Climate Change, Risk Management and the Big Emitters

The global landscape for climate action is changing quickly. The United States just announced plans to use its Environmental Protection Agency to limit CO2 emissions from power plants, and an advisor to China’s government said shortly afterward that his country, where six local carbon markets are now active and stricter pollution rules were recently approved, was considering national CO2 emissions controls after its next five-year plan starts in 2016. 

These are the two leading greenhouse gas emitters, and they are stepping up their climate action plans as we move toward a new international climate agreement in 2015.

The push for effective action on climate change needs to come from many directions as the science makes clear the risks ahead. The World Bank Group along with others is calling on governments and businesses to support putting a price on carbon. Businesses, investors, and civil society groups have also been publicly calling for climate action. After the EPA announcement on Monday, more than 170 business leaders and investors, organized by Ceres, issued a letter of support for the planned U.S. regulations, calling them “a critical step in moving our country toward a clean energy economy.”

Evidence and Risk Management

Underlying this growing recognition of the need for policies that drive the shift to low-carbon, resilient economies is the science, spelled out in the latest Intergovernmental Panel on Climate Change reports.

On Monday, as the U.S. EPA released its plans, IPCC lead authors Chris Field and Ottmar Edenhofer joined a discussion at the World Bank on the science of climate change and its impacts development. The impacts are evident in changes in water supplies as glaciers and snow cover disappear; in agriculture subjected to drought or excessive rain fall; and even risks of conflict, said Field, the co-chair of the IPCC Working Group II report on adaptation. It raises the risk to the poor, who have the fewest resources to adapt, but even the wealthiest societies are vulnerable to the impacts climate change.

Field talked about climate change in the framework of risk management – a framework that investors and business leaders are well acquainted with and which helps them now consider the risks and opportunities climate change creates for their sectors and businesses.

Climate change is a threat multiplier that adds new dimensions and complexity to the development challenges we’re already facing, Field said. “Fundamentally, the challenge of managing climate change is a challenge of managing and reducing risk. We know plenty, but we need a transition from the perspective of knowing lots to doing lots,” he said.

Sharing the Benefits

The IPCC reports describe the dangers posed by climate change, the trajectory with and without action and mitigation efforts, and the benefits of action.

The Working Group III report on mitigation, co-chaired by Edenhofer, discusses the local and social benefits of climate action, such as improving air quality, reducing health costs, and reducing other social costs of climate change. It’s an issue both of the global commons and intergenerational justice, he said.

There is no single, magic bullet for slowing human-induced climate change, Edenhofer said. It will take a mix of policies and new technologies, including several discussed in the IPCC reports, such as carbon capture and storage technologies that can sequester CO2. It will also take time, but action can provide short-term benefits in jobs, health, and lowering the social costs of carbon.

 “The IPCC report makes crystal clear that time is of the essence,” said World Bank Group Vice President and Special Envoy for Climate Change Rachel Kyte, who joined the discussion. “The sooner we start to tackle the problem, the better our chance of fixing it and, importantly, the lower the cost. As we can see, that sense of urgency is increasingly shared by key decision-makers.”

The Big Emitters

The announcement this week by the U.S. EPA and the comments from the advisor to China’s government show the world that the two largest emitters are engaged in the issue. That political will is important as countries prepare for the UN Secretary-General’s Climate Summit in September and work toward a new international agreement at the UN Framework Convention on Climate Change Conference of Parties in Paris next year.

The proposed U.S. regulations, which still require review and formal approval, are designed to cut carbon emissions from the power sector by 30 percent below 2005 levels by 2030. According to EPA figures, the move would provide up to $93 billion in climate and public health benefits and avoid up to 6,600 premature deaths and 490,000 days of missed work or school. The power sector accounts for roughly 40 percent of the United States’ emissions.

Shortly after the U.S. announcement, He Jiankun, chairman of China’s Advisory Committee on Climate Change, told a conference in Beijing that China was considering absolute controls on its CO2 emissions after its next five-year plan starts in 2016. He said such controls could help China’s emissions to peak around 2030 and non-fossil fuels in the energy mix to reach 20 to 25 percent, according to Reuters. China already has six active local carbon markets, with a seventh planned, and it recently approved amendments to its environmental protection law to crack down on pollution.

The World Bank Group and others are urging governments and corporate leaders to join the movement toward climate action ahead of the summit. Learn more about the initiative and how leaders can show support for putting a price on carbon through the initiative website.