As the United Nations Climate Change Conference of the Parties ("COP") in Glasgow has drawn to a close, with seemingly mixed messages and a somewhat ambiguous conclusion, it is worth reflecting on the overall trajectory of the climate issue, societal expectations, and the accomplishments that — with time — Glasgow is likely to represent.  COP26 highlighted the fragility of the planet, as well as the fragility of the global consensus-based United Nations approach to protecting it.  It highlighted the sweep of global climate-induced challenges and the scale of transformation needed to address them.  With rising temperatures has come a rising global focus on climate and a far greater set of emerging societal expectations for meaningful responses by government and the private sector.  Despite the risk that the global agreement forged in Glasgow is seen by climate activists as all talk and no action — what they referred to as "blah, blah, blah" — I believe that a number of features will endure as important accomplishments.

Representatives from 197 nations, businesses, hundreds of civil society organizations, scientists, educators, media, and climate activists — you name it — all converged on Glasgow to shine a global spotlight on the climate crisis.  The Conference had some 40,000 registered participants.  With just a few thousand of those involved in the negotiations themselves, the rest converged around elevating climate understanding, climate solutions, and climate action.  And still tens of thousands of others converged to protest and lend their voices to the climate debate.期望因Covid-19延迟一年以及美国返回巴黎气候进程而提高但这些期望都集中在依赖实现每一项结果一致性的联合国谈判进程上 。

尽管Covid云下集合和大批与会者所构成挑战,但缔约方会议在某些方面组织得比以往更好。它不再完全是一个国际谈判,而更多地是一个通信机制,以凝聚世界对雄心气候行动需求的看法United Nations进程启动全球领导人峰会,有120位国家元首参加It featured inspiring statements from governmental and societal leaders, such as Sir David Attenborough.  The Summit then flowed into the overall COP, which had a thematic organization for each day of the conference, by which it highlighted actions or the sweep and scale of climate impacts in a more coherent fashion than ever before — spanning from energy, finance, transport, cities and the built environment, science and innovation, nature, gender, youth, and adaptation to and loss and damage from climate change.  And the overall gathering encapsulated a heightened global focus on climate as a defining generational issue in a way that has never happened before.

The World Rallied Around the Urgency Shown By the Evolving Climate Science

The defining element of the Glasgow considerations was the acceptance of a far sharper sense of climate science findings around the scale and urgency of emissions reductions needed to stabilize the earth's climate and prevent catastrophic consequences.  Every aspect of the discussions was judged by the context the new climate science shows.

Leading up to the COP, the UN's authoritative science body, the Intergovernmental Panel on Climate Change ("IPCC"), had issued two reports — one in 2018 focused on the imperative of holding global average temperature rise to 1.5 degrees Centigrade, and one in the Summer of 2021 highlighting the "overwhelming" evidence of climate change.  The reports showed that a rise in global temperature to 2 degrees would lead to catastrophic results in both the frequency and severity of climate-induced events and global changes.  The reports found the science of human-induced impacts "unequivocal" and noted that global temperatures had already risen by 1.1 degrees over pre-industrial levels — demonstrating how limited the remaining carbon budget is —  and that climate adverse effects were widespread, rapid, and intensifying.The report further found that urgent action is needed to cut emissions by 45% by 2030 and achieve net zero emissions by 2050 in order to maintain a sustainable trajectory.

The IPCC findings were characterized by UN Secretary General António Guterres as a "code red for humanity."  They became the touchstone for judging the adequacy of country pledges and private sector net zero commitments.  In addition to the scale of the emissions reductions, the need for an accelerated pace of change also became far clearer and a widely accepted expectation.  The notion that we are now in a "decisive decade" to get on the right emissions trajectory was embraced by the COP process.  Going into the COP, various assessments, such as from the International Energy Agency, showed that existing country emissions reduction commitments would lead to a global temperature rise of 2.8 degrees by the end of the century.  Those pledges covered less than 20 per cent of the gap in emissions reductions needed to be closed by 2030 to keep a 1.5 degree path within reach.  According to a number of projections, the plethora of new commitments announced at the COP would, if delivered in full, lower the rise to somewhere between 1.8 and 1.9 degrees.  The UN noted that the actual nationally determined contributions ("NDCs") submitted by participating nations would result in an unsustainable global temperature rise of 2.4 degrees.

At the end of the day, the overall agreement reached by 197 countries — including new emissions reductions announcements, the move to more regular revision of national commitments, transparency requirements around that process, and the development of rules for the global carbon markets — at bottom kept alive the possibility of limiting global temperature rise to 1.5 degrees by the end of the century and essentially transformed that temperature target into the new object of the UN process.虽然1.8度和1.5度之间的差值似乎不大,但实际上它代表着减轻气候变化最大破坏性影响的实质性差值。 广泛报道的争议涉及是否逐步停用煤炭和化石燃料补贴,发展中国家是否有足够的气候资金,以及是否向受影响国家提供补偿“损耗和损害”抑制了对协议的热度。 尽管如此,正如缔约方会议主席Alok Sharma得出的结论, “我们现在可以可信地说我们已经保住1.5度。But, its pulse is weak and it will only survive if we keep our promises and translate commitments into rapid action."

Paired with these science targets was a far more prominent voice given to the moral underpinnings to the proceedings that focused on the inequity created because the most vulnerable nations to climate impacts are those who have contributed least to the emissions causing such impacts, and a palpable sense of obligation to future generations.  The IPCC report drove home the concept that the COP process is not some future exercise with distant impacts, but that the delegates were poised to address an urgent crisis of the here and now.

The Paris Climate Framework Survived the Absence, and Accommodated the Return, of the United States as an Active Participant

The nations of the world remained committed to the UN Climate Framework Convention's goal of "the stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system" even in the absence of U.S.巴黎气候协议自下而上承诺框架由每个国家根据自身环境确定,体现了应对这一全球挑战的共同全球承诺,没有美国则保持稳定和适切性participation, and the reaffirmation of that framework may be one of Glasgow's greatest accomplishments.

The Paris balance had achieved a "bottom-up" system of emissions reduction commitments that flexibly accommodates the circumstances of individual countries, yet one that does not allow so much flexibility that there is no realistic hope of actually bettering the climate situation by addressing emissions mitigation, adaptation to the already locked-in effects of climate change, and assistance for climate-impacted developing nations.  Paris provided a solution and a directional sense of its goals, even as it admitted that its trajectory may need to grow more stringent over time, informed by meaningful science.  Glasgow refined that process with a commitment by the parties to revisit their NDCs in one year rather than five and with enhanced transparency around individual country goals and their implementation.  This process preserves the possibility that the collective emissions reduction actions are calibrated to avoid the worst climatic impacts.

The durability of the Paris structure was aided, to be sure, by the promise of new technology, which could allow for countries to enhance their emission reduction commitments through cost effective wind, solar, energy efficiency, and electric vehicle technologies — technologies that were still only on the verge in Paris — making a clean energy transformation that is consistent with the Paris climate goals today seem like an attainable objective.

When the United States did return to the negotiating table, it brought with it an ambitious NDC — pledging to achieve a 50-52 percent reduction from 2005 levels in economy-wide net greenhouse gas pollution by 2030, to achieve 100 percent carbon pollution-free electricity by 2035, and net zero emissions no later than 2050.  It also brought a bevy of other actions to instill more confidence in its commitment.This included leadership in assembling a global methane reduction coalition by which more than 100 countries agreed to cut emissions to tackle this highly potent short-acting greenhouse gas by 2030, a "first movers" technology coalition, as well as a series of whole-of-government financial and regulatory initiatives.

While the Biden Administration would have liked to have had its actions backed up by climate legislation, particularly power plant incentives and a range of clean energy tax credits in the reconciliation bill, it made a strong case nonetheless about the comprehensive approach it is taking to prioritizing climate outcomes across the government, whether that be in the financial sector, energy, or transportation.  And the United States demonstrated ambition in its diplomacy, reaching a surprise commitment with China to work collaboratively across a range of areas to keep alive the prospects for achieving 1.5 degrees.  President Biden's address to the COP was complemented by a widely praised speech by former President Obama speaking directly to youth climate activists who had taken to the streets during the COP, as well as by Congressional leadership.

The Global Focus on the Climate Crisis Puts a New Spotlight on the Importance of Business Solutions and the Business Opportunities Around Climate — Subject to Ever Greater and More Intensive Scrutiny

The first week of the COP brought a breathtaking series of collaborative public and private sector announcements to achieve carbon emissions reductions.  In many ways, these commitments seem almost as significant in accomplishing a clean energy transformation as the text of the UN agreement itself.

In addition to the methane pledge, leaders from over 120 countries, representing about 90 percent of the world's forests, pledged to halt and reverse deforestation by 2030.  Hundreds of financial firms, operating through the Glasgow Financial Alliance for Net Zero (GFANZ), committed over $130 trillion of private capital — representing 40 percent of global financial assets — to transforming the economy for net zero.Various combinations of development organizations and private sector capabilities identified a range of opportunities they will pursue for investments in particular developing nation economies, such as in efforts to stem coal use in South Africa.  Nearly 30 national governments, joined by cities, states, major automotive manufacturers, fleet owners, and investors, signed the Glasgow Declaration on Zero-Emission Cars and Vans to end the sale of internal combustion engines by 2035 in leading markets, and by 2040 worldwide. Other transportation commitments touched on heavy duty vehicle electrification, green shipping, and enhancing the deployment of sustainable aviation fuels.

Glasgow in many ways represents a shift in focus from a governmental initiative to a recognition that the scale and pace of the energy and societal transformation and response demanded by climate change necessarily will require swift and credible action by the private sector as well.  As one Chief Executive Officer put it, the concept of a "climate-advantaged" company has taken hold, where sustainability has been transformed from a "nice to have" effort being done on the side, to a vital consideration at the center of business strategy, and where such companies can benefit from a substantial value premium.  As one of the UN's High Level Climate Champions put it: "Net zero has gone from extreme to mainstream."

Of course, with the proliferation of net zero pledges comes an increasing level of skepticism about the credibility of those commitments and the ability to deliver on them in the long run.  In the ramp up to the COP, the IPCC focus on the more stringent and nearer term emissions reductions meant that the Science Based Targets Initiative formally revised its goals for net zero corporate commitments to align with the new 1.5 degree IPCC target and issued a new standard for evaluating company emission reduction offerings.  Along these same lines, the so-called "Under 2 Coalition," representing commitments by some 60 percent of world's economy, is recasting itself as the "Net Zero Coalition."

Likewise, the UN Secretary General, at the Opening to the World Leaders Summit portion of the COP and prompted by developing nation and activist concerns over the credibility of emissions reduction commitments, characterized "a deficit of credibility and a surplus of confusion over emissions reductions and net zero targets, with different meanings and different metrics."  The Secretary General therefore announced that he will "establish a Group of Experts to propose clear standards to measure and analyze net zero commitments from non-state actors."  The Secretary General reiterated his intent to establish a high level group for this purpose at the conclusion of the COP as well.  These will likely complement a range of emerging national financial sector and ESG transparency requirements, including the announcement of the formation of a new International Sustainability Standards Board, along with other Paris Climate Agreement provisions, particularly the new carbon market rules.

Indeed, youth activists expressed particular concern over the pace and credibility of emissions reduction commitments, stating quite simply that "we don't believe you" and urging the business community to "prove them wrong."  This skepticism was heightened by the overall context of the final COP debate around the failure to honor in a timely way climate finance commitments of $100 billion per year to affected developing countries, the absence of a clear loss and damage compensation commitment, and the somewhat relaxed treatment of fossil fuels, particularly the insistence by some nations to preserve an ongoing role for coal.

Just as there will be these formal processes to help refine net zero expectations, there no doubt also will be enhanced activist group scrutiny of company pledges and climate impacts.  Companies will be called to task to demonstrate what they are doing to implement their net zero commitments.This scrutiny is likely to be even more acute given the inability of the formal negotiating process to achieve a level of ambition through country NDCs that will reach the 1.5 degree target or deliver in the short term the climate finance commitments for the developing world and the credibility gap that this outcome may perpetuate.  As France's former Climate Ambassador and the key architect of the Paris Climate Agreement, Laurence Tubiana, put it, "Greenwashing is the new climate denial."  Climate accountability in many ways will be the new currency.

We Can Expect More Focus on Climate Commitments Going Forward

Building on the Paris accord, the agreement follows the pattern of existing domestic environmental laws in recognizing that it may not be a perfect solution, in and of itself, and that the science will continue to evolve.But those frameworks recognize that it is critical to get started on the emissions reduction process even if the target may be revised in the future.  Similar to the Clean Air Act's five year review provision for fundamental health-based pollutants, Glasgow acknowledges the need to calibrate future emissions reductions based on new science more frequently and with greater transparency to assess the success of country measures in meeting the emissions targets, and that there is a fierce urgency of the now being expressed by climate advocates that should inform those evaluations.  While the global community has demonstrated that it can, in essence, walk and chew gum at the same time, the question this time is whether it can do so while running.That will be tested starting next year with submissions to the next COP.

Implementation of the various COP26 pledges will be a critical piece of the equation.  The test will continue to be how to turn commitments into action for this decade.  As the UN Secretary General indicated, "COP27 begins today."  In some ways, Glasgow represents a sharper focus on science-aligned plans — by governments and business and in the face of a new global climate consciousness — to maintain climate stability, and the focus will now shift to the implementation and refinement of those commitments.  For companies, growing global climate consciousness and risks and opportunities posed by the energy transformation present a new post-Glasgow dynamic necessitating climate engagement, but requiring a credible approach in doing so.

The Biden Administration has promulgated interim figures for the social cost of carbon (SCC), which will support key policy efforts in the next year until a final, revised figure can be established.

As we noted in a prior post, the SCC is a concept, developed by the Obama Administration's Interagency Working Group, that seeks to quantify the economic harm from climate and other impacts of greenhouse gas emissions by expressing a dollar value cost to society from a one metric ton increase in CO2 (or methane or nitrous oxide) emissions.  This is a complex task, as it seeks to quantify future impacts across human civilization, such as human mortality, depressed agricultural production, increased risk of conflict, property damage from extreme weather events, and the value of ecosystem services.  Although the Trump Administration continued to apply an SCC in agency decisionmaking, it relied on a revised methodology, which estimated the SCC to be roughly one-seventh of the cost estimated by the Working Group.

Biden's interim SCC figures re-establish the Obama Working Group estimates, adjusting them only for inflation, resulting in an estimated cost per metric ton for current year emissions using a 3 percent discount rate of $51 for CO2, $1,500 for methane, and $18,000 for nitrous oxide.  The same policy decisions undergirding the Working Group SCC estimates, most notably the choice to take into account global, not just domestic, damages, remain in place.  Additionally, while the Trump Administration used two discount rates recommended by OMB's Circular A-4 – 3 and 7 percent – Biden's interim SCC figures revert to use of three discount rates – 2.5, 3 and 5 percent.

The reconvened Working Group also observes that new evidence on the consumption discount rate (based on the average rate of return on inflation-adjusted 10-year Treasury Securities) supports that the appropriate discount rate is notably lower than 3 percent.  The Interagency Working Group also observes that consideration of the uncertainty and ethics associated with discounting intergenerational impacts warrant consideration of discount rates below 3 percent, including 2 percent and lower.  As an interim recommendation, the Interagency Working Group urges agencies to consider conducting additional sensitivity analyses using discount rates below 2.5 percent.

An accompanying White House blog post signed by Heather Boushey of the Council of Economic Advisers (on behalf of the Interagency Working Group co-chairs) notes that "our understanding of the appropriate approach to discounting[] has advanced rapidly," and that an upcoming Federal Register notice will invite comment on how to improve the government's approach.  This is consistent with another of Biden's day one orders which directed the Director of OMB to "identify ways to modernize and improve" the regulatory review process.

The Interagency Working Group will be working to provide a more comprehensive update by January 2022.  These new estimates could look quite different, as the current interim ones do not incorporate the recommendations of a 2017 report by the National Academy of Sciences.

As the Working Group progresses its efforts, expect future SCC estimates to take into account equity considerations, consistent with the President's broader focus on environmental justice.  As noted in a recent panel discussion, one of the emerging frontiers in climate econometrics is demonstrating the disproportionate impacts that climate has on disadvantaged areas.  Biden's day one executive order directed the Working Group to provide recommendations to revise SCC methodologies to take into account "environmental justice" and weigh these impacts to better steer federal decisionmaking!博客文章确认此焦点并承诺工作组与公众和多方利益攸关方接触,以开发“透明强势科学估计值”。