POSITION PAPER
June 2015
O
n the road to Paris
A GLOBAL DEAL IS OUR BUSINESS
KEY MESSAGES
A legally-binding agreement with comparable mitigation efforts from major
1 economies is the best mechanism to provide the necessary certainty for
business investments. For those that have not yet done so, the prompt
publication of their Intended Nationally Determined Contributions (INDCs)
is crucial.
Business is key for a successful and ambitious agreement in Paris and its
2 implementation. Therefore, an institutional channel for business
engagement should be recognised in the implementation of the new
agreement.
BUSINESSEUROPE has devised ten recommendations to feed into the
3 international climate negotiations towards COP21. If implemented, this set
of recommendations will achieve adequate global climate protection as
well as enable a true level playing field for European industry.
KEY FACTS AND FIGURES
The global market for low-
By
March
2015,
the
T
he EU accounts for only
carbon and environmental first UNFCCC submissions’ 9% of global emissions and
goods and services is deadline, only three out of this share is still falling.
projected to grow to over the
six
world’s major China is responsible for a
€4 tril ion by the end of emitters have published quarter of global emissions
2015
their INDCs.
and the US for 11%.
POSITION PAPER
On the road to Paris
A GLOBAL DEAL IS OUR BUSINESS
The stakes for European companies are very high in the run up to the United Nations
Climate Change Conference (UNFCCC) in Paris in December 2015 (COP21).
Decision-makers must seize this opportunity to provide for ambitious global action,
committing all parties to a legally-binding agreement, after the missed opportunity to do
so in Copenhagen in 2009.
Business is a significant part of the solution to addressing the impacts of climate
change, and it is therefore important that the agreement can support business
innovation and growth. The global market for low-carbon and environmental goods and
services is projected to grow to over €4.8 tril ion by the end of 2015. This shows the
size of the investment that must be encouraged and facilitated across the world. An
international legally-binding agreement is the best way to stimulate investment and
provide opportunities for companies in the research, development and deployment of
existing and new technologies.
Such a multilateral agreement must also help to drive the competitiveness of European
industry, supporting global emissions reductions in an efficient manner. To safeguard
sound international competition for industry and to ensure effective protection for EU
companies against carbon leakage risks, it is vital that non-EU industrial competitors
operate under comparable climate protection rules to EU companies. This will allow a
level playing field for European businesses competing globally and promote economic
growth.
In the run up to COP21, BUSINESSEUROPE has devised 10
recommendations to
feed into the international climate change negotiations.
BUSINESSEUROPE a.i.s.b.l
AVENUE DE CORTENBERGH 168 – BE 1000 BRUSSELS – BELGIUM
TEL +32 (0)2 237 65 11 – FAX +32 (0)2 231 14 45 – E-MAIL xxxx@xxxxxxxxxxxxxx.xx
WWW.BUSINESSEUROPE.EU
EU Transparency register 3978240953-79
1.
Establish a shared vision for long-term global action to combat
climate change
All countries must sign up to long-term global action consistent with science, and to a
continuous political process to review progress towards the objectives. European
companies have helped the EU become the most emissions’ efficient economy in the
world. It achieved a 19% emissions reduction between 1990 and 2013 while its GDP
grew by 45%. Currently the EU only accounts for nine percent of global emissions and
this share is still falling.
To achieve a truly global level playing field more is needed from the world’s major
economies too. Countries with the highest responsibilities and capabilities need to
reflect this in the ambition of their commitments. Today China is responsible for a
quarter of global emissions, while the US accounts for 11%, thus having major
economies on board will be crucial to tackle world emissions.
In addition, the new agreement should have as much geographical coverage as
possible, this would bring obvious benefits not only for the global climate but also for
businesses trading globally by being subject to similar standards. Besides mitigation
efforts, all industrialised, emerging, and developing countries should draw up national
adaptation strategies.
2.
A global legally-binding climate regime post-2020
All major economies must sign up to a legally-binding agreement under the United
Nations regime containing transparent, comparable, fair and ambitious emissions
reduction commitments. All countries will benefit from an agreement with such a
legally-binding nature. By establishing a common system, the new deal will provide the
necessary trust that each country is implementing its long-term pledge while
encouraging global ambition, predictability and legal certainty for investors.
While some progress has been achieved, to date only three out of the six world’s major
emitters (China, US, EU, India, Russia and Japan) have already published their
Intended Nationally Determined Contributions (INDCs). And in total, on top of the EU,
ten countries have submitted their contributions, accounting for about 20% of global
emissions only.
We call for the prompt publication of INDCs from those countries that have not done
so. An early submission is essential for a timely evaluation of the total contributions
ahead of COP21. Regarding those that have already published their INDCs, in some
instances there is still not enough clarity on how they will impact their industrial sectors
exposed to global trade. INDCs should include as a minimum the following: quantifiable
information on the reference point (including a base-year), timeframes and/or periods
for implementation; scope and coverage for mitigation as well as, for adaptation and
provisions of finance, planning processes, assumptions and methodological
approaches including those for estimating and accounting for anthropogenic
greenhouse gas emissions and, as appropriate, removals. In addition, a process to
regularly review the INDCs should be established.
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3.
Emissions reduction efforts also from emerging economies
The UNFCCC is based upon the notion of action based on the respective capabilities
of individual nations. Given the urgency of the problem, all countries need to act
urgently and collectively. Since the Kyoto Protocol was agreed in 1997, the geo-
economic landscape of the world has changed. While some emerging economies still
face challenges, their capabilities have also evolved.
Therefore, advanced developing countries should commit to setting their emission
policies in a way that reflects their actual capabilities. This stems from the need for
collective action but it will also be in the interest of these economies to be on the same
global level playing field. For that purpose, a review process should also be established
to encourage comparable efforts as much as possible.
4.
Equivalent
measurement,
reporting
and
verification
(MRV)
obligations to all parties
To achieve the necessary confidence among parties, the new agreement must provide
for robust transparency and accountability. The new regime must therefore include
comparable national rules on MRV as well as a review process on an annual basis. An
enforceable and sanction mechanism for non-compliance with reduction commitments
must also be established.
A common regime will be essential to provide the certainty that all parties are using the
same reference not only to measure emissions but also to assess how they are on
track to meet their respective commitments. This becomes even more necessary in the
event of linkages between different regional carbon markets (recommendation 5). In
addition, the sharing of best practices should be encouraged. European industry has a
deep expertise in MRV and would be able to offer adequate capacity building to foster
implementation of an MRV regime in other economies.
5.
Incentivise the creation of linkable carbon markets
The development of a global carbon market will help stimulate investments in
innovative technologies, installations and products to be made in locations where they
deliver the greatest possible climate benefits at the lowest economic cost. Market-
based mechanisms – like the current Clean Development Mechanism (CDM) – which
provide incentives to business to invest in emission reductions within developing
countries and cap and trade systems – such as a reformed EU ETS – must be
recognised as important tools to achieve emissions reductions at the lowest cost to
societies and economies.
Policy-makers should make every effort to ensure that carbon markets are attractive for
all participants and become compatible and linkable. To this end, they need to be
designed in a carbon leakage-proof fashion and anchored in the new agreement with
the aim of enabling a global carbon market in the long-term. Comparable framework
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conditions will encourage business to continue and to increase their investments in the
research and development of new technologies.
This will require the setting of a global level playing field to ensure a fair comparison
and should encompass similar methodology, tools and standards including clearly
defined indicators to assess the performance/efficiency in different world regions, also
taking into consideration diverging local conditions.
6.
Institutionalize business engagement within the UNFCCC
Business wishes to see the creation of a recognized channel to improve its
participation in the UNFCCC process. The expertise of the business community is
essential to achieve successful outcomes and implementation. As a result, an
institutionalised channel for private sector engagement should be recognised in the
implementation of the new agreement. Over the years individual countries and COP
Presidencies have sought ways to enhance participation by the private sector, recently
that has been the case for Poland and now France.
In the spirit of the solutions agenda, a channel for business participation within the
UNFCCC would improve communication, information sharing and enhanced dialogue.
It should be established in a manner that enables broad business participation by
companies and associations through affiliates in all nations. In its activities this
business channel should, inter alia:
Facilitate a two-way communication between the private sector and the
UNFCCC (parties, regional groups and the secretariat);
Be responsive as a resource to requests from parties, regional groups, the
UNFCCC secretariat and others involved in international climate processes;
Develop input and, where appropriate, nominate representatives to relevant
advisory boards and bodies;
Provide information to parties and the UNFCCC secretariat;
Assist the UNFCCC secretariat and other relevant bodies, e.g. in setting
agendas and identifying experts to participate in official dialogues and
workshops;
Complement other dialogue channels with recognized observer organizations.
Besides enhancing routine interactions, this channel would lay the foundations of an
official business dialogue to ensure a transparent engagement of the private sector in
the UNFCCC decision-making and implementation.
7.
Mobilise financing for climate action
In order to encourage investment in climate action, financial instruments such as the
Green Climate Fund (GCF), alongside other targeted measures, should act as
catalysts to leverage private investments. Business’ participation wil depend in large
part on the investment environment and the effectiveness of institutional arrangements
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which should be evaluated by independent experts. Resources for the existing
Adaptation Fund should also be increased, entailing a fair contribution by all parties to
the funds' reserves.
Eligibility for finance should be determined using results-based criteria such as the
contribution to transformational change in the recipient region. The GCF should be a
convener of concessional loans, risk-sharing financing instruments and other sources
of financing such as carbon financing from multilateral development banks. This would
provide a basis for the GCF to leverage the huge amounts of private financing that are
required to deliver climate mitigation and adaptation action. The GCF should also be
results-oriented and closely monitored even when implementation of projects is left to
accredited entities. These funds must be used in strict compliance with strong pre-
defined transparency, additionally and environmental integrity principles.
8.
Protect intellectual property rights from compulsory licensing
Effective Intellectual Property Rights (IPRs) protection is a key enabling factor for
technology to be developed, deployed and shared with others in global technology
value chains and through trade and foreign direct investment. IPRs protection is critical
for Europe’s advanced manufacturing and clean technology sectors. It provides a key
incentive for companies to invest in these markets and offers European companies a
critical competitive and first-mover advantage to our global trade. It also allows
companies to work with business partners, suppliers, and customers around the world.
Successful technology transfer will be stimulated where companies can operate within
a legal framework which secures the protection of intellectual property and WTO-
compatible rules apply. Global rules on IPRs have proved their worth and should not be
weakened in the framework of UN climate negotiations. We call on the EU to ensure
that IPRs are fully protected within the current and future climate change agreements.
9.
Include clear measures to address forestry issues
The main deliverables of COP-18/CMP-8 in Durban on Land Use, Land Use Change
and Forestry (LULUCF) which have since been transposed into EU legislation, should
be included in the future International agreement in order to secure full accounting of
emissions from forestry and land use change. LULUCF rules should be streamlined in
a way to ensure that more countries participate in proper forest accounting.
10. Establish global solutions for controlling emissions from aviation
and shipping
Given the specific nature of the aviation and shipping sectors, their emissions should
be addressed as part of any post-2020 global climate change agreement. The
international air transport and maritime organisations have been proactively involved in
developing global solutions.
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Unilaterally imposing emission reduction burdens on European aviation and shipping
could lead to substantial carbon leakage in these sectors with little or no environmental
impact, likewise, non-harmonised national regulation could have a similar impact.
The new agreement shall ensure that it does not distort competition amongst aircraft or
shipping operators and should treat both sectors indivisibly rather than by taking a
country / regional approach.
* * *
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