Does the Paris climate deal sideline business?

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Man visiting the US pavilion at the COP21 climate change conferenceImage source, Getty Images
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Can climate change be halted without involving the private sector more directly?

The Paris Agreement on climate change has been widely hailed as a historic moment, but the business community could be forgiven for feeling a little marginalised by the substance of the deal.

In the whole 12-page document, there is just one reference to the private sector, tucked away in Article 6, where it talks of enhancing "public and private sector participation in the implementation of nationally determined contributions".

By way of contrast, much attention is paid to the roles of such organisations as the Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts, as well as the Subsidiary Body for Scientific and Technological Advice.

Given that the behaviour of manufacturers and their choice of energy use is likely to be a big factor in achieving the deal's ambitious targets, this might be seen as something of a lapse.

As it turns out, business groups did push for a bigger acknowledgement in the agreement, but their expectations weren't met.

The US Council for International Business has said it is "disappointing" that the document makes no specific reference to business at all.

In the words of Norine Kennedy, its vice-president of strategic international engagement, energy and environmental affairs: "Given how important business will be to delivering so many of the issues in the agreement, it would be appropriate for business to be mentioned."

'Level playing field'

The Paris pact aims to curb global warming to less than 2C (3.6F).

Nearly 200 countries took part in tense negotiations in the French capital over two weeks, striking the first deal to commit all nations to cut emissions.

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The Paris deal is only the beginning as far as manufacturers are concerned

The agreement, which is partly legally binding and partly voluntary, will come into being in 2020.

Business groups have been supportive of its laudable aims, but in the UK, there is a striking convergence in the language that senior figures have been using to praise the agreement.

While welcoming the move towards a low-carbon economy, they are pressing for the UK government to ensure they are fairly treated under the new regulatory framework.

The new director of the CBI business lobby group, Carolyn Fairbairn, says the challenge for governments is to "turn global ambition into national reality".

For the UK, this is about providing "a stable environment that enables investment in cleaner, more affordable and more secure energy generation".

She adds: "As other nations start to play a greater role and increase their ambition, the UK needs a level playing field for carbon costs, so that our energy-intensive industries can compete effectively in a global, low-carbon market place."

That phrase crops up again in the views of manufacturers' organisation the EEF, whose head of climate policy, Claire Jakobsson, has said: "While this development in climate action is to be applauded, it is only the beginning of what is necessary to ensure a level playing field for UK manufacturing."

In other words, business in the UK is in effect saying to Prime Minister David Cameron: you signed up to this, now make sure we don't lose out globally as a result, don't let China and India undercut us on this.

Carbon capture

Obviously the most directly affected business sectors are those engaged in the production of fossil fuels - specifically, coal and oil.

Image source, AP
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Coal is still an important source of energy in developing nations

The World Coal Association says the 2C climate target "will not be possible" unless governments support technology to cut coal emissions, such as carbon capture systems.

Last month, however, the UK government announced in its spending review that it was scrapping a £1bn grant for developing new carbon capture and storage technology.

As for the oil industry, it has its hands full right now with cost-cutting measures in response to the falling global prices of crude. It can ill afford to spend extra money on shrinking its carbon footprint.

For the moment, then, business is cautiously optimistic about the effect of the climate deal. But then again, it can afford to be.

Since it was not explicitly included as a stakeholder in the text of the agreement, it has arguably not signed up to anything - and it is putting the onus on government to make the deal stick.