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HomeOpinionLettersThe Paris Agreement 5 years on: Taking stock and looking forward

The Paris Agreement 5 years on: Taking stock and looking forward

11 December 2020

This week marks the anniversary of not one but two historic international agreements signed in Paris. The 5th anniversary of the Paris Agreement is a moment to take stock of what has been achieved and to refocus on the challenges that remain. And as the OECD turns 60 this week, it is a chance to reflect on how we at the OECD can ramp up yet further our support to members and key partners as they seek to drive global action on climate change while also recovering from the COVID-19 crisis.

When world leaders gathered in Paris in 2015, they succeeded in agreeing a comprehensive, ambitious and universal global agreement on climate change. The Paris Agreement established the goals and the framework  for  accelerating  climate  action  in  three  main  areas:  reducing  emissions  to  limit  global temperature rise to well-below 2°C, even to 1.5°C; enhancing resilience and adaptive capacity; and making finance flows consistent with low-emissions and climate-resilient development pathways. For the first time, the Paris Agreement gave equal political priority to adapting to climate change and reducing emissions. This was a major step forward in recognising the existential threat posed by climate change for large parts of the world’s population.

The temperature goal was a major breakthrough in ambition. As the special report by the Intergovernmental Panel  on  Climate  Change  subsequently  made  clear,  even  1.5°C  of  warming  carries  significant  risks. Temperatures  are  hitting  record  levels  and  many  developing  countries  have  been  hit  by  devastating cyclones this year. We are sleepwalking into a catastrophe if we let climate change rise unchecked.   We are on a collision course with nature.

Despite progress, atmospheric CO2concentrations continue to increase

The Paris Agreement has proven to be remarkably resilient, and there have been encouraging signs of action. We have witnessed a notable acceleration of countries, cities, regions and companies announcing targets for  net-zero emissions by  2050  including (so  far) 21 OECD  countries. I  am delighted to see the international  community  coming  together  around  the  concept  of  net-zero,  which  I  first  suggested  in  my inaugural biennial climate lecture in 2013. If achieved, these goals would bring the Agreement’s upper bound temperature stabilisation objective firmly into view for the first time. Nevertheless, atmospheric CO2concentrations continue to increase. There is no time for hesitation.

Long-term targets are only as good as the policies put in place to achieve them, and that is where we have been falling short. While emissions will fall heavily this year because of the recession, the IPCC tells us The Paris Agreement 5 years on: Taking stock and looking forward that  to  stand  a  goodchance  of  limiting  warming  to  1.5°C,  emissions must  continue  to  fall  at  nearly  the same rate every yearuntil 2030. Despite progress, notably on renewable energy, around 70% of emissions are completely unpriced. Governments continue to spend billions on fossil fuel subsidies, with the OECD’s latest  estimates  at  USD  178  billion  in  2019  across  50  countries.  That  represents  a  5%  year-on-year increase, driven by a 30% rise in production support in OECD member countries.

The  donor  community  is  still  catching  up. The OECD’s update on progress by developed countries in providing and mobilising climate finance for developing countries showed steady progress in 2018, totalling USD 78.9 billion in aggregate, up 11% from 71.2 billion in 2017. However, too little of this money was for the most vulnerable, with less than 30% spent on adapting to climate impacts.

Despite progress, we are also still a long way from aligning financial flows with the Paris objectives. Positive developments include the rapid scaling up of instruments such as green bonds, initiatives such as the Task Force  on  Climate-related  Financial  Disclosure  and  the  development  of  taxonomies  to  guide  financial decisions,  including  in  the  European  Union.  Nevertheless,  the  lion’s  share  of  financing  is  not  yet sustainable, even though, according to OECD estimates, making infrastructure climate-compatible would require only a 10% increase in expenditure over known levels.

The next 5 years

In the next five years, countries need to do more to drive the Paris Agreement forward.

First, all countries need to come forward with more ambitious Nationally Determined Contributions (NDCs), clarifying how these short-term contributions are consistent with their long-term objectives on climate and, more broadly, the Sustainable Development Goals. These plans need to integrate the COVID-19 context and strive to leave no one behind. The OECD’s well-being approach to climate mitigation is an important tool in this regard. Broadly speaking, climate policies, including carbon pricing, need to be ambitious and progressive, putting people at the centre.

Second,  we  need  to  accelerate  the  shift  towards  a  financial  system  that  fully  takes  into  account  critical environmental challenges. Great progress has been made on disclosing the risks climate change poses for financial returns (i.e. financially material climate-related risks).  However,  in order to achieve climate and  other  environmental  objectives,  there  also  needs  to  be  improved  disclosure  and  management  of corporates’ impact on the  environment  (i.e.  environmental  materiality).  A  double  materiality  approach (financial and environmental) is reflected in the EU’s Non-Financial  Reporting  Directive,  as  well  as  the OECD  Guidelines  for  Multinational  Enterprises.  For  finance  to  be  truly environmentally  sustainable,  the financial markets need globally comparable, high quality data as well as more standardised methodologies.

Third, we need to integrate resilience in our economic development strategies. This year has exposed our vulnerabilities  to  unexpected  global  shocks  and  has  underlined  the  challenge  of  responding  to  and recovering from compounding risks, such as extreme weather events during a health crisis. Nature is a key  element  to  build  resilience  and  to  address  mitigation  and  adaptation  challenges  simultaneously.  A good example of this is the restoration of mangroves that provide crucial and effective natural carbon sinks, while protecting us against increasing climate-related coastal risks.

The OECD at 60: a champion of climate action

The OECD has been a pioneer of global environmental policy since the 1970s. Recently, the Organisation has been instrumental in providing evidence that tackling climate change is a global policy priority, in the interest of all countries. The OECD has been at the forefront of advising countries on their immediate and longer-term responses to the pandemic, including by highlighting the opportunities and the imperative of ensuring that economic recovery policies are sustainable.

Looking  ahead,  the  OECD will  continue  to  support  governments  to  fight  climate  change  and  preserve biodiversity  as  they  navigate  the  COVID-19  crisis  and  engineer  the  recovery.  If  we  do  not  seize  the opportunity  to  use  the  unprecedented  scale  of  stimulus  spending  to  make  our  economies  low-carbon, green, resilient and competitive for the future, our efforts to achieve the Paris Agreement goals may be in vain. The OECD’s country-by-country  tracking  of  recovery  measures  points  to  some  potentially  game-changing investments in a green economy. Nevertheless, so far, the overall balance of funding is still in favour of less sustainable options. More needs to be done before it is too late. The OECD stands ready to help  countries  to  achieve  their  de-carbonisation  objectives  through  an  integrated  framework  and  to measure progress through relevant indicators.

The year 2021 promises to be the environmental ‘’super year’’ (that 2020 should have been), with major conferences on deserts, climate, biodiversity and the ocean. I call on countries to embrace a revitalised multilateralism that will build the transparency and trust we need to overcome these challenges collectively, with the full support of the OECD. By the time OECD turns 90, we will have reduced global emissions to net-zero.

Angel Gurría

OECD Secretary General

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