More than 40,000 participants, 20,000 accredited delegates, 3,000 journalists, 196 parties of the UN Framework Convention on Climate Change, 2°C or even 1.5°C global warming temperature above pre-industrial age and one final agreement. China Water Risk attended the 21st Conference of Parties (COP21) in Paris. CWR’s Thieriot shares his on-the-ground views through 5 takeaways.
1. The threat is recognised but time is running out
There has rarely been a COP that isn’t touted as “the last change to save the climate”. Whether or not this is true for COP21, our time to act is definitely running out. And the later we act, the more painful and costly it will be.
It would take less than 30 years to fully ‘consume’ our carbon budget if emissions rate remains unabated
Climate change relates to the cumulative greenhouse gas emissions: every tonne of carbon dioxide emitted today is a tonne that we won’t be able to emit tomorrow, if we are to remain below a 2°C average warming. The so-called carbon budget is shrinking year by year: it would take less than 30 years to fully ‘consume’ this budget if emissions rate remains unabated.
Further creating a sense of urgency is the growing frequency and intensity of climate change related disasters, such as typhoons, droughts and floods. Finally, the existence of tipping points might dramatically increase the cost of inaction and calls for strong commitments and actions now.
2. Inaction is costly but tackling climate change raises financial risks across sectors
Besides human costs, climate change creates significant physical and liability risks. Recently, Citibank estimated that the “negative effects” of climate change could cost up to USD44 trillion by 2060 if nothing is done to tackle it. Cost of inaction is high, but climate related action also creates financial risks.
In September this year, the governor of the Bank of England warned the financial community: the transition to a low-carbon economy required to mitigate climate change could “prompt a reassessment of the value of a large range of assets as costs and opportunities become apparent”. This “transition risk” is epitomized by the findings of Carbon Tracker: to stay below 2°C warming over the next 40 years, only 20-40% of the world’s available oil, coal and gas reserves can be burned.
Were we to reach the 2°C target, around 60-80% of fossil fuel assets may be stranded
Therefore, were the parties to actually implement the 2°C target, the remaining 80-60% of fossil fuel assets may be stranded. Is this carbon bubble on the verge of bursting? With voices like Al Gore’s, hopefully this warning will get heard and the transition will happen smoothly. Already the pressure is mounting on companies to analyse and disclose their climate change risks, starting with fossil fuels companies but not only.
3. Enterprises and cities calling for action but also called on to play a greater role
In the weeks and months preceding COP21, some enterprises and cities became more vocal about the need to tackle climate change. In November 2015, the CEOs of 78 major firms called for a price on carbon. Earlier in 2014, 73 countries (including China) and more than 1,000 businesses supported similar measures. In addition, more and more companies are committing to source 100% of their electricity from renewable power sources.
Cities are also taking action, not merely content to follow state policies any longer. Regional leaders and mayors convened at The Climate Summit for Local Leaders in Paris during COP21. A few days later, they committed to reduced carbon emissions by 12.4 gigatonnes compared to business as usual predictions, which is more than China’s annual carbon emissions, the biggest global emitter.
Speaking of China, there has never been as many Chinese companies attending a COP as there was this year (over 90 companies), according to Vanke’s CEO Wang Shi. Several Chinese cities also participated, including Qingdao, Zhenjiang, Shenzhen, Lanzhou as well as Hong Kong. A good sign that China is serious about tackling climate change.
4. China is ramping up its efforts with her own interests in mind
A landmark step towards an ambitious deal in Paris has been the US-China Joint Statement on Climate Change adopted in September 2015, in which China set out goals in terms of carbon intensity, afforestation and announced a national emissions trading system starting from 2017. Earlier on, China already pledged to cap its coal use in 2020 and peak its carbon emissions around 2030. These moves have been crucial in the way towards a Paris agreement.
“China is not acting because other countries want China to do it, but because China has interest in it”
Xie Zhenhua, China’s lead climate negotiator
Altruism is not the only motivation behind these efforts. As China’s lead negotiator Xie Zhenhua said in Paris, “China is not acting because other countries want China to do it, but because China has interest in it”. Over the last months and years, researches have repeatedly shown that action against climate change is more beneficial than inaction. To mention but a few, the New Climate Economy, the China’s Future Generation 2.0 and the Deep Decarbonization Pathway reports conclude that transitioning to a low-carbon society represents an economic opportunity for China rather than a burden – more on this in our article “COP21: What Does It Mean For China?“.
Reducing carbon emissions is not the only reason for China to reel in its addiction to coal. Curbing coal consumption is also key in China’s struggle to improve its air quality. Ironically, a red alert over air pollution in Beijing was raised on the very day of the first COP21 negotiations. A similar alert, the highest of a four-level alert system, was to be raised a week later.
The picture on the right shows how it gave a whole new meaning to “white Christmas”.
Most of the harmful impacts of climate change for China relate to water
On top of this, China has much to loose from climate change, as highlighted in its “Third National Assessment of Climate Change” (more here). Most of the harmful impacts of climate change for China relate to water, whether it be floods, droughts, sea-level rise, melting glaciers or changing rainfall patterns. Water is everywhere when we talk about climate change.
5. Water is everywhere and nowhere
We see water prominently featured in countries’ Intended National Determined Contributions (INDCs) – documents submitted by the parties (countries) prior to COP21 stating their intended actions to mitigate and adapt to climate change. Throughout the INDCs, water is identified as the most vulnerable sector and the highest priority area for adaptation.
Water is the most vulnerable sector and the highest priority area for adaptation
The importance of water has also been highlighted by the Paris Pact on Water and Adaptation – more on this here. This surely is a step in the right direction but much more remains to be done. The efforts and investment required in water management and infrastructure are daunting: it should be reminded here that water supply and treatment will require significantly more investment by 2030 than transport, power and telecommunications combined.
Accordingly, one might be surprised that the word water does not appear in the final agreement of the COP21. But does it really matter? The words oil, coal and fossil fuels do not appear either and yet, they are at the core of climate issues. What matters the most is that the targets agreed on are achieved and that countries actually initiate the needed transition.
The transition won’t be straight and easy
The final agreement has been hailed by many officials, experts and media as a historical moment, a ‘major leap for mankind’. While there are reasons to celebrate the hard-fought deal, many other voices are not joining in the celebration. It would be wise not to dismiss these as mere grumpy ramblings.
Many countries have get-out clauses of the Agreement as their commitments are conditional on the availability of financing
The agreement has yet to be translated into national policies and many challenges remain in transferring technology, channelling investments and changing behaviours. Other obstacles also include national selfishness, vested interests, improper incentives, ‘lock-in’ infrastructure choices, aversion to change and more importantly, the lack of financing. Many countries have get-out clauses of the Agreement as their commitments are conditional on the availability of financing.
Obviously, we would like to see concrete action plans on how countries intend to reach their commitments and targets – more on what this means for China here. It starts with ratifying the agreement, which is most likely to happen given the reasonable ratification levels requirements. The path towards a low-carbon society is long and certainly neither straight nor easy, but it has to proceed and proceed fast; after all, ‘mid-century’ is not so far away. The agreement is historic but the hard work is just beginning.
- COP21: What Paris Means For China - All eyes are on China, the largest contributor to global emissions as it transitions to a low carbon future. See what Paris means for China from carbon trading, peak emissions to carbon-intensive industries
- Paris Water Pact: Feeling Blue – The rise of water at COP was evidenced by the Paris Pact for Water and Adaptation, Delta Coalition & the Megacities Coalition on Water. However, we are still feeling blue, CWR’s McGregor expands
- Climate Finance: Who Pays? – A Paris Agreement was made but a lot of it and our future climate resilience comes down to money – north of USD100 bn. Xu Nan from Central University of Finance & Economics takes a look at who could pay what
- Green Finance Revolution: China Can Lead – Can financing required to meet targets laid down in Paris be met? WRI’s Shouqing Zhu & Andrew Steer on how China can lead with five recommendations
- Societal Relevance of Flood Risk Modelling - Economic losses due to flooding amounted USD19 billion and will grow. Wouter Jan Klerk from Deltares shares cases from Vietnam, China & the Netherlands showing why flood risk modelling is a must for robust growth
Water & Business
- 2015 World Water Week: Key Takeaways - What’s water’s role in sustainable development? How can we ensure water for all? China Water Risk’s McGregor on this, how Asia is fairing, the Sustainable Development Goals & more from World Water Week 2015
- China Water-nomics – Will China’s economic development be hampered by limited water resources? The very existence of the Three Red Lines signals that China can’t keep developing the way it has. Read on for why GDP will be capped at 5.7% given China’s water-nomics
- Incorporating Environment Into Business -Companies are incorporating environmental performance into business, so suppliers need to follow suit or risk losing customers. The Business Environmental Performance Initiative (BEPI) can help both parties as BEPI’s Micilotta explains