US, China pledge swift accession to Paris climate deal

7 April 2016

US President Barack Obama and Chinese President Xi Jinping will sign the recent multilateral deal on climate change at a UN ceremony on 22 April, according to a joint statement issued last Thursday. They also pledged to take the necessary steps to ratify the pact in their respective nations as early as possible this year.

The leaders of the world’s two largest economies and carbon dioxide emitters further committed to work together and with other actors to promote the Paris Agreement’s full implementation in order to “win the fight” against climate change.

Struck last December at a UN Framework Convention on Climate Change (UNFCCC) gathering, the Paris Agreement is the world’s first universal climate pact, envisaging mitigation contributions from all nations.

To this end, each nation will present climate action plans on a five-yearly basis, use a common accounting framework, and be involved in a regular, global stocktaking to assess collective progress toward tackling climate change.

UN Secretary General Ban Ki-moon, host of the April event in New York that will mark the first day the Paris Agreement is open for signature, commended the move in a statement released by his office. 

India has also indicated that it would take part in the signing ceremony. Officials estimate that over 100 countries will attend, helping to maintain political momentum around the Paris Agreement.

Some stakeholders have, however, called on poorer nations to hold off on signing until stronger guarantees are received around finance, technology, and compensation for damage caused by climate impacts. 

Obama and Xi’s statement additionally signalled plans to work bilaterally and with other countries to achieve successful outcomes on related multilateral agendas this year.

This includes negotiating an amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer that would specifically target climate warming hydrofluorocarbon (HFC) emissions and setting up a global market-based mechanism on aviation emissions under the International Civil Aviation Organization (ICAO).

Talks are ongoing this week in Geneva, Switzerland, on the HFC amendment, while ICAO is conducting regional dialogues to gather inputs from states and stakeholders on the new mechanism, before a high-level discussion on a draft text scheduled for 11-13 May. 

Paris Agreement timeline

The Paris Agreement will come into effect 30 days after it is ratified by at least 55 nations accounting for at least 55 percent of total greenhouse gas (GHG) emissions. Three Pacific island nations – Fiji, Palau, and the Republic of the Marshall Islands – have already completed domestic steps necessary for ratification.

News of potentially swift ratification by major players suggests that the deal could come into play sooner than some stakeholders had expected, given that its original mandate foresaw a 2020 implementation date.

Some observers have consequently pointed to potential timing discrepancies. The Paris Agreement and an accompanying decision mandate a series of further negotiations to hammer out key operational aspects of the new regime.

For example, a working group should develop recommendations for modalities, procedures, and guidelines for transparency of action and support around countries’ individual climate efforts, to present for consideration by 2018.

Others are confident these schedules can be pragmatically amended if needed.

“As a matter of international law, the Paris Agreement, being a treaty-level instrument, will trump Decision 1.CP/21, as well as the Durban Mandate,” wrote Michael Dobson, climate advisor to the Marshall Islands, for media outlet Climate Home.

“Countries will thus be able to take decisions to amend the work programme to ensure that all necessary rules and procedures can be negotiated and agreed by the time the Agreement enters into force, and the first meeting of its parties is held,” he explained.  

Financial stakeholders, investors take note

Separately, last Thursday also saw the release of an initial report from an industry-led task force on climate-related financial disclosures. Chaired by Michael Bloomberg – the US billionaire, climate advocate, and former New York City mayor – the task force was established last December in Paris by the Financial Stability Board (FSB) in light of concerns both around the shifting value of assets as the world moves to a low-carbon economy and the risks to assets presented by climate impacts.

The document outlines the scope and objectives for the group’s work on recommendations for improving principles and practices around firms’ climate disclosure. This should help a variety of stakeholders understand the concentration of carbon-related assets and investments in the financial system.

Seven fundamental disclosure principles are also presented. These include the transmission of relevant, specific, and complete information on a timely basis; the need to be clear, balanced, and understandable; consistency over time, comparability with other companies within the same sector; and that such disclosures be reliable, verifiable, and objective.

A second report, due out at the end of the year, will include recommendations for voluntary climate disclosures within mainstream financial reports.

“The more that [climate] risk gets priced into the market, the more attractive clean energy investments will be,” Bloomberg said in New York this week as he described the task force’s upcoming work.

The initiative comes amid evidence of growing concerns among shareholders around climate-related issues. According to the Financial Times, some 94 proposals linked to climate change – such as returning capital to shareholders through dividends instead of investing in fossil-fuel linked projects – have been put to US companies this year.

US-based firms can prevent shareholder proposals from coming to a vote as long as approval is secured from the nation’s Securities and Exchange Commission (SEC). The regulatory body has, however, in recent years proved increasingly reluctant to grant approvals in relation to climate change.

For example, the SEC ruled in March that major oil company ExxonMobil must include in its annual shareholder meet a resolution that would oblige the company to outline how specific risks from climate change – or legislation design to curb it – would affect its ability to operate profitably.

ICTSD reporting; “UN’s Paris climate deal could enter into force this year,” CLIMATE HOME, 4 April 2016, “Developing nations urged to boycott Paris Agreement signing,” CLIMATE HOME, 3 April 2016; “US shareholder votes on climate change hit record,” THE FINANCIAL TIMES, 31 March 2016.

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