Impact of the UN Climate Agreement on U.S. Business

The UN post-2015 climate agreement will be built on member countries’ Independent Nationally Determined Contributions (INDCs), or binding pledges, in which each country commits to lowering its greenhouse gas emissions by certain amounts over the next several decades. The United States, for example, has pledged to reduce its greenhouse gas emissions by 17 percent by 2020, and by 83 percent in 2050.

The agreement will have far-reaching effects on the world economy. Global markets will be impacted, including emissions trading markets, and trade measures and barriers arising from the diverse national approaches countries are setting out. Intellectual property rights may come under attack by countries that wish to frame IPR as a barrier to the spread of green technologies. Certain technologies may be disqualified or stigmatized, limiting technical options that will be needed to further energy security and advance climate friendly development and economic growth.

Rather than using the agreement to choke off markets, technologies and investments, the global business community sees an opportunity to design international climate cooperation that works with markets to deploy investment and innovation, and to encourage companies in all sectors to integrate climate mitigation into their activities and supply value chains.

Top Areas for Action

green_lightbulbGlobal business is seeking an international climate agreement that recognizes the importance of all markets and avoids barriers on investments that are necessary for a climate-friendly transformation. Open markets provide the best means to spread investment and technology profitably and effectively. Any policy that hampers markets will slow the pace of climate action and make it needlessly expensive for society to achieve its environmental goals.

In order for the private sector to unleash the innovation needed for global action on climate change, the UN climate agreement must provide:

Commitments and Transparency

The post-2020 climate agreement to be signed in Paris must provide a clear framework for international cooperative action, committing all large economies to the measurement, monitoring and reporting of pledged activities to control and reduce greenhouse gas emissions, such as those announced by China and the U.S. recently.

Financing and Investment 

The UN’s Green Climate Fund, designed to finance the international community’s efforts to combat climate change, is on track to reach its initial $10 billion capitalization target. But going from $10 billion to the $100 billion or more needed to advance climate change objectives depends on the mobilization of private investment and innovation.

Business Engagement

With so much riding on economy-wide transformational change that will rely on the private sector, the Paris agreement must move to anchor the role of business in the UN climate negotiations.  Given the wide impact that a UN agreement will have on markets, regulations and national competitiveness, an agreed structure is needed to enable representative and responsible business expertise and support to the process.

Business Priorities on ClimateCOP21Paris2015

Enabling Frameworks for Trade and Investment

  • All markets are important and necessary for a climate-friendly transformation. The UN climate negotiations should not give rise to barriers to trade and investment.
  • Do not overlook the role financial institutions have to play in the UN’s efforts to mobilize funds for climate action.
  • Carbon pricing is an important, but not the only, market-based climate policy tool. Different countries and regions have specific economic and energy circumstances and goals, so any such pricing at the international level would need to reflect those realities.
  • Trade will encourage climate-friendly investments and the broad dissemination of cleaner technologies and energy sources, and Paris outcomes should work in synergy with multilateral trade.

Intellectual Property Rights

  • Intellectual property rights must be preserved to protect investments in green technology. IPR should not be mentioned in any way in the UN climate agreement.
  • Technology and knowhow are deployed through trade and commercial transactions, so the right regulatory frameworks matter.
  • Society needs to consider all solutions to address climate change, therefore all technologies should be taken into account, and none should be disqualified.

Business Input in National Pledges

  • Business must be at the heart of the discussions on country pledges because it has knowledge and experience to offer on practical, cost-effective initiatives for greenhouse gas reductions.
  • Involving business in the development of country pledges will make it easier for society to support and enact the UN’s climate agenda.
  • Business engagement will help provide insight on the worldwide economic and technological implications of climate action.
  • The private sector has experience in measuring, reporting and verification which will be essential to assess countries’ comparative efforts on climate change policy.

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Staff Contact:   Norine Kennedy

VP, Strategic International Engagement, Energy and Environment
Tel: 212.703.5052

Norine Kennedy promotes U.S. business participation in international environmental policy and management initiatives, and works closely with industry, government and NGOs to promote sustainable development and green growth. She also spearheads USCIB’s strategic international engagement initiative, which seeks to advance meaningful business participation and regulatory diplomacy in inter-governmental organizations.
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