The international negotiation on climate change is open again. Overcome the ambiguities of the Paris agreement. Last call for the italian chairmanship of G7

Written by Corrado Clini, former Minister for the Environment of Italy



The G7 Energy Ministers meeting last month showed that the US is still very critical of the Paris Agreement. As things stand, it seems highly unlikely that a common ground on climate change can be reached.

This should come as no surprise – not so much because of Trump’s words before and after the election but rather because the American Senate had already shot down the Paris Agreement in 2015. The rejection stemmed from the fact that no thorough investigation had been made into the economic and geopolitical impact of the Agreement on US economy, particularly in terms of energy security and competitiveness with the emerging economies (China and India above all).

It is a well-known fact that if Obama had brought it before the Senate, the Paris Agreement would not have been ratified. For more or less the same reasons, the US opted out of the Kyoto Protocol in 2000 after the Senate had unanimously rejected its ratification under President Clinton in 1999.

The controversy and witticisms levelled at Trump’s position on climate change blatantly fail to understand America’s arguments and conveniently dodge the fundamental issues left hanging by the Paris Agreement.

While it is true that (former) advisors such as Stephen Bannon still consider climate change a political trap set up by China, America’s great energy companies have recently advocated an American involvement in climate change negotiations, calling for strategies that may realistically lead to a progressive and sustainable cut in fossil fuel consumption without harming the competitiveness of the US economy, or causing distortions that would favour the emerging economies (China and India above all).

Interestingly, this position is also shared by former ExxonMobil CEO and current US Secretary of State Rex Tillerson.

The key question let unanswered by the Paris Agreement is very simple: is there a way to cut back on fossil fuels while ensuring that the increased energy demands from emerging and developing economies do not penalise the developed economies?

This is a topical issue not just in America but also in Europe, Canada, Japan and Australia.
 One proposal coming from the American energy industry is the introduction of a global carbon tax. This would have a direct and non-distorting effect on the selection of sources and on the efficiency of energy end-usage; furthermore, it could “stimulate investments in the right lowcarbon technologies”.

The other bone of contention is the Paris Agreement’s failure to appropriately address three major issues :

Is a global agreement for the reduction of fossil fuels compatible with: 

•  … India’s dramatic growth, which will be driven in the next 25 years by a four-fold increase in the use of coal despite the growing role of renewables and nuclear power?

•  … the ongoing programmes in Africa (from Mozambique to the Ivory Coast, from Angola to Sudan), in South-East Asia (Malaysia and Indonesia), in Brazil and in countries coming out of war or embargo (Iraq and Iran) for the full exploitation of new oil and gas deposits? 

•  … the medium- and long-term strategies of oil and gas countries such as Saudi Arabia, Russia, UAE, Azerbaijan, Algeria, Qatar, Nigeria and Venezuela? 

FINALLY, CHINA 

At the World Economic Forum in Davos last January, President XI pointed out that despite having a per capita GDP five times lower than America and 3.5 times lower than Germany, in 2016 China invested twice as much as the US in clean technologies ($110 billion versus $56 billion) and reached a 4% decarbonisation rate, doubling that of the G7 countries.

In addition, China promoted – and is currently funding – the Global Energy Interconnection, the first concrete technological and industrial project aimed at decarbonising the global economy.

But can China realistically drive the world economy while paying the highest per capita price for decarbonisation? 


A COMPLEX PUZZLE

It is a complex puzzle made, even more intricate by the symmetrical arguments of the involved parties.
Taking sides with or against the Paris Agreement without first entering into a constructive negotiation will produce the same effect as the struggle between Europe and America at the turn of the millennium, when the Kyoto Protocol was on the table: any policies and measures to reduce emissions will slow to a crawl and eventually stagnate.

Instead, the issues that have so far been left behind must become the groundwork for any future negotiations.


THE LAST CALL FOR ITALY

The Italian G7 presidency has the opportunity to set up a platform for dialogue where the US and the other partners can work to find a common ground and strive to solve the issues the Paris Agreement failed to address in spite of their criticality for the future of the world’s climate. 

The platform should be open at least to Russia, China, India, the OPEC and international financial institutions, including the Asian Infrastructure Investment Bank.

As uncomfortable as they may be, these items must be on the agenda if CO2 emissions are to be cut in order to save the planet:

1. Introducing a clearly established global carbon tax as a first step to avoid distortions and to ensure that the benefits or decarbonisation are enjoyed in fair measure by all countries.

2. Establishing global financial rules and mechanisms to direct and reward investments for worldwide spreading of low-carbon technologies, taking into account the estimated required investments by IEA over the next 25 years : $45,000 billion, a far cry from the paltry $100 billion envisaged by the Green Climate Fund.

3. Setting compensatory measures to support the transition to a decarbonised economy in oil and gas dependent countries.