The deal establishes rules and guidelines for how governments will track, report on, and verify emissions-cutting efforts.
Delegates from 196 countries and the European Union convened in Katowice, Poland, in December for two weeks of negotiations on creating a common rulebook for putting the Paris Agreement into practice.
The Paris Agreement, adopted in 2015, is the first multilateral agreement on climate change that covers almost all of the world’s greenhouse gas emissions. It provides for a long-term goal of limiting global warming to below 2°C above pre-industrial levels and agrees on a general mechanism to implement this goal. However, many practical (and often technical) questions were left open at the time of drafting. As envisaged by the Paris Agreement, the Conference of the Parties (COP) is responsible for developing implementation guidelines to put the climate change goals into action. The Katowice Climate Change Conference (COP24), which was held from December 2 to 15, agreed on a set of rules and guidelines for how governments will track, report on, and verify emissions-cutting efforts. These rules are designed to ensure that all countries are held to common standards and must be transparent when reporting on their efforts and accomplishments in lowering greenhouse gas emissions.
Key elements of the rulebook adopted at COP24 include:
- Information to facilitate clarity, transparency, and understanding of nationally determined contributions (NDCs)
- Guidance for accounting for NDCs, requiring states to generally account for anthropogenic emissions and removals in accordance with methodologies and common metrics by the Intergovernmental Panel on Climate Change (IPCC)
- Modalities and procedures for the operation and use of public registries in which the parties’ NDCs and reports on adaptation measures will be recorded
- Information to be provided by developed countries when reporting on their contributions to climate finance in developing countries
- A new collective goal for developed countries’ climate finance contributions of US$100 billion per year by 2020
- A framework for technology development and transfer
- Modalities, procedures, and guidelines for a transparency framework for action and support
- Modalities for the parties to take stock of the effectiveness of climate action
Other decisions were postponed because the parties could not agree on common rules, e.g., guidelines on emissions trading. In particular, rules for carbon credits, which may be awarded to countries for their emissions-cutting efforts and their carbon sinks (such as forests), were highly controversial and postponed until next year.
COP24 also did not agree on a general commitment to limit global warming to below 1.5°C above pre-industrial levels, which was urgently recommended by an IPCC special report that was published in October 2018. To the contrary, a group of countries (including the US, Saudi Arabia, and Kuwait) joined forces to prevent the conference from embracing the special report’s findings. While a large group of countries (sometimes referred to as the “High Ambition Coalition”) affirmed their intention to accept the IPCC’s recommendations, it became clear that there currently is no international consensus on the 1.5°C goal. The US — the world’s second-largest greenhouse gas emitter — has stated its intention to withdraw from the Paris Agreement as soon as possible (presumably on November 4, 2020), and the host country of COP24, Poland, has announced its strict commitment to coal mining and coal-fired power generation. Meanwhile, greenhouse gas emissions have reached a record high in 2018. While the EU and the US have managed to reduce their emissions over the past years, India’s and China’s emissions are still rising.
The general view is that COP24 was a success, even though the failure to agree on market mechanisms for emissions trading was received with disappointment. The new transparency rules will enable the public to track and evaluate each country’s progress in reducing emissions. However, transforming the guidelines adopted at the conference into actual policies is a time-consuming process. Industry stakeholders and investors will have to monitor future developments closely in order to identify opportunities as well as impacts on business strategies. Latham & Watkins will continue to report on relevant future developments.