In the past 50 years, the length and fragmentation of supply chains have exploded due to new manufacturing, transport and logistics, and communication technologies, as well as international economic regulations related to trade liberalisation. Today, international production is highly organised within global value chains, where the different stages of the production process are located across different countries. As of 2021, an estimated 70% of international trade involved global value chains. The global financial crisis of 2007 – 2008 and the multiple recent events of 2020 – 2022 such as the COVID-19 pandemic, the Russian invasion of Ukraine, and the blockage of the Suez Canal caused supply shortages, raising awareness of the fragility of global supply and logistics chains and their international dependencies. These disruptions resulted in the Global Supply Chain Pressure Index recording an all-time high value of 4.3 above the historical average of 1997 to 2022. Ιn the future, an ongoing changing context could lead to more regional value chains that are closer to customers, corresponding to a shortening of global supply chains. A review of the long-term strategies of the five leading economies – China, India, Japan, the United States and the EU – published between 2020 and 2022 found that none of them mention phrases related to shortening supply chain distances, reducing freight movements or reducing long-distance freight, shifting supply chains closer and developing local production-consumption ecosystems. This reveals an important gap between science and policy. The possibility of a reduction of movements and distances, should be considered as a core component of any realistic freight decarbonisation strategies reaching zero emissions by 2050. This demand-side component of the strategy should be articulated with necessary technological changes in a coherent systemic change.
- The buildings sector is one of the major greenhouse gases (GHG) emitters, but progress in decarbonising the sector has not been fast enough. In addition to combating climate change, accelerating mitigation efforts has the potential to contribute to achieving no less than 16 of the 17 Sustainable Development Goals (SDGs).
- The significant potential of international cooperation to promote mitigation in the sector has so far been underutilised. Collectively, Parties to the Paris Agreement can promote additional mitigation efforts by: (a) developing a sector-specific international decarbonisation target and roadmap, including indications of when the buildings sector should achieve zero or net-zero emissions and interim emission reduction milestones, potentially with regional differentiation, (b) requesting inclusion of sectoral emission targets and concrete policies in Parties’ Nationally Determined Contributions (NDCs) and long-term climate strategies, (C) establishing additional reporting requirements on the implementation and achievement of NDCs in individual sectors under the Paris Agreement’s Enhanced Transparency Framework.
- Beyond the UNFCCC, interested Parties and non-Party stakeholders could: (a) adopt and coordinate commitments to decarbonising their own building stock and to procuring only highly efficient equipment and appliances, (b) increase support for policy development, planning, implementation, evaluation and enforcement capacity of national and local governments in developing countries, and (c) scale up financial support and risk-sharing for investments as well as capacity building for local financial institutions in developing countries.
- The newly established “buildings breakthrough” should be strengthened by specifying its objective, mobilising pledges for specific actions by its members, including means of implementation for developing countries, and appropriate staffing of its secretariat.
- The Agriculture, Forest and Other Land Use (AFOLU) sector is one of the major gross emitters of greenhouse gases (GHG), mostly driven by deforestation and agricultural emissions, while Forest and Other Land Use (FOLU) remains a net sink. Mitigation measures in the sector can contribute positively to climate change adaptation and several of the Sustainable Development Goals (SDGs).
- International cooperation has significant potential to promote mitigation in the sector, in particular in developing countries. However, up to now mitigation results have been limited and not sustained over time despite the investments made in capacity building and readiness activities.
- Enhancing coordination among initiatives, and broadening the participation (i.e. government-civil society, public-private) and balancing decision-making (i.e. developing and developed countries) power among relevant groups, could help to incorporate these actors’ interests into global governance and make the initiatives more effective and the results resilient.
- To successfully foster the sector’s potential in an increasingly interconnected world, land-use governance needs to be strengthened through consistent land policies and regulation, enhanced land administration functions, and better land information and monitoring systems at all scales.
- The adoption of consistent sector standards for measurement, reporting and verification (MRV) across existing institutions and initiatives, aligned with the rules and modalities adopted by the UN Framework Convention on Climate Change (UNFCCC), could greatly enhance the transparency and comparability of efforts across countries.
- No solution will work if there is only reliance on one finance stream based on result-based payments (i.e. though carbon markets) where the underlying risk aversion of donors and buyers and the short-term nature of targets and goals remains an issue. Upfront investments and other economic and non-economic incentives will need to be considered in the space of international cooperation and finance.
- Transforming the land transport sector towards decarbonisation is crucial to achieving the long-term temperature goal of the Paris Agreement. While international cooperation has considerable potential to advance this transformation, this potential has remained underexploited.
- To drive the sector’s transformation, Parties to the United Nations Framework Convention on Climate Change (UNFCCC) and Paris Agreement can agree to: (1) develop a transport-specific decarbonisation roadmap accompanied by a global net-zero target; (2) integrate sectoral emissions budgets into their Nationally Determined Contributions that include transport targets (NDCs); and (3) create additional reporting requirements under the Paris Agreement that specifically focus on the implementation and achievement of NDCs in individual sectors, including for transport.
- To complement efforts pursued under the UNFCCC, groups of states can also develop a joint agreement to phase-out the sales of new fossil-fuelled vehicles by a specific date.
- Another option for enhancing international cooperation outside the UNFCCC can take the form of a climate club focused on electric vehicles. In addition to setting a phase-out target for the sales of new fossil-fuelled vehicles, such a club could also commit to harmonising market-share targets for zero-emission vehicles and zero-emission vehicle charging infrastructure.
- International cooperation holds great potential to advance the global decarbonisation of energy-intensive industries (EIIs). However, despite existing far-reaching international cooperation this potential remains underexploited. Major gaps remain regarding (1) harmonised standards for near-zero emissions basic materials, (2) related lead markets, (3) sufficient means for technology development and transfer, (4) rules addressing international competition and carbon leakage, and (5) orchestration of existing activities.
- Existing institutions hold significant potential to address the gaps of lead markets and means as well as, to a lesser extent, harmonised standards and orchestration. However, they lack the needed institutional capacity and legitimacy to address competition and carbon leakage or ensure a near-universal harmonisation of standards.
- The proposed G7 Climate Club holds further potential to advance international cooperation on harmonised standards, lead markets and orchestration. However, its narrow membership and limited legitimacy constrain its effectiveness, while clear incentives for other countries to join are lacking. These shortcomings can be addressed by especially reaching out to emerging and developing countries with an established interest in international cooperation on industrial decarbonisation, explicitly addressing equity issues, making clear financing commitments and providing access to lead markets.
- Neither existing institutions nor the Climate Club have the required institutional capacity or legitimacy to address competition and carbon leakage. Whereas bi- or plurilateral cooperation holds some potential, the current geopolitical context might render broader international cooperation on carbon leakage politically unfeasible. To put EIIs on track for near-zero emissions by mid-century, enhancing and deepening cooperation on the other gaps should therefore be prioritised.
- Sectoral systems differ substantially in their political economies, technologies, financing structures, industrial composition, and international connectedness. Taking these differences into account allows for enhancing international cooperation for climate action.
- The Conference of the Parties serving as a Meeting of the Parties to the Paris Agreement could promote a sectoral perspective in a number of ways, such as requesting Parties to include sectoral emission targets and concrete policies in their Nationally Determined Contributions and long-term climate strategies and revise reporting requirements to put more focus on individual sectors.
- Parties could also conduct a range of joint activities to promote sectoral cooperation internationally, for example in the framework of the new work programme for urgently scaling up mitigation ambition and implementation, such as developing sector-specific international decarbonisation roadmaps, promoting exchange on potential technological, economic and policy options, or reviewing and/or endorsing relevant international cooperation efforts.
- The submission suggests several sector-specific cooperation options for selected individual sectors, focusing on agriculture, forestry, and land use; buildings; fossil fuel supply; industry; and land transport.
Aviation is one of the most challenging sectors to decarbonise. Although the Paris Agreement in principle covers emissions from all sectors, including those of aviation, most Parties to the Paris Agreement have not included emissions from international flights in their Nationally Determined Contributions (NDCs). However, these emissions are explicitly addressed by the International Civil Aviation Organization (ICAO).
In 2016, ICAO adopted a market-based mechanism – the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) – to address the sector’s growth in emissions. In the meantime, Parties to the Paris Agreement in 2021 agreed on a detailed rulebook for market mechanisms under Article 6 of the Agreement, which creates linkages with CORSIA.
We identify four types of interactions between CORSIA and Article 6 rules: (1) allowing Parties with single-year targets to use the averaging accounting approach creates a loophole that may undermine the environmental integrity of both CORSIA and Article 6; (2) the quality criteria for CORSIA offsets may be strengthened by following Article 6 rules; (3) the level of CORSIA’s ambition will affect the supply side of carbon credits, including those provided under Article 6; and (4) like CORSIA, the operation of Article 6 may rely on private certification standards’ registries.
To ensure that CORSIA provides a meaningful contribution to climate change mitigation in the sector, we suggest that ICAO Member States should: (1) adopt a long-term climate target for the sector in line with the Paris Agreement, (2) revise its quality criteria for offset programmes, (3) address non-CO2 effects, and (4) carry out an assessment of the impacts on the functioning of the Article 6 mechanisms each time a decision is made.
Parties to the UN Framework Convention on Climate Change could also take specific action, including refining guidance on averaging, establishing a buffer pool to offset an increase in emissions, and considering a requirement for Parties to transition towards multi-year emission targets.
The five-yearly Global Stocktake (GST) plays an essential role in the overall ambition mechanism of the Paris Agreement on climate change by ‘assess[ing] the collective progress towards achieving the purpose of this Agreement and its long-term goals’. With the first GST due to start at COP26 in Glasgow, there is an urgent need to identify how the GST could be organised so as to maximise the effectiveness of the process. This policy brief aims to contribute to this understanding.