Outlook 2016: Warmer prospects for green policies

The COP21 agreement may not be perfect but it does provide cause for celebration.

While the debate surrounding climate change is far from over, the number of those willing to err on the side of caution and take action is steadily growing. Perhaps more important than how many are accepting the science behind climate change is who they are and in what position to actually make a difference.

This past year alone, Syracuse University said it would divest its $1.2 billion endowment fund from direct investments in fossil fuel companies, making it the biggest university in the world to do so, according to The Guardian. That decision, which followed similar moves by Stanford University and the University of Maine, was the result of a two-year student campaign.

In October, California Governor Jerry Brown signed into law Senate bill SB185, which requires the state's two public pension funds and the largest in the country – the California Public Employees' Retirement System (CalPERS) and the California State Teachers' Retirement System (CalSTRS) – to divest from coal companies by July 1, 2017.

The above are just two examples of initiatives launched in the past year that would make any retrospective of 2015 incomplete without a look at efforts to mitigate climate change. 

And no place would serve as a better starting point than the agreement reached at COP21, the climate conference held in Paris in December.

Although there are a number of aspects of the agreement that provide fertile ground for criticism – the agreement is not legally binding and even if it is successfully implemented it will fall short of limiting temperatures from rising within the 2 degrees celsius acceptable threshold – it is nonetheless a milestone in the world's effort to mitigate climate change.

To begin with, 195 countries have signed the voluntary agreement which outlines a concrete set of implementation and monitoring mechanisms, which in and of itself is “an outstanding success,” according to Eugene Zhuchenko, executive director of the Long-Term Infrastructure Investors Association (LTIIA).

While the agreement is not legally binding, it does create peer pressure on each participating country to deliver on the Intended Nationally Determined Contributions (INDCs) – pledges individual countries have formulated to demonstrate how they plan to fight climate change, which served as a foundation for the final agreement.

“Peer pressure as a core incentive for going green has already proven effective in the corporate world, and can also repeat its success with governments. What really matters now, after the principle has been set, is the implementation that enables keeping the peer pressure high through publicity, transparency and strict adherence to agreed monitoring mechanisms,” Zhuchenko told Infrastructure Investor.

While the Paris agreement is not perfect it certainly signifies a major turning point. As the LTIIA's executive director points out: “What's important is that this deal is not a declarative one – it's actionable and features concrete accountability and implementation mechanisms, for instance through article 13 relative to transparency. The governance mechanisms set up by this agreement are probably by far the most promising ones.”