When the announcement finally came in Paris, there was a palpable sense of relief. After two weeks of intense negotiations, over 180 countries including the United States and China, along with international companies, unveiled an agreement to keep the global temperature rise to “well below” 2C, and attempt to limit it to 1.5C, committing to carbon neutrality in the second half of the century.
As President Barack Obama was quick to declare the Paris agreement is “the best chance we have to save the one planet we have”, and a “turning point” towards a low-carbon future.
Yet, amid the fanfare over the declarations of nations and their leaders, a major achievement of December’s conference has perhaps been overlooked: the way it has engaged the private sector in making a low-carbon future a reality, putting national pledges within a wider decarbonisation strategy.
“Never before have we seen this level of engagement from business,” says Lise Kingo, executive director of the UN Global Compact, the UN initiative that brings responsible businesses together to tackle climate change.
In fact, Kingo says the private sector can help to fill the gap between what has been committed by governments through the INDCs (Intended Nationally Determined Contributions that outline each country’s post-2020 climate actions) and what is needed to reach a carbon neutral world economy by the mid-century.
“We must increase the pace and ambition of corporate sustainability as the risks and opportunities are now even more apparent,” she says. “Working closely with our local networks in more than 80 countries, we will continue to inspire companies to transform their business models, reallocate their capital to invest in technologies that reduce carbon emissions, and be transparent about their efforts to ensure that commitments are met.”
For businesses, governments and their people alike, the Paris agreement is widely being seen as a diplomatic triumph, especially given the troubled history of such summits.
Six years ago in Copenhagen there was dismay when that climate summit ended in deadlock. Developed and developing countries failed to reach agreement, while the US’s failure to ratify the Kyoto protocol undermined what had been the first serious international attempt to tackle global warming.
Although there has been criticism of the Paris agreement, especially over the absence of solid measures for setting national targets, there is also a feeling that it has given the transition to a low carbon economy unstoppable momentum. The estimated scope of global emissions coverage is 95%, for instance – a huge leap from the 30% coverage of Kyoto.
Daniele Agostini, Enel’s head of environmental and low carbon policies, believes that a number of factors helped the Paris talks achieve so much more than previous ones.
Crucially, he says, the United Nations Framework Convention on Climate Change (UNFCCC) adopted a new negotiating approach that combines bottom up elements – mainly voluntary national commitments – with top down measures on governance.
Greater public awareness and the resulting pressure on policy makers to take real action against climate change also played a vital role in ensuring that a deal everyone was happy with was hammered out.
The resulting agreement sets strict deadlines for monitoring progress, reporting on and reviewing national pledges. The aim is to increase transparency and encourage higher ambition in tackling climate change.
The Paris framework will take account of evolving national interests, as well as allowing comparisons between countries. It also recognises that developing countries need support through, for instance, technology transfer and climate financing facilities – providing the “fair premises” for an agreement that has a legally binding goal of emission reduction at a global scale.
Agostini echoes Kingo in seeing an expanding and important role for businesses in delivering the sustainable future that Paris has promised.
He particularly emphasises the role energy companies such as Enel will play, both as energy generators and users. The energy sector in which companies like Enel operate plays a critical role, he explains, because energy-related emissions make up roughly two thirds of global greenhouse gas emissions – and are expected to grow further as emerging economies develop.
“The energy sector contributes the most to climate change but it’s also the core element for achieving new climate targets. On one side the energy sector is asked to satisfy an increasing energy demand, on the other side, to reduce overall emissions by leveraging on its high emissions’ abatement potential.
“Energy companies can help to decarbonise the energy mix by deploying renewables, by upgrading the infrastructure with smarter grids able to handle distributed and intermittent renewable energy generation, and by working with customers to find new ways to satisfy their energy needs using less resources.”
The Paris agreement acknowledges the importance of this technological evolution and provides more long-term certainty for investors, giving a clear indication to businesses that it is worth putting money into new renewable technologies, Agostini says.
“The clear political signal coming from world-wide governments over the importance of decarbonising our economies is bound to provide new confidence to investors, to further drive technological innovation, and provide greater support to the low carbon transition. At Enel, we believe that the Paris outcome closely reflects the huge shift in business practices that companies like ours are already pioneering.
“We are reshaping our own business and are strongly committed to doing so. We have put green energy production at the centre of our industrial plan in anticipation of the massive increase in global renewable energy demand as the world’s nations decarbonise. We will substantially increase our investments in this area. We have already increased our zero-emission power generation capacity to 47% and are on track to meet our commitment to become carbon neutral by 2050.”
Decarbonisation is not only about investments and market signals but also a matter of international cooperation to promote energy transition that is fair and equitable, adds Agostini. Enabling developing countries to power growth while reducing emissions is a central part of the Paris story.
“As a member of the UN’s Global Compact and the UN’s Sustainable Energy for All initiative, energy access is very much in focus for us at Enel. We are committed to ensuring access to affordable, reliable sustainable and modern energy to three million beneficiaries in Africa, Asia and Latin America by 2020, through a series of initiatives that include the development of mini grids.”
Kingo agrees, pointing out that the private sector will play a key role in fostering the international cooperation needed to promote energy transition in every country. New cooperative approaches and financing facilities will help to mobilise private resources for developing countries. “The agreement signed in Paris will provide predictability, unlock capital, drive innovation and reward responsible business,” she says. “It is no longer a question of if we transition to a low carbon economy. Rather, it is a question of how.”
Private sector capital in particular is going to be essential. Enel is already investing heavily in renewable energy and contributing to the transition of several emerging economies, including India, Brazil and South Africa. Agostini is also confident that the integration of renewables with storage systems and smart networks will make renewables more attractive to investors and speed up the decarbonisation of other sectors such as transport.
Important steps forward have been made in Paris this year. However, it would be wrong to see the conference as the end point. The success of Paris will be measured in actions.
“If decarbonisation is to be truly successful,” Agostini says, “policy makers, international organisations together with the private sector and the civil society must work more closely together particularly around infrastructure, managing markets, and developing new technology.”
That means government commitments and support for climate financing facilities and carbon markets, to give the energy sector the confidence to invest in low carbon technologies and energy infrastructures on a global scale.
In the past, he adds, some stakeholders have been sceptical about the role the private sector can play in tackling climate change. At last, though, the importance of non-governmental actors such as companies and cities is being acknowledged, not least in leading green innovation.
“There is more and more realisation that the only way to fight climate change is through a joint global effort that includes the creativeness of markets – and the effectiveness of the private sector in finding new technological solutions and deploying them rapidly,” Agostini says.
Content on this page is paid for and produced to a brief agreed with Enel, sponsor of the energy access hub on the Guardian Global Development Professionals Network.
