Following the conclusion of the Paris climate negotiations, this expert roundtable will examine the critical elements of the final agreement and what this means for the future of energy and climate policy in key countries.

The discussion will examine what the agreement means for keeping global average temperatures below two degrees Celsius and assess whether ambition will be ratcheted over time. It will also look at the primary implications of the outcome for key regions and countries such as the EU, United States, China and India. Finally, the session will also consider the next steps in terms of implementing the agreement. 

Attendance at this event is by invitation only. 

Summary

• Plans for an EU-wide Energy Union are taking shape, following the European Commission’s adoption in February 2015 of a ‘Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy’. The strategy underlines the EU’s ambition to attain ‘secure, sustainable, competitive, affordable energy for every European’.
• The initiative seeks to transform energy markets and energy/climate policy across the EU. Its goals include cross-border coordination and integration in energy security, supply, market operations, regulation, energy efficiency, low-carbon development, and research and innovation.
• There is an important foreign policy aspect to the Energy Union, given the imperative of managing security and supply risks in Europe’s neighbourhood and further afield. By addressing structural divisions between member states, the Energy Union could have a marked beneficial effect on the EU’s capacity to conduct a unified and effective foreign policy.
• Development of the Energy Union presents abundant challenges, however. Policy and legislative changes will need to be coordinated across 28 countries. Variations in EU member states’ attitudes to security and energy policy may lead to differences in, or clashes between, priorities. The wider context is also complicated. Interrelated challenges rooted in broader policy issues include the partial transition to low-carbon energy, and concerns over competitiveness relative to other major economies.
• The current EU approach to energy security and infrastructure focuses on natural gas. This ‘gas first’ approach risks crowding out other responses to the energy security challenge. It could result in the creation of ‘stranded assets’, if the future gas demand on which investments are predicated does not match projections. A narrow focus on new gas infrastructure could also impede development of other dimensions of the Energy Union.
• The markets for coal, oil, gas and renewables are changing significantly. The shale oil and gas ‘revolution’ in the United States has altered the economics of hydrocarbon fuels, and the plunge in oil prices since mid-2014 is causing energy businesses in the EU to reassess investment plans.
• The EU is rapidly expanding the use of renewable energy. Dramatically falling prices for renewables will challenge traditional energy utility business models. How the Energy Union enables market access for new business models will be key to determining future energy trajectories.

Summary

• The Paris Agreement, reached at COP21, was a triumph of diplomacy. The deal can be characterized as: flexible, combining a ‘hard’ legal shell and a ‘soft’ enforcement mechanism; inclusive, as it was adopted by all 196 parties to the UNFCCC and is therefore the first truly global climate deal; messy, as the bottom-up process of creating nationally determined contributions means the system is unstandardized; non-additive, as the contributions do not currently deliver the agreement’s stated long-term goal of keeping the rise in global average temperature to ‘well below 2˚C’; and dynamic, as the deal establishes a ratchet mechanism that requires more ambitious contributions every five years.
• The next five years are critical for keeping the below 2˚C goal within reach. A ‘facilitative dialogue’ starting in 2018 will give states the opportunity to revisit their contributions in advance of the agreement entering into force in 2020. International forums, such as the G7 and G20, can play a crucial role in kickstarting these efforts.
• The ‘coalitions of the willing’ and clubs that were launched under the Lima-Paris Action Agenda provide an innovative space for state and non-state actors to unlock transformational change. However, it is important that these groups set specific and measurable targets to ensure effective delivery of objectives.
• The post-Paris regime implies a significant role for civil society organizations. However, in many countries the ‘safe operating space’ both for these organizations and for the media is shrinking. Expanding the capacity of civil society and the media in areas such as communications, litigation, project implementation and technical expertise will be important if they are to support the regime effectively.

Summary

• Over the last 30 years the EU has played a central role in addressing the competitiveness, security and climate dimensions of energy policy among its member states. The UK has been critical in driving forward integration of the European energy market, and has been a strong advocate of liberalized energy markets and some climate change mitigation policies.
• If, at the June 2016 referendum, the UK does vote to leave the EU, energy and climate policy will be part of the overall package of issues to be negotiated, as it is unlikely that each sector will be treated separately. The model of relations for energy and climate may well be determined by political and public sentiment on higher-profile issues such as freedom of movement, rather than by what is best for the UK in these policy areas.
• The UK is increasingly reliant on imports, including from and through continental Europe, and its energy market is deeply integrated with that of its European neighbours. As a growing share of the UK’s electricity is exchanged with EU partners, it would be neither possible nor desirable to ‘unplug’ the UK from Europe’s energy networks. A degree of continued adherence to EU market, environmental and governance rules would be inevitable.
• This paper reviews the risks and trade-offs associated with five possible options for a post-exit relationship. Of these, the Norway or the Energy Community models would be the least disruptive, enabling continuity in energy market access, regulatory frameworks and investment; however, both would come at the cost of accepting the vast majority of legislation while relinquishing any say in its creation. The UK would thus have less, rather than more, sovereignty over energy policy.
• The Switzerland, the Canada and the WTO models offer the possibility of greater sovereignty in a number of areas, such as buildings and infrastructure standards as well as state aid. None the less, each would entail higher risks, with greater uncertainty over market access, investment and electricity prices. These models would reduce or even eliminate the UK’s contribution to the EU budget, but would also limit or cut off access to EU funding mechanisms.
• All five Brexit models would undermine the UK’s influence in international energy and climate diplomacy. The UK would no longer play any direct role in shaping the climate and energy policies of its EU neighbours, at a time when the EU’s proposed Energy Union initiatives offer the prospect of a more integrated and effective European energy sector. A decision to leave the EU would make it easier for a future UK government to change direction on climate policy, since only a change in domestic legislation would be required.
• ‘Brexit’ could affect the balance of energy policy among the remaining member states. In its absence, the centre of gravity for EU energy policy might shift away from market mechanisms and result in weaker collective action on greenhouse gas reduction targets.
• In the field of energy and climate change policy, remaining in the EU offers the best balance of policy options for Britain’s national interests: the UK would continue to benefit from the integrated energy market, while maintaining influence over its direction and minimizing uncertainty for crucial investment.

In May 2016, Chatham House published a research paper that assessed the options for the UK’s climate and energy policy in the event of a British vote to leave the EU. It determined that:

• The UK’s energy market is deeply integrated with that of its European neighbours and that it would be neither possible nor desirable to ‘unplug’ the UK from Europe’s energy networks. A degree of continued adherence to EU market regulations, energy efficiency standards of appliances, environmental and governance rules would be inevitable. 
• The EU’s collective negotiation on international climate issues has given the UK greater political weight than any member state has alone.
• The EU’s coordinated approach in engaging with major fossil fuel producers such as Russia and countries in the Middle East has helped support price stability and security of supply, including through infrastructure investment to make existing pipeline systems more efficient and improve storage and capacity.   

In light of the decision to leave, Chatham House is hosting a roundtable to reassess the options for a future UK-EU energy and climate change partnership. The meeting will bring together those experienced on UK and EU policy in both climate change and energy and explore the short and medium-term climate and energy policy considerations. 

Attendance at this event is by invitation only.

Over the next two decades, a combination of ‘circular economy’ approaches and distributed manufacturing methods such as 3D printing raise the prospect of fundamental changes to the nature of production, the reconfiguration of supply chains and changes to patterns of resource consumption – with profound implications for sustainability. This roundtable will bring together expert participants from companies, government, civil society and academia to discuss the state of innovation in the ‘circular economy,’ with a particular focus on the approaches and activities of entrepreneurs and investors, what is needed to scale up and accelerate innovation, how to track and measure progress, and how to ensure that innovation in the ‘circular economy’ makes a significant contribution to the meeting of short and medium term climate and sustainability goals.

Attendance at this event is by invitation only. 

The US Department of Defense regards climate change as an ‘accelerant of instability and conflict’. A former head of the US Pacific Command described it as the most significant long-term security threat in his region. US federal agencies have recently been mandated to fully consider the impacts of climate change in the development of national security policy. This step-change in the US approach reflects the Pentagon’s conclusion that climate impacts are a ‘threat multiplier’ for security concerns – not just for the future – but which pose ‘an immediate risk to national security’.

A new documentary from the US, The Age of Consequences, explores the links between climate change and security, including in current events in Syria, Egypt, the Sahel and Bangladesh. Our high-level panel will reflect on key sections from the documentary, which will be screened during the event, and explore whether security strategists, militaries and policy-makers in nations other than the US are fully cognisant of the risks posed by a changing climate, and whether they are ready to anticipate and respond to its potentially destabilizing effects.

The panel discussion will be followed by a Q&A.

THIS EVENT IS NOW FULL AND REGISTRATION HAS CLOSED.

On 7 November, as governments reconvened in Marrakech for the first major round of climate talks since the momentous Paris summit, they had the wind in their sails. The sense of momentum that had built in the run-up to Paris had continued, with recent global deals to phase out HFCs (potent greenhouse gases used in refrigeration and air conditioning) and tackle emissions from aviation. However, by the morning of 9 November the mood changed to one of unease and trepidation, as news of Donald Trump’s US election victory sunk in. Only days after entering into force, the Paris Agreement was faced with the possibility of the world’s second largest emitter, and a key dealmaker and architect of the regime, withdrawing.

Although details of Trump’s positions on climate and energy policy are scarce, his statements on the campaign trail appear to signal a marked departure from the Obama administration’s approach. The president-elect has said he would ‘cancel’ the Paris Agreement and ‘rescind’ the Climate Action Plan which underpins US action to reduce emissions. On the basis of these statements, it is hard to view the election result as anything other than a major setback for the climate. The new international climate regime now faces a very early and very big test.

Paris’s first test

The response from governments has been swift. Statement after statement emphasized a clear and consistent message: countries remain committed to the Paris Agreement and to delivering their emissions reductions. While there is hope that the US will remain a part, the message was that the process will continue regardless. Importantly, there have as yet been no indications that recusant parties to the agreement might use a US withdrawal as cover to do the same.

This display of unity is arguably Marrakech’s defining success. Progress in talks to flesh out the so-called ‘rulebook’ for how the Paris Agreement will operate come 2020 was modest in some areas and disappointing in others; on finance, the perennial tensions between developed and developing countries were as clear as ever. But when the time came to uphold the nascent regime in the face of a threat, powerful international norms on climate action meant there were no divisions.

Two important questions

The prospect of US disengagement from the international regime, whether de jure or de facto, raises two important questions: one for the US and another for the rest of the world.

For the international community, the question is one of leadership. In the run-up to Paris, the US and China together set expectations for a global agreement, signalling their intent through a series of joint announcements that set the bar for ambition and carried other countries with them. Progressive countries hoped this partnership would re-emerge in 2018, when talks begin on closing the gap between national emission reduction plans and what is needed to achieve the Paris goal of containing warming ‘well below’ 2°C. A wholesale step change in ambition is required if the 2°C goal is to remain within reach, requiring intense climate diplomacy of the kind witnessed before Paris. Will China be prepared to unilaterally set the pace and raise ambition first? Will a new partner come forward, or new coalition emerge, to fill the vacuum left by the US and work alongside China to provide leadership?

The US faces a question of national interest. With the rest of the world apparently united on climate change, what costs might the US incur were it to withdraw from the global regime? To fly in the face of strong international norms on climate action would certainly erode American soft power and concede global status to China, which continues to signal its ambition to decarbonize. And with the US expected to take a more protectionist approach to trade, it is possible that other countries, frustrated at US free-riding on the emissions reductions of others, might impose tariffs on American imports to adjust for the lower emissions costs of US exporters. Nor will American prosperity be served by the US economy remaining shackled to fossil fuels while the rest of the world’s economy transitions away from them. All countries stand to lose if the US backslides on climate change, most of all the US.

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Summary

• The use of wood for electricity generation and heat in modern (non-traditional) technologies has grown rapidly in recent years, and has the potential to continue to do so.
• The EU has been, and remains, the main global source of demand, as a result of its targets for renewable energy. This demand is largely met by its own forest resources and supplemented by imports from the US, Canada and Russia.
• Countries outside the EU, including the US, China, Japan and South Korea, have the potential to increase the use of biomass (including agricultural residues as well as wood), but so far this has not taken place at scale, partly because of the falling costs of competing renewables such as solar PV and wind. However, the role of biomass as a system balancer, and its supposed ability, in combination with carbon capture and storage technology, to generate negative emissions, seem likely to keep it in contention in the future.
• Although most renewable energy policy frameworks treat biomass as though it is carbon-neutral at the point of combustion, in reality this cannot be assumed, as biomass emits more carbon per unit of energy than most fossil fuels. Only residues that would otherwise have been burnt as waste or would have been left in the forest and decayed rapidly can be considered to be carbon-neutral over the short to medium term.
• One reason for the perception of biomass as carbon-neutral is the fact that, under IPCC greenhouse gas accounting rules, its associated emissions are recorded in the land use rather than the energy sector. However, the different ways in which land use emissions are accounted for means that a proportion of the emissions from biomass may never be accounted for.
• In principle, sustainability criteria can ensure that only biomass with the lowest impact on the climate are used; the current criteria in use in some EU member states and under development in the EU, however, do not achieve this as they do not account for changes in forest carbon stock.

Also see Woody Biomass for Power and Heat: Impacts on the Global Climate, which assesses the impact of the use of biomass for energy on greenhouse gas emissions, how these are accounted for under international climate accounting rules, and analyses the sustainability criteria currently in use and under development to minimise negative impacts.