Thursday 27 May 2021

Expert updates

New climate ambitions

By CPR AM's Research and Strategy team

The coming to power of Joe Biden involved a 180° turn in US environmental policy. This was notably materialized by the organization of a virtual climate summit attended by the leaders of the major powers, including China, at which several announcements were made or repeated. To find your way around, we take stock of the climate objectives of the major powers and the strategies associated with them. We focus in particular on the possible implementation of a carbon tax at borders.

CLIMATE SUMMIT ANNOUNCEMENTS

As soon as he took office, Joe Biden signed an executive order that marked the return of the United States to the Paris Agreement, which his predecessor had decided to leave. In addition to his domestic projects, Biden has worked to restore US leadership in the fight against climate change, described as the "existential crisis of our time."

This notably led to the organization of the Leaders Summit on Climate, on April 22 & 23, in which 40 heads of state participated. In addition to the presence of Xi Jinping and Vladimir Putin with whom the United States maintains complex relations, it is also necessary to note the presence of leaders of countries like India, Brazil, Turkey or Australia who delayed until now to formally commit to the fight against global warming. This joint participation can be seen as an encouraging sign of an awareness of the need to accelerate in this area.

At this summit, most heads of state displayed strong climate ambitions, by announcing new targets for reducing greenhouse gas (GHG) emissions, or by reaffirming the announcements made few months ago. It should be remembered that each country signatory of the Paris Agreement must publish its 5-year roadmap (the National Defined Contribution, NDC) before COP 26, which will take place in early November. Table 1 summarises the main announcements and recalls the quantified targets for the G20 countries. The difficulty here lies in the fact that each country or area presents its climate objectives in its own way: the reference emission levels are different, the types of emissions also (sometimes refers to CO2, sometimes to all GHGs, sometimes to certain GHGs excluding C02), the objectives are sometimes not quantified...

The main announcement of the summit was that the United States aims to reduce GHG emissions by 50 to 52% by 2030 compared to 2005 levels, which is significantly more ambitious than the target displayed under the Obama presidency (26-28% reduction by 2025 compared to 2005 levels).

Carbon Action Tracker indicates that 131 countries covering 73% of GHG emissions have adopted or are working towards adopting a carbon neutral target. There is indeed an urgent need to act: the IEA (International Energy Agency) recently indicated that if the level of CO2 emissions linked to energy at the global level had indeed fallen by 5.8% in 2020 compared to 2019, it had already returned to its pre-crisis levels by the end of 2020. The IEA also indicated in its Global Energy Report 2021 that the demand for fossil fuels will again increase significantly in 2021. For its director Fatih Birol, “it is a terrible warning that the economic recovery following the crisis Covid is currently anything but climate sustainable ... and unless governments around the world rush to cut emissions, the situation will likely be much worse in 2022. "

Finally, it is important to remember that the Paris agreement provided for peak emissions to be reached later for developing countries because emission reductions had to be undertaken on the basis of equity and with the objective of sustainable development. As such, they should not undermine efforts to eradicate poverty, which is a key development priority for many developing countries.

WHAT STRATEGY FOR THE BIGGEST GHG EMITTERS?

For the United States, the adoption of the infrastructure plan will be key

With the Biden presidency, the United States is making a 180° turn in terms of climate policies, with the goal of reducing GHG emissions by 50 to 52% by 2030 from 2005 levels and achieving carbon neutrality by 2050. This contrasts with the previous administration but success will largely depend on the adoption or not of the American Jobs Plan (AJP) of $ 2250 billion over 8 years (which should be financed in whole or in part by tax increases on companies).

One of the preferred means of reducing GHG emissions relates to the production of electricity (the sector that emits the most in the United States), which the Biden administration would like to see completely carbon-free by 2035. AJP plans to extend tax credits for the production of renewable electricity by 10 years and to force suppliers to produce “clean” electricity by 2035. Thus, the plan provides for $ 100 billion of investment in clean energy and for the electrical network. Another 35 billion is planned for funding research on new technologies to fight climate change in areas such as carbon capture, hydrogen, biofuel, rare earths, nuclear power, etc.

Then, the Biden administration aims to generalize the electric car in the United States, as the transport sector is the second largest emitter of GHG in the country. Joe Biden had already ordered, via an executive order, that the fleet of 650,000 government-owned vehicles be gradually replaced by electric vehicles. But the AJP proposes to spend $ 174 billion to encourage Americans to switch to electric cars and trucks: by offering financial incentives for households to buy American electric vehicles, by subsidizing local communities so that they build a nationwide network of 500,000 charging stations by 2030, replacing 50,000 diesel-powered transit vehicles and electrifying at least 20% of the US school bus fleet through a Clean Buses for Kids program...

For Europe, the generalization of efforts

In Europe, the objective posted so far for 2030 was a reduction of at least 40% of GHG emissions compared to 1990 levels. The European Commission had initially envisaged a GHG emissions reduction target of 55% by 2030, while the European Parliament wanted to raise it to 60%. Finally, the European institutions reached an agreement ahead of the summit and Europe announced its target of a 55% reduction in net GHG emissions by 2030. This objective will be incorporated into the European Climate Law currently being drafted. This reduction includes an increase in CO2 absorption targets for carbon sinks in forests and soils. Leaving aside this increase in carbon capture, the effort to reduce emissions would only be 52.8%. However, scientists estimate that it would take a 65% drop in emissions by 2030 to be in line with carbon neutrality targets by 2050...

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