Anthony Cox, Director, OECD Environment Directorate
“National governments must take the lead and do so with a recognition that they are part of a global effort.” Speaking last week at the Munk School of Global Affairs in Toronto, OECD Secretary-General Angel Gurría urged countries not to retreat behind their national borders in dealing with climate change. A purely inward-looking approach to climate change is clearly inadequate as we see signs that short-term national self-interest is increasingly seeping into the global debate on climate action. This is especially a risk as a number of countries continue to try and escape from low growth traps. Effective climate action needs ambition and action at both national and global levels.
We are now in the middle of the UN COP23 climate conference in Bonn which aims for “Further, Faster Ambition Together”. Two years after the historic Paris Climate Agreement at COP21, there are encouraging signs of progress, but there is a huge amount left to do. We have known for some time that the commitments to Nationally Determined Contributions (NDCs) beyond 2020 made under the Paris Agreement would be insufficient in limiting temperature increase to below 2 degrees Celsius, and that more ambition and action would be needed. The Paris Agreement gives us an international legal instrument that measures up to the scale and urgency of the climate challenge, with mechanisms that can increase the ambition of action over time. The negotiators in Bonn are looking to refine and clarify the “rulebook” on how to achieve this.
Each country must do its part by implementing their existing climate change plans using the range of policy levers available to address climate change. But the politics of activating them are daunting right now as they compete with the pull of some countries to retreat behind national borders. And yet, strong climate action should not be seen as a threat to growth. Rather it is the foundation for our future economic well-being and prosperity. This point is backed by a growing body of evidence, as the OECD’s 2017 report, Investing in Climate, Investing in Growth clearly shows. Thinking of climate policy as an integral part of the policy landscape, alongside fiscal policy and structural reforms, is the only way forward.
A number of countries are leading the way and showing it can be done. Take Canada as a prime example. It is a major OECD country with its fair share of challenges in overcoming carbon entanglement and remedying the problems of limited progress during the last decade of climate policy. But Prime Minister Trudeau’s election in October 2015 and his progressive climate agenda has led to a political sea-change that underpinned the success of COP21. In a recent interview with the Financial Times, Environment Minister Catherine McKenna demonstrated not only Canada’s strong commitment to tackling climate change, but also a keen awareness of the transitional challenges that Canada faces.
The OECD will be launching its Environmental Performance Review of Canada in a few weeks’ time. The Review highlights the progress that Canada has made on its climate agenda. At the top is the carbon pricing mechanisms that four provinces have already implemented, as well as the new Pan-Canadian Framework on Clean Growth and Climate Change, which includes a proposal for country-wide carbon pricing by 2018.
There is no cause for complacency. Climate action needs to accelerate around the world. Without the vision, ambition and resolve demonstrated by countries such as Canada, more countries may pull up their national drawbridges, which would do nothing for climate change and, on the contrary, jeopardise human, fiscal, financial and environmental security. We have no choice but to work together towards the far more positive future of a sustainable, prosperous and inclusive world that still lies within our grasp.
References and links
To read the OECD Secretary-General’s lecture on Climate Action, see: http://www.oecd.org/environment/munk-school-climate-action-time-for-implementation-canada-2017.htm.
For more information on the report Investing in Climate, Investing in Growth, see: http://www.oecd.org/environment/cc/g20-climate.
For more information on OECD climate change work see: http://www.oecd.org/environment/action-on-climate-change.
Following the hand-wringing, relief-sighing and back-slapping in Paris after nailing the landmark agreement on climate change in December, I took myself off to a farm in rural England to enjoy the new year driving tractors and herding small children (not with tractors). Conversations with friends typically started with remarks about the unseasonably mild weather and often ended on climate change, and unsurprisingly, COP21. As a soundbite buff, I quickly got my lines sorted: “COP21 gave governments a giant shove in the right direction, an emotional rollercoaster ride of hope, expectation and promise”.
Given the years of preparation – and for some OECD colleagues, a life’s work – my hope (which later proved false) was for an enduring, ambitious text, helping us to avoid climate catastrophe. My expectation was far less grand, more closely aligned to the reality of getting 195 countries to adopt an agreement with legal force. The result and attendant promise, which far exceeded my modest expectations, can be described as historically significant and not only provides a mechanism for getting us onto a zero-carbon pathway, but also new approaches to the way we use the planet. So now back at the office and with winter finally arriving with a frosty thud, our attention moves to action on the agreement, or initially at least, a fuller digestion of it and the setting out of a working plan.
- The reaffirming of the 2°C objective in the Paris Agreement is an accomplishment but presents a huge challenge. The implementation of current Intended Nationally Determined Contributions (INDCs) would deliver an outcome of close to 3°C warming and won’t be sufficient to avoid climate risk, particularly for the most vulnerable. The ambition in 1.5°C is significant but achieving that would require the remaining carbon budget for the 21st century to be reduced by almost half that of the 2°C scenario and we would have to become carbon neutral some 10-20 years earlier. We need a rapid switch to low-carbon energy everywhere, requiring technology, innovation, capacity building and (obviously) finance. To make the transition to a low-carbon, climate-resilient world, the fundamental changes needed will be challenging for even the most developed economies. Developing economies will require support to achieve low-GHG and climate-resilient development pathways. Building on the work in 2015 on aligning policies, the OECD could support policy alignment and cost-effective action to implement countries’ own emissions reduction commitments.
- The 5-year review cycle of country’s contributions to cutting emissions will inform future NDCs. This is an important element, allowing countries’ commitments to be updated and rolled forward. This “Global Stocktake” of progress sees the first report being undertaken in 2023 and every 5 years thereafter, ahead of setting each successive round of NDCs. This will be a key mechanism for attempting to make bottom-up NDCs consistent with the long-term goal. Common methodologies need to be developed for NDCs, each demonstrating a progression on the previous one. Support is needed for developing country parties for implementation of the review cycle. The OECD/IEA Climate Change Expert Group (CCXG) has undertaken work on mitigation goals, baselines and accounting that could support countries in preparing their NDCs.
- Undertaking and strengthening adaptation action is in many of the INDCs submitted to date and governments agreed in Paris to provide continued and enhanced international support for adaptation to developing countries. Many countries pushed for the idea of “political parity” which means putting as much effort in terms of political momentum and financial resources into adaptation as to mitigation. Adaptation remains the activity for which a large number of developing countries require assistance, particularly the poorest (LDCs) and most vulnerable (Small Island Developing States – SIDS). Closing the climate finance gap for adaptation compared to mitigation and mobilising new funding sources is essential. The OECD is the ideal forum for the sharing of experiences between the public and private sectors and the work linking policy and economics could help governments move from planning to implementing smart adaptation.
- The single framework to track progress has built-in flexibility which takes into account the different capacities of each of the parties. Countries will regularly report on emissions and progress toward their NDCs, adaptation actions and on the means of implementation supported including finance, technology and capacity building. However, significant gaps remain in terms of improving the transparency of information on climate finance, technology transfer and capacity building, both on the side of those who provide such support and those who receive it. Following on from the work on Climate Change Mitigation: Policies and Progress, the OECD’s data and policy analysis can support transparency. Additionally, the OECD engages directly with parties on technical policy issues within the UNFCCC process. This is a key component of the work of the joint IEA-OECD Climate Change Expert Group, which will be meeting in March 2016 to discuss key aspects of transparency of support and adaptation action.
- The COP will set a new finance goal before 2025, with the existing commitment of USD 100 billion per year acting as a floor until then. The OECD-CPI report on climate finance provided an update on progress by developed countries in meeting their finance commitments ahead of COP21 and informed the debate within the negotiations themselves. Climate finance issues will now be addressed by the UNFCCC’s Subsidiary Body on Scientific and Technological Advice (SBSTA) with recommendations to COP24 in 2018. The OECD development statistics system
Instead of a climate march in Paris, thousands of silent but symbolic shoes found their way to Place de la République during COP21. There’s an old Italian proverb that says “between saying and doing, many a pair of shoes is worn out”. Indeed, we are in that period of reflecting on what’s been said and pursuing actions that make a difference. Paris matters tremendously – we got an agreement with legal force after all – but getting our actions to work to reduce the risks of climate change in future decades will probably matter even more.
Noe van Hulst, Ambassador of the Netherlands to the OECD
With the world welcoming the new comprehensive global climate agreement at COP21 aiming to limit the global average temperature rise to well below 2 degrees Celsius, it is worth noting the significant contribution that the OECD family has made. These contributions were aptly summarized in a useful joint statement by the secretariats of OECD, IEA, International Transport Forum and Nuclear Energy Agency right after COP21 kicked off. Let me highlight a few key points.
In their report Aligning Policies for a Low Carbon Economy, already discussed at the OECD Ministerial Meeting in June 2015 under Dutch presidency, the organisations called on governments to fix the policy misalignments across the economy that make the energy transition more costly than needed. A startling example of this are the fossil fuel subsidies that still amount to nearly $500 billion per year on a global level. At the IEA Ministerial Meeting in November 2015, Ministers called for the gradual phasing out of inefficient fossil fuel subsidies to end-users. This should probably be done by 2030.
In addition, IEA Ministers agreed on the need for stronger policy efforts aimed at achieving a peak in emissions already around 2020 by increasing energy efficiency and investment in renewable energy, phasing out the least efficient coal plants, and reducing methane emissions from oil and gas. The IEA has documented in detail how this could be done in a pragmatic manner.
Another important point that IEA and OECD have both been stressing repeatedly is the need to accelerate technology innovation. The IEA estimates that we need no less than a tripling of public energy investment in RD&D (research, development and demonstration) and a scaling up of collaboration between public and private entities in developed and developing countries alike. Public RD&D is obviously another area where we haven’t got it right yet and where misalignment of policies needs to be fixed.
A key area of OECD work has been on analyzing the commitments of developed countries to mobilise the $100 billion a year by 2020 for climate finance actions by developing countries, both in mitigation and in adaptation. Adaptation and increasing resilience is crucial to protect the most vulnerable (e.g. small island states) and also for the energy sector infrastructure itself. The calculations on how far we have come with mobilising climate finance for developing countries were the subject of intense debates during COP21. It is now clear, however, that even more than $100 billion is probably needed after 2020 on a yearly basis, with climate adaptation getting a bigger slice of the pie. Last but not least, the joint organisations have argued that a transparent mechanism is needed for assessing, strengthening and rolling forward mitigation contributions on a regular five-yearly basis. A clear example of a recommendation that is remarkably similar to the relevant text of the Paris Agreement in this respect.
Now that COP21 has successfully been concluded under the very able French presidency, we can surely identify more areas where OECD and IEA have made significant contributions to the final result. More importantly, it is more than likely that OECD and IEA will be called upon frequently going forward, given the immense task of implementing the ambitious climate agreement in the most efficient and cost-effective way.
Angel Gurría, OECD Secretary-General
The Paris Agreement at COP21 marks a decisive turning point in our response to climate change. I strongly applaud this historic commitment and the robustness of a deal that includes an ambitious target for limiting the global temperature rise, a five-year review cycle, clear rules on transparency, a global goal for resilience and reducing vulnerability and a framework for supporting developing countries.
Countries’ nationally determined contributions to emissions reductions post-2020 lay a pathway to a low-carbon, climate-resilient future that could safeguard the future health and prosperity of billions of people. But this is just the beginning of the road. The agreement is a framework for action, and governments now need to act.
Each country must spell out a credible roadmap for action consistent with the goal of holding the average temperature increase to well below 2 °C above pre-industrial levels and pursuing efforts to limit the increase to 1.5 °C. The timescale and sequencing of actions will vary across countries, reflecting their different circumstances, but this goal requires the full engagement of all major economies. Sustainable development and climate goals must be mutually reinforcing and advanced economies must fulfil their promises to support developing countries in addressing climate change with finance, technology and capacity building.
Strong and coherent domestic policy is essential to drive the changes we need, including putting a meaningful price on carbon, eliminating fossil fuel subsidies, spurring investment in green technologies and innovation and tackling the policy misalignments that impede climate action. Effective policies will unleash the transformational capacities and capital of the private sector and will allow investors, and other actors such as cities and regions, to plan with confidence. The low carbon transition requires little more money than the trillions already being invested today. But it requires a massive shift towards low-carbon, energy efficient and climate-resilient systems. We welcome the recognition that Article 2 of the Agreement gives to making finance flows consistent with this goal.
A key role of the UNFCCC will be to monitor and review country performance against commitments, not only in emissions reductions but also in climate finance. The Agreement provides mechanisms for regular reporting, review and updating to check whether national targets and pathways are consistent with our collective climate goals. International organisations like the OECD can provide data and analysis to support transparency and accountability in many of these areas and we stand ready to support all countries in this process. The OECD will continue to work with governments to help remove the barriers to climate action that are built into existing policies from the fossil fuel age in everything from investment, taxation, electricity land use and transport.
This is a watershed day for the world and especially heartening for the OECD as one of the first international bodies to call for zero net emissions in the second half of the century, for a price on carbon and for greater efforts to channel finance into the low carbon economy.
I would personally like to congratulate the French President François Hollande, the COP President Minister Laurent Fabius, French Environment and Energy Minister Ségolène Royal, Ambassador Laurence Tubiana and their team on helping steer us to a successful outcome. The Paris Agreement builds on the considerable efforts by previous COP Presidencies, notably the Peruvians who laid the groundwork for this agreement in Lima a year ago and made subtle, inclusive and tireless efforts to support an agreement over the subsequent year. We owe a great debt of thanks to Christiana Figueres, the Executive Secretary of the UNFCCC, and her team for their exceptional commitment, energy and leadership over the past many years.