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Debates

Energy & Environment

What European business wants from COP21

Emma Marcegaglia / Oct 2015

You remember 1992 when people around the globe for the first time heard about the “Kyoto Protocol”?   Many years have passed since the Conference of the Parties, also known as COP, gathered in Japan to address the global challenge of climate change. Many COPs happened since. But this year is not like the others. This time around, Paris will host the most important climate summit since the Kyoto Protocol was signed and it must be a deal breaker for European business. We need and want an international ambition that is in line with the efforts we are already committed to in Europe. Our main purpose is to have a global level playing field for our trading internationally businesses. Ideally boundaries for trade don’t exist; ideally we should be dealing with comparable standards globally.

Many European companies are already global leaders in climate-friendly products but to succeed protecting the global climate we need collective action, Europeans cannot solve the problem alone. A pragmatic global approach is needed to ensure that greenhouse gases reductions in one place do not lead to emission increases somewhere else in the world. European companies have helped the EU become the most emissions-efficient economy in the world. It achieved a 19% emissions reduction between 1990 and 2013 while its GDP grew by 45%. Now the EU only accounts for nine percent of global emissions and this share is still falling.

 

 

To achieve a truly global level playing field, more efforts are needed from other world’s major economies, too. Countries with the highest responsibilities and capabilities need to reflect this in the ambition of their commitments. Today China with 1400 million inhabitants is responsible for 25% of all global emissions and the US with 322 million citizens account for 11%, while the EU accounts for 9% with 500 million people. This in mind, it’s economically unsustainable for Europe when China and the US continue to substantially increase their emissions while Europeans face massive costs from further bringing EU’s emissions down. Thus, having all major economies on board will be crucial to tackle world emissions.

Given the urgency of the problem, all countries need to act without delay and collectively. Since the Kyoto Protocol was agreed, the geo-economic landscape of the world has changed. While some emerging economies still face challenges, their national circumstances have also evolved.

Therefore, advanced developing countries should commit to setting their emission policies in a way that reflects their actual capabilities. This stems from the need for collective action but it will also be in the interest of these economies to be on the same global level playing field. To this extent, what is happening with the process of Intended Nationally Determined Contributions (INDCs) is unique. This peculiar acronym refers to the voluntary contributions from the world’s governments on how they plan to reduce emissions in their countries. It is the first time such a worldwide, bottom-up process, is tested at UN level.

By the deadline of the 1 October, 148 countries had submitted their planned pledges. These are of great importance for industry and businesses which expect, as early as possible, clarity and predictability on policies in order to plan their investment decisions. Tacking stock of the contributions published so far, it is evident they correspond to a patchwork of intentions, covering different baseline scenarios and different sectors. While in some countries it is evident how they will affect the power sector, it is less the case when it comes to their industries’ exposed to international trade. This is something that needs to be addressed when it comes to evaluating the new agreement against European business’s competitiveness and to ensure a fair distribution of efforts for the benefit of the planet.

Moreover, to achieve the necessary confidence among parties, the new agreement must provide for robust transparency and accountability. The new regime must therefore include comparable national rules on measurement, reporting and verification (MRV) as well as a review process on an annual basis. An enforcement and sanction mechanism for non-compliance with reduction commitments must also be established. It’s very important to increase trust among all parties.

The development of a global carbon market will also help stimulate investment in innovative technologies, installations and products in locations where they deliver the greatest possible climate benefits at the lowest economic cost. Policy-makers should make every effort to ensure that carbon markets become compatible, linkable and attractive for all participants

Last but not the least, businesses wish to see the creation of a recognized channel to improve their participation in the UNFCCC process. The expertise of the business community is essential to achieve success as the main stakeholder responsible for the implementation of the governments’ decisions. As a result, an institutionalised channel for private sector engagement should be recognised in Paris. Over the years individual countries and COP Presidencies have sought ways to enhance the participation of the private sector. That has been the case recently in Poland and now in France. Allowing business to participate in a transparent manner would improve communication, information-sharing and enhance dialogue within the UNFCCC. This is something that is also supported by our international counterparts from other major economies, with whom we regularly liaise.

From COP21 we expect nothing less than a legally-binding agreement with comparable mitigation efforts from major economies as the best mechanism to provide the necessary certainty for business investments. Business is key for a successful and ambitious agreement in Paris as well as for its implementation. We have spent the last decade helping transform the European economy into the most carbon efficient in the world. We are committed to continuing delivering; the ball is now in the world leaders’ courts.

Emma Marcegaglia

Emma Marcegaglia

October 2015

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