It may not often be framed as such, but the Paris Summit promises to be one of the biggest business stories of our generation. BusinessGreen will be striving to make sense of the implications for the green economy
For the next five months all roads lead not to Rome, but to Paris.
After more than two decades of negotiations the UN climate change talks are winding towards one of their periodic crunch points. In fact, it is possible to argue (and people have) that this December's Paris Summit will be the most important meeting in the history of human civilisation. That may sound over the top for a series of talks that so frequently disappoint, but if the optimists are right and Paris delivers what it is supposed to, the meeting will become instantly hyperbole-resistant. Regardless of what happens – civilisation shaping commitment to global decarbonisation, tragic failure of international diplomacy, or, most likely, something in between – this is a very big deal.
That is why BusinessGreen is from today stepping up our coverage of the Road to Paris (and perhaps more importantly, the Road from Paris) with the launch of a new content hub. Brought to you in association with PwC, the hub will not only keep you updated on all the latest news from the Paris negotiations, it will also provide in-depth analysis of the business impact the talks will unleash.
Like climate change as a whole, the Paris Summit is not commonly understood as a business story, but it is one of the biggest business issues of our generation. As such, we'll be doing our best to ensure the green business community, which will be so crucial to delivering on the vision world leaders sign up to in Paris, is as informed as possible. Whether it is the direct business impacts that will come from national emissions plans and global carbon market agreements or the indirect impacts that will be felt through mounting public and political interest in climate change, we'll be covering it.
From aviation to energy and IT to retail, we will explore the implications of the summit for a raft of different sectors, we'll analyse the policy detail within a business context, and invite leading commentators from around the world to offer their take on the economic and commercial consequences of the talks. Thanks to PwC's support, we'll be able to provide an in-depth look at what the summit means to businesses and we will also be inviting all our readers to comment and contribute, providing their insight as to why Paris matters to them.
Because if one thing is clear about the Paris Summit it is that, regardless of what its detractors say, it matters.
As with any history-shaping event, the summit is already open to multiple interpretations and the battle to establish a dominant narrative will only escalate in the coming months. There are those who think the future of civilisation rests solely on the shoulders of the negotiators in Paris and those who think it a first-class-lounge sideshow to real-world decarbonisation efforts already under way at a national and sub-national level. There are those who think a successful summit must deliver a legally binding treaty with a global carbon price, explicit carbon targets, and $100bn of funding a year for the developing world (bizarrely, this group includes both green NGO idealists and climate sceptics who are preparing to brand the whole process a failure if it delivers anything less than this deliberately high bar). Then there are those who believe the already-secured commitments to national emissions reduction programmes, or INDCs in the UN's will-sapping jargon, mean the talks will end in success, even if the other deeply vexed issues that can be collected together under the banner of "climate justice" are kicked along the road yet again.
The difficulty for businesses, investors, and entrepreneurs analysing the run-up to and the fallout from Paris is that all these viewpoints are valid to varying degrees. As so often in politics, life, and the climate debate, the truth lies in the grey area in the middle.
But ultimately the Paris Summit matters, not for the detail of the eventual compromise agreement that the diplomats pull out of the acronym soup they have been stirring for the past 20 years, but for the impact it can and will have on the ground. The UN negotiations in themselves never reduced one tonne of emissions. In fact, as their climate-sceptic detractors are always quick to point out, the air-conditioned, conference centre-loving caravan has an elephantine carbon footprint of its own. The UN negotiations are only important in the context of the clean tech investments they mobilise, the forests they protect, the low-carbon infrastructure they enable, the green policies they unleash.
Consequently, the debate between top-down and bottom-up climate action is a false one. It is not an either/or choice, it is a symbiotic relationship with the headline-grabbing hopes for a global treaty and the community, city, state, and national-level action needed to actually decarbonise the global economy. Each climate-related project delivered increases the chances of an international policy framework; each step towards a global deal makes it easier to deliver green infrastructure outside the hallowed ground of the UN-commandeered conference halls.
This is why, above all else, the Paris Summit is a business story, an economic story, and a technology story. If it cannot accelerate significantly the global green industrial revolution that is already under way then it will have failed, regardless of the finer detail. That is the bar that has to be cleared. As such, it is worth remembering immediately after the Paris Summit as the politicians and the commentariat debate whether the talks have been a success or failure that the only honest answer to that question is the same as the one former Chinese premier Zhou Enlai reportedly gave in response to the question about the impact of the French Revolution of 1789: 'It is too soon to tell'.
That said, the eventual deal (and there will be an agreement, even if it is of the face-saving variety) will have an immediate impact on green investment and business prospects. As such, every business, large and small, would be advised to keep a close eye on the talks and their likely implications. From energy costs to clean tech opportunities and investment risk to consumer demand, the Paris Summit is likely to have sizeable long-term implications for the climate the world's businesses have to operate in throughout the first half of this century and beyond. That is why hundreds of high-profile businesses are now calling for an ambitious treaty to be agreed, confident in the knowledge that climate change represents a threat to their operations and a global agreement will help them tackle that threat and turn it into an opportunity.
Despite the daunting scale of the climate challenge and the past failure of the UN talks, there are reasons to be optimistic.
The proposed system of national action plans or INDCs appears, at last, to have broken the deadlock over emissions targets and eased some of the tension over rich/poor world responsibility. Consequently, the talks are said to be being undertaken in a more conciliatory atmosphere than at any point in their history. A comprehensive agreement on forest protection has already been agreed. Bilateral agreements between key players China, the US, Brazil, India, and the EU, are abounding.
That much has become obvious this week, as China has announced plans for $6.6tr of low carbon investment and the US and Brazil have committed to sourcing a fifth of their power from renewables within 15 years. The new system of INDCs, while far from perfect, represents a hugely important breakthrough, as it raises the prospect of all nations adopting a long term approach akin to the UK's Climate Change Act. Businesses and investors are getting relatively clear signals about the direction of policy travel in favour of decarbonisation and green investment, making it easier for them to mobilise investment. As China, the US, Brazil, the EU, and others are proving, every new INDC style commitment contains within it the creation of massive new markets and commercial opportunities. Long term, the INDCs confirm once again you are better off investing clean power and electric cars than coal and deforestation.
Obviously, the battle over funding for developing world climate adaptation and decarbonisation will be more intense than ever and the shadow of Vladimir Putin looms over the talks much as it looms over any discussion of geopolitics these days. Moreover, it is clear the INDCs on their own will not deliver deep enough emissions cuts and as such a system for reviewing and strengthening national plans is essential. But that said, the EU and a number of other economies have shown that medium emissions targets are there to be beaten, sometimes comfortably.
The Paris Summit will not deliver enough – how could it, when you consider the full scale of the challenge? But a system of national emissions-reduction plans and the prospect of a global framework for strengthening them is not nothing. In fact, it is far more than anyone could have hoped for in the immediate wake of the Copenhagen Summit in 2009 and the national focus promises to make it easier to ensure these policy plans deliver tangible results.
Most important of all, though, is that the context in which the talks are taking place has been transformed. About a year after the Copenhagen Summit I had dinner with Yvo De Boer, the diplomat who chaired the fateful talks and deserves immense credit for keeping the show on the road even as the failure to deliver a global deal threatened to scupper the chances of a credible treaty for a generation. He was understandably downbeat at the talk's inability to deliver the treaty that had been hoped for, but he was also resigned to the fact a truly ambitious deal was impossible at that point once it became clear a handful of the key players had not yet bought into the argument that green economic growth and low-carbon development was both possible and desirable. As ever, the issue came down to the economy, stupid.
Six years on and some important things have changed. Renewable energy costs have plummeted and from Washington to Beijing (and let's not kid ourselves, those are the two capitals that matter most) there is a growing confidence a modern economy built on clean technology is possible. This time around green growth is not a promise, it is a reality – as witnessed, perhaps, by the IEA data showing global emissions stalled last year even as GDP continued to rise.
This recent green economic progress is set to be maintained regardless of what happens in Paris; green businesses will continue to prosper. But the summit will help determine the pace at which its development continues and whether the gap between the emissions reductions that are needed and the reductions that are delivered is bridgeable. That is why we'll be treating the Paris Summit as one of the biggest business stories of our generation. That is why all roads lead to Paris and why the road we take from Paris is so important for the global economy, and yes, even the history of civilisation.
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