Meeting of the OECD Council at Ministerial Level Paris, 30-31 May 2018 IMPLEMENTING THE PARIS AGREEMENT: REMAINING CHALLENGES AND THE ROLE OF THE OECD This document is published under the responsibility of the Secretary-General of the OECD and does not necessarily reflect This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, the official views of OECD Members. to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Implementing the Paris Agreement: Remaining Challenges and the Role of the OECD 2 │ Key Messages The scale and pace of climate change is rapidly moving the natural systems that underpin human well-being into uncharted territory, with the potential for severe and irreversible impacts. Climate change will destroy human and physical capital, and drive major changes to ecosystems. Strong climate action is not a threat to, but rather the foundation of, future economic well-being. Greenhouse gas (GHG) emissions in one part of the world affect the climate globally, so any effective response must be multilateral in nature. The Paris Agreement is an international legal instrument with the potential to measure up to the scale and urgency of the climate challenge. However, governments must overcome significant challenges if its potential is to be met. In aggregate, action and commitments on GHG emissions are inadequate to limit the average global surface temperature increase to the Paris goal of well-below 2°C, let alone 1.5°C. Efforts must be scaled up and accelerated to peak global GHG emissions as soon as possible, with rapid reductions thereafter towards zero or negative emissions in the second half of the century. Ambitious domestic action needs to go hand in hand with an increase in the amount and effectiveness of international climate finance and other support for developing countries, in line with international commitments. Since climate impacts are already occurring and may be severe even if the Paris goals are achieved, major efforts are required now to enhance resilience and adaptive capacity. Holistic planning and coordination across ministries is needed to improve policy coherence across climate change mitigation and adaptation, food security and biodiversity conservation. Governments alone cannot solve climate change. Success will depend on the transformational actions of many other organisations, institutions and individuals, including businesses, financial institutions and regulators, cities, social and labour organisations, researchers and innovators. Governments need to enable and support these efforts by sending a clear policy signal that the transition to low-emissions climate-resilient development pathways is irreversible. Governments can send a powerful signal by pricing the harmful external effects of GHG emissions more coherently across all sectors of their economies, including agriculture and land- use, and at a higher level. Inefficient fossil fuel subsidies also need to be phased out. The OECD has a vital role to play in supporting countries to make these transformational changes over the coming decades. In particular, the OECD will: o Support countries to develop low-emissions, climate-resilient pathways that take a whole-economy approach, reflect country characteristics and effectively integrate social and distributional considerations. o Inform, accelerate and track efforts to make finance flows consistent with the goals of the Paris Agreement. Relevant initiatives include the Centre on Green Finance and Investment, the Paris Collaborative on Green Budgeting, the Research Collaborative on Tracking Private Climate Finance and the OECD-DAC statistical system. IMPLEMENTING THE PARIS AGREEMENT: REMAINING CHALLENGES AND THE ROLE OF THE OECD For Official Use │ 3 o Assist governments in their efforts to develop measures of effective carbon rates and to reform fossil fuel subsidies. o Provide policy analysis to inform countries on how to manage the climate, land-use, ecosystems, and food nexus (i.e. Sustainable Development Goals 2, 7, 11, 13, and 15). IMPLEMENTING THE PARIS AGREEMENT: REMAINING CHALLENGES AND THE ROLE OF THE OECD For Official Use 4 │ 1. Climate change: a global challenge requiring bold, collective action 1. The scale and pace of climate change is rapidly moving the natural systems that underpin human well-being into uncharted territory, with the potential for severe and irreversible impacts. This will make it more difficult to achieve the Sustainable 1 Development Goals (SDGs). Global atmospheric concentrations of carbon dioxide (CO2) have surpassed 400 parts per million (ppm) from a pre-industrial level of around 280 ppm. This concentration is higher than at any time in the last 800,000 years. Global mean temperatures are a product of a long-term warming trend due to emissions of greenhouse gases (GHGs) and climate variability at different timescales (Figure 1.1). Temperatures reached 1°C above pre-industrial levels in 2015 as a result of both climate change and a strong El Niño that continued into 2016. Projections of end-of-century average global surface temperature are between 2.6°C and 3.1°C above pre-industrial levels, based on commitments in current nationally determined contributions (NDCs) under the Paris Agreement.2 Without rapid and significant acceleration of mitigation action, the Paris Agreement’s goal of limiting average global warming to well below 2°C, let alone the 1.5°C goal, will remain well out of reach.3 2. Climate change will destroy human and physical capital and exacerbate existing pressures on biodiversity, driving major and potentially irreversible changes to ecosystems. How these changes translate into economic terms depends on complex and unpredictable interactions between climate, ecological, economic and social systems, including infrastructure networks.4 Climate change is therefore a risk management problem: how to find and implement the most cost-effective ways to limit climate risks to a politically agreed level, informed by the best scientific evidence. Early and ambitious action on adaptation and mitigation can significantly reduce these risks. For example, limiting the global average surface temperature increase to 2°C relative to even a 3°C scenario could bring significant benefits in terms of avoided flooding, heatwaves and cropland decline. 5 1 This paper draws extensively on OECD (2017), Investing in Climate, Investing in Growth, OECD Publishing, Paris http://dx.doi.org/10.1787/9789264273528-en, which was subject to extensive Committee consultation in 2017 (with twenty OECD Committees and Working Parties). It also draws on the Secretary-General’s 2017 climate lecture at the Munk School of Global Affairs at the University of Toronto, Canada, “Climate Action: Time for implementation” www.oecd.org/environment/cc/Climate-Action-time-for-implementation-lecture-by-Secretary-General-2017.pdf 2 Vandyck, T., Keramidas, K., Saveyn, B., Kitous, A. and Vrontisi, Z. (2016), A global stocktake of the Paris pledges: implications for energy systems and economy, Global Environmental Change, 41, pp.46-63. 3 UNEP (2016), The Emissions Gap Report 2016, United Nations Environment Programme (UNEP), Nairobi. 4 For a global estimate of some of the direct and indirect economic consequences of climate change see OECD (2015), The Economic Consequences of Climate Change, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264235410-en 5 See Chapter 2 of OECD (2017), Investing in Climate, Investing in Growth, OECD Publishing, Paris. IMPLEMENTING THE PARIS AGREEMENT: REMAINING CHALLENGES AND THE ROLE OF THE OECD For Official Use │ 5 3. Even the “well-below 2°C” goal is insufficient to avoid major impacts from climate change.6 A certain amount of climate change is already locked in from past and current emissions and the extent to which countries succeed in further mitigating climate change will affect the scale of climate impacts they face. Some types of extreme weather events are projected to become more severe and frequent, especially those related to extreme heat, even if international climate goals are met.7 Floods, droughts and wildfires are also projected to increase. Rising seas will exacerbate coastal flooding, inundate low- lying land and lead to salinization of water supplies in some areas, while ocean acidification will continue to drive coral mortality, with severe implications for fisheries, tourism and coastal erosion.8 Food insecurity will likely also worsen.9 Concerted action is required to build climate resilience to reduce the harm caused by climate change. Figure 1.1. Global average temperature - difference from the 1961 to 1990 average Source: UK Meteorological Office10 6 IPCC (2014), Summary for policymakers. In: Climate Change 2014: Impacts,Adaptation, and Vulnerability. Part A: Global and Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Field, C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S. Kissel, A.N. Levy, S. MacCracken, P.R. Mastrandrea, and L.L.White (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, pp. 1-32. 7 IPCC (2013), Summary for Policymakers. In: Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor, S. K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA. 8 See footnote 6. 9 Wheeler, T. and Von Braun, J., 2013. Climate change impacts on global food security. Science, 341(6145), pp.508-513. 10 Met Office (2018), Global Surface Temperature, www.metoffice.gov.uk/research/monitoring/climate/surface-temperature accessed on 19 March 2018. IMPLEMENTING THE PARIS AGREEMENT: REMAINING CHALLENGES AND THE ROLE OF THE OECD For Official Use 6 │ 4.