Powering tomorrow Navigating the energy transition landscape 2024 - Flipbook - Page 8
In pursuit of Paris
Agreement goals,
by carrot or stick
In 2015, 196 countries adopted the
Paris Agreement: the world’s first legally
binding climate change treaty, the goal
of which was to limit global warming
this century to 1.5-2 degrees Celsius
above pre-industrial levels.
Since then, much progress has been made—
but as Simon Stiell, Executive Secretary of
UN Climate Change, put it late last year, “We
are still nowhere near the scale and pace of
emission reductions required to put us on
track toward a 1.5 degrees Celsius world.
To keep this goal alive, national governments
need to strengthen their climate action
plans now and implement them in the
next eight years.”
These plans have included, and will continue
to include, a mix of regulations and incentives.
Businesses around the world should take note.
The European Union (EU) and United
Kingdom (UK), for instance, jumped out
ahead, laying out a variety of “sticks” to
drive new corporate behaviors. These
include heightened disclosure and reporting
requirements, including the Corporate
Sustainability Reporting Directive and
Sustainable Financial Disclosure Regulation;
stricter rules, like those for companies whose
products rely on deforestation; and supply
chain directives, like the German Supply
Chain Due Diligence Law.
Band 1
By contrast, the United States (U.S.) followed
with a more “carrot-heavy” approach, o昀昀ering
hundreds of billions of dollars in tax and
investment incentives through the In昀氀ation
Reduction Act (IRA) and the Infrastructure
Investment and Jobs Act. A new report
concluded that these initiatives put the U.S.
in a signi昀椀cantly stronger position to realize
its climate ambitions, yet also highlights
substantial barriers, including the need
for new pollution standards, potential
transmission bottlenecks, and supply
chain constraints.
International Trade
Chambers U.S., 2023
8
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