Opening Days at COP21: Will there finally be a binding agreement and a price on carbon?

by Nell Achtmeyer T’16

The American public have likely heard more about the lead up to the COP21 these past couple of weeks than probably any other Conference of the Parties (COP) hosted by the UNFCCC, and for good reason. With the US and President Obama talking about wanting to “secure” a meaningful agreement in his opening remarks and China showing a willingness to participate, points of historical controversy seem to have subsided and it certainly seems as if the stars are finally aligning for progress. Despite the security nightmare they provided, some 150 heads of state showed up in Paris, during the first two days of the Conference, “to show our resolve” as President Obama said. This further emphasizes the climate leadership and commitment to leaving Paris with something to show for, beyond the other 20 talks.

Two themes on what will make Paris a success have emerged during these opening days: producing a binding agreement and having the financial package, at least the targeted $100 billion outlined in Copenhagen, to have the financial instruments to support the needed change. Related to both of these themes is the topic of carbon pricing, and many discussions were conducted on whether it will be a component of having a successful outcome at the end of next week. The opening day supported many conversations on the topic, including a high level press conference with heads of state hosted by the former President of Dartmouth College and now President of the World Bank, Jim Yong Kim. French President Francois Hollande described his vision for achieving a price on carbon that was differentiated to meet regional and national needs, both for price and mechanism, but comprehensive and worldwide. Chancellor of Germany Angela Merkel echoed Francois Hollande’s remarks, but also called out the US specifically on its lack of participation to date in truly utilizing existing carbon pricing instruments extensively. Heads of state from Chile, Mexico, Ethiopia, and Canada also shared remarks at this press conference about their country’s commitment and efforts towards putting a price on carbon, and the need to consider the moral limitations of the market. Justin Trudeau, the recently elected Prime Minister of Canada, described the successful examples of a carbon tax in British Columbia, a cap and trade program in Ontario, and his hope to use these models to implement a price on carbon throughout Canada. Throughout these remarks, the critical role of business was emphasized.

The UNEP followed up on the second day of COP with a side event open to observers that gave a deeper dive into the mechanics of carbon pricing and the role of business. Tom Kerr, Principal Climate Officer at the World Economic Forum, opened the panelist presentation by reviewing a history of emission trading systems (ETS), and noted how their pervasiveness has tripled in the past decade. Specifically on the role of business, Kerr used the example of Microsoft and its internal carbon price that has created revenue for a fund that allocates money to special projects related to innovation and technologies within the company. Yet as the other panelists described, while businesses are taking the lead on carbon pricing and advocating for some type of carbon pricing instrument (tax, cap, shadow price, etc.) to provide market signals, there is less enthusiasm for general and flexible constraints on price and mechanisms across geographies–or the “let 1,000 flowers bloom” approach as one panelist said. Yet despite the acknowledgement that business will play an important role and the example of Microsoft’s pioneering effort, the how business will play a role in a post Paris agreement is still to be determined.

Remarks from heads of state, President Obama’s included, got the press they deserved, but now it comes down to the large plenary meetings, subcommittee meetings, and collectively editing massive documents projected on a large screen with Track Changes on as party leaders scrutinize the details. Panelists and experts providing workshops and holding press conferences are continuing to champion that sense of urgency and reinforcing the hope for a binding agreement, but it seems too early to tell if it will happen.

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