A few weeks ago it was reported that the Paris climate summit will take place in just a couple months in which leaders from almost 200 countries will converge on the French capital to fashion a new global warming plan. In order to avert mass starvation and environmental disaster, leaders will be tasked with drafting a new UN agreement.
Meanwhile, U.S. President Donald Trump said in a press conference on Saturday that he would decertify the UN deal reached in 2015 and questioned why we should pay “billions and billions of dollars” to other countries to counteract the effects of the nation’s own policies.
This was just the latest in a long-running series of twists and turns surrounding the agreement. After vowing to withdraw the United States, President Trump delayed his decision in an effort to ease the path for other countries and re-negotiate a better deal. That window closed earlier this month when Mr. Trump once again announced his intent to get out.
Under the 2015 Paris agreement, any country willing to reduce greenhouse gas emissions must embrace a carbon price. Even the U.S. has agreed that the price of carbon must rise to make carbon pollution prices more desirable to investors. However, the issue in recent years has been how to effect that rise.
As evidence of a linkage between energy prices and climate policies in Europe and elsewhere is weak, a 10 percent increase in the price of oil this year is likely to have a huge impact on many countries’ production costs and contribute significantly to the climate “disaster” of the Paris agreement.
Adding to the depth of discord is the irony of the Paris climate deal failing to make any specific reference to the proven fact that human beings are directly causing climate change and that various natural cycles contribute to temperature changes. It is more than ironic. It is downright perverse.
Many aspects of the climate deal have been troublesome in its own right for decades. The target date for agreement was reportedly April 2020. According to the latest available US embassy Twitter posts, the May 2017 meeting of world leaders in Bonn was an “excellent opportunity to confirm plans for next year’s Conference of Parties (COP) in Poland.” Unfortunately, the report on the climate accord signed in Bonn indicated that only nine of the 196 “nations responsible for climate change” participated.
Although the Paris agreement committed nations to try to hold global warming below two degrees Celsius above pre-industrial levels by 2100, there is a “no first use” provision of the Paris agreement, that states, “An increase of more than 1.5°C above pre-industrial temperatures is envisaged,” but lacks clarity on how this would be achieved, how much it would cost, and what would be done with the emissions that are already released.
Instead of a fundamental lack of commitment from US allies to cut emissions, there have been a few episodes of European governments or companies or both trying to bend the Paris agreement to their own will and often in ways that undermine the fundamental treaty of the Paris agreement.
To date, Europe has implemented a number of ETS plans, which is a new tax on emission emissions and which assigns a “polluter-pays” standard, which we found may be violating the agreement by requiring emissions reductions that are far below what is needed to return global warming to 2 degrees Celsius below pre-industrial levels.
There has also been a proposal to dramatically increase the phase-out of highly polluting diesel vehicles in Europe.
The impact of carbon prices has been gradual but it has been significant. Europe is now faced with large gaps between the legally-binding reductions mandated under the Paris agreement and the emission reductions in the actual market.
In total, EU emission reductions mandated by European law are falling short of reductions needed to return global warming to 2 degrees Celsius below pre-industrial levels.
To make matters worse, a European commission had proposed that in addition to the €20/tonne carbon price in a zero carbon economy, a €50/tonne carbon price would be used in a 1.5 degree Celsius climate agreement. This was an example of how Europe favored reducing emissions in a carbon-fee environment.
The end result is an energy trade war that is a product of the Paris agreement and the resulting extreme market distortions and perverse market outcomes.
Bottom line, despite its alleged green intentions, the Paris climate agreement is actually a disaster for business and the planet. Europe’s demand for carbon emissions is low enough to bring down the global carbon price dramatically, which has both