The Covid-19 pandemic presents massive challenges to our global community, but it could also offer an opportunity to press ahead towards the “Net Zero” goals of the Paris Agreement. Around the world, governments are crafting stimulus packages to boost economies out of recession. Many economists and business leaders see this as an opportunity to put green objectives at the center of these plans – including Net Zero climate goals.
Increasingly, leaders are targeting this action on the ultimate Paris temperature objective (1.5°C - 2°C) and the goal of achieving a balance between emissions and removals of greenhouse gases (GHGs), known more simply as the “Net Zero” goal (see Article 4 of Paris Agreement).
Before the pandemic began, the European Commission had already unveiled a “Green Deal,” proposing nothing short of a revolution in how the bloc produces and consumes energy and goods. This proposal will now move through a legislative process. Other regions and corporates made similar moves, bringing clearer focus to how they plan to achieve Net Zero GHG emissions by mid-century.
In the wake of Covid-19, there is little sign of countries and corporates wavering in their ambition to shift to sustainable economic models; far from it. In recent months, many leaders in government and business have doubled-down on commitments to pathways for deeper GHG reductions, clean technology, sustainable investments and climate-resilient infrastructure.
“Net Zero” means more than just making deep cuts in man-made CO2. It means driving emissions down as far as possible AND using carbon sinks and other technologies to remove and store the remaining CO2. To achieve this balance, we will need to tap nature-based solutions on a massive scale, plus deploy new technologies and activities to capture, store or use CO2. The ambition to achieve the goal is there, and the next steps will be to establish policies to get there.
IETA’s own constituency of business and industry has set out its vision for pursuing Net Zero goals. In a new paper prepared and endorsed by our global governing Council, IETA highlights how its work supporting market-based climate policies can help achieve Net Zero, how it can assist its members across regional and corporate efforts, and how we can use our influence constructively to reach that goal.
Our vision begins with support for the Paris Climate Agreement, the UNFCCC and IPCC science. We understand that the Net Zero journey must bring together the global community in a cooperative venture at a scale never seen before.
The IPCC’s research on pathways for holding temperatures to 1.5°C shows this. Deep emissions reductions need to be coupled with successful strategies to remove carbon from the atmosphere using natural and technological solutions. Success in achieving these ambitions will depend on international cooperation between countries on a massive scale.
Emissions markets offer one important means of international cooperation. Well-designed carbon markets can create economic value for businesses to reduce emissions and in removing emissions from the atmosphere, reaching across international borders to tap the most cost-effective solutions.
This approach fits IETA’s longstanding vision about the power of markets for climate protection. Since its inception in 1999, IETA’s mission has been to advance climate goals through the use of environmentally robust, fair, open, efficient, accountable and consistent market mechanisms that work across national boundaries. We remain committed to developing ambitious cross-sectoral and cross-border carbon markets, taking advantage of the scope and scale that cooperative action brings.
International trading is not just an opportunity for business cooperation. It can open the way for countries to achieve net zero together. Every country faces a set of challenges and opportunities in addressing climate change. Some countries simply cannot achieve net zero on their own, while other countries offer potential to reduce or remove emissions beyond their fair share. A trading system, grounded in solid accounting rules under Article 6 of the Paris Agreement, can enable such countries to achieve their Net Zero goals together. Economically, both will be better off by acting together rather than in isolation, as demonstrated by research we conducted for the CPLC with the University of Maryland.
IETA has started to focus on new areas where carbon pricing mechanisms can drive ambition toward Net Zero. Last year we launched a new initiative, Markets for Natural Climate Solutions, which aims to bring the power and scale of markets to improve natural climate sinks. It is removals by forests, agriculture, and eventually new technologies like direct air capture that will carry us over the finish line of Net Zero. This initiative includes work on COVID-recovery plans that can put farmers and foresters to work on carbon removal programmes.
We need to work together so that Net Zero does not wither away into lofty words or empty rhetoric. It must be backed by a bold action agenda aligned to the goal. COVID recovery packages offer an opportunity for tackling both climate and economic stimulus. We plan to work with governments on economic recovery plans that are aligned with the Net Zero goal – and that leverage international market-based policies oriented towards the Net Zero goal. Together, we can get further – faster – together.
