Businesses call for strong government actionWe Mean Business
Yesterday the United States pledged to reduce greenhouse gas pollution by 26-28 percent below 2005 levels by 2025. By formally submitting its Intended Nationally Determined Contribution (INDC) to the United Nations Framework Convention on Climate Change (UNFCCC), the US joined Switzerland, the European Union, Norway, Mexico and Russia in tabling pledges that pave the way for a comprehensive international climate agreement in Paris at the end of the year.
The US pledge is a welcome, serious and comprehensive effort to reduce greenhouse gas emissions across key sectors of the American economy. Underlying the pledge are domestic regulations which increase the fuel economy of vehicles, conserve energy in the built environment, appliances and equipment, promote alternatives to highly-warming hydroflourocarbons, reduce carbon pollution from power plants, and address methane emissions from landfills and energy production. In their respective sectors, these measures are credible, important signals which incentivize business to make low carbon investments, and therefore support bold business action to cut emissions.
The US Administration has demonstrated leadership by advancing these in the face of concerted domestic opposition, however, by itself the US INDC is not sufficiently ambitious. Alongside INDCs already announced and those anticipated later this year, the US pledge puts the world on a path towards 3.5 degrees Celsius of warming, well above the globally agreed goal of keeping warming below 2 degrees. We therefore urge the US to pursue the following steps to turn the potential for ambition inherent in this INDC into a truly transformational commitment:
- To drive the transition to the low carbon economy, the US pledge for 2025 must be situated within a detailed national decarbonization pathway, and guided by a clear global long-term objective in the Paris agreement that directs business towards low carbon investment, such as net zero emissions well before the end of the century. The US submission provides a natural entry point for this by stating that the 2025 target is consistent with a pathway to “deep, economy-wide emission reductions of 80% or more by 2050”, as “part of a longer range, collective effort to transition to a low-carbon global economy as rapidly as possible.”
- Given that initial commitments under the Paris agreement will likely take us towards 3.5 degrees of warming, reaching the below 2 degree goal will require the US and all other countries to regularly strengthen the ambition of their targets every 5 years instead of every 10.
- A credible transition to the low carbon economy will require the continued scale-up of public finance to build climate resilience and to accelerate private sector investment, beginning with the release of the first tranche of the US contribution to the Green Climate Fund. It is important that the US contribution is not just a re-branding of foreign aid or the double counting of development projects with climate co-benefits, and that the majority is available on a grant basis to increase accessibility for the most climate-vulnerable countries. And perhaps most importantly of all, the US approach to climate finance must do more to leverage private sector capital in support of low carbon development.
Building a truly ambitious Paris agreement around the US INDC will demand American leadership. Business leaders are looking to governments to make emission reductions commitments that are ambitious, will be strengthened over time, and follow a long-term decarbonization pathway. These reductions should be founded on domestic policies that catalyze bold business action to cut emissions, and are supported by a strong global framework with the widest possible participation. Scaled-up climate finance that is new, additional, adequate and predictable from both public and private sources is also fundamental to incentivize the market to fuel the transition to a low carbon economy.
The US INDC is an important first step in this direction. We now ask the US government to continue down the path to high ambition with the promise that business is ready, willing and able to join this journey. When the US moves an inch, the world will move half an inch.