Principles for a Climate Deal

This is the third in a series of posts on the prospect that nations will reach a global climate agreement in Paris this December at the next big international climate conference. The first two described the challenges for the United States' chief negotiator and the ideal climate deal, respectively.

If the U.S. team negotiating an international climate treaty is looking for guidance, it needn't look far. Over the years, scores of organizations ranging from oil companies to green groups and think tanks have offered their ideas on the principles that should guide an international climate agreement. Much of their unsolicited advice was written years ago, but it remains relevant today because there has been so little progress.

I will invoke my blogger's license to start with an example from about a decade ago, because I was involved in its development. The "Wingspread Principles on the U.S. Response to Global Warming" were created by an eclectic group of American thought leaders and endorsed by scores of other notables as the result of a meeting at the Wingspread Conference Center in Wisconsin. Here are excerpts followed by principles published by a few other organizations. I have quoted them directly, with some minor deletions for brevity. See if you can detect the similarities.

Great nations rise to great challenges. Today, no challenge is more critical than global climate change. It reaches to the core of humanity's relationship with the Earth. It tests our capacity to make intelligent changes in our economy, policies and behaviors in the interest of all people and all generations.

Effective Action: Experience proves that voluntary measures alone cannot solve the problem. Aggressive government action, including mandates based on sound science, is imperative and must be implemented now.

Consistency and Continuity of Purpose: Climate stabilization requires sustained action over several decades to achieve deep cuts in greenhouse gas emissions throughout the economy. With its frequent changes of leadership and priorities, however, the American political system does not lend itself to long-term commitments. Leaders in both government and civil society must shape policies and institutions that ensure sustained climate protection.

Opportunity: Mitigating and adapting to global warming offer the opportunity to create a new energy economy that is cleaner, cheaper, healthier and more secure. We must awaken America 's entrepreneurial spirit to capture this opportunity.

Predictability: Measures that signal investors, corporate decision makers and consumers of the certainty of future reductions are essential to change the economy.

Flexibility: Deep cuts in greenhouse gas emissions demand and will drive innovation. Our economy will innovate most efficiently if it is given the flexibility to achieve ambitious goals through a variety of means, including market-based incentives and/or trading.

Everyone Plays: Measures to stabilize the climate must change the behaviors of business, industry, agriculture, government, workers and consumers. All sectors and the public must be engaged in changing both infrastructure and social norms.

Multiple Benefits: Actions to stabilize, mitigate or adapt to global warming should be considered alongside other environmental, economic and social imperatives that can act synergistically to produce multiple benefits. ... Many actions to stabilize climate offer local, regional and national, as well as global, benefits.

Accurate Market Signals: The true and full societal costs of greenhouse gas emissions, now often externalized, should be reflected in the price of goods and services to help consumers make more informed choices and to drive business innovation. Policymakers should eliminate perverse incentives that distort market signals and exacerbate global warming.

Prudent Preparation: Mounting climatic changes already are adversely affecting public health and safety as well as America's forests, water resources, and fish and wildlife habitat. As the nation works to prevent the most extreme impacts of global warming, we also must adapt to the changes already underway and prepare for more.

International Solutions: U.S. government and civil society must act now to reduce their own greenhouse gas emissions, regardless of the actions of other nations. Because greenhouse gas emissions and the effects of climate change are global, however, the ultimate solutions also must be global. The U.S. must reengage constructively in the international process.

Fairness: We must strive for solutions that are fair among people, nations and generations.

Keeping in mind the central importance of energy to economies of the world, ExxonMobil believes that it is prudent to develop and implement strategies that address the risks to society associated with increasing GHG emissions. Effective strategies must include putting policies in place that start the world on a path to reduce emissions while recognizing that addressing GHG emissions is one among other important world priorities such as economic development, poverty eradication and public health....

Within ExxonMobil, we analyze and compare the various policy options by evaluating the degree to which they meet the following principles:

  • Ensure that any cost of carbon is uniform and predictable across the economy;
  • Let market prices drive the selection of solutions;
  • Promote global participation;
  • Consider priorities of the developing world;
  • Recognize the impacts of imbalances among national policies;
  • Minimize complexity to reduce administrative costs;
  • Maximize transparency to companies and consumers;
  • Adjust in the future to developments in climate science and the economic impacts of climate policies.

Reducing greenhouse gas emissions is a global issue that requires global engagement and action. GHGs do not recognize sovereign borders. Climate change risks stem from the cumulative effect of GHG emissions from all nations. ... Unilateral action by any country or jurisdiction could result in unintended consequences that could distort markets, reduce competitiveness of trade-exposed industries and undermine intended environmental objectives -- without reducing climate change risks to that country or jurisdiction.

ICMM members support the development and implementation of a binding and effective global climate agreement based on the following principles:

Comprehensiveness: Include commitments from all major national emitters covering all greenhouse gases, sources and sinks.

Policy flexibility: Allow a range of policy approaches that individual governments can adopt.

Recognition of national circumstances: Recognize differing national economic, environmental and social circumstances and respect national sovereignty.

Alignment: Accommodate the simultaneous imperatives of economic development, energy security and environmental stewardship.

Fair play: [Do] not disadvantage early movers.

Simplicity: Minimize national compliance and administration costs.

(This statement was signed by 365 investors representing more than $24 trillion in assets.)

We are acutely aware of the risks climate change presents to our investments. In addition, we recognize that significant capital will be needed to finance the transition to a low carbon economy and to enable society to adapt to the physical impacts of climate change....

We call on governments to develop an ambitious global agreement on climate change by the end of 2015. This would give investors the confidence to support and accelerate the investments in low carbon technologies, in energy efficiency and in climate change adaptation.

Ultimately, in order to deliver real changes in investment flows, international policy commitments need to be implemented into national laws and regulations. These policies must provide appropriate incentives to invest, be of adequate duration to improve certainty to investors in long-term infrastructure investments and avoid retroactive impact on existing investments. We, therefore, call on governments to:

  • Provide stable, reliable and economically meaningful carbon pricing that helps redirect investment commensurate with the scale of the climate change challenge.
  • Strengthen regulatory support for energy efficiency and renewable energy, where this is needed to facilitate deployment.
  • Support innovation in and deployment of low carbon technologies, including financing clean energy research and development.
  • Develop plans to phase out subsidies for fossil fuels.
  • Ensure that national adaptation strategies are structured to deliver investment.
  • Consider the effect of unintended constraints from financial regulations on investments in low carbon technologies and in climate resilience.

What points stand out in the advice from these diverse organizations? Here are a few:

  1. The response to climate change must be global.

  • The most effective response will be an intelligent mix of market forces and government policies.
  • Stop subsidizing fossil fuels.
  • Climate policies should create the conditions that encourage private investment in clean energy. Those conditions include stable prices, markets and regulations -- in other words, predictability.
  • Although climate science is complicated, climate policies should be clear, simple and transparent.
  • Whatever a final climate agreement looks like, it must be fair to all, including the least among us.
  • Easy, right?