If only someone could predict what would have been the repercussions on the Paris Agreement and the commitments of countries had it been for Trump winning a second term? I would have predicted that the outlook would not have been as bright as it looks now …
The win for Joe Biden, and his commitment to bring the US back into the Paris Agreement on day one, marks a new era in the fight against climate change, both for the United States as well as for others.
It appears that for the first time the world’s three biggest economies are in syzygy! Biden, the European Union, and China are all aligned and committed to a net-zero future between 2050 and 2060. There is actionable evidence suggesting a shift in tone and a strong move towards decarbonization. The United States rejoining the Paris agreement is going to signal to the world that it is committed to a global solution to climate change. It will also, in my opinion, in some way pressure the rest of the world to join in this fight. Net-zero is fundamental for environmental change.
Do not be mistaken though, the road will be long and bumpy. Biden’s election is a small win of a battle but not the end of the war. To achieve the target a lot has to be done. Political will, economics, and consumer demand are the cornerstones for this success - it would be vital to make inroads with policies, that make financial sense, and which will help gradually replace fossils with greener energy sources. Aviation, shipping, road travel, agriculture, and heavy industries making cement, steel, and plastic will all need to transform and end CO2 emissions for good! Carbon offsetting will also be pivotal for tipping the scales.
Biden is proposing to make US electricity production carbon-free by 2035 and to have the country achieve net-zero emissions by the middle of the century. Reaching net-zero requires that carbon emissions be balanced by absorbing an equivalent amount from the atmosphere.
Once in office, he wants to spend $2 trillion over four years to drive down emissions by upgrading governmental buildings to make them more energy-efficient. He wants to spend heavily on public transport, to invest in electric vehicle manufacturing and charging points, and give consumers financial incentives to trade up to cleaner cars.
There is evidence that the Senate could be a hurdle towards passing the reforms needed and getting approval for the spending required to achieve the target. There is no better person than Biden though, who knows very well how to navigate the Senate – he himself was elected to the Senate six times. If he could produce a plan that will create jobs, then he could probably swing the vote in his favor.
On the other side of the world, there is also a lot happening: European governments have approved a roadmap to turn the European Investment Bank (EIB) into a “climate bank” with a €1 trillion green investment package to be spent by 2030. Under its Climate bank roadmap, the EIB is committed to increasing its lending to climate action and green activities to more than half of its funding activities by 2025. Moreover, 10 associations representing around 400 public development banks signed a declaration committing to align their activities with the Paris agreement. It is also evident that stakeholders are beginning to demand a defined strategy from companies with whom they engage in order to satisfy their own climate risk agenda, including whether a particular investment or transaction should be made or whether to exit. Boris Johnson has unveiled his 10-point green recovery plan, promising a multi-billion pound package of investment across the green economy designed to create an estimated 250,000 new jobs in the carbon capture, electric vehicle, nuclear, hydrogen and renewables sectors.
The annual COP meetings held every year are a way for governments to agree to lower their carbon emissions. China, Japan, and South Korea have already committed to long term goals. With all eyes on the COP26 climate summit in Glasgow in November 2021 and the pledge for carbon zero emissions by 2050, the opportunity has arisen for countries otherwise being skeptical, to follow Biden’s example, and act accordingly. Rejoining of the Paris agreement by the United States definitely adds weight to the meeting due to its (The United States) sheer size and bolsters the success of the meeting.
Now is the time for all of us to act accordingly and responsibly. With the world’s three largest economies in syzygy, I sincerely hope that we see a brighter future not just for our industry but for our planet.