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Policy Proposals  Environment and Energy Realizing effective and fair global warming countermeasures under the Paris Agreement

(Tentative Translation)
November 13, 2018

1. Need for implementation guidelines ensuring effectiveness and fairness

In December 2015, the 21st Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21) adopted the "Paris Agreement", a new international framework for global warming countermeasures to replace the Kyoto Protocol. With the so-called "2°C target"#1, the Agreement aims to significantly reduce global greenhouse gas emissions, and promises that all countries, including developed, emerging and developing countries would take action to counter global warming. All countries in the world have taken a "historical step" for future global warming countermeasures.

The Paris Agreement and the COP21 decisions set out an overall institutional framework, and now it is detailed implementation guidelines that are needed to bring the Agreement to the implementation stage. Unlike the Kyoto Protocol, the Paris Agreement does not impose legally binding obligations on countries to achieve their national reduction targets. Therefore, in order to ensure effectiveness and fairness, it is essential to guarantee transparency with regard to each country's actions. Thus, the implementation guidelines of the Paris Agreement are considered extremely important for enhancing transparency.

The final agreement on the implementation guidelines of the Paris Agreement is aimed at COP24 scheduled to be held in Katowice, Poland, in December 2018, three years after the adoption of the Paris Agreement. In this regard, many negotiations so far have been held over a wide range of issue areas. However, deep-rooted differences in opinion, particularly between developed and developing countries, have yet to be resolved. Negotiations are still only halfway towards a final agreement.

We request the Japanese government to make maximum efforts in negotiations at COP24 so that the Paris Agreement will become a framework ensuring effectiveness and fairness.

2. Agreement on key issues

In order to ensure effectiveness and fairness of the Paris Agreement, it is essential to fulfil the necessary requirements, the main ones being "all countries' participation in the Agreement", "common rules for all countries", and "promotion of an appropriate PDCA cycle based upon the pledge and review approach". We strongly expect these requirements to be fully met, from the perspective of equal footing in the international business environment.

In particular, "transparency" and "finance" are considered key issues that influence effectiveness and fairness of the Agreement.

1) "Transparency"

Article 13 of the Paris Agreement provides for a "transparency"#2 framework. The major focus of Article 13 is to what extent exceptions are granted in terms of "flexibility"#3, taking into account parties' "different capacities". Given the increasing presence of emerging countries such as China in the world economy, it is important to secure a level playing field (fair competitive conditions) under the Paris Agreement. Thus, rules prepared for developed countries should be commonly applied to emerging countries with sufficient capacities. This is a prerequisite for ensuring that there is still an avenue for the United States, which announced withdrawal from the Paris Agreement, to remain in the Agreement in the future. On the other hand, the rules have to be practical and feasible for those least developed countries and small island developing states, which do not have sufficient capacities. Therefore, the rules should ensure comparability among countries, while maintaining an appropriate balance.

2) "Finance"

Article 9 of the Paris Agreement stipulates expanded mobilization of climate finance to include contributions not only by developed countries but also by other countries on a voluntary basis. It is desirable that rules should be worked out by which each country will make fair contributions according to its capacities.#4

In negotiations over the implementation guidelines, some developing countries are requesting that a review process applied to "finance" should be equivalent to that applied to "mitigation". The basis of this argument is a claim that a "symmetry" should be maintained between these two agendas. We would like countries to deal appropriately with this issue by examining the validity of such argument in light of the original intentions of the provisions concerned.

3. For improved international presence

Meanwhile, enhancing the effectiveness of global warming countermeasures requires not only this type of intergovernmental negotiations, but also actions by non-state actors such as NGOs, private companies, and research institutes, which have become increasingly important. In fact, greater attention is being paid at COP to side events and other activities organized by non-state actors, demonstrating their growing complementary role to national actions.

We would like to see the Japanese government, through COP side events and other activities under public-private partnership, to convey some specific examples of Japan's strengths and international contributions on global warming countermeasures. By doing so, Japan should aim to raise its international presence in countering global warming. At the same time, actions taken under public-private partnership will be extremely important to gain an international understanding of contribution to avoid greenhouse gas emissions through the global value chain (GVC), one of the pillars of future global warming countermeasures.

Under the framework of the Paris Agreement that ensures effectiveness and fairness, Keidanren will continue to voluntarily and proactively commit to global warming countermeasures, steadily promoting Keidanren's Commitment to a Low Carbon Society as a core principle, by working on the formulation of a long-term vision of global warming countermeasures for 2050, contributing to avoiding greenhouse gas emissions through the global value chain, collaborating with overseas economic organizations and companies, and promoting innovation.

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Future actions by the Japanese business community

Since the introduction of the "Keidanren Global Environment Charter" in 1991, Keidanren has to date been proactively promoting global warming countermeasures ahead of policy decisions made by the government and other public bodies. Through voluntary actions based on the "Keidanren Voluntary Action Plan on the Environment" formulated in 1997 prior to the agreement of the Kyoto Protocol at COP 3, and "Keidanren's Commitment to a Low Carbon Society" formulated in 2013, the Japanese business community has been striving to reduce greenhouse gas emissions on a global scale.

Currently, unprecedented attention is being paid to actions made by non-state actors in promoting global warming countermeasures. Based on various experiences and achievements of voluntary actions so far, the Japanese business community will promote the following four points as immediate actions to step up the pace of future global warming countermeasures.

1) Steady promotion of Keidanren's Commitment to a Low Carbon Society#5

"Keidanren's Commitment to a Low Carbon Society" is considered to be a pillar of Japan's efforts towards achieving its mid-term target (26% reduction by fiscal 2030 compared to fiscal 2013) as its NDC. The Commitment features the following four pillars: (i) "emissions reduction from domestic business operations"; (ii) "strengthening cooperation with other interested groups"; (iii) "promoting contribution at the international level"; and (iv) "development of innovative technologies". Centering upon these four pillars, and making effective use of the PDCA cycle, we will proactively take actions to reduce greenhouse gas emissions globally as well as domestically. While analyzing economic trends, we will constantly review the maximum target level of domestic emission reduction for business that can be committed to society, and achieve better accountability for validity and progress of the target, thereby ensuring the effectiveness of Keidanren's Commitment to a Low Carbon Society.#6

2) Public relations activities for formulation of long-term visions of global warming countermeasures for 2050

ESG investment is expanding worldwide against the backdrop of the adoptation of the "Sustainable Development Goals" (SDGs) and the adoption of the Paris Agreement by the UN in 2015. Meanwhile, the Japanese government is eagerly discussing to develop its long-term strategy for 2050, based on the Paris Agreement.

Developing long-term global warming countermeasures envisioning a long-term future through 2050 cannot be based on a "bottom-up compilation" of existing countermeasures like the mid- term targets; rather it requires envisaging "a vision for goals and major directions". Keeping this in mind, Keidanren has invited its members to formulate a respective long-term vision, and simultaneously promotes public relations activities both in Japan and overseas to show where Japanese companies and organizations stand with regards to long-term global warming countermeasures. We hope that such initiatives led by the Japanese business community will contribute to building momentum for long-term global warming countermeasures among not only stakeholders within Japan but also governments and companies overseas, thereby promoting ESG investment.

3) Promotion of actions to avoid emissions through the global value chain#7

Keidanren will promote actions on "contributing to avoided emissions through the global value chain" as one of the approaches to contribute to reducing greenhouse gas emissions on a global scale. In order to extend this approach globally, Keidanren has recently compiled and published a concept book "Contributing to Avoided Emissions through the Global Value Chain". We would like to make use of future opportunities such as side events at COP24 and, through public-private partnership, encourage other countries to gain an understanding of this approach.

4) Promotion of collaboration with overseas economic organizations and companies

We will also actively collaborate with overseas economic organizations to promote global actions to reduce greenhouse gas emissions worldwide. Specifically, through collaboration with BizMEF#8, we will propose what role the business community can play in the implementation of the Paris Agreement and NDCs. We will also use the occasion of B20 to be held in Tokyo in March 2019 to further strengthen collaboration with economic organizations of major countries.

In addition, there has been more importance put on actions to develop and disseminate hydrogen technologies as a clean energy source, and this has highlighted hydrogen as a key technology to reduce greenhouse gas emissions. The Japanese government is leading an international collaboration by holding the Hydrogen Energy Ministerial Meeting. In order to make use of hydrogen in a stable and inexpensive way, private companies will collaborate with initiatives taken by the government, and bring about international cross-sectoral collaboration.

  1. "The 2°C target" means the long-term temperature goal agreed at COP21, i.e. "Holding the increase in the global average temperature to well below 2°C above pre-industrial levels".
  2. Under the Paris Agreement, each country is required to submit "Nationally Determined Contributions (NDCs)" and to clarify reduction action. In order to compare the degree of effort by each country, it is important to enhance the transparency of country's action taken as well as support extended (for developing countries). Article 13 of the Agreement provides for the establishment of a framework for reporting and review on "mitigation" and "support" as the "transparency" framework. It is necessary to build common rules that can enhance transparency for actions made by all countries.
  3. Article 13 of the Paris Agreement provides for the flexibility to be given to those developing country parties that need it in the light of their capacities. Flexibility is given in view of the differences in national circumstances and capacities, considering that some countries do not have sufficient experiences, nor do they have enough economic and administrative capacity in periodic reporting. It allows developing countries to be treated differently from developed countries, taking into account Parties' "different capacities".
  4. Apart from discussions over implementation guidelines of the Paris Agreement, COP15 decisions set a target to annually mobilize a total of USD100 billion through public and private funding in all developed countries. Many uncertain factors such as the situation in the US make it difficult to predict if this target will be achieved. If we intend to attract private funds to realize the mobilization of USD100 billion, it is necessary to develop an appropriate investment environment.
  5. Keidanren website: http://www.keidanren.or.jp/en/policy/index07.html
  6. Under the Keidanren Voluntary Action Plan on the Environment (1997 - 2012), 29 industries revised and raised targets over 41 times. Most recently, in the mid-term review of 2016, six industries revised and raised targets.
  7. Keidanren website: http://www.keidanren.or.jp/policy/vape.html
  8. Abbreviation of the "Major Economic Business Forum on Energy Security and Climate Change". A partnership that was launched in 2009, with participation by economic organizations of major countries including the United States. Keidanren participates from Japan.

Environment and Energy