The deal reached in Paris at the end of last year was a remarkable outcome. This is not because of the ambition associated with national pledges. These remain voluntary and together fall well short of the globally mandated one-and-a half to two degree Celsius temperature stabilisation target. No, the agreement was remarkable because it set out a roadmap for reducing global carbon pollution; one based on a mutually agreed transparent process of accounting and a five year review of voluntary emissions reductions. There was no empty threat of sanctions associated with “legally binding” treaties. As we argued in the past, an agreement based on mutual self-help, competition and collaboration has a greater chance of success than one based on ‘burden sharing’ or the ‘right to emit’.

For the first time, global leaders seeking an international agreement acted on the need to harness the potential benefits from climate action rather than use the language of shared sacrifice. This has served to reduce incentives to free-ride on the actions of others and therefore secure ambitious action to limit climate change and take advantage of low-carbon finance and technologies.

The second remarkable feature of the deal relates to the more deft management of expectations compared to previous summits. As with all deals relying on agreement from 190 countries, the Paris outcome constituted a compromise. And yet, by setting credible expectations well in advance of the summit and selling the agreement as a turning-point and a fresh start, rather than a disappointing and acrimonious failure, the impact of the conference is likely to be markedly different from the one reached in Copenhagen five years ago (which was less of a failure than was widely perceived). As a result, investors are far more likely to see this as a signal to shift their focus from fossil fuels to clean energy which itself is likely to make the optimistic prophecy self-fulfilling.

The core insight underlying the new approach is the realisation that the main criteria determining national mitigation pledges are domestic political agendas and the need to satisfy popular opinion, local institutional and industrial interests. This means that so-called ‘intended nationally determined contributions’ or INDCs which have been submitted by 156 countries accounting for 92% of global emissions are likely to reflect national circumstances. These include i) the cost of action, taking into account natural endowments, such as reserves of fossil fuels, or the energy intensity of production (for example the presence of industry dependent on coal); (ii) anticipated local damages from climate change, and—crucially—(iii) the benefits that accrue from policies that aim to reduce emissions and attain other policy goals.

While the third reason has in the past been relegated in importance, there is growing recognition that there are significant social and economic returns from investment in emissions reduction for many developed and developing countries that are not captured in narrow cost assessments. A recent authoritative study found that more than half of emissions reductions required to meet an ambitious target generate co-benefits. These include health benefits from reductions in urban pollution, addressing traffic congestion, increases in efficiency or improvements in energy security and supply. For example, air pollution destroys millions of lives and livelihoods every year and cost between 5% and 15% of GDP for major emitters – as much as many of these countries spend on healthcare. Efforts to reduce emissions through renewable energy, clean transportation and energy efficiency stand to slash such impacts.

Recognising these opportunities–as some INDCs do–strengthens the case for climate action in most regions, but does not diminish the responsibility of rich countries to support such a transition through technology cooperation, financing and capacity-building. Indeed, investing in domestic opportunities with global implications in terms of reduced emissions requires coordinated support.

The ultimate aim of international collaboration in the form of finance, technology cooperation and sectoral partnerships is the support of projects with high domestic returns and global climate benefits. If the availability of good emissions reduction projects goes up as a result of the recognition of new opportunities, it increases the case for supporting the diffusion of technologies, capacity- and institution-building and access to cheap finance.

To overcome domestic opposition and make for a credible international pledge, climate action must be recognised to deliver local benefits in the direct self-interest of the country taking the action. We need to move away from the narrow principles of cost and ‘burden-sharing’ towards incorporating the principles of equitable access to sustainable development, including the benefits to growth from climate action. There is no shame in INDCs openly calling for finance and technology from other countries in order to deliver such benefits, if the end-result is global emissions reductions. Some already do this; others should be encouraged.

Recognising the benefits of climate action, as well as the opportunities to attract inward investment through collaborative partnerships, is helping increase the level of ambition in managing climate change risks, while advancing development goals. The shift in focus from burden-sharing—which has led to decades of delay, division and deadlock—towards collaboration and opportunity increases incentives for all countries to strive for ambitious reductions in carbon pollution. For this, the Paris deal marks an historic milestone.

This article was first published in Greek in the Kathemerini newspaper on 10th January 2016.

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