Worldwide: Paris Agreement On Climate Change Boosts Clean Energy Innovation And Finance

On December 12, 2015, 195 countries came together in Paris to adopt a landmark climate change deal. The Paris Agreement creates, for the first time, a long-term global framework that commits nearly every country to reducing greenhouse gas emissions to address climate change. The Agreement sets a concrete goal of limiting temperature increases to "well below" 2 degrees Celsius above pre-industrial levels, and pursuing efforts to meet a more ambitious goal of 1.5 degrees Celsius. Under the Agreement, all countries must establish nationally determined climate targets and report on their progress using a rigorous, standardized process of review.

NATIONALLY DETERMINED CONTRIBUTIONS, INTERNATIONAL ACCOUNTABILITY

The cornerstone of the Agreement is the requirement that each country set a nonbinding (i.e., intended) target for itself to cut its carbon emissions. Although there is no penalty for failing to meet a target, the Agreement includes a robust transparency system that enables countries to hold each other accountable for meeting their targets. This transparency system requires countries to report on national inventories of emissions by source on a uniform basis and on progress made in implementing and achieving the targets put forward (with some flexibility for developing countries). As a further check, the Agreement establishes a comprehensive technical expert–review process that analyzes whether their reporting is in line with adopted standards.

FUTURE TARGETS AND CHECK-INS (A NAME AND SHAME MECHANISM)

To ensure that progress continues, every five years (starting in 2020) all countries are required to create new, more stringent reduction targets. (Certain countries initially sought a less frequent 10-year review cycle, but the more rigorous five-year cycle was ultimately chosen). These targets will be submitted nine to 12 months before they are finalized to provide time for other countries and the public to comment on the proposed targets, increasing pressure on countries to conform their actions to their national targets and the goals set forth in the Agreement. We expect this component of the Agreement, in particular, will result in greater demand for clean technologies as these new and more ambitious greenhouse gas targets come into play.

FINANCING (VARYING LEVELS OF COMMITMENT)

To hold all countries accountable to this Agreement, and to avoid the shortcoming of the Kyoto Protocol in 1997 (in which only developed nations were required to reduce emissions), both developed and developing countries alike are required to set national climate targets. To encourage developing nations to implement a low–carbon growth path, the Agreement requires developed countries to mobilize climate finance from a wide variety of sources. While the text of the Agreement does not set a specific amount that must be contributed, the preamble states a goal of at least $100 billion a year in contributions by 2020 and, among other things, adds new commitments to provide at least the same level of finance through 2025.

IMPLICATIONS FOR NATIONAL CLIMATE POLICY

Under the Agreement, carbon regulation, as a legal matter, is dependent on each country's laws, regulation, and policies. The United States has pledged to cut its carbon emissions by 26 – 28 percent from 2005 levels by 2030. Achieving this target depends, in part, on whether the Clean Power Plan survives legal challenges and is successfully implemented. The Clean Power Plan requires existing power plants to cut their carbon emissions by 32 percent from 2005 levels by 2030. As the emission reduction goals by the United States ramp up at future five-year intervals, national climate policy will have to be adjusted accordingly. However, the Agreement intentionally does not assign legal requirements for countries to cut emissions at specific levels, as this type of deal would have required ratification by the U.S. Senate. Such a strategy suggests the implementation challenges the United States may face going forward as the necessary actions for meeting the target goals are determined. While certain policies—such as the Clean Power Plan - can be implemented by executive action, Congressional action will likely be important to meet the increasingly ambitious targets in the future.

MARKET-BASED MECHANISMS AND INNOVATION

Or perhaps market-based mechanisms and technological innovation will do the work instead? Article 6 of the Agreement recognizes that emissions trading programs have played a role in achieving emission reduction targets. The Agreement does not mandate the use of cap and trade programs, as insufficient preparatory work was done to bake cap and trade in the Agreement. Nonetheless, the Agreement contemplates that such programs will be used, and that the parties will develop international guidance for those programs.

But it is likely that the most substantial work will be done by businesses and investors in response to emissions reductions embodied in the national commitments. At the same time, the Agreement's greenhouse gas mitigation targets also help create the need for better, bigger markets for clean technologies. The Agreement states that accelerating, encouraging, and enabling innovation is critical for an effective response to climate change, and establishes a technology framework to provide guidance for the existing technology mechanism. Increased demand provides an opportunity for businesses to be first to market in this wider-scale deployment of renewables and other low carbon energy technology, providing an economic incentive to invest in clean energy technologies. We expect businesses and investors to drive renewables development and energy technology innovation, enhanced utilization of natural gas and nuclear generation, and renewed focus on carbon sequestration in forests and other carbon "sinks" and carbon-capture technology.

CONCLUSION

The Paris Agreement was designed to establish a global commitment to reduce greenhouse gas emissions to incentivize investment and innovation in cleaner, low-carbon technologies. The Agreement very clearly depends on commercialization of such technologies, responding to the pressures exerted by national emission reduction commitments, to achieve its goals. In this sense, the Agreement is anything but a repudiation of "the market"; rather, it relies on regulatory mandates to help make the market, from which the low-carbon economy will grow. Traditional and renewable energy developers, technology companies, and investors the world over will be impacted by the Agreement, making it important to stay informed about developments in international, national and sub-national law and policy that will follow from its implementation.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Christopher J. Carr
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions