The Paris Agreement was a landmark event, the longest warm-up to taking tangible action on a global crisis in recorded history (that I can think of). From the establishment of the UNFCCC to the Kyoto Protocol took 5 years (1992–1997), from the Kyoto Protocol to the Paris Agreement took 17 years (1997 -2015). It seems it is getting increasingly difficult to get agreement on ambitions and targets. To make this worse, after the signing of Kyoto it took more than 7 years for it to come into force, how long for the Paris Agreement?
The answer is in fact unimportant! Current optimistic estimates give us only 12 years to take action that has a real impact or suffer climate catastrophe — fully implementing the Paris Agreement won’t even get us close! This makes it clear that the speed at which we are moving is grossly inadequate. The track record of the current climate regime in delivering actual emission reductions, is worse, due to major accountability gaps and inadequate governance. We need a radically different approach that builds on what we have learnt so far and that is systemically more responsive and robust.
Why has this well intentioned and collaborative effort fallen so far short of what we need?
1. At a personal level it is hard for people to do the right thing when one’s job and family’s immediate well being depend on you doing the opposite or ignoring the issues
2. At an organisation level doing the right thing often carries cost and in a competitive and short term focussed world organisations must also act in their self-interest
3. At a country level, there is a limit to what measures and regulation can be put into place without alienating citizens and organisations who put political leaders in power
The global economy has long supported the externalisation of long-term environmental costs and impacts. It is at the centre of this conundrum, it is also the solution, as the economy integrates the actions of people, organisations and countries. Our economies harness our self-interest to drive development and prosperity; what is clear is that the implementation of self-interest in the economy has been too narrow for some time, and we are now seeing the impact of this. The radical change in direction must start with the economy, by creating a market for climate risk, and the rest will follow.
To ensure fairness and justice for people, organisations and countries, this must be implemented at a global level; as the economy is global and the gains to trade have not diminished just because of the rise of nationalism. The establishment of such a global market for climate risk reduction could work in concert with the World Trade Organisation (WTO), and should learn from and improve on the global institutions of the last half century.
Markets are dynamic and therefore well suited to respond to the dynamic and likely volatile nature of climate change. The current approach of target setting is linear, communist era thinking which is ill-suited to the challenge, and we can clearly see it is not working. A global market for climate risk is very different to emission trading or carbon taxes, which are very important at a country or region level; allowing countries to pick the policy that is best for them. This market must be structured so that both buyers and sellers are empowered to achieve a fair price, improving governance and the delivery of reductions in climate change damage.
These arrangements could be underpinned by a new class of debt — potential future debt for climate change damage. This will secure the scale and speed of investment needed as there is a huge potential to leverage the reductions in damage costs and thus generate profit. This requires a framework that assesses each countries level of responsibility and gives them the opportunity to improve their economic position by taking climate change damage reducing action. As it happens there is such a framework: DRaCULA — the Dynamically Relative and Cumulatively Universal Liability Attribution framework (which is explained below).
Dynamically Relative — a country’s liability will change as the severity of climate change goes up or down, and their share of responsibility is relative to the actions they take to prevent damage. Cumulatively Universal — it is not necessary for all participants to join the treaty from the outset, as the size of the market opportunity will disadvantage countries who are external, driving full membership over time. Liability Attribution — as liability has so far not been able to arise under international law, it would seem sensible for it to arise under a specific multi-national treaty where actions and outcomes are binding, using a common understanding of liability to simplify operation and interaction with the global institutions and the broader economy.