On the 21st of January 2021, Joe Biden was sworn in as the 46th President of the United States. This day marked significant for many people and that for several reasons. One of them is Biden’s decision to re-join the Paris Agreement on his very first day in office. This is an essential step forward by the US to improve climate change and reduce greenhouse gas emissions following Trump’s earlier decision to withdraw the US from the Paris Agreement. Especially, given that the US has one of the largest shares of emissions on a global scale. However, the question may arise whether the Paris Agreement is effective enough to achieve change. This article aims to look at the (in)effectiveness of the Paris Agreement and consider potential loopholes therein.
MAIN OBJECTIVES OF THE PARIS AGREEMENT
In 1992, the United Nations Framework Convention on Climate Change (UNFCCC) came into existence. As its name suggests, it is a framework treaty. This means that while it is legally binding, it only sets forth broad commitments while leaving room for other subsequent protocols and agreements or national legislation that could lay down more specific goals. This function of the UN Framework Convention is nicely reflected through the several treaties that arose to supplement the UNFCCC. Among these supplementing conventions can be found the Paris Agreement, a legally binding international treaty, adopted in late 2015 by 197 states. The Paris Agreement aims to keep the temperature increase below 2°C compared to pre-industrial levels, and preferably limit the temperature increase to 1.5°C.
The Agreement demands the submission of voluntary national pledges from the state-parties. These pledges, specifically termed as “nationally determined contributions” are set on a domestic level and have to be communicated every five years by the individual states. This reflects the bottom-up approach that the Paris Agreement implements for achieving its primary goal.
This standpoint can also be seen through the other crucial element of the Paris Agreement, which focuses on “common but differentiated responsibilities and respective capabilities.” What this seemingly fancy phrase means is that each country should act within its own limits. So, while the Paris Agreement’s main objective – to limit temperature increase below 2°C – is shared or “common” among the state parties, the applied measures and “nationally determined contributions” vary from one country to another based on their different circumstances. Therefore, the idea is to achieve the same goal on a global scale by applying different methods.
However, ideas usually translate differently to real-world-problems than imagined. This is also the case with the Paris Agreement. Even though the Agreement leaves the individual countries with the freedom to establish their own national pledges, this is also where the Agreement’s ineffectiveness lies – most of the national commitments for 2030 brought forward by the state parties are insufficient to achieve the Paris targets. The emissions of the first and third largest emitters – China and India – continued to rise throughout the past two years. However, the pandemic could bring some positive change with regards to this. China is hoping to induce a green recovery from the coronavirus pandemic. The Chinese President had also announced new climate targets for 2030 at the Climate Action Summit in December 2020. China’s key updates concern more stringent carbon emission reductions, more focus on non-fossil energy share and an increased forest planting volume. The newly announced commitments also emphasise reaching the peak of carbon emissions before 2030 to achieve carbon neutrality by 2060. While these are inspirational steps to be taken by China, which will indeed contribute a great extent to the achievement of the Paris targets, the overall problem is that the state parties’ national pledges generally lack motivation and result in inertia. Moreover, there are two main issues – carbon lock-in and carbon leakage – that are rarely addressed and adequately dealt with only once in a blue moon.
CARBON LOCK-IN
This phenomenon refers to the tendency of sticking to fossil-fuel-based energy systems instead of changing to other low-carbon alternatives that would be more environmentally friendly. Carbon lock-in is mainly caused by the interplay of technical, economic and institutional factors. This is one of the main problems that prevent the Paris Agreement from effectively achieving the set goals. The Agreement focuses on national commitments. However, it is essential to realise that most countries’ governments are under the influence of big corporations which lobby for their own benefits. This phenomenon can be observed in major polluting countries within the EU as well as elsewhere. Corporations primarily aim to get the highest profits and such goals most often do not go hand in hand with sustainable options. Instead, it becomes more expensive for them to operate on low-carbon emissions and follow sustainable business models and thus, they do not prefer these alternatives.
However, the extra costs of switching to greener alternatives would only be apparent in the short term. Carbon lock-in can be easily understood as a vicious circle where the existing infrastructure induces the creation of habits and social practices that become the norm. Take the example of cars – due to the existing infrastructure – people are usually more inclined to use their cars than to ride their bike to work (except for those living in the Netherlands). This ties into the politics of the specific country – often, industries are heavily subsidised or even nationalised. When it comes to the car industry, major European markets reward car-buying businesses with ample benefits – such as the deduction of VAT or depreciation write-offs. These benefits are rarely given to individual buyers. This links to the economic power of large companies. Due to their bargaining power and colossal influence, these big corporations manage to uphold the vicious circle of carbon lock-in. So, while the bottom-up approach implemented in the Paris Agreement is an appealing method and gives space to individual countries to establish their national commitments, carbon lock-in offers a possible explanation why such national pledges are often insufficient. The governments responsible for the nationally determined contributions are the governments who are themselves shareholders or are heavily lobbied by large corporations. This also explains the lack of ambition and inertia shown by individual countries.
CARBON LEAKAGE
Another problem that underlines any effort to combat climate change is referred to as carbon leakage. Due to more stringent regulations, companies outsource their production lines to other countries with more lenient emission constraints. This effect can lead to an increase in greenhouse gas emissions on a global scale. The Paris Agreement through the “common but differentiated responsibilities and respective capabilities” gives a breeding ground for carbon leakage to take place. Based on the “common but differentiated responsibilities” outlined in the Paris Agreement, countries are not required to implement the same climate policies. While some might opt for strict emission constraints, others would go with laxer regulations. However, in Europe, a possible solution to carbon leakage was found by introducing the EU Emission Trading System. This entails that emissions from specific sectors have to operate under a “cap and trade” principle. This means that companies and factories can only emit a certain amount, and this amount is limited – as to say, there is a cap on the number of emission allowances. However, within the cap, companies are free to trade with their emission allowances as they wish. If they need to emit more, they can purchase such allowances from companies with excess allowances. The cap is gradually reduced.
The EU Emission Trading System exists since 2005 and is divided into different trading periods, referred to as phases, with increasingly more ambitious goals. In 2021, phase 4 started, which primarily focuses on achieving the targets of the Paris Agreement. The EU Emission Trading System operates on a regional level, reducing carbon leakage within the EU. What is good news, that as of the 1st of February, China will start a national carbon emissions trading system. This certainly sparks some hope in the quest to combat the climate crisis. While carbon leakage continues to exist, the introduction and use of emission trading systems can effectively prevent it. Such trading systems also significantly contribute to the achievement of the Paris goals.
In conclusion, the Paris Agreement is a great international achievement bringing together 197 state parties, out of which 190 states went on to ratify the Agreement, including the largest emitters such as China, the US (gratefully now again), India, Russia and the European Union. While the Paris Agreement sets an overall goal to keep the global temperature increase below 2°C, it employs a bottom-up approach and requires the parties to submit their national pledges. However, this is where the problem occurs, as most national governments are lobbied by large and powerful companies that most often try to prevent the transition to sustainable alternatives to safeguard their own profits. As long as governments remain under the pressure of large companies, their national pledges are unlikely to get more ambitious. Another issue is the carbon leakage, which occurs when due to stricter emission constraints companies move their production lines to countries with laxer regulations. However, well-enforced emission trading systems can remedy this problem. Overall, while the Paris Agreement allows for some optimism, especially now with China’s freshly announced climate commitments, the transition to sustainable alternatives in all segments of life should be more promoted and made more attainable.