The Role of Long-Term Strategies in Aligning Near- and Midterm Plans with the Paris Agreement Goals
Although not explicitly part of the “ambition mechanism”, long-term low greenhouse gas emission development strategies, long-term strategies (LTS) in short, play a vital role in reaching the temperature goals of the Paris Agreement. The ambition mechanism calls for countries to present (and implement) progressively more ambitious Nationally Determined Contributions (NDCs) every five years in order to arrive at a collective level of mitigation ambition to limit average global temperature increase to “well below 2°C” and work toward limiting the increase to 1.5°C. The current aggregate level of ambition of NDCs falls well short of what is required to keep the world on track towards a Paris-compatible pathway (UNEP 2017). Urgent action is therefore needed to identify how to improve NDCs in the short term in order to align them with the long-term perspective. Long-term strategies play an important role in planning both short- and medium-term steps for greenhouse gas emission reduction and in setting targets for the next rounds of NDCs. Long-term strategies should focus on full decarbonisation in line with the Paris Agreement’s long-term goals for each sector and the required financial resources to implement them. Beyond NDCs, clear long-term strategies aligned with the Paris goals are key to avoid locking in high-carbon technologies and losses associated with stranded assets.
LTS are essential for short term policy and investment planning
A detailed understanding of what the long-term Paris goals mean for national economies and policy planning, especially for individual sectors, is severely lacking in most countries—developed and developing alike. For many, temperature limits are relatively intangible concepts, and the long and loosely defined time horizon of achieving full decarbonisation by the second half of the century adds to a sense of abstractness that does not provide policymakers with sufficient clarity on the more practical dimension of what this actually means and how this affects near-term policy decisions.
A clear long-term vision of what a fully decarbonised economy may look like and what that means for individual sectors is crucial to develop effective policy responses as well as to inform business and investment strategies. The private sector in particular benefits from a clear long-term vision, political consensus, and continuity to enable and constructively contribute to a smooth transition process. Investors, first and foremost, seek certainty on the long-term direction of government policy to define investment strategies and understand associated investment risks.
Many critical investment decisions to enable the long-term transformation of key sectors need to be made today. Infrastructure assets in many sectors, including energy, transport, and industrial assets, have lifespans that extend to midcentury. Developing countries and emerging economies in particular are now making important investment decisions that will have consequences for decades to come. Uncertainty presents significant risks, including the potential for waste of resources that arises from carbon lock-in (from a climate policy perspective) and stranded assets (from the perspective of the investor).
To achieve the ambitious Paris goals, many investments need to shift to zero-carbon alternatives immediately (Sterl et al. 2017). Take, for example, the energy sector: Decarboniszing the power sector is the first step in the comprehensive transformation of the energy system. Analysis of the global efforts needed to reach the Paris goals shows that the electricity sector will need to fully decarbonise by around midcentury (Rogelj et al. 2015). In 1.5°C scenarios, the share of decarbonised technologies in the electricity mix would need to reach close to 100 percent by 2050. To limit warming to 2°C, full decarbonisation is necessary by 2060 (Kuramochi et al. 2018). For that to happen, current growth rates of renewable energy technologies such as wind and solar need to continue (Sterl et al. 2017). No new coal power plants should be built, and emissions from existing plants should be reduced rapidly (Kuramochi et al. 2018). Also, natural gas–based electricity generation needs to be phased out by midcentury based on modeling results considering least cost pathways toward well below 2°C (Cantzler et al. 2017). The transformation of the electricity sector requires substantial investments not only in plant infrastructure but also in transmission and distribution networks including storage, with sufficient flexibility to accommodate scaled-up participation of fluctuating renewable sources.
The example of the electricity sector underlines the scale of the challenge and the importance of short-term action for the achievement of long-term goals. Although the term long-term may not inspire an immediate sense of urgency, decisions taken today will shape the economy in 2050, in particular how difficult and costly it will be to get where we need to be. In essence, this means that delayed action or lower ambition in the short term will lead to lock-in and missed opportunities that will require much more drastic and costly interventions in the future. It is therefore in the interest of policymakers to develop concrete long-term strategies to inform short- and medium-term policy planning processes and investment strategies.
The importance of equity and fairness in the development of LTS
A climate policy planning process—including target setting for NDCs—that starts from the long-term Paris alignment (or decarboniation) goals will improve the likelihood that the individual and collective level of effort will be sufficient. NDC targets can be extrapolated from where a country or sector needs to be in 2050 by translating the Paris goal into national and sector-level carbon budgets. A visioning exercise on potential pathways toward decarbonisation for critical economic sectors, and what that might look like, can accompany this exercise. Understanding and clear public communication of what the different pathway options mean—not only in terms of technology choices and climate impacts but, more importantly, also for the socioeconomic development of the country and sector—will help drive transition-oriented policy change that takes into account the different perspectives and interests of those affected.
A key question that arises in the context of carbon budgets is that of equity and fairness—in other words, how much of the carbon budget can be used by whom and when. The Paris Agreement does not provide clear guidance on how mitigation efforts to stay within the agreed temperature limits should be distributed among countries (or sectors). What is clear is that significantly scaled-up efforts are required by all, eventually resulting in a fully decarbonised global economy. All countries’ emissions need to peak and decline as fast as possible. The energy sector (and electricity in particular) has to decarbonise very fast in order to allow for continued emissions from those sectors (e.g. land use, industry) where full decarbonisation is more difficult. At the same time, there are synergies to be found among the energy, transport, and building sectors which can promote a virtuous cycle toward decarbonisation.
At the same time, the overarching principle of “common but differentiated responsibilities and respective capabilities” underlines that developed countries will need to take the decarbonisation lead. Arguably, industrialised countries have already used up more of their (fair) share of the global carbon budget, given their historical emissions. Generally higher per capita emissions as well as wealth, capability, and know-how add to their responsibility to pioneer decarbonisation.
Considering the imperative for all countries to maximise transition efforts, the issue of fairness shifts from a question of “who does how much” to one of “how fast” and, more importantly “who pays.” Developing-country decarbonisation efforts need financial and technical support from developed countries, as articulated in the Paris Agreement. For developing countries, it is therefore essential that they clearly and specifically indicate the support they need to implement the transition. Linking long-term objectives to short- and medium-term measures is critical to the definition of finance and technology needs. Less-developed countries have the largest opportunity to leapfrog to a low-carbon economy, which is also associated with important sustainable development benefits. Given the availability of new technology, following the dirty development path of rich countries entails both a significant waste of resources and significant risks for both the climate and the economy, given the potential for stranded assets. Developed countries, in contrast, need to provide sufficient financial resources to encourage the development of long-term strategies and ultimately enable the implementation of the ambition process. Beyond providing financial and technical support, developed countries also play an important role in driving down the costs of technologies essential for the decarbonisation of sectors (as has been the case for renewable technologies).
Although not explicitly linked in the Paris Agreement text, long-term strategies and short- and medium-term target setting under the NDCs need to be considered as part of a larger overall ambition process that leads to full decarbonisation. While the post-Paris debate initially seems to have focused on the current round of NDCs and their implementation, policymakers’ attention is increasingly shifting toward the need for long-term or midcentury strategies. It is important to get a common understanding of what long-term strategies are and how they can inform short- and medium-term planning. It is clear that especially for least-developed countries, adaptation and resilience building, as well as the overarching role of the sustainable development goals, are high priorities. And, of course, any long-term strategy needs to consider potential synergies and trade-offs. At the same time, to play the role that they need to (in the context of the ambition mechanism and Paris goals), long-term strategies must be defined as decarbonisation or “well below 2°C” transition strategies. Such strategies are an opportunity to undertake a much-needed exercise to fully understand the implications of the Paris Agreement for economies in the long term at the national and sector level.
Lastly, on a more practical note, rather than developing abstract high-level national strategies, it is most important to focus on specific sectors, working toward a single end point—for example, a decarbonised energy sector in 2050. Line ministries and stakeholders need to own and drive this process to ensure anchoring and full mainstreaming. At the same time, it is critical to consider the interplay and potential synergies of different sectors to ensure a coherent national approach.
Cantzler, J., et al. 2017. “Foot Off the Gas: Increased Reliance on Natural Gas in the Power Sector Risks an Emissions Lock-In.” Climate Analytics, Ecofys, NewClimate Institute: Climate Action Tracker. https://newclimateinstitute.files.wordpress.com/2017/06/cat-2017-06-16-decarbonisationseries-naturalgas2.pdf.
Kuramochi, T., et al. 2018. “Ten Key Short-Term Sectoral Benchmarks to Limit Warming to 1.5°C.” Climate Policy 18, no. 3: 287–305. https://dx.doi.org/10.1080/14693062.2017.1397495.
Rogelj, J., et al. 2015. “Energy System Transformations for Limiting End-of-Century Warming to below 1.5°C.” Nature Climate Change 5: 519–27. https://www.nature.com/doifinder/10.1038/nclimate2572.
Sterl, S.. et al. 2017. Faster and Cleaner 2: Kick-Starting Global Decarbonization—It Only Takes a Few Actors to Get the Ball Rolling. https://newclimateinstitute.files.wordpress.com/2017/04/faster-cleaner-fulldoc_041817.pdf.
UNEP (United Nations Environment Programme). 2017. The Emissions Gap Report 2017. Nairobi. https://www.unenvironment.org/resources/emissions-gap-report.