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Trust, Transparency, Tracking: The Paris Rulebook deep-dive

Golf can be a confusing and frustrating game. But its handicap system ensures the sport is fair and equitable for players of all abilities, and it’s a useful way of understanding how the Paris rulebook could work.

A handicap is a calculation of how good a golf player is. It equals the number of free shots per round you get. Good players have a low handicap. Weaker players have a high handicap. As you get better, your handicap gets lower.

All players compete under the international rules of golf. These ‘top-down’ rules dictate the size of balls, equipment specifications and the nature of golf courses. The ‘bottom-up’ handicaps mark out players individual circumstances. Golf is a game built on trust, transparency and tracking. Players complete their own scorecard, then checked by their fellow competitors.

Now imagine the countries of the world as individual players. The US, Europe and other rich nations will have low handicaps. Emerging economies will be slightly higher - but not much - given their level of development. Poorer small island states and African nations will have high handicaps.

They’re all playing the same course. They need to know the size of balls they can use, the types of clubs. They all have a map and a scorecard. Over time their handicaps will improve - they may even benefit from better equipment and training in time.

The goal for all is the same. 18 holes in a low score… or net zero emissions by 2050!

Rulebook background

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Transparency and accountability rules are the backbone of global action to combat climate change under the UN’s climate body – and the essence of a rules based regime. The Paris Agreement built on existing rules and also made them relevant to new economic realities.

The old system agreed just after Copenhagen was called MRV – Measurement, Reporting and Verification. It was based on the logic of one set of rules for the global North (known as Annex I) and another for the global South (known as Non-Annex I). This created a zero-sum approach: developing countries were cautious about improving their transparency and accountability for fear of being held accountable to the same standards as richer nations, but without the requisite experience or resources.

But Paris marked a turning point. Developing countries began to understand that more robust rules would help them entice low carbon investors. Yet because developing countries have relatively limited capacity and experience in upholding tougher rules, many are anxious that they might not be able to get it right straight away and could struggle.

Article 4.4 of the Paris Agreement states “Developing country Parties should continue enhancing their mitigation efforts, and are encouraged to move over time towards economy-wide emission reduction or limitation targets in the light of different national circumstances.”

 

COP Decision 4.4 of the Paris Agreement states “Developed country Parties should continue taking the lead by undertaking economy wide absolute emission reduction targets. Developing country Parties should continue enhancing their mitigation efforts, and are encouraged to move over time towards economy-wide emission reduction or limitation targets in the light of different national circumstances.”

Add onto this some tricky political dynamics. The US wants to see China - considered a developing country in the UN climate talks - abide by the same rules as it does. China is not desperate to kowtow to the US - which announced its withdrawal from the Paris Agreement in 2017 - nor keen to break out of its strong held diplomatic alliances with developing countries. And it is not keen on a unified system where all are treated equally. Meanwhile, many countries and observers pushing for an ambitious outcome are concerned that a potential bilateral agreement between China and US could be to the detriment of the rigour of the rules.

What’s the solution?

The solution that needs to be found could allow the US to walk away from COP stating that China is no longer using a different set of rules. It could allow China to walk away understanding it has more leeway than the US in applying the rulebook, and those keen on securing ambition, knowing all countries are moving towards a common rulebook and not allowed to roll back.

If all goes to plan, the political decisions about moving beyond a binary division of the rulebook at COP24 will be essential to unlocking some of the more technical discussions on the rulebook to happen over the coming months.

What we won’t see is a tough compliance system that fines or punitive action; very few international agreements have this. Instead, through transparency and verification, countries will be held accountable through international pressure and spotlights.

-The rules will offer more detail on when and how countries communicate their climate plans, also known as Nationally Determined Contributions (NDCs).

-They will outline how they should monitor and report on progress, the metrics they should use, how they should account for carbon sinks or greenhouse gases aside from CO2.

-They provide an umbrella under which countries will move at varying speeds - not all countries will have to comply with all rules from the start.

Keen for a deep dive? Here are 8 elements to the rules business groups want to see (not all possible in Katowice)

1 - They will set the parameters of what will become a regular global stocktake of where the world is… starting in 2023.

Governments are set to agree how the Global Stocktake (GST) will work. Expect details on how temperature rises, adaptation records, finance donations / needs and specific sectoral analysis should be presented. It’s important because… it should send a clear signal on where we’re on and off track – informing how governments and business can recalibrate their attention, actions and investments

2 - They should apply to all countries, but in a process that may evolve over time.

Nearly 90 countries already get special treatment under the Paris Agreement as least developed

countries or small island developing states

Having everyone under the same umbrella over time is important as developing countries account for over 60% of emissions today, and that percentage will grow every year.

China alone accounts for some 29% of carbon dioxide emissions from energy.

3 - They should outline how often countries must update their Nationally Determined Contributions… otherwise known as climate plans.

Countries will likely agree how frequently to communicate their NDCs. Currently some have plans stretching to 2025 (USA/Brazil) while others chose 2030 (EU, Canada, China). Business leaders are asking for five year updates, which they say will “better reflect evolving market and technological trends.”

4 - They should ensure these plans are accessible to assess and compare. Evolving from a binary set of rules, to a more complex single set means there needs to be consistency and comparability. If they’re not consistent or comparable it will be hard for investors to make informed decisions and the campaigners to hold governments accountable.

Criteria they should include:

  • Base years, target years, greenhouse gases included, geographies covered, sectors covered
  • Percentage of national emissions covered by the target
  • Levels to which a country plans to use carbon markets to meet its obligations
  • Extent to which ‘carbon sinks’ are accounted for, and how they are accounted for
  • Whether national ‘business as usual’ projections are subject to frequent review
  • How plans will be implemented, policies, legislation, regulation and financial measures

These types of information can be factored into business strategies. What’s vital is that NDCs offer businesses clarity on the future regulatory landscape.

5 - They should ensure the metrics used make sense. So 2+2 doesn’t equal 1.

Countries should supply complete and accurate GHG inventories to ensure there is global trust in how efforts to tackle climate change are progressing. They should be using the latest methods and common metrics as used by the IPCC covering all GHGs and short lived climate pollutants such as methane. That means a single set of guidelines covering not only how emissions are reported but also finance flows, adaptation efforts and details of how these submissions will be reviewed.

Business leaders are asking for a “minimum set of common indicators” for all countries; those with more capacity can offer more detailed submissions.

6 - The rules will help developing countries plan for the future by offering clarity and detail on the financial and technical support they will receive.

You’ll hear people talk about Articles 9.5 and 9.7 of the Paris Agreement.

Better forecasting for funding mobilization will likely help poorer countries plan for the future.

Still, it’s worth knowing that this issue risks being a spoiler: developing countries may say they cannot commit to more transparency over their emissions and climate plans unless they receive more predictable finance. Expect a bargain/deal with other rulebook-related elements.

In short…

  • Governments can rarely force other sovereign nations to change – there is no global government, only diplomacy, incentives and cooperation work
  • Multilateralism/Rules based regime is set up to help government’s trust each other better and not game the system, but create the rules of the game
  • Transparency, comparability are essential for governments to trust each other and important for business to make informed investment choices
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