The need-to-know business guide to the COP24 Katowice deal
UN climate summits can seem removed from the real world of business, but it was important for the green economy — here's why.
Agreeing on a Rulebook for the Paris Agreement was a massive exercise in international diplomacy. Ministers, negotiators and officials cheered its release Dec. 15 in Katowice, after two weeks of intense talks.
But smart business leaders also will be swotting up on the outcome of the talks. They may seem obtuse and complex to outsiders, but the decisions taken at this United Nations climate summit hold ramifications for almost every business on Earth. Here are seven reasons why COP24 matters for your business.
1. Bolder national climate plans are coming
Following the decision, critics suggested this COP provided a "mixed signal" on whether countries will raise ambition ahead of 2020, when the Paris Agreement officially kicks in.
There had been considerable hope going into the summit that the COP24 outcome would issue a clear call to arms for countries to prepare fresh, more ambitious climate targets in time for 2020. But as it stood, the official text only "invited" countries to consider calls made at the summit under the Talanoa Dialogue to boost their ambition. As such, no single key paragraph required governments to strengthen their plans.
Nevertheless, clear signals did emerge that a host of countries will submit more ambitious plans to the United Nations in time for 2020. Throughout the two-week event countries such as India, Canada, Ukraine and Jamaica said they were working on more ambitious pledges for 2020. Meanwhile, the United Kingdom is already considering ramping up its climate target to deliver net zero emissions goal, as is the EU. A key summit staged by U.N. Secretary-General Antonio Guterres is set for September, when calls for countries to submit tougher plans in 2020 will reach fever pitch.
Businesses therefore must prepare for tougher climate targets — and an influx of accompanying new green policies — in the coming years.
2. The 'Rulebook' matters
The Paris Agreement Rulebook is littered with U.N. jargon, and it is easy to think the systems and decisions it sets out will have little real-world impact on the way businesses operate.
"It does trickle down into country policies, which affect companies in different ways," he said. "In India, there is a program called Perform, Achieve and Trade, where industries are given targets on the emissions they should have during production. That directly affects the technologies we invest in and the processes that we use. So the rulebook does affect industry because the rulebook then leads to national policies which companies have to follow."
3. Common rules for all
One major diplomatic battle at this year's negotiations was expected to be whether developing countries would have to follow the same emissions reporting rules as richer developed nations.
A key concession in the Chinese position means countries will have to broadly follow the same rules, with some flexibility for poorer nations, from 2024. This means all businesses, wherever they are in the world, eventually will end up operating under a national emissions monitoring system that is replicated around the world. Reporting will be standardized, making it much easier to spot gaps and inefficiencies in countries' performance, as well as reward climate leaders.
4. Shift towards public/private finance
As BusinessGreen chronicled during the summit, the question of climate finance is increasingly becoming an issue for the private as well as the public finance markets. The falling cost of green technologies such as solar and wind means clean tech projects are a profitable venture in many parts of the world without the need for government support.
But the growing interest of private markets in climate finance opportunities throws up some tricky issues for negotiators — namely, how to count private money in the assistance promised from developed to developing nations for climate-related spending.
The final rulebook offers developed nations considerable flexibility in reporting their finance flows, with countries allowed to report the full value of loans as climate finance rather than just grant cash. This means industrialized nations well may be even keener to attract private capital in support of green projects going forward. Expect more initiatives like the U.K. government's green finance hub to come forward.
5. COPs are a key business forum
We saw the first clear signs at Paris, but U.N. climate summits are fast becoming key events in the green business calendar. This year was no exception, with perhaps the biggest announcement of the conference coming from shipping giant Maersk, which promised to transition to net zero emissions by 2050. Meanwhile, a host of fashion firms teamed up to launch a ground-breaking industry charter, setting an emissions reduction goal across the sector for the first time.
"Climate action makes sense for business, and it was great to see multiple industries set their own ambitious plans," noted Gabrielle Giner, head of environmental sustainability at BT, who was at COP24. "That being said, we now need to see ambitious climate goals from policymakers, which will allow us to make deeper and faster progress."
Alongside new climate pledges, the COPs are also acting as forum for debate over the best way to approach an economic transformation of the scale the climate threat demands. The backdrop of the summit in Poland's coal heartlands, and the ongoing "Gilet Jaunes" protests in France, prompted widespread debate over the need to secure a 'Just Transition' for workers coping with a global shift to a greener economy.
"Community dialogue is another one," he added. "Looking to enable transition assistance so that people can find other livelihoods. Without that, there are a couple of problems. One of them is that climate ambition is reduced; another is that support for an open, global trading platform is reduced. And business does not want to see that happen. So a just transition is not just about treating people fairly. It is also about maintaining the global trading system on which business depends."
6. Carbon market row won't derail corporate interest
The row over carbon markets may have garnered headlines as the major sticking point for negotiators, but in the short term businesses should be aware the decision to delay the talks on Article 6 until next year will not have an immediate impact on the operation of carbon markets around the world.
As pointed out by Carbon Brief, the Paris Agreement allows for carbon trading to move ahead even if no guidance exists yet in the Paris Rulebook to govern it. This means existing national carbon markets, and new ones in the pipeline, still will proceed as normal.
7. Transforming the real economy — the hard work starts now
French diplomat and key Paris Agreement architect Laurence Tubiana had perhaps the most prescient message for businesses as talks drew to a close in Katowice.
With the international "bickering" over, it is now time to focus on the transformation of the global economy, she told journalists. "I hope we will enter now after this COP in a new phase, a phase of implementation, of acceleration of action," she said. "It is a moment when everything that is happening in the real economy begins to really influence the mindset of the governments."
With two years to go until 2020 and the prospect of more governments coming forward with net zero emission strategies, the onus is on green business leaders to reassure politicians that such deep decarbonization is both possible and desirable.
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