“Legally binding enforcement system … will reassure investors”

john kerry

U.S. Secretary of State John Kerry, who is in Paris this week for the COP21 negotiations, is making the Obama Administration’s case for the new Paris Agreement (or Paris Outcome, as it was renamed last week at China’s suggestion). “A legally binding enforcement system will reassure investors, who have to carry the low-carbon economy beyond what governments can do.” With one phrase, Kerry switched the focus from the U.S. government being a global climate leader or good international neighbor to more simply enabling capitalism to address climate change.

“It’s not that we’re going to leave here knowing that everything we do is going to hit the 2 degree mark,” Kerry is quoted as saying. “What we’re doing is sending the marketplace an extraordinary signal – that those 186 countries are really committed – and that helps the private sector to move capital into that, knowing there’s a future that is committed to this sustainable path.”

While there are currently 196 Parties to the UN Framework Convention on Climate Change (195 countries plus the EU as a regional party), Kerry was referring to the countries who filed their intended nationally determined contributions or INDCs before coming to Paris to negotiate a new climate change agreement.  Most of these countries are developing countries that, under the Kyoto Protocol, do not have hard GHG mitigation obligations.  Under the Paris Outcome, they would.  In return, developed countries signing on to this new agreement would help them fulfil these commitments through direct financial support.  While all developed countries who are party to the UNFCCC acknowledge that industrialization has largely caused atmospheric warming, and that their relative wealth enables them to finance mitigation and adaptation in the developing world, the form of this climate finance is currently one of three major sticking points in the last 36 hours of COP21.

Hard at work, waiting.

Hard at work, waiting.

As we blogged earlier, the OECD recently reported successful progress toward the $100 billion per year starting in 2020 promised by developed countries in COP15 in Copenhagen.  As of 2014, OECD calculates that some $62 billion per year has been pledged.  While developing countries look at this number critically, it is the source of these funds that rankles even more.  These UNFCCC parties who expect public financing – donations from governments – to make up this $100 billion.  Thus Kerry’s quote today speaks volumes about the US approach to climate finance – and the current “divergence” (in negotiation speak) that has the 20,000 people here tonight at COP21 waiting for the public side of the negotiations to resume.

Secretary Kerry is no stranger to climate change negotiations.  He understands well how his comments resonate in this international arena, as well as within the DC Beltway.

In a White House press release today, he reacted this way to a reporter’s question on the importance of a deal in Paris.

“I was in Rio. I’ve been in successive COPs, including Kyoto, managed Kyoto on the floor of the Senate in a senate that would do nothing unless China were deeply involved, which is one of the reasons why I went to China two years ago to try to get China involved. And I think that we wouldn’t have 186 countries with INDCs if China hadn’t joined in, so I think that’s been a very important synergy.

But I know it’s – people, you have to sort of try to find the right level of concern to express, because if you go too far people think you’re over the top. And a lot of what is happening can lend itself to conclusions that people will judge to be over the top, but they’re real. They’re absolutely real. Science is science. I keep trying to say this to people. I mean, this is not based on a supposition, what we’re doing. It’s not based on a theory. It’s not an ideology. It’s based on years and years of scientific analysis and study. 

So it’s important because we could have massive human dislocation on the planet. [T]his is a matter of how we organize ourselves as human beings on the face of this planet. And it’s – but what we need to grab on to, and many of you here, particularly those in business already have, is this is not – this doesn’t have to be disruptive in a negative way with respect to economies. This is the most extraordinary market opportunity in the history of humankind. The market of the 1990s which created the greatest wealth our nation has seen since the days of no tax and the Rockefellers, Carnegies, et cetera, Mellons, we created the greatest wealth in the 1990s in America – and we shared it, by the way, with everybody. Every quintile of American society went up.

Venezuela's #2 prepares for tonight's meeting.

Venezuela’s #2 prepares for tonight’s meeting.

 But this is a bigger market. That was a $1 trillion market with 1 billion users. This is already a 4 to 5 billion user market and valued at multiple trillions of dollars, and we’re going to spend at least 17 trillion in the next ten years on new energy projects, et cetera. So that’s why AT&T and Microsoft and Apple and Google and Walmart and GE and a whole bunch of companies have signed on to the President’s business initiative. And they’re already making pledges to make sure that their products are produced without a huge chain of deforestation, with a virtuous fuel cycle, with sustainable practices and outcomes. 

And that’s going to be the difference that young people growing up now, all of whom are in touch with each other 24/7 around the world, are not going to stand for the hypocrisy and they’re not going to stand for the delay. They’re going to demand products and goods and options that are sustainable, and we owe it to them. That’s why this is what is so important in Paris. 

Media waits too.

Media waits too.

Now, a final comment. I don’t expect Paris and I never expected Paris, given the Kyoto experience, to come out with a firm, we’re going to hit 2 degrees and everybody’s going to live by the same standard. That didn’t work. It’s not going to work. The virtue of this is that every country is designing their own plan, and every country is coming to the table with what it can do, not what it’s being told to do. And that differential is going to create a huge momentum.

And I believe the reason it is so singularly important is that that market that I just talked about, it’s going to explode if we get the right market signal coming out of Paris. And I’ve never looked to the government to be the savior here. 

The government isn’t going to make this decision. You are. Businesses are. This is going to be a business-driven transformation that will take place combined with just consumer demand and voter demand ultimately. And you’re seeing it in China. I mean, China just shut down its schools for two days and its transportation and said no open fire burning. And you see on the news today the pictures of what Beijing looks like. They have to do it. And they’re concerned that if they don’t do it, it could be destabilizing to the party and to the party’s interests and control of the country. So I think you’re going to see a mass movement here, particularly if Paris comes out with the judgment we hope.