Today marks an important time in the international climate negotiations: In Bonn, Germany, policymakers are starting what is likely to be the last five days of UN climate change negotiations before the Paris Climate Conference in December. What negotiators create this week will inform the final outcome of the Paris agreement.
The good news is the negotiation co-chairs have released draft text that looks like a real agreement. Should all parties accept it, this draft will serve as the basis for the first truly global climate deal. To date, 150 countries responsible for nearly 90 percent of global emissions have submitted commitments (also known as “intended nationally determined contributions,” or INDCs) to the UN to reduce greenhouse gases and build climate resilience. These commitments include developed and developing countries alike, as well as all of the major economies.
In addition to these commitments, one of the most important aspects of the agreement will be provisions that incentivize business to invest in a low-carbon economy. For business clarity and certainty, an international climate agreement must prioritize the following three things:
- A global, quantifiable emissions target to stay below 2°C: Article 2 references global, long-term emissions reductions, which provides an aspirational direction for the new agreement, and Article 3 indicates the agreement will have a quantified target and deadline. Businesses and investors need both of these to provide the certainty to shift investments toward a low-carbon future. The best target and deadline would guarantee a trajectory that would keep warming below 2°C. Net zero emissions, well before the end of the century, would do this.
- A system to improve commitments every five years: According to the research consortium Climate Action Tracker, the current INDCs will reduce projected warming from 3.8°C to 2.7°C. This shows significant progress in the five years between the Copenhagen/Cancun pledges and the Paris INDCs. To continue this momentum, a successful Paris outcome must ensure that governments come back to the table again in 2020—and every five years thereafter—to increase commitments. The pace of business innovation, investments, and partnerships will drive a low-carbon economy, and if negotiators renew commitments every five years, this should help policy keep up with developments in technology and the economy.
- A mechanism to leverage private finance to shift to a low-carbon economy: The current draft includes the Copenhagen pledge to mobilize US$100 billion in climate finance by 2020, but it does not define how it will unleash the trillions of private-sector investments we need to build a low-carbon economy. To catalyze these investments, negotiators need to deliver a stable policy environment that, among other things, includes a carbon-pricing system. These clear signals will both increase the number of donors and the amount of investments from the private sector, catalyzing the transformational change required to meet the objectives of the convention.
Over the last few weeks, the business community has called repeatedly for an ambitious Paris climate agreement: Today, in the second round of action from the American Business Action on Climate Pledge, 50 companies convened by the White House asked for a strong global agreement. On October 16, CEOs from 10 major oil and gas companies also called for an effective climate change agreement. This comes on the heels of a call by 14 companies (which have a combined revenue of US$1.1 trillion and 1.5 million employees) for a Paris agreement requiring all countries to reduce greenhouse gas emissions, transparently report out on their progress, periodically renew their commitments, and facilitate international carbon markets. Before that, the CEOs of 10 food, beverage, and agriculture companies called for a “sound agreement, properly financed, that can affect real change.” Six major U.S. banks called for “commitments leading to a strong global climate agreement.” And the members of We Mean Business—a coalition of organizations, including BSR, that is working with more than 6 million companies around the world—have put out a demand for an ambitious climate deal.
We commend governments for their hard work that brings us within arm’s reach of a global climate deal, and we are hopeful that negotiators in Bonn this week will heed the call of business to develop an agreement that sets a quantifiable, global goal, ensures that countries improve commitments every five years, and leverages the trillions necessary from the private sector. With these commitments, we all work together to build a low-carbon economy.