COP 21 Agreement
Lapo Pistelli Vice-President ENI.
The agreement reached in Paris last December by more than 10.000 delegates representing 195 countries bears historic importance. For the first time, such a number of nations agreed on the fundamental need of limiting global temperature to 2 °C above pre-industrial levels by the end of the century, going as far as to “pursue efforts” to keep them below 1,5°. Moreover, they agreed on the concept that rich countries should help poor ones to meet their de-carbonization goals.
On a political and diplomatic standpoint, this is a brilliant success – even brighter as it comes at a time of increasing international uncertainty and scarce cooperation among countries. In particular, we are talking about a great achievement of the French diplomacy and his chief, Laurent Fabius, who chaired negotiations few weeks after the Paris terrorist attacks, and met their goals thanks to a dynamic, global and creative approach.
Looking backwards, we understand further the importance of the Paris achievement. Previous climate deals – the last of which in Copenhagen, six years ago – inevitably failed in uniting such a collection of world powers, falling short of engaging them with concrete vows on how they will act to curb their polluting emissions. As the world order shift towards an increasing multipolar fashion, China, India and Russia joined a resolute Obama-led US and the EU to take on climate change, and this was no easy prediction at all.
Besides this realization, however, it might be useful to consider few elements that could harm the climate deal while it unfolds in practice.
Primarily, besides an amusing yet powerless “peer review” mechanism, there is no clear international enforcement structure to make countries effectively match their original pledge over the years to come. Most importantly, all pledges remain “nationally determinate” and therefore weak, as they depend upon the willingness of each government to abide by its promises. In many countries, it is easy to imagine how parochial interests and the desire of winning political support at home could easily alter the initial commitment.
Secondly, and crucially, the sum of all pledges might not be enough to hinder global warming under the 2° threshold. Many analyst argue that even where we stand now there is a high risk of hitting a 3,5° increase between 2020 and 2030. Under current post-agreement conditions, the UN body organizing the summit forecasts a fall by 56bn tonnes of CO2 by 2030: to prevent any increase above 2 degrees they should be 100 times higher.
To reach our two-degrees aspiration we shall strengthen our response, establishing a clear link between goals and policies that apply globally, drive meaningful on-the ground results and set firm deadlines.
Renewable energies are too expensive and currently not capable of replacing hydrocarbons in the international market. Carbon-based fuels are and will remain a reality in the upcoming years, as well as in the longer run. Most authoritative studies on the evolving energy mix acknowledge that even in a 2°C scenario, fossil fuels will still account for more than two thirds of our energy needs in 2030. By then, wind and solar energies combined will have reached a mere 6% worldwide.
Right now the feasible priority is to foster a gradual, economically sustainable transition from high-carbon energy forms like coal to the cleanest possible alternatives; and this must be done without hobbling industries or unfairly penalizing consumers by creating price spikes in fuel. Natural gas is not only more environmental than other carbon-based fuels, but it is also ultimately more economical. By promoting natural gas over other carbon-based fuels, we are more likely to avoid the kinds of unintended consequences that have afflicted some European countries.
The willingness coming out of the COP21 to promote de-carbonization, and to do so on a global and coordinated scale, is definitely a step in the right direction, as it shows the comparison of Germany and Great Britain’s recent plans to cut-emissions. While German lawmakers championed highly subsidized renewables with no limits on coal consumption, British ones backed renewables while actively promoting a switch from coal to gas via new outcome-oriented Energy Performance Standards, without rewarding any specific fuel choice. In Germany, cheap US coal, driven out of its own market by the domestic shale gas boom, ultimately undercut cleaner-burning gas. As an outcome, Great Britain reduced emissions four times more than Germany.
To reduce carbon consumption in a cost-efficient manner, we need policies that use natural gas to fully price in the cost of carbon, thereby harnessing the market in driving smart energy choices.
Such a model creates a win-win solution for both policy-makers and energy companies and providers: natural gas has the potential to satisfy a substantial portion of the world’s energy needs over the coming decades, while the companies’ shareholders will thank them for prioritizing long-term growth and value-creation over short-term quarterly profits.
Under these premises energy companies could gradually become standard-bearer of climate change themselves, by promoting their own comprehensive emissions-cutting policies and procedures, which should span both strategic and operational decision-making. These measures could include a self-imposed carbon price that feeds into the evaluation of capital investment proposals and rigorous environmental management systems focused above-all on energy-efficiency. ENI has already embarked on this endeavor, by cutting emissions by 27% over the last 4 years, setting the goal of reaching flaring zero within 2030 and limiting our presence in the Artic to relatively low-risk ice-free areas.
Moreover, thanks to their very structure and composition, energy companies are better placed to play a major role in boosting research and in engaging lawmakers and regulators to promote the sustainable transformation of our industry. For instance, ENI is currently part of Oil & Gas Climate Initiative, a privately funded group that is setting the stage for the establishment of effective, binding international standards that are applied consistently across advanced and emerging countries alike. These and similar actions are essential for any program hoping to overcome the fragmentation that characterizes the current policy landscape. They would also reduce unfair competitive distortions between countries.
Paris is showing us the way, but the climate agreement is just the end of the beginning. Governments are drawing up the groundwork in which all players have to cooperate to achieve a sustainable and more equitable model of energy consumption. To tackle the issue of global warming successfully, we need to act with courage and shared commitment, with readiness to take on factionalism and vested interests. This is no easy task, and work will be long and hard. Nevertheless, we must hold in mind that there is no way back: we owe future generations a better and cleaner future.