What Will the Paris Climate Accords Mean for Your Company?

By Casey C. Sullivan, Esq. on December 22, 2015 | Last updated on March 21, 2019

Last week in Paris, 195 nations reached a landmark agreement to address climate change and reduce greenhouse gas emissions. The Paris climate accords marked the culmination of COP21, the semi-regular meeting of signatories to the UN Framework Convention on Climate Change. It also marked the first time ever that all countries have agreed to reduce emissions.

In order to meet its new commitments, the U.S. and other nations will need to make significant changes to achieve "a low-carbon future." Much of that work will fall to the private sector.

What the U.S. Agreed To

The main goal of the Paris accord is to reduce global temperate rise to less than 3.6 degrees Fahrenheit, the level needed to avoid the worst effects of climate change. The agreement is actually a bit shy of what climate scientists believe is necessary, but it's a massive improvement over the decades of delay and disagreement that have followed the 1992 Kyoto Protocol. The U.S. signed but did not ratify the Kyoto Protocol, largely on the basis that it did not require universal emissions reductions. The Paris Accord does.

The U.S. and other nations didn't agree to many specifics in the plan. Instead, they agreed to the target of 3.6 degrees, as well as procedural requirements like five-year reviews of goals and regular reporting on emission reductions efforts. Each nation is responsible for setting its own reduction goals and developing a plan to meet its own emissions targets.

What It Means for You

The U.S. hasn't revealed any specific plans for reaching its climate change goals and the agreement hasn't yet been ratified by the Senate. (Senate ratification might not be necessary, though.) The U.S. could pursue new climate change legislation, but that's unlikely to be successful in the current Congress.

The President could also pursue emissions reductions through the Clean Air Act, which would be sure to be a litigious process. At the beginning, you can probably expect a greater focus on funding for clean energy projects and new limits to carbon-intensive natural resource projects on public lands, but it's likely that a multipronged approach will be taken.

In the meantime, the most immediate action is likely to come from the market. According to The New York Times, the Paris accords could signal a shift towards private investment in low-carbon industries:

The deal could be viewed as a signal to global financial and energy markets, triggering a fundamental shift away from investment in coal, oil and gas as primary energy sources toward zero-carbon energy sources like wind, solar and nuclear power.

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