Paris Agreement: PwC comment on transparency; compliance; targets; developing nations

Published at 21:22 PM on 12 December 2015

PwC’s sustainability & climate change team comment on the Paris Agreement, covering the Agreement, transparency/accountability, compliance, financial services, business and REDD.
Follow updates @pwcclimateready. Speak to our team in Paris or London via Rowena Mearley in Paris on +1 347 5010931/+44 7952715739 or Lynn Hunter (+44 7841 570487)
[email protected]

“Perhaps the most important outcome from this global agreement is that it gives all countries confidence that they are working together towards the same goal.” Jonathan Grant, director, PwC sustainability & climate change

“The legally binding transparency and review framework is the cornerstone of making the Paris Agreement a credible climate deal in the eyes of the world. But there is still room for improvement.” Celine Herweijer, partner, PwC sustainability & climate change

The Agreement delivers what’s needed on compliance to move forward under the Agreement’s new international climate regime. A global climate deal was never one that would happen today if non performance or non-compliance resulted in punishment.” Celine Herweijer, partner, PwC sustainability & climate change

“Success in Paris doesn’t guarantee a successful deal – the agreement now needs to be ratified and implemented by all countries.” Jonathan Grant, director, PwC sustainability & climate change

“While agreement today is encouraging, if ambition does not continue to increase in future years, then the achievement of 1.5, or even a 2C target, and many SDGs will be in danger.” Sam Bickersteth, CEO, Climate & Development Knowledge Network

"The Paris agreement sends out a clear signal on the role forests will play to limit GHG emissions.” Chris Webb, forestry & land use specialist, PwC sustainability & climate change

"The role of the private sector in supporting this and the significantly bigger sums required if we are to stay below 2C could never be more important." Jon Williams, partner, PwC sustainability & climate change

THE AGREEMENT
Jonathan Grant, Director, PwC sustainability and climate change

“There is constructive ambiguity, or even woolly wording in some areas, but as COP21 President Laurent Fabius said this morning, this allows all countries the ability to take the deal home and declare success.

“Overall, the Paris Agreement should mutually reinforce actions at the national level as it sets up a process of review and continual improvement. Perhaps the most important outcome from this global agreement is that it gives all countries confidence that they are working together towards the same goal.”

TRANSPARENCY / ACCOUNTABILITY
Celine Herweijer, partner, PwC sustainability & climate change

“Transparency, an issue at the heart of deal credibility, went down to the wire in Paris which was no surprise. At its simplest a robust transparency mechanism helps to build confidence that national targets and promised actions are being delivered. The machinations of this part of the deal along with its sister elements - the five year review process and the compliance committee - represent Paris's legally binding accountability and compliance framework. It is the cornerstone of making the Paris Agreement a credible climate deal in the eyes of the world.

“The Agreement is committed to robust and common accounting and reporting standards, with independent review through a new compliance committee. It has built in flexibility that recognises the different national circumstances of poorer countries, and provides support to enable these parties to comply. The five year review cycle provides a basis to check-in, and raise performance levels with no back-sliding. This is an element critical to ensuring parties are accountable not just to targets, but good enough targets to reach the overarching goal of well below 2C warming.”

COMPLIANCE
Celine Herweijer, partner, PwC sustainability & climate change

“The Agreement delivers what’s needed on compliance to move forward under a new international climate regime. There is still work to do, but it has brought all parties under the tent, and if other international treaties like UN Montreal Protocol are anything to go by, the mechanics of transparency and compliance can be amended and strengthened over time."

"A global climate deal was never one that would happen if non performance or non-compliance resulted in punishment - in withdrawal, fines, or sanctions. The Paris text makes this clear by stating compliance is "non punitive". The goal for a climate deal always had to be one of a deal, action and shared challenge on a global basis. Parties that have come to the table at Paris will hopefully stay there, as the deal represents a new regime that no party can afford not to be a part of. The draw of being at the front of the low carbon transition is great, and certainly bigger than the risk of being left behind not addressing climate change is, in economic terms."

BUSINESS
Jonathan Grant, Director, PwC sustainability and climate change

“For business, it is good to see the inclusion of emissions trading and references to the role of the private sector in the Agreement. But success in Paris doesn’t guarantee a successful deal – the agreement now needs to be ratified and implemented by all countries.

“For policy makers and business, the action now is at the national level. The focus now needs to be on implementation. CEO's act on regulation more than international agreements so governments will need to return home and implement the policies needed to achieve their climate goals.

Jon Williams, partner, PwC sustainability & climate change
"Business has been actively engaged throughout the negotiations leading up to this agreement and its important role has been recognised in the final text. With the Agreement in place, and negotiations over, expect to see more action, and not just from the usual suspects in business. Significant shifts in energy, heavy industries, transportation, real estate and agriculture will be expected in the coming decade. Companies will need to factor future climate regulation into their business models both from an opportunity and risk perspective. Those that are ready for the low carbon transition will be the winners."

GAP IN EMISSIONS COMMITMENTS
Jonathan Grant, Director, PwC sustainability and climate change

“Page 3 of the deal exposes the big gap between the global ambition to limit warming to 1.5°C and the targets in the current national plans (or INDCs) and notes the need to raise ambition. While some countries are more ambitious than others, overall the national climate plans show a step change in action over the next 15 years. On average countries will need to double the reduction in carbon intensity of their economies in order to achieve their targets.

“PwC’s analysis shows just how challenging it will be to achieve the 2°C goal. Currently the carbon intensity of the global economy is falling at 1.3% per year – the result of increases in renewables, improvements in energy efficiency and growth of lower carbon services sectors. But limiting warming to 2°C will require decarbonisation of over 6% every year according to our Low Carbon Economy Index.

“The INDCs show that coal will be targeted in many countries whether through carbon pricing or emissions standards. Obviously low carbon technologies will get a boost from this agreement, but will need massive flows of finance to deliver the ambition set out in the long term goal.

DEFORESTATION / FOREST NATIONS
Chris Webb, forestry & land use specialist, PwC sustainability & climate change

"The Paris agreement sends out a clear signal on the role forests will play to limit GHG emissions. With deforestation excluded from the Kyoto agreement, and positive action in the forestry sector given secondary status under the CDM, investment to date to reduce emissions from deforestation and forest degradation (REDD) has been limited, particularly from the private sector.

"The inclusion of REDD+ in the Agreement, coupled with the 'REDD rule book' agreed earlier in the year, is now clear signal to both tropical forest countries and the private sector, of the opportunity that positive action to preserve and enhance the world’s forests presents."

DEVELOPING COUNTRIES
Sam Bickersteth, CEO of the Climate & Development Knowledge Network

“The Paris agreement will frame future economic development pathways for the least developed and most climate vulnerable countries as an element of the Sustainable Development Goals (SDGs). Critically, it will increase the flow of additional public and private finance for vulnerable countries for both low carbon and climate resilient investments.

“Ambition, including the pathway towards a possible 1.5C is seen as a lifeline to Small Island Developing States and Least Developed Countries which could not survive at two degrees of warming. But both this development, and the five yearly reviews will need to be played out through the national climate plans. The reality is, implementation will need to being immediately, and ramp up shortly afterwards. So while agreement today is encouraging, if ambition does not continue to increase in future years, then the achievement of 1.5, or even a 2C target, and many SDGs will be in danger.”


ROLE OF FINANCE & FINANCIAL SERVICES SECTOR
Jon Williams, partner, PwC sustainability & climate change

"The role of finance has been centre stage in Paris and nobody expected this to be easy. The role of the private sector in supporting this and the significantly bigger sums required if we are to stay below 2C could never be more important."

"The finance sector will play a critical role in providing the $6tn a year needed to build a resilient, low carbon economy. With the many commitments made by the finance sector at Paris, including efforts planned on disclosure and management of climate risks, whether it’s investing in green bonds or reducing carbon intensive lending, it's quite clear that Paris has been something of a tipping point for the sector."


Our team are available for further comment or interview, in London or Paris at COP21. Contact Rowena Mearley in Paris on +1 347 5010931/+44 7952715739 or Lynn Hunter (+44 7841 570487)
[email protected]


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