Norine Kennedy, United States Council for International Business (USCIB), discusses how climate is turning a new page

While abundant press attention has greeted the return of the United States to the Paris Agreement, the gravity and scope of the changes and challenges ahead for business have not been fully appreciated by most outside observers. While a new U.S. President who has made climate change a core focus bodes well for a successful outcome at COP26, there are also outstanding challenges, including from the perspective of U.S. business represented by the United States Council for International Business (USCIB).

While the United States has been a consistent and continuous Party to the U.N. Framework Convention on Climate Change (UNFCCC), even after the U.S. withdrew from the Paris Agreement, the Biden Administration will surely launch a next chapter that will be unprecedented both in the specific setting of Paris and the broader climate treaty structure, but also across the entire multilateral system.

USCIB has represented the voice of American business in the UNFCCC since 1993, working closely with the International Chamber of Commerce (ICC) as its U.S. National Committee

USCIB has represented the voice of American business in the UNFCCC since 1993, working closely with the International Chamber of Commerce (ICC) as its U.S. National Committee. Over that time, USCIB has witnessed the evolution of both the international treaty and the postures of the United States from White House to White House. However, in those 30 years, we have never seen anything like the Biden team and its vision on climate change. So what has changed, what does it mean for the rest of the world, and how does business engage with opportunities?

First of all, the Administration is dead serious about pursuing an all-of-government approach to climate change. In addition to a new expanded White House climate office led by Gina McCarthy, and a Presidential Special Envoy for Climate Change, John Kerry, political appointees across the spectrum bring significant climate change policy and economic expertise to advance the Administration’s climate vision. As of today, all appointed Cabinet level Secretaries have been confirmed and can be expected to embed climate priorities in their Departments.

We will see more of what this means in practice as the U.S. develops its Nationally Determined Contribution (NDC), laying out its pledges and policies in connection with the Paris Agreement. A first version of the NDC is to be introduced at the April 22nd White House Climate Summit, and consultations to elaborate the U.S. NDC are already underway and will continue into the summer. USCIB will be working with its members to inform the consultative process to develop what will essentially be a 5 year plan for the U.S. economy, i.e. the U.S. NDC.

Secondly, we are seeing like never before a convergence of domestic and international climate policy plans, and an extension of the latter beyond the U.N. deliberations themselves. While the U.S. Administration has signaled caution on the matter of border carbon adjustment proposals under consideration as part of the EU Green Deal and associated EU recovery package, we fully expect that climate change will be a priority consideration for U.S. engagement in a wide range of international economic deliberations, whether in the context of WTO reform, G7 or G20 to name just a few.

Lastly, we are watching the mobilization of government spending for economic rescue and recovery on a truly monumental scale, as the recently passed $1.9 trillion COVID economic rescue package demonstrates. The next massive bill in the queue envisions some $3 trillions of spending on infrastructure, a substantial portion of which is intended to advance Administration climate objectives and policies. While we await the specifics, and follow the Congressional consideration of the proposed package, we expect to see a lively and contentious debate of how this ambitious program will be paid for, what it means for U.S. jobs and energy mix, and will be on the lookout for new costs and regulations for the U.S. business community. The slim majority that Democrats maintain in both legislative houses suggests a long and winding road to the eventual conclusion of the infrastructure proposal, and USCIB will monitor discussions closely, again especially in the context of the development of the U.S. NDC.

Because while the Administration has announced greenhouse gas reduction goals, calling for net zero by 2050 and zero-emissions electricity generation by 2030, the big question is how these targets will be delivered – and paid for. USCIB is recommending that the U.S. NDC should reflect:

  • All-of-economy action, avoiding the tendency to focus on sectorally siloed approaches, instead engaging all business sectors as the U.S. economy seeks to rebuild better and more sustainably;
  • Enabling eco-systems for accelerated private sector innovation and its deployment, including through multilateral trade;
  • Taking close account of employment and competitiveness impacts, and avoiding additional burdens on economic growth and employment creation;
  • Favoring approaches that reflect the broader framework of the UN Sustainability Goals, which encompass mutually reinforcing social, economic and environmental objectives via partnerships.

In spite of the Administration’s focus on climate change as a central priority for U.S. policy, uncertainties and wild cards abound en route to COP26. The U.S.-China relationship continues to rocky, with major implications for cooperation among the world’s top 2 greenhouse gas emitters. In addition to China, the U.S. will certainly challenge other big emitting countries to do more in terms of greenhouse gas emissions. The overall greenhouse gas emission reductions currently reflected in NDCs submitted to date fall far short of reductions necessary to attain 2.0 or 1.5 temperature rise limits, even in spite of climate-centric policies of the EU Green Deal, and attention is now turning to what non-state actors can also deliver, with a notable focus on the business community to step up with its own pledges.

U.S. companies have forged ahead, associating with net-zero 2050 objectives and making (and executing) climate leadership commitments in many areas, such as climate finance and investment, adaptation and capacity building. Still the full potential of fast-tracking global business innovation towards climate and sustainability – as we saw demonstrated with rapid COVID19 vaccine development through Project Warp Speed – has not been fully tapped. In addition, the catalyst of trade to fully disseminate cleaner energy and more environmentally sound products and services is also a business-facing opportunity that USCIB members will continue to encourage the U.S. and its allies to pursue energetically via the WTO and in other multi-lateral trade agreements, while steering clear of trade disruptive measures.

En route to Glasgow, a fundamental point all business groups can unite on in dialogue with governments and the international community is the vital importance of bringing business to the table in meaningful ways at every step of national and international climate policy and market design, delivery, assessment and improvement. In the view of USCIB, the UN Climate Treaty and its Paris Agreement will benefit from enlisting, listening to and partnering with the private sector in all its diversity, especially through the ICC network. We look to COP26 to launch this next challenging chapter on climate action and economic recovery by enabling and mobilizing the private sector as essential to building this new world.

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