COP25 and the implications for Australian Business

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The 25th annual United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP25) took place in Madrid on 2-13 December 2019.

COP is central to the Paris Agreement target to limit the increase in the global average temperature to well below 2°C above pre-industrial levels and to limit the temperature increase to 1.5°C above preindustrial levels. With the Paris Agreement due to take effect in 2020 and the UN Emissions Gap Report 2019 warning that efforts to halt climate change have been inadequate so far, COP25 provided a rapidly-closing window of opportunity to galvanise the world into action. 


COP25 objectives

COP25 highlighted the global need to ramp up national targets to cut emissions at least 50% lower than under Paris Agreement pledges by 2030 before global warming passes the point of no return.

To help this, the meeting aimed to:

  • incentivise countries to set tougher new and updated five-year national emission reduction plans, known as Nationally Determined Contributions (NDCs), for the 2020-25 period
  • finalise Article 6 of the Paris Agreement – the so-called ‘Paris Rulebook’ – to establish credible, global rules around international carbon trading and green finance. Done effectively, these could help countries reduce the overall cost of meeting their NDCs through voluntary international cooperationCOP25

Outcome 

While the majority of COP nations recognise the need to scale up their NDC targets, they refrained from signing off on Article 6 at COP25, an outcome the ICC said “fails to match the ambitions of business and other stakeholders”.

This was because nations were reluctant to allow bigemitters Australia, Brazil and India to ‘carry over’ surplus carbon credits and quotas from the Kyoto Protocol (which ends in 2020) into the Paris Agreement (which takes force this year).

If Australia is allowed to carry over its Kyoto credits – mostly earned by counting earlier savings from reduced land clearing – it will be able to achieve more than half of its already-soft Paris Agreement target to cut emissions by 26-28% on 2005 levels by 2030 without having to make any further material reductions in emissions.

Rather than accept this arrangement, COP25 nations opted instead to push for resolution on Article 6 at COP26 which will be held in Glasgow, United Kingdom from 9-20 November 2020.


Continue reading to find out the implications, the outlook for Australia and more.

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