Legal & Regulatory

Paris Agreement Meets Final Requirement to Enter into Force

As of October 5, the Paris Agreement—the first global agreement on efforts to limit and mitigate the effects of climate change—had been ratified by a sufficient number of countries, representing at least 55% of global greenhouse gas (GHG) emissions, to bring the agreement into force.

The Paris Agreement was reached by representatives of 195 nations on December 12, 2015, at the 21st conference of the parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC or Convention). The agreement enters into force on the 30th day after the date on which at least 55 Parties to the Convention, accounting in total for at least an estimated 55% of total GHG emissions have ratified it. The first requirement was met on September 22.

The U.S. and China, the world’s top two GHG emitters, ratified the agreement on September 3.

There was a recent flurry of countries depositing their ratification documents, including India (the fourth-highest emitter) on October 2 and New Zealand on October 4. The European Commission ratified the agreement earlier this week, but the agreement also had to be ratified by individual European Union (EU) countries—together representing the third-highest GHG emitter—which was accomplished today.

Although the UNFCCC ratification status website was not updated immediately, U.N. Spokesman Farhan Haq was reported as saying that the EU, Canada (the ninth-highest emitter), and Nepal were all expected to deposit their instruments of ratification on October 5—which appears to have happened given the progress meter on the UNFCCC site (below).

The UN Framework Convention on Climate Change website showed that both conditions for entering into force had been met on October 5, 2016. Source:
The UN Framework Convention on Climate Change website showed that both conditions for entering into force had been met on October 5, 2016. Source:

What the Paris Agreement Seeks to Achieve

As the Convention’s website explains:

The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius. Additionally, the agreement aims to strengthen the ability of countries to deal with the impacts of climate change. To reach these ambitious goals, appropriate financial flows, a new technology framework and an enhanced capacity building framework will be put in place, thus supporting action by developing countries and the most vulnerable countries, in line with their own national objectives. The Agreement also provides for enhanced transparency of action and support through a more robust transparency framework. Further information on key aspects of the Agreement can be found here.

Each of the Parties to the agreement is to make “nationally determined contributions” (NDCs) that are reported on regularly. For the most part, this has entailed having individual nations announce reductions in GHG emissions over a designated timeframe. The UNFCCC website has a searchable interim registry of NDCs.

The UN Framework Convention on Climate Change website includes a searchable database of signatory countries' nationally determined contributions (NDCs). Source:
The UN Framework Convention on Climate Change website includes a searchable database of signatory countries’ nationally determined contributions (NDCs). Source:

Ensuring that each nation meets its goals, which are not legally binding, could pose challenges—from measuring emissions, to developing new policies, to ensuring that progress toward goals is accurately accounted for.

In April, for example, just a month before New Zealand’s (NZ) government ratified the Paris Agreement, an investigation by the Morgan Foundation claimed that carbon credits used by NZ to meet its obligations under the earlier Kyoto Protocol were fraudulent. The credits in question mostly originated in Ukraine and Russia, where they were “manufactured by organised crime.” NZ’s GHG emissions are relatively low, but proportionately, the country “holds four times more of these credits than any other country,” according to a story in Climate Change News. The government banned further purchase of these credits in 2014 but plans to continue using the surplus credits to meet its 2020 and 2030 Paris Agreement goals. Economist Geoff Simmons of the Morgan Foundation noted that the country has “a real credibility deficit to make up in terms of showing that our future transactions will be ethical.”

Implications for the U.S.

The NDC for the U.S. states that “the United States intends to achieve an economy-wide target of reducing its greenhouse gas emissions by 26-28 per cent below its 2005 level in 2025 and to make best efforts to reduce its emissions by 28%.” The statement also notes that the U.S. had, prior to the December meeting in Paris, “already undertaken substantial policy action to reduce its emissions.”

Although multiple sectors, including transportation and oil and gas extraction, are included in those efforts, the one that has been the most contentious is the administration’s Clean Power Plan. Though the Environmental Protection Agency rule addressing carbon dioxide emissions from power plants was finalized in August 2015, it was stayed earlier this year by the U.S. Supreme Court until an appeals court ruled on the plan’s merits. The D.C. Circuit Court of Appeals heard arguments in the case on September 27; a decision is anticipated within four months.

There’s no question that the Paris Agreement is the most noteworthy international development concerning climate change to date. But its effect on the U.S., and especially the power generation sector, may be less direct than in other nations. That’s due to a number of trends that were already in motion before the December meeting: low natural gas prices, leading to increased generation from lower-carbon-emitting natural gas plants; nearly flat demand growth; falling costs for wind and solar generation at all sizes, paired with increasingly affordable storage options; and continuing progress toward renewable portfolio and energy efficiency goals at local, state, and regional levels. As for the Clean Power Plan, should it survive legal challenges, it would effectively raise the bar for new coal-fired plants, requiring much greater efficiency, carbon capture capability, or both. In today’s fuels market, with low natural gas prices, building even a “traditional” coal-fired plant would be a challenge.

Carbon Tax Announcement in Canada Precedes Paris Agreement Ratification Vote

Canada is set to reduce GHG emissions 30% from 2005 levels by 2030. That country’s debate over ratification this week took an unexpected turn when Prime Minister Justin Trudeau announced plans for a carbon tax with a “floor” of C$10 (US$7.60) per metric ton (mt) beginning in 2018, that would rise to C$50/mt by 2022. “Provinces and territories will have a choice in how they implement this pricing,” he said. “They can put a direct price on carbon pollution, or they can adopt a cap-and-trade system, with the expectation that it be stringent enough to meet or exceed the federal benchmark,” the prime minister was quoted as saying.

The province of British Columbia already has a carbon tax—effective July 1, 2008, it was the first in North America. Alberta’s carbon tax is to go into effect next year. Ontario and Quebec have cap-and-trade programs, but they would not meet the goals set by the federal program as outlined by the prime minister.

CTV news reported that Saskatchewan and the three northern territories are opposed to a federal plan. A CBC news outlet reported that Alberta Premier Rachel Notley “supports the principle of a common price on carbon, but could not yet embrace the amounts laid out today.”

If the provinces don’t adopt a carbon tax or a cap-and-trade program, Trudeau said, “the government of Canada will implement a price in that jurisdiction.” A similar situation, involving a Federal Implementation Plan, would apply to U.S. states that do not develop an implementation plan for the currently stayed Clean Power Plan.

Trudeau said the program would be revenue neutral for the federal government; any revenue generated would stay in the province or territory where it was generated.

Consequences of Paris Agreement: TBD

In Canada, as in the U.S., there is public and political disagreement about whether legislative and regulatory moves to limit GHG emissions would be a net positive or negative for individuals and the economy. Although, as POWER previously reported, the energy policy differences between the two U.S. presidential candidates are “black and white,” market forces—more than politics—may prove stronger determinants of the nation’s future fuels mix and its resulting GHG footprint.

Gail Reitenbach, PhD, editor (@GailReit, @POWERmagazine)

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