isn’t really any different to what we have right now.

In between the top-down and bottom-up poles however, some parts of the final deal can be made fixed and legally binding while others more flexible and changeable, some parts optional and others mandatory. In October, the Centre for Climate and Energy Solutions at Arizona State University produced a tight little briefing outlining the spectrum of structural options for a final agreement. In essence, the trade-off will be between a document with higher ambition but lower ratifiability and lower ambition but higher ratifiability.

But of course, we should remember that achieving consensus amongst 196 countries (and a handful of other non-country parties) on a plan to engage in extremely expensive, radical changes to their economies is also perhaps the most arduous, grandiose exercise in herding cats ever mounted in history. For all the process’s many faults, even to have come as far as we have is a monument to diplomatic persistence.

Written by . Published on January 6, 2015. Last edited on April 19, 2016.

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